Jubilee 2000 / USA Campaign
Jubilee 2000 / USA is part of a worldwide movement of concerned
people and groups seeking to cancel the debts of the poorest countries
by the new millennium.
Why is debt a problem for poor countries?
In order to repay foreign debts, many poor countries are being
forced to divert scarce government resources away from health
care, education, and other vital services. The result has been
to deny many children the chance to go to school, women access
to prenatal care, HIV-infected persons access to counseling and
treatment, and small farmers access to credit and technical assistance.
African countries now spend twice as much on average repaying
foreign debt as on providing health care. The United Nations Development
Program in 1997 stated, "Relieved of their annual debt repayments,
the severely indebted countries could use the funds for investments
that in Africa alone would save the lives of about 21 million
children by 2000 and provide 90 million girls and women with access
to basic education."
How much do these countries owe?
The 41 countries defined by the World Bank as "Heavily
Indebted Poor Countries" (HlPCs) -- 33 of them in Africa
- owe about $220 billion in foreign debts. Each African child
inherits about $379 in debt at birth. A child in Nicaragua is
born owing over $2,000, while average yearly income there is only
How did these countries get so indebted? Isn't it their own
* During the Cold War, Western governments including the US
often lent money to undemocratic or corrupt governments for political
reasons and largely ignored how the borrowers used the money.
Many leaders squandered money on badly designed projects, military
spending or personal corruption.
* While some poor countries have suffered from adverse weather
and armed conflicts, virtually all have endured long-term declines
in world prices for their primary exports (e.g. items like coffee
or cotton). As export earnings dropped, governments could no longer
keep up interest payments, which were added to the unpaid principal
of the debt. This compounding of interest and rescheduling of
loans has led to situations in many countries where, despite years
of making debt payments, the level of indebtedness has not been
reduced. Indeed for many countries the debt is higher now than
To whom do the poor countries owe money?
The main creditors are the world's wealthiest nations, such
as the US, Britain, Japan, France, and Germany. Other important
creditors include the large international financial institutions
like the International Monetary Fund and the World Bank, which
are controlled primarily by the world's wealthiest nations. Regional
development banks, such as the Inter-American Development Bank,
and many commercial banks also have outstanding loans to poor
Why should Americans care? How does it affect us?
* Unrepayable debt, and the austerity measures that accompany
new loans, can inflame social conflicts. That can lead to civil
war and even genocidal campaigns, as in Rwanda. Many of these
conflicts have resulted in costly humanitarian interventions by
the U.S. and other nations.
.* A large debt burden motivates many poor countries to lower
labor standards, as they engage in a desperate struggle to attract
foreign investment and thereby earn enough "hard currency"
from export revenues to repay foreign debt. That leads to lower
wages and growing poverty around the world.
* Debt harms the environment, encouraging rainforest destruction
and pollution as poor countries use cheap but environmentally
destructive ways to earn export revenues To attract foreign investment
to help pay the debt, countries often weaken the enforcement of
international and national environmental standards and regulations.
Is debt cancellation really practical?
Most poor countries have tried very hard to repay these debts.
In 1996 nations in sub-Saharan Africa paid $14.5 billion on their
foreign debt. But in 1995, they could only pay 57% of payments
due. The reality is that the debt cannot and will not be repaid,
and it is senseless for creditors to pretend otherwise. Countries
cannot develop healthy economies when millions of their people
are being denied basic health care and education and earn wages
so low they can barely survive. A bold step to cancel poor countries'
debt is the most practical way to restart their economies, protect
the global environment and reduce poverty.
Who has the power to cancel these debts.
Governments of the wealthiest nations, including the U.S..
They can provide financial resources to international agencies
like the IMF and the World Bank and direct that the funds be used
to write off poor countries' debts. They should require, however,
that the debt be canceled in a way that benefits ordinary people
and without conditions that lead to more poverty and environmental
Our government and others together have the power, and the
resources, to do it: the only thing missing is the political will.
That must come from the people
Has debt cancellation been tried before?
Yes. Debt has readily been canceled for many nations in the
past, including Germany after World War II.
Won't debt cancellation cost a lot?
Because the world financial community knows full well that
the official amount ("face value") of these debts will
never be repaid, the market value of the debts is only a fraction
of that amount. The contributions needed from wealthy nations
to write off these debts would be based on this market value and,
therefore, relatively small.
Won't debt cancellation just benefit corrupt leaders rather
than help ordinary people?
While corruption remains a problem in many places, a growing
number of poor countries have more democratic governments and
active civic groups and non-governmental organizations working
to hold those governments accountable. Inaction is no solution.
That penalizes ordinary people, not the corrupt leaders. The real
challenge is to ensure that the resources made available from
debt relief are used for reducing poverty.
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