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US Considering Debt Relief for Poor Countries
WASHINGTON - Leaders in the United States Congress recently proposed a bill expanding debt relief for impoverished countries, a move hailed by development groups as progress in the fight against global poverty and unfair lending practices to poor nations.
Women beg for money on the streets of Riyadh, in 2006. Nearly 140 million Arabs live below the poverty line, according to a report by the United Nations Development Programme and Arab League. (AFP/File)
What's the Story?
In mid-December, a bi-partisan group of lawmakers introduced the Jubilee Act in the U.S. House of Representatives. If passed, this bill will broaden debt relief for poor countries, reform the policies of international financial institutions, and press lenders to use responsible practices with respect to the world's poorest nations.
"As the global-economic crisis pushes tens of millions more people around the world below the global-poverty line, it is more critical than ever that Congress act on this vital legislation," said Alexander Baumgarten of the Jubilee USA Network, a coalition of groups pressing for debt relief for poorer nations. "We've seen the success of debt cancellation in the past, putting children in school, providing life-saving health services, and bringing economic opportunity to millions."
The Jubilee Act would cancel the debt of up to 22 additional nations struggling with poverty. The reduction of oppressive debt payments will help these nations meet the Millennium Development Goals by redirecting money to projects like health care, education, and clean water.
"Congressional leaders put aside partisan differences to stand together in support of the world's poorest," said Neil Watkins, Jubilee USA's executive director. "The financial crisis has slammed into the world's poorest countries and the Jubilee Act is a cost effective and proven way to help the world's poor while strengthening the United States' security." [» Get the full story from Jubilee USA Network.]
The Importance of Debt Relief
Every year, African nations pay approximately $14 billion in debt remunerations to wealthy nations and international financial institutions while receiving less than $13 billion in international aid. Agreements to cancel or reduce debts have enabled states to spend more on much-needed social programs and translated into a higher quality of life for millions of people in developing countries.
But a lot of other needy countries are still paying off debts, and the money used to pay back lenders is typically rerouted from programs intended to benefit these countries' least privileged citizens.
According to Jubilee USA, it would only cost 40 cents per American to cancel the debt that 24 impoverished countries owe to the United States, and less than $1 more to cancel the debts of these countries to the World Bank and the International Monetary Fund.
The Jubilee Act for Responsible Lending and Expanded Debt Cancellation passed both the House of Representatives and the Senate Foreign Relations Committee in 2008. But the legislation expired before passing the full Senate. The Jubilee Act of 2009 has been reintroduced in the House and the legislation is expected to come to the Senate floor in early 2010.
In addition to expanded debt cancellation for impoverished countries, the bill seeks to reform the lending policies of governments and international financial institutions to increase responsibility and transparency. The bill would also mandate an audit of existing debts to examine unfair lending policies and companies that profit off the debt of poor countries, known as vulture funds.
Vulture Funds Case Study: Liberia
Vulture funds prey on countries that qualify for debt cancellation by purchasing discounted debts -- reduced by the IMF or World Bank to ease the burden on struggling nations -- and then suing that nation to collect the full value of the loan, explains the International Bar Association.
In late November, a London court awarded two vulture funds $20 million in a case against Liberia -- an amount equal to the county's entire education budget and 150 percent of their health spending in 2008, reports Africa Action.
"The Liberia case is a textbook example of kicking a country while it's down. Liberia has done everything right to gain debt relief, yet our system allows an off-shore, unaccountable corporation to hold out on the deal," said Ruth Messinger, president of the American Jewish World Service, a faith-based group that supports projects to improve lives in poor countries.
The two private companies that sued the Liberian government for debt collection were the only lenders that refused to participate in a reduction of Liberia's debt negotiated last April -- a debt largely incurred during the regime of former Liberian dictator Samuel Doe.
"The final insult is that now poor Liberian people are being asked to pay back wealthy investors," said Africa Action's executive director Gerald LeMelle. The Liberian government has told reporters that the country is unable to pay the awarded judgment.
Taking Action: Change, Not Chains
Advocacy groups dismayed by the outcome for Liberia insist on the need to pass the Jubilee Act and other pending legislation, notably the Stop VULTURE Funds Act. This bill, introduced last June, would protect impoverished countries and require greater transparency by creditors suing these nations.
The Jubilee USA Network has started the Change, Not Chains Campaign to urge the Obama administration to support expanded debt cancellation. Without debt payments hanging over their heads, poor countries will have a better change to fight poverty and improve the lives of their people.
The campaign Web site states: "It is time for global change -- time for a global economy that works for all. It is time to once and for all break the chains of international debt to fight poverty and injustice."
21 Comments so far
Show All"forgive us our debts as we forgive our debtors."
is this aimed at China?
Maybe the banks would consider forgiving OUR debt!
I was watching C-span several years ago, and this senator from Arkansas was the only one trying to stop debt relief going to an African country, because it's leader bought himself a Lear Jet with the money. So much for helping poor people!
People, the loan to poor countries and poor people is about the same thing. Economic Slavery!
What the IMF & World Bank did to poor countries like Argentina, just happened to the United States. Economic Slavery!
At least the people in Argentina came out into the streets and beat pots and pans in protest, took over the indebted factories, made a profit and paid back the loans. I doubt they will ever be fooled again.
What country on God's Green Earth is poorer than these United States? Repudiate our National Debt!
Oh yeah! On paper, at least, we are the world's poorest nation. But with virtual military domination of the Planet, who's gonna call in their debts?
Pathetic! please give me a break! you want poor? try Afghanistan, Haiti, Mali, Uganda, not even room to list half of them...there are a billion hungry people in this world, almost al of them in the Global South. 24000, mostly children, starve to dearth every day. these are the people Jubilee is trying to help.
why arent vulture funds buying US debt?
Money is a new form of slavery, and distinguishable from the old simply by the fact that it is impersonal -- that there is no human relation between master and slave.": Leo Nikolaevich Tolstoy - (1828-1910)
''Banking was conceived in iniquity and was born in sin. The Bankers own the earth. Take it away from them, but leave them the power to create deposits, and with the flick of the pen they will create enough deposits to buy it back again. However, take it away from them, and all the great fortunes like mine will disappear and they ought to disappear, for this would be a happier and better world to live in. But, if you wish to remain the slaves of Bankers and pay the cost of your own slavery, let them continue to create deposits." : Sir Josiah Stamp (1880-1941) President of the Bank of England in the 1920's, the second richest man in Britain
"Endless money forms the sinews of war." : Marcus Tullius Cicero -
(106-43 B.C.) Roman Statesman, Philosopher and Orator
“The process by which banks create money is so simple that the mind is repelled.”
Professor. J. K. Galbraith
You are living in a totalitarian tripartite dictatorship, viz Elected, Press and financial. The last sustaining the two former, due to the fact that money is created out of NOTHING as an interest bearing DEBT enslaving you all from cradle to grave. Any other legislation is only cosmetic, giving a semblance of democracy. What is needed is a basic paradigm shift in the Noe classical economics which governed by interest bearing DEBT, get the money lenders out of the market, get the elected government to issue the money towards productive capacity as interest free loans, to be repaid and debt cancelled, hence counter inflationary.
The insidious and invidious practice of usury is NOT necessary or inevitable.The Torah, Bible, Koran and the Gita condems it
You are doing a good job but running in the wrong direction just as the rest of the poor devils.
Unless you addresses the question of Money Supply, you all will remain enslaved, and the enslaved will do any thing as they are ordered to do and be willing connon foder to fight illegal illicit wars based on lies
In the Third World a child is killed EVERY THREE SECONDS, the HOLOCAUST is alive and well and had been for decades, you all have been blind
The US is BANKRUPT it total debt is U$56 Trillions including Fed debt and obligations and rising at U$ ! Trillion a year.
Interest alone was U$45 Billion last year.
We are borrowing at £500 million a DAY, ouur total debt is £ 1.8 Trillion
'' It's well enough that our people of the nation do not understand our our Banking and Monetary system if they do there will be a revolution to morrow,''Henry Ford
There is the next round of Commercial property collaspe
Plus Credit Card Debts running in to Trillions
How about the govt. buy up all of the middle class and below debt, and then forgive it for the citizens of this country. I don't have much right now, but there are those who's lives it would change. Talk about a boost to the economy, people could afford to spend the money earmarked for credit card payments. And, when the debt is forgiven, forbid credit card use for those individuals for say seven years or so. By then, maybe they will learn to live without one.
sounds like you do not understand the problem. debt cancelation for highly indebted poor countries is not for effing credit card debt, it's to stay alive for one more day, and then start planning for tomorrow.
did you notice the part about African countries, where people are starving, paying 14 billon to fabulously wealthy bankers in the u.s. and e.u.? does that sound fair? or even sane?
They need knowledge, information, communications. Send computers.
No they don't. They need food!
Yes, we well fed Americans don't even think of food as a prime motivator.
The Jubilee campaign is about trying to relieve the most desperately poor people in the world, mostly in the Global South, of the monstrous burden of being required to pay billions in "debt" to the world bank and imf. the people being asked for this money never borrowed it, nor did they ever see any.
It does seem spectacularly unfair for people who are already too fat to be demanding "debt" payments from people who do not have enough to eat. And could starve to death tomorrow.DROP THE DEBT!
"The final insult is that now poor (brown or black poor country here)________ people are being asked to pay back wealthy investors,"
Wrong.
This is the CONTINUING insult. It is centuries old and changes names and style but it's all the same; the rich exploit the poor and then label the poor as unproductive thieves. How convenient for the rich.
Let us all be fair in terms of equity. If the poor countries couldn't pay off the debts, why not pay creditors lands to clear debts? With the lands in hand, the creditors may find ideas to do whatever they like - turning them into an industrial estate and get cheaper labors from there. This is a win-win situation for all parties concerned. Well, a bird in the hand is worth two in the bush.
After sucking their blood dry for one century, the US will now throw poor countries a bone?
One wonders what's behind this "generosity", probably some deal with the devil. Poor countries should be very skeptical.
Debt relief for unfair lending practices? When will that come for most U.S. citizens?!
The USA should forgive those debts, that would help our national karma and would be a step in the right direction. If not, then the poor nations should refuse to make payments.
John Perkins, the self-confessed economic hitman has done a great job reporting on what these debts are really about:
http://www.johnperkins.org/
Everyday an estimated 25,000 people die of hunger while tons of food rots in the world. Humanity is one, we're all connected to each other, and all that needless suffering has a huge, negative effect on all of us.
"...We think... we can go on in the old ways... more competition, more greed... It is not so any longer; it does not work. If two-thirds of the world’s population are living in poverty then the economic system does not work. If we think that they will go on without asking that it work for them, then we are sorely out of step with reality." Benjamin Creme
"Without sharing there can be no justice;
without justice there can be no peace;
without peace there can be no future...
Man must change or die.
There is no other course."
Maitreya, the World Teacher
http://www.share-international.org/maitreya/Ma_prior.htm
This takes the cake!
Debt relief to poor countries...ha! Would this be the same poor countries that are poor because of the US's meddling in their affairs (such as Palestine, Haiti, Mexico, South American countries, African nations, etc.) or would they be different poor countries?
It high time they stopped policing the world, pretending to try to fix the world, in order to gain their own greedy political influence, and started taking care of the homeless, jobless, hungry ones right here who are USA citizens.
Until Congress and the WH get off their rear ends and actually do that, which will happen when hell freezes over, I am afraid, they have no room to talk, brag, or crow about anything.
What bloody hypocrites! Doesn't charity start at home? How about giving relief to all those people that were scammed by Wall Street and the banksters? How about asisting Main Street first for a change? Bailing out the rich is not charity, it is theft.