"Every seventh year we will forgo working the land and will cancel all debts." —Nehemiah 10:31
In Kenya, 1.3 million people are living with HIV/AIDS, and many lack essential medicine and food. Half the population lives in poverty; 40 percent are unemployed. Yet, in recent years, the Kenyan government has had to pay as much in debt payments to foreign creditors—hundreds of millions a year just in interest—as it has for water, health, agriculture, roads, transport, and the finance ministry combined! With this budget, Kenya attempts to fund HIV/AIDS treatment, meager agricultural extension services for poor farmers, and a deteriorated road network that needs an estimated $1 billion in repairs.
Most of Kenya's external debt of some $10 billion was racked up during the 24-year dictatorship of Daniel Arap Moi, which lasted until 2002. Moi and other corrupt government officials salted away billions in private bank accounts, as Western governments were well aware. Yet, the International Monetary Fund and the World Bank, which are controlled by the United States and other wealthy countries, continued to lend to Kenya until 1997.
As Wangari Maathai, Kenyan environmental activist and Nobel Peace Prize winner, puts it, "The people who are really being punished [for Kenya's debt] are the poor people who never received that money to begin with. ... Those who did business with our leaders knew they were corrupt, that they were not delivering services, that the money was quite often stolen and stashed away. Yet when you request cancellation [of debts], people want to pretend that you got that money."
Like dozens of impoverished countries, Kenya is not even being considered for the main debt cancellation plan that exists today, the Multilateral Debt Relief Initiative. Frustrated, the Kenya Debt Relief Network, Catholic Economic Justice, and other Kenyan campaigners are now calling for their government to refuse to pay the debts. They are being supported by the global Jubilee Debt movement, as well as by the more mainstream voice of Jeffrey Sachs, a prominent Columbia University economist, who is urging impoverished governments to shift scarce resources from debt payments to the urgent needs of their people.
Around the world, at least 45 impoverished countries require full debt cancellation to begin to meet their peoples' basic needs. Thanks to the efforts of the Jubilee movement in the past decade, more than 30 nations have seen cancellation of multilateral debt totaling some $80 billion. But low-income countries still owe foreign creditors, including the World Bank and IMF, $400 to $450 billion. Oxfam estimates that poor countries still pay $100 million a day in debt payments. The original debt has been paid several times over, but because most countries can only afford to pay the interest, they can never draw down the principal.
In 2000, people of faith and conscience declared a year of Jubilee and put the debt crisis squarely on the political agenda of world leaders. Following the biblical injunction for a Sabbath year every seven years, in 2007 global debt campaigners are calling for concerted action to cancel the debts of poor countries once and for all.
Debt relief works. Some of the most important gains from the original Jubilee campaign came in commitments made in 1999 and 2005 by creditor countries, which freed 22 nations in Africa and Latin America from crippling debts. While not all the debts of these countries have been cancelled, and debts to other creditors were not included, this is still cause for celebration.
Countries that have received debt relief have been able to abolish school fees, provide free immunizations, fight HIV/AIDS, and improve access to safe drinking water. When Burundi abolished school fees, an additional 300,000 children could enroll. In Zambia, fees for rural health clinics have been abolished, making it possible for people to access medical care in a country where 65 percent of the population lives on less than a dollar a day. According to Grace Chibanda, a Zambian pharmacist, "Debt relief is a good thing. It is getting medicine for people who didn't have it before."
Unfortunately, the current debt cancellation deal is far less generous than it looks at first glance, at least where the World Bank is concerned: For every dollar of debt relief granted a country, the Bank is reducing the amount given in development assistance. The Bank will give new grants only once it receives additional contributions from wealthy donor countries. The additional $40 million this year in Zambia's budget that has allowed it to cancel fees and plan to hire more teachers and doctors is due to IMF debt cancellation, not that of the World Bank.
Forced policies. When the Bank does disburse its grants, it will decide which countries receive them based on their compliance with previously imposed "adjustment" policies. For the past two decades, the IMF and World Bank have mandated often-harmful policy conditions, such as promoting privatization and government spending reductions, on countries that borrow from them. This restricts those countries' "policy space"—their flexibility to shape their own development agendas.
These debt cancellation programs still require applicants to follow the same economic and policy conditions. Studies show it is the poor who pay, through higher prices for water, education, health care and essential services, and loss of their land to export agriculture.
In 2002, officials in the U.S. Treasury Department, which holds a controlling share of IMF board votes, openly stated that "one of the primary aims of the current debt-relief system [is] imposing conditions to guarantee that debtor countries make economic choices that fit the free-market vision of the Treasury, the Bank, and the IMF."
Many developing country governments disagree with these economic policies, which weaken states and open their economies to transnational business, but are powerless to act otherwise. Failure to cooperate means no debt relief.
Worse still, countries must spend several years putting these policies into place before being granted any actual debt cancellation—years during which people die from lack of health care and children are unable to go to school. Haiti is a case in point. The most impoverished nation in the Americas, Haiti is saddled with an external debt of $1.3 billion, nearly half accrued under the blatantly corrupt Duvalier family dictatorship. Haiti was approved in 2006 for debt reduction, but has to wait until December 2009 at the earliest before seeing any concrete benefit. In the meantime, the country will have paid $220 million in debt service, precious resources needed for building schools and providing clean water and health care.
Haiti's scenario is repeated around the world. Eighteen impoverished countries are currently on the list for "Highly Indebted Poor Countries" debt cancellation, but will not be granted any relief until they implement "adjustment" policies to the satisfaction of the Bank and the IMF.
This state of things raises a key issue. Even if countries escape their debt burdens, what would prevent them from slipping into indebtedness yet again, unless global economic relations are changed? Debt campaigners are keenly aware that repeated cycles of destructive indebtedness are symptomatic of deeper injustices in the global economy. In addition to harmful conditions imposed by the IMF and World Bank, rising oil prices and the need for greater aid flows than are currently available provide strong pressure for countries to borrow again—and they are doing so, just to make ends meet.
A lasting solution to the debt crisis requires major systemic changes to the shape of global economic relationships. International treaties, strategies for sustainable development, and trade rules must promote social justice among and within nations. International agreements that permanently give preference to wealthier, more powerful sectors or countries must be eliminated or replaced.
The road ahead. In Europe, debt campaigners are determined to keep the issue of debt, particularly illegitimate debt, on the agenda of wealthy countries. Organizers said an estimated 80,000 people attended weekend protests in Germany leading up to the G8 Summit there in June.
In the United States, the Jubilee USA Network is continuing to press for expanded debt cancellation and new rules to assure greater responsibility in future lending. The network is supporting a bill in Congress calling for 100 percent cancellation of debts, without harmful conditions, for all countries needing those resources to meet the Millennium Development Goals, which include reducing extreme poverty and hunger by 50 percent by 2015.
Debt reduction is a practical issue. It is also one of the most pressing justice issues facing us today. Economic justice is a recurring theme in the Bible, and God's people are called to treat others with fairness and compassion, forgiving debts to restore the wholeness of community. As people of faith, we are called by God "to do justice, and to love kindness, and to walk humbly with your God" (Micah 6:8).
Cancellation of unsustainable debt frees people from misery and despair. This is as true today as it was in biblical times. God's justice and compassion requires no less. n
Christina Cobourn Herman was an associate director of the Oblate Justice and Peace/Integrity of Creation Office in Washington, D.C., when this article appeared.