http://www.progresoweekly.com/index.php?progreso=Engler_ant&otherweek=1117861200
Triumph over debt? (Part I) How 100% debt cancellation for poor countries-now being debated by wealthy nations was transformed from an implausible demand into a winning issue, and what barriers lie ahead for the debt relief movement. By Mark Engler An old maxim in social movements (adapted from Schopenhauer's prickly take on the history of great ideas) states: "First they ignore you. Then they attack you. Then you win." For years, campaigners for debt relief in the developing world and their international supporters were dismissed or derided. For 2005, however, a new question has emerged: Will they finally be able to claim victory? A decade ago, in 1995, activists pushing for world leaders to cancel the huge debts that stunt development in the global South were told simply, "debt will not be a major issue." By 1998, these same groups - led by the Jubilee debt coalition - were warned that they were asking too rudely for too much. "If you make a campaign out of it," one columnist wrote, or "use extreme language... the very people you want to influence, the ministers and officials of the rich democracies, stop listening to you." The campaign continued despite these admonitions. Now, observers of the debt issue have predicted that major advance for cancellation is within reach, possibly as soon as this summer. Although leaders from the Group of Seven, or G7*, wealthy industrialized nations failed to finalize a debt agreement in Washington, DC, in April, they will continue their deliberations when they come together for their annual meeting on July 6-8 in Perthshire, Scotland. On the table is a plan to grant up to 100% multilateral debt relief for many of the world's heavily indebted poor countries. That the legitimacy of 100% debt cancellation is now widely accepted represents a dramatic reversal in the debt debate. Many have commented in recent years that the globalization movement has won the moral argument about trade and development, but that its positions have not translated into policy. Yet the issue of debt provides one clear instance in which a network of international activists has affected governmental decision-making and in doing so has opened real possibilities for human development. At the same time, with U.S. Treasury Secretary John Snow presenting fresh barriers to progress on full cancellation and with advocates discussing difficulties that will face developing nations even in a post-debt-relief era, a win long in the making is bringing with it a series of new challenges. The making of "a major issue" In the early 1990s, debt cancellation was far from the mainstream political agenda. While in the global South a discussion that began in the 1980s was raging - condemning an emerging debt situation in which some impoverished countries, especially those in sub-Saharan Africa, were paying more in debt service to advanced capitalist nations than they were receiving from them in aid - the issue had very little traction in wealthy nations. "There was almost zero awareness" of the debt issue in the U.S. at the time, says Neil Watkins, National Coordinator of Jubilee USA. When a small group of social movement activists, along with government leaders from the developing world, tried to gain a hearing for the issue at the 1995 UN Copenhagen Social Summit, the U.S. impeded discussion. President Bill Clinton and British Prime Minister John Major ultimately avoided attending the summit altogether. Not long after, though, the grassroots work on the issue began to bear fruit. The formation of the Jubilee network in 1997 united a broad spectrum of religious, labor, non-governmental organizations into a joint international campaign. In May 1998, Jubilee helped mobilize 50,000 supporters to protest the G7/G8 summit in Birmingham, England. The protests returned in full force at the following year's summit in Cologne, Germany, where another 50,000 people formed a human chain through the city's streets to represent the "chains of debt." During the same period, concerned members of religious congregations, in particular, witnessed some gratifying developments. The efforts of Roman Catholics drew notice when, in 1996, the Catholic Bishops of Africa began publicly denouncing debt payments made "at the expense of providing basic healthcare, education, and other social services to the poor in our countries." Bishops from Latin America came forward with similar statements. In November 1998, the late Pope John Paul II, who had shown previous sympathy for the campaign, held up debt relief as "a precondition for the poorest countries to make progress in their fight against poverty." Demanding immediate action, he asserted "it is the poor who pay the cost of indecision and delay." Other religious bodies throughout the world came forward to endorse the Jubilee campaign. In the U.S. alone, these included the Episcopal Church, the Evangelical Lutheran Church of America, the Mennonite Church, the Union of American Hebrew Congregations, the Presbyterian Church, and inter-faith groups like the Inter-Religious Task Force on Central America, Church World Service, and the Ecumenical Program on Central America and the Caribbean. By this time policy-makers and pundits could no longer afford to ignore the call for debt cancellation. But some went on the attack. Following the Birmingham demonstrations, Andreas Whittam Smith, a columnist with the London Independent, echoed much of elite opinion by calling the Jubilee campaign's goals "laudable," but criticizing its political strategy as "badly conceived." Cautioning against "monstrous accusation" he defended the laborious negotiations about debt taking place at the World Bank and IMF, and he charged that the Jubilee coalition's political action would "be ineffectual... if not counter-productive." First victories In fact, as grassroots efforts to highlight the issue grew, the G7 responded at each stage by grudgingly expanding its limited proposals for debt relief. In 1996, the countries controlling the International Monetary Fund (IMF) and World Bank introduced their first Heavily Indebted Poor Countries (HIPC) plan, designed to offer 42 of the world's most indebted poor nations some relief after six probationary years. Unfortunately, actual cancellation of multilateral debt involved high levels of "conditionality." HIPC required poor countries to implement IMF-advised structural adjustment programs, which often resulted in cuts to health care and social service spending. Moreover, as HIPC progressed it soon became clear that debt relief was coming far too slowly to have any substantial effect. In 1999, with pressure mounting, the IMF instituted HIPC-2. This plan accelerated the pace of relief, but it kept debt cancellation contingent upon structural adjustment. Moreover, the amounts of debt it canceled still left poor countries with unmanageable burdens. By the end of the year 2000, 22 countries had received some relief from the HIPC initiatives, yet the program on average had canceled only one third of each country's debt--hardly an adequate solution to the crisis, especially for impoverished nations that had more than paid off their original loans, but still owed massive debts. As the United Nations Conference on Trade and Development's 2004 report on Africa explained, "the continent received some $540 billion in loans and paid back some $550 billion in principal and interest between 1970 and 2002. Yet Africa remained with a debt stock of $295 billion." The report concluded that the continuation of exploitative interest payments constituted "a reverse transfer of resources" from poor to wealthy countries. Perhaps a more important victory came in September 1999, when President Clinton responded to intensive lobbying by announcing that the U.S. would cancel 100% the bilateral debts owed it by the HIPC nations. Two months later, the UK put forward a similar plan for bilateral debt cancellation; other creditor nations, such as Germany, France, and Japan soon followed suit. The governments' actions marked a critical milestone. At the same time, in dollar terms, the total cost of this U.S. bilateral debt relief was estimated at $330 million, while totals for debt owed by poor countries to multilateral creditor institutions, such as the IMF and World Bank, were estimated in the hundreds of billions. In 2000, Jubilee activists were also instrumental in pressuring Congress to pass legislation requiring U.S. representatives to the World Bank and IMF to oppose any project that charges end-user fees for basic healthcare and education services. Because of the influence the U.S. wields within these institutions, this measure dramatically curtailed the use of user fees, especially in education. As Robert Weissman wrote in a September 2003 Washington Post op-ed, 1.5 million more Tanzanian children were able to start school as a result of the 2000 victory. HIPC itself, with all its limitations, also had an important impact. Because the program did provide some debt relief, it began establishing a track record for what cancellation could accomplish. Critics had regularly charged (and some continue to believe) that money from debt cancellation would be mismanaged and would not be used to reduce poverty. In fact, HIPC demonstrated that cancellation could be a most effective form of foreign aid, allowing developing countries to retain and make use of their own resources. By 2004, HIPC had advanced some measure of relief to 27 countries. A 2004 report from the World Bank showed that together these countries nearly doubled their total spending on poverty reduction - including education, healthcare, and clean water - in the period from 1999 to 2004. (Next week's Part II will demonstrate how the neoliberal system - or corporate globalization - has helped deepen the divide between wealthy countries and those of the global south.) *The G7 includes Canada, the United Kingdom, France, Germany, Italy, Japan, and the United States. Since 1998, the Russian President has also joined the heads of state from the G7 countries at annual summits, creating the G8. However, because Russia is not considered a major economic power or a leading creditor, finance ministers from the G7 nations continue to meet as a distinct group. Decisions about debt cancellation will be determined by the G7 countries, although Russian representatives will be present at meetings like the July summit in Scotland to discuss other matters. -- Mark Engler, a writer based in New York City, is an analyst with Foreign Policy In Focus (www.fpif.org). He can be reached via the Web site http://www.democracyuprising.com. 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