From the Executive Director's Desk...
Jubilee debt cancellation
Rev. John L. McCullough
May 23, 2008
By Rev. John L. McCullough, Executive Director and CEO, Church World Service
The U.S. Senate is now considering a bill to extend debt relief to a new group of 24 low-income nations. This represents a tremendous opportunity to bring much needed relief to nations that are struggling to meet poverty and development goals. Having already passed in the House, a favorable vote in the Senate would represent another feather in the cap for the U.S. religious community which has been a stalwart champion of the Jubilee movement.
“Every seventh year you shall grant a remission of debts" Deuteronomy 15: 1
“Proclaim liberty throughout the land to all its inhabitants; it shall be a jubilee for you.” Leviticus 25: 10
The Hebrew Scriptures introduce us to the covenant-making God and talk to us about living in right relationship with God, the human community, and all of creation. One of the most profound practices is the observance of Jubilee, a time when slaves are set free, debts are forgiven, and land lost through debt is returned to its original owners. These are actions meant to restore the community to wholeness. While the full Jubilee liberation was set for a 50-year cycle, freedom for slaves, debt cancellation and rest for the soil were commanded for every seven years.
Underlying the notion of Jubilee is an appreciation and celebration of the Sabbath. Observing the Sabbath is a time to honor God, refresh creation and renew our souls. Faithful Sabbath practice includes rectifying economic, environmental and social inequalities. We lift burdens that oppress and destroy so that all of creation can breathe freely once more.
Building on Past Success
“The Jubilee Act for Responsible Lending and Expanded Debt Cancellation of 2008” (Jubilee Act) which passed the House of Representatives by an impressive 285-132 vote in April builds on previous legislative successes championed by debt campaigners.
People of faith in the United States have been working on debt issues since “The Third World Debt Crisis” for more than two decades. Informed by the evidence gathered by church staff around the world and faith partners, the U.S. religious community led the way in creating the U.S. Debt Crisis Network, and later the U.S. component of the Jubilee 2000 debt movement. The latter was a coalition of groups from more than 40 countries calling for the cancellation of “Third World” debt by the new millennium. Today, religious bodies continue to comprise the majority of members of the Jubilee USA Network.
Political change usually takes time and patience, but we have seen significant progress. Responding to mounting pressure, the IMF and World Bank launched the Heavily Indebted Poor Country Initiative (HIPC) in 1996, expanded in 1999. This program aimed at reducing the debt load of the poorest countries to a “sustainable” level. Some 41 countries are potentially eligible, although only 23 have received irrevocable debt relief to date. The total amount of money committed through this proposal so far is $49 billion.
This was an important, though partial, victory. For example, Uganda was one of the first countries to receive debt cancellation. In 2001 Charlotte Mwesigye, then coordinator of Jubilee 2000 Uganda, told a gathering of U.S. Jubilee 2000 advocates that “health clinics have doctors and medicines, and schools have teachers and textbooks, that did not have these before. There are children alive today in Uganda because of what the global Jubilee campaign has accomplished.”
A second major victory came in 2005, when the U.S. and other affluent nations made a much bolder commitment. They promised to cancel 100 percent of eligible HIPC nations' debt to: themselves; other Paris Club members (the 19 wealthiest nations in the world); the International Development Association (IDA) at the World Bank; the IMF; and, the African Development Bank. In 2007, loans from the Inter-American Development Bank were included. This bolder plan is called the Multilateral Debt Relief Initiative (MDRI).
The continuing need
Together these two initiatives commit to reduce the debt stock of 31 nations by $96 billion. While impressive, more needs to be done. Since 1996, and the launch of the HIPC initiative, the world's poorest 66 nations have continued to pay more than $230 billion in debt service, an amount greater than the foreign assistance they have received from donor governments. This creates a financial revolving door or treadmill where the countries can never get ahead on funding important development initiatives. In fact, UN Secretary General Ban Ki Moon reported last year that “debt relief has been too slow” and needs to be extended to countries that are not part of the existing initiatives.
Kenya, where CWS has worked extensively, is a good illustration of this point. The national government has a foreign debt load of $7 billion dollars. Each year, nearly one-quarter of the federal budget leaves the country as debt service. Nearly one-quarter of the population lives in extreme poverty while more than half of the country earns less than $2/day. About one-quarter of Kenya's children are not enrolled in primary school. One of the deterrents is school fees, which many families cannot afford. Debt relief could free-up funds so that Kenya would not have to charge public school fees to raise education revenues.
For countries like Kenya, debt cancellation would enable them to spend more money on medical personnel as well as teachers and make better progress towards achieving Millennium Development goals on health, education, and gender equality. For the United States government, the strongest motivation for debt cancellation is enlightened self-interest. In a globally-connected world everyone benefits by developing countries' advancement.
The Jubilee Act (S. 2166) calls for the U.S. Treasury to negotiate a multilateral agreement for debt cancellation for an initial 9 and up to 24 total additional IDA member countries. It prohibits harmful economic and policy conditions as a requirement of debt cancellation. And it directs the Government Accounting Office to audit debts resulting from odious lending by the World Bank, IMF, and US. This would set the stage for a future conversation for further debt cancellation.
Jubilee USA estimates that the amount of debt owed to the U.S. by the first nine eligible countries would be $119 million, with total debt relief of $957 million for all 24 nations. The amount of World Bank debt to be cancelled would be $24 billion with an additional $11 billion at regional development banks. Most of the capital needed for the debt owed to the Bank and other international financial institutions could come from internal sources.
It is promising that the Jubilee Act has good bi-partisan support in the Senate. This legislation represents an opportunity to make Jubilee and the year of remission real once again for millions of our sisters and brothers around the world.
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