The Common Good
May-June 1998

For a Dignified Life

by Marie Dennis | May-June 1998

The worldwide movement for debt relief is rooted in Jubilee.

Matchbox Child

Living in a matchbox
This city
This barrio
This shack
This life.
Cruel, ludicrous lack of space
Competing for limited everything
Survival of the toughest
Self-preservation a permanent posture
Imprisoning fear
Strangling hope
Why bother?

I am a match
Small, skinny, easily snapped in half
Snapped in half every day
Until I am so small
As not to be counted at all
Disposable.

—From a poem by
Annette Mandeville,
Maryknoll Lay Missioner
in El Salvador.

M

atchbox children staggering under the weight of $2 trillion in debt live daily the reality of "limited everything." With three billion other people in the world who live on less than $2 per day, they yearn for the basics essential to survival. With 1.5 billion others without access to potable water, they thirst for the possibility of a dignified life. One hundred and fifty million of these matchbox kids never get to school, yet they hunger incessantly for the knowledge that enables good work—for the possibility of nurturing the unique potential that each human life, including the most impoverished, contains.

How many hundreds of thousands of times has an Alice Walker or a Beethoven, a Martin Luther King Jr. or a Rigoberta Menchu flickered out in a matchbox of poverty and hopelessness? And how is this tragedy linked to the staggering foreign debt that cripples the economies of many impoverished countries?

This link—between debt and poverty—is one of the most pressing moral issues for people of faith as we approach the new millennium. In the Hebrew scriptures (Leviticus 25:8-12), Jubilee is described as a set time when slaves are to be freed, land restored, and debts totally remitted. An increasingly insistent worldwide call is heard for a jubilee level of debt cancellation by the year 2000. Why is it so fervent?

ACCORDING to the 1997 "Human Development Report" from the U.N. Development Program, debt is a millstone around the necks of sub-Saharan and other least developed countries. Every person in the global South now owes about $300 (U.S.) to foreign creditors, more than an entire year’s income for many of our world’s people. Furthermore, impoverished countries have been forced to use scarce resources, including bilateral aid, to make payments on their debt. For every $1 that Northern countries provide in aid, between $3 and $4 comes back in the form of debt servicing.

Consider some facts about debt:

• Depending on what figures are used, between 1972 and 1992, borrowing countries paid back $227 billion to $302 billion more than they borrowed—yet their debt burden continued to grow.

• One-third of Africa’s total debt is in arrears, meaning it cannot be paid. In 1994, African countries paid $11 billion to service their debt, but this was only half of the $22 billion they needed to pay in order to stay current.

• In 1996, Nicaragua’s debt was $6 billion; its annual income was only $2.1 billion. In recent years its debt payment obligation has been more than half of its annual budget.

Mozambique is one of the poorest countries in one of the poorest regions of the world. The annual per capita income is about $90; the average life expectancy is 47 years. During 16 years of a civil war that ended in 1992, two-thirds of the primary school network and a third of the country’s health posts were destroyed or forced to close. Yet in Mozambique, as in Nicaragua and other extremely poor countries, payments to foreign creditors consume more than half of the public revenues, precluding necessary expenditures on health, education, or even infrastructure that would help enable a better life for the majority of people.

Furthermore, the need of highly indebted countries to earn the "hard currency" (like U.S. dollars) required for debt service payments often results in overused soil, overfished waters, destroyed forests, and unregulated mining practices. The impact of unmanageable debt, then, is felt in rich countries as well. Environmental damage does not respect national borders; nor do communicable diseases, uncontrolled for lack of resources. Migration pressures and drug traffic, both exacerbated in debt-drained economies, are not—despite desperate measures—stopped by border patrols or high fences.

Although there is some debate about how the debt burden in the impoverished world grew to its current enormous proportions, the facts and some of the causes are increasingly clear. The crisis first came to public attention in August 1982 with the imminent possibility of default by Mexico. But the problem began much earlier and arose from factors external to most impoverished countries—including the dramatic rise in oil prices in the 1970s and the consequent glut of oil money in Western banks.

Needing to put this money to work, these banks made loans primarily in Latin America—often to ill-conceived projects and at variable interest rates. Interest rates were extremely low at that time, but they skyrocketed to more than 20 percent within just a few years. In Africa, donor countries were often more interested in gaining Cold War allies than in whether their loans served the people or went to well-designed, productive projects.

Honorable debts with just arrangements for payback should be respected, but much of today’s debt is anything but honorable. Billions were lent by Northern governments, commercial banks, and multilateral development banks to repressive or irresponsible governments for reasons the majority of their people neither agreed with nor from which they derived any benefit.

Even blatant corruption did not discourage the lending. Notorious dictators like Marcos in the Philippines and Somoza in Nicaragua are reported to have stolen millions and millions of dollars from their people, yet banks made the loans to them anyway, exacting payment in lost educational opportunities, declining health, and unemployment from future generations.

Both creditor and debtor nations share the responsibility for the debt crisis, but under the rules of the global economic game, only debtor countries—especially their most vulnerable people—carry the principal burden. No mechanisms for bankruptcy exist to which these increasingly indebted, poor countries can turn for relief.

In fact, the staggering problems created by heavy debt burdens have been made worse by requirements imposed in order to qualify for either debt relief or new loans needed to pay off old debt. Debtor countries have been required by the International Monetary Fund (IMF), the World Bank, and other multilateral, as well as bilateral, creditors to institute fiscal austerity and structural adjustment measures.

These policies have sought to control inflation and stimulate growth. They include devaluing the national currency; raising interest rates and decreasing the availability of credit; reducing government spending (usually resulting in deep cuts in social programs and subsidies); lowering tariffs and liberalizing trade; and selling state-owned enterprises, whether productive or not. Agricultural and industrial production is shifted from food staples and basic goods for domestic use to commodities for export.

Adjustment prescriptions have been designed by international institutions led by rich nations and implemented by debtor governments without popular debate or civil society participation. Yet they have had profound consequences for people in the global South and their natural environments.

Such issues have been responded to by the Religious Working Group on the World Bank and IMF, an ecumenical coalition of more than 40 religious institutions, denominations, and communities. In the statement "Moral Imperatives for Addressing Structural Adjustment and Economic Reform Measures," they say:

We recognize that some kind of economic reform is often necessary and that environmentally responsible growth is important for impoverished countries. But it is morally unacceptable that people who struggle barely to survive are carrying the burden of these policies on the assumption that the benefits may eventually "trickle down." Means as well as ends must be just....We urge international financial institutions and governments to seek new approaches which involve greater openness and flexibility, foster broader civil society participation, protect the environment and encourage more equitable distribution of economic power and resources within and among nations.

OVER THE YEARS, many initiatives to reduce the debt have been designed. Most recently, in 1996, recognizing the seriousness of the debt crisis, the World Bank and IMF approved a debt relief framework for heavily indebted poor countries (HIPCs). This framework, known as the HIPC Initiative, was a step forward in that it involved all creditors of a given country in addressing the problem comprehensively, but its flaws have become increasingly evident during implementation.

The harsh economic reforms required of debtor countries seeking relief, as well as long delays and even the ultimate objective of debt sustainability (getting a debtor country to the point that it can manage to keep its debt payments up-to-date) rather than cancellation, have made visible the need for a much more radical solution.

This has sparked an international movement, named Jubilee 2000, of people who agree that it is time for a definitive level of cancellation of the debt that prevents countries from providing adequately for the basic rights and needs of their people. The Jubilee 2000 campaign was initiated in Great Britain, now the hub of a tremendous worldwide movement with links or affiliated campaigns in dozens of countries, including Australia, Austria, Canada, Denmark, France, Ghana, Germany, Honduras, Hong Kong, India, Ireland, Italy, Kenya, New Zealand, Norway, Philippines, Sweden, Switzerland, Tanzania, the United States, Zambia, and Zimbabwe.

In the United States, this call was launched by the Religious Working Group. As Jubilee 2000/USA, a rapidly growing number of religious institutions, other organizations, and individuals are working for debt cancellation that has the following characteristics (italicized statements are from the Jubilee 2000/USA platform):

Definitive cancellation of the crushing international debt in situations where countries burdened with high levels of human need and environmental distress are unable to meet the basic needs of their people or achieve a level of sustainable development that ensures a decent quality of life.

The Jubilee campaign is not calling for the cancellation of all debt in a random manner, but of death-dealing debt in impoverished countries and at a level substantial enough for lasting benefit.

Definitive debt cancellation that benefits ordinary people and facilitates their participation in the process of determining the scope, timing, and conditions of relief as well as the future direction and priorities of their national and local economies.

Debt relief that benefits only the elites, gives support to human rights violators, or is likely to disappear through corruption or be poured into bloated military budgets is not acceptable. Ordinary people must be informed by international creditors and their local governments about any plans for debt relief. They must also be given voice in the ways debt relief and any attached conditions will be applied in their country.

Definitive debt cancellation that is not conditioned on policy reforms that perpetuate or deepen poverty or environmental degradation.

Structural adjustment and economic reforms attached to debt relief must be thoroughly evaluated according to criteria such as those described in the "Moral Imperatives" statement–-and changed as necessary.

Acknowledgment of responsibility by both lenders and borrowers, and action to recover resources that were diverted to corrupt regimes, institutions, and individuals.

Serious efforts must be made to hold accountable those who stole loans intended for the public good. Impunity in the world of finance is no more acceptable than impunity for egregious human rights violations.

Establishment of a transparent and participatory process to develop mechanisms to monitor international monetary flows and prevent recurring, destructive cycles of indebtedness.

Without radical changes in the way the world does its business, including more—not less—citizen participation in the loan-making process, and more—not less—accountability on the part of investors and local governments to the citizens of a country, even significant debt relief will not be definitive.

ALTHOUGH THE DEBT owed by the poorest countries is enormous to them, the amounts are small in relation to the wealth of rich nations. Doing right is its own reward, but the benefits of debt relief would be evident in our own country as well. Relieving the pressure of debt and debt-driven structural adjustment programs would diminish social strife in many countries and our world and lessen the inclination of impoverished countries to exploit natural resources unwisely for export or to lower labor standards in order to attract foreign investment. But building the political will in the U.S. Congress to support the appropriation of money for increased debt relief will be a major undertaking.

Economic decisions involve moral choices and are subject to moral accountability. Our faith insists that public policies in the realm of economics as in all others be shaped and evaluated according to the standard of God’s love and mandate for justice. At a November 1997 meeting attended by James Wolfensohn, president of the World Bank, Cardinal Roger Mahoney of Los Angeles made clear this connection between our faith and the call for debt relief:

The church’s advocacy for the reduction or cancellation of Third World debt emerges from its abiding concern for the poor....The [Hebrew] prophets remind us that the quality of justice in the land and the integrity of the community’s relationship with God are measured by how the poor, the widow, the orphan, and the alien are treated. Throughout the Hebrew scriptures, right worship and fidelity to the covenant relationship with God are judged by the community’s treatment of the poor and marginalized. The demands of solidarity in an increasingly globalized world argue for Third World debt to be a concern for all of us.

MARIE DENNIS is director of the Maryknoll Office for Global Concerns and a member of Assisi Community in Washington, D.C. She is chair of the Religious Working Group and on the Executive Committee for Jubilee 2000/USA.

For additional information, contact Jubilee 2000/USA, 222 E. Capitol St. NE, Washington, DC 20003-1036; (202) 783-3566; coord@ J2000USA.org; www.j2000usa.org/j2000. For information about the campaign in other countries: http://www.oneworld.org/jubilee2000. A summary of the "Moral Imperatives Statement" is available from the Religious Working Group, c/o Maryknoll, P.O. Box 29132, Washington, DC 20017.

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