Debt cancellation tops agenda of international groups
Issue receives increasing political clout
International AIDS activists have begun to succeed in bringing the issue of debt relief/cancellation to the attention of political leaders, as well as to the general public, in the past year, and they express optimism that some major changes have begun.
"I absolutely think there’s reason to hope, and awareness of issues is growing," says Mara Vanderslice, an outreach coordinator for Jubilee USA Network of Washington, DC. Jubilee is an advocacy group for debt cancellation and has been teaming with AIDS activists to pressure the World Bank to increase debt relief. To goal is to use the money saved in debt interest payments to fund AIDS prevention and treatment programs. "The debt relief that has been provided so far wouldn’t have happened without ordinary people raising their voice to Congress and the media," Vanderslice says. "Health experts could be powerful advocates for the community and Congress."
The Office of the United Nations High Commissioner for Human Rights and the Joint United Nations Programme on HIV/AIDS of Geneva have recently revised the "HIV/AIDS and Human Rights International Guidelines."
Quick debt relief is recommended
This includes a recommendation that creditor countries and international funding institutions implement debt relief for developing countries more quickly and extensively. The recommendation further notes that states should dedicate a proportion of debt relief resources to HIV/AIDS prevention, treatment, care, and support.
Another example of the changing political tide is the April 2002 introduction of the Debt Relief Enhancement Act of 2002 in the U.S. Senate and the Debt Cancellation for the New Millennium Act in the U.S. House of Representatives. The bills have been stalled in subcommittees since May. "The pending bills in Congress would deepen relief, but so far the Bush administration has rejected those," explains David Bryden, communications director of Global AIDS Alliance in Washington, DC. However, this issue will not go away because the AIDS epidemic highlights its importance, Bryden says.
Many countries saddled with huge debt
"The burden of debt on countries affected by the AIDS epidemic is important," Bryden says. "Payments that countries have to make on a backlog of old debt and on new debt could be better spent and should be better spent on fighting pressing crises like AIDS."
International debt amounts to nearly $300 billion for African countries, and half of this is owed by 34 countries included in the World Bank and International Money Fund’s (IMF’s) Heavily Indebted Poor Country (HIPC) debt-relief initiative.1 However, current debt-relief programs do not go far enough to relieve the financial pressure on the world’s poorest nations, which now are being crushed under the burden of the AIDS pandemic, AIDS activists say.
With 70% of the world’s 40 million HIV-infected people living in sub-Saharan Africa, where the debt burden is extraordinary, there clearly has to be an elimination of debts so that these governments can shift every possible resource to AIDS prevention and treatment, according to Asia Russell, an activist with Health Global Access Project of New York City. "Debt relief used for mitigating AIDS in the third world is on the top of the agenda of a coalition of groups because the AIDS crisis is the clearest example of how policies of the U.S. Treasury, IMF, and World Bank have failed people in developing countries," Russell says.
ACT UP in Philadelphia also has become involved in this issue, marching with protesters opposing IMF and World Bank policies. "These two organizations are largely responsible for an obstruction to health care access for impoverished countries," says Kris Hermes, an ACT UP member.
Examining the history of third-world debt
A look at the history of third-world debt may offer an explanation why AIDS activists and others are convinced that international debt cancellation is necessary and humane. "A lot of private banks in the 1970s, with no accountability, lent to countries," Vanderslice says. "There was a lot of stolen wealth for military conflicts or development projects that were never finished." For example, in the Philippines, there was an international loan made for a nuclear power plant that was located, at the advice of Western donors and experts, on an earthquake fault line, Vanderslice says. "That plant never went on line, and the Philippines now is paying $170,000 a day until the year 2018, which is more than 5% of that country’s debt, on that loan," she points out.
Vanderslice compares the 1970s’ loan accesses to developing nations to the loan accesses in the 1980s made by U.S. savings and loan (S&L) companies to developers. However, the big difference is that the U.S. government bailed out the S&Ls, and the defaulted loans were not repaid by the bankrupt developers. With nations, there are imposing obstacles to defaulting on international loans, even when these were taken out by corrupt dictatorships that have since been replaced by more responsible governments, she says. "The poorest countries don’t have the power and leverage to say, We’re declaring bankruptcy, and we’re not going to pay,’" Vanderslice says. "Their need for new loans is used for leverage to require these countries to implement policies favorable to the wealthiest countries."
While critics may say that canceling debt in third-world nations will just lead to more inappropriate borrowing and increased expenditures toward military campaigns, Jubilee’s studies have shown that this has not been the case in nations where debt relief has already taken place, she points out. "We’ve seen a lot of emerging democracies in Africa and Latin America that are more accountable than past governments," Vanderslice says. "And we don’t have private banks lending so much anymore, so it’s very controlled."
However, these same governments are being hindered in their efforts to improve and become more self-sufficient because of debt accumulated from past decades, she notes. "Some countries are selling off anything they can to get revenue to pay debt," Vanderslice says. "They have to repay the debt in the currency of the creditor, and they can only get that currency through export sales, so they’re shifting from domestic agriculture to export crops, which is a long process of impoverishment."
Debt cancellation restrictions could prevent the money from being diverted to buy additional arms, but even without oversight of these stipulations, the trend has been that countries receiving debt relief are shifting more money toward necessary domestic programs, she says. "There’s a great track record," Vanderslice says. "Our report shows that 10 countries receiving debt relief all had increased spending in health and education and no change in military spending."1
Current initiatives don’t go far enough
The problem with current debt relief initiatives is that they do not go far or fast enough to rescue developing nations from the burden of the AIDS epidemic, AIDS activists say. "There has been very limited debt relief in the last couple of years," Russell says. "The debt burden so far has been too conditional and irrational in structure."
Critics of the World Bank’s and IMF’s debt relief efforts point out that some of the requirements for this debt relief are counterproductive with regard to helping poor nations improve their health care systems. The restrictions are meant to ensure the countries implement austerity policies, but these often go too far, Vanderslice says. For example, nations receiving debt relief are required to privatize their water systems, which means that private companies taking over the public water supplies will charge water fees that are too expensive for the vast majority of residents, she says.
The same has happened with health care services, where these countries are required to charge people a user fee prior to receiving hospitalization or health care services, Vanderslice adds. "It’s quite deadly, and we have stories of people coming to the hospital with a child who is dying, and they can’t get in because of the 60-cent fee," she says. "Those are some examples of IMF policies that are trade liberalization, and these all have huge impacts on the economy and stability of the community." For instance, when these nations are forced to use international industries for local services and products, it results in the local companies being unable to compete and local people losing jobs, Vanderslice adds.
Jubilee and other groups propose more radical debt cancellation that does not include stipulations that lead to worse social and health care climates in developing nations, she says. The U.S. House of Representatives’ debt cancellation bill would be a very good start, Vanderslice adds. The bill, as introduced, would require:
• Debt relief provided by IMF and the World Bank under the Enhanced HIPC Initiative to be sufficient to cancel 100% of the HIPCs’ debt.
• Debt relief would have no provision to be conditioned on any country’s implementing a structural adjustment or stabilization program of the Poverty Reduction and Growth Facility of the IMF.
• All HIPCs that are working to develop and implement their Poverty Reduction Strategy Papers would not be required to make service payments on their debts, ensuring that the savings from the debt relief would be invested in HIV/AIDS treatment and prevention, health care, education, and poverty reduction programs.
1. Greenhill R, Blackmore S. Relief Works: African Proposals for Debt Cancellation — and Why Debt Relief Works. London: A report from Jubilee Research at the New Economics Foundation; 2002.