G8 PROPOSALS ARE INSUFFICIENT
(released 9 June 1999)
The World Council of Churches is of the view that proposals made by G8 governments for solving the debt crisis are insufficient and calls on G8 leaders to adopt a more radical approach at their meeting next week in Cologne. The Council believes that it is lack of political will rather than financial resources that has made it difficult to find a lasting solution to the debt problem.
Experiences with the Highest Indebted Poor Country Initiative (HIPC) indicate that it does not adequately address the problems of the countries that qualify for debt reduction under HIPC conditions. The outcome of the meeting at Cologne is likely to be a broadened HIPC initiative with only slightly better conditions. This adds little to the original proposal as it links debt cancellation with stabilisation and structural adjustments imposed by the IMF.
Christians and Churches in the South and the North are increasingly concerned that major actors in the global economy have stipulated and reordered economic relationships and trade rules in their favour to maximise profits, growth and influence. An insufficient response to the call for cancellation of foreign debt will only motivate and provoke further critique of the global financial and trade systems by an increasing number of people. This will increase the number of voices pointing to the devastating consequences of unfettered and uncontrolled speculation and transnational flow of financial capital.
The G8 governments and the Bretton Woods institutions (World Bank and International Monetary Fund, IMF) have primary responsibility for the root causes of the debt crisis. They initially encouraged irresponsible lending and then compounded the problem by raising interest rates. This resulted in indebted countries being caught in endless cycles of borrowing, losing control of their financial, economic and social affairs, and being forced to implement IMF Stabilisation and Structural Adjustment Programmes. Moreover, debtor governments have also been obliged to give priority to their debt repayments rather than spending on health, sanitation, clean water, education, and other social needs. This has often led to the erosion of local democratic institutions and has built an environment for corruption.
If the G8 governments are genuinely concerned about poverty and impoverishment, they should accompany initiatives for debt cancellation with reforms of the financial and trading systems and also respond positively to the demand for greater control of the transnational flow of capital by governments and civil society. However, their response to the recent Asian financial crisis, which revealed the volatility of the global financial system, points in the opposite direction. Their response has supported the Multilateral Agreement on Investments and increased power for the World Bank, IMF and WTO and, through them, for Transnational Corporations.
The eighth assembly of the World Council of Churches, which met in Harare last December, affirmed the importance of the biblical jubilee vision, which offers a critical mandate for periodically overcoming structural injustice and poverty, including release from debt and slavery, and restoration of right relationships. The Harare Assembly not only lent its support to the goals of the jubilee 2000 coalitions, but appealed to the leaders of the G8 nations to recognize the urgent need to:
a. cancel the debts of the poorest countries to enable them to enter the new millennium with a fresh start;
b. substantially reduce the debts of the middle income countries within the same time frame;
c. accept that debt cancellation cannot wait until conditions set by creditors are met;
d. introduce a new, independent and transparent arbitration process for negotiating and agreeing upon international debt cancellation;
e. implement measures to promote accountability of debtor countries when debts are relieved. These measures must be determined and monitored by local community organizations, including churches and other representative organizations of civil society, to ensure that debt cancellation leads to a just distribution of wealth;
f. use their powers to ensure that funds illegitimately transferred to secret foreign bank accounts are returned to debtor nations;
g. engage, in consultation with civil society, in a process of global economic reform toward a just distribution of wealth and preventing new cycles of debt.
The WCC will continue to support and co-operate with member churches, ecumenical organisations and groups in their search for just and sustainable alternatives. The biblical vision of the jubilee encompasses and embraces more than a single campaign. It gives hope to people, struggling for economic justice and the affirmation of life.