The Mennonite Economists have given us solid reasons to support the Jubilee 2000 program of significant debt relief for about 50 countries. Cancelling unpayable debt is the right thing to do, the time is right, such debt relief is a peace ministry, and it would cost us very little. Further, they note the drawbacks of halfway measures.
The realization of Jubilee 2000 requires a strong reaction to this limited, unrealistic HIPC program, they write, in criticism of the current plan of the IMF.
Mel Loewen, in response, wants us to first appreciate the good will and the good work of the World Bank and the IMF in the last 55 years. Second, he would like to temper the eagerness for Jubilee by reminding us of the importance of stable financial institutions, sound credit, and responsible debt repayment. This leads him to argue for the wisdom of the moderate HIPC initiative, complete with the 21st century version of the infamous Structural Adjustment Programs — the Poverty Reduction Strategy Paper.
This on Jubilee 2000. But Loewen is only half through. For lurking in the shadows are those Seattle/Washington/Prague demonstrators, calling into question not just the good intentions of the IMF, but all the assumptions about the divine right of capital to have its way wherever a check can be cashed or a resource sold. The rest of his argument is a defense of current global economic arrangements, properly seen as the culmination of a constantly-improving
human economic venture. From Adam and Eve through barter to specialization and trade, the Enlightenment, industrialization, and finally, in our hour of post-WWII need, the IMF and World Bank which made the world safe for today’s global economy. Truly, we have come this far by faith.
Now, I have the unfair advantage of writing after the mid-August release of a major review of the world economic mess, cooperatively authored by the IMF, the WB, the OECD and the UN. Well,
cooperatively if we overlook the resignation of the principal author when US and European officials demanded that he put more emphasis on economic growth and
free-market policies as ways to alleviate poverty.
The report acknowledges what returning MCC workers have been saying for years — both poverty and inequality are increasing. Those two need to be documented separately, because the wealthy countries, as they have become wealthy through trade growth, have been arguing that increased inequality should be accepted, even that their fabulous increase in wealth would somehow be accompanied by a reduction in two-thirds world poverty. This global Reaganomics has emphatically not worked any better than the domestic version.
Poverty: — In the last five years, an increase from 1.0 to 1.2 billion living in absolute poverty — For more than 30 countries, real incomes have been falling for the past 35 years
Inequality: — Comparing the average income in the 20 richest countries to the 20 poorest, today it is 37 times as much, double the gap of 40 years ago
It is in this context that we should return to Jubilee as a biblical principle. Release from bondage. The Jubilee teaching is to protect relationships in the community. This requires limiting, no, undoing the concentration of wealth over time. From time to time, for the health of all concerned, we need to cancel debts and to free slaves. The structures of international finance have operated to produce a dramatic concentration of wealth in the hands of a few powerful countries. These structures have done what they were designed to do — protected the financial interests of the designers.
Seen in this context, the Jubilee 2000 program is far too modest: cancelling all the debt of 52 countries would cost .003 of the annual income of the OECD countries — that’s a third of a percent of income, not of net wealth. (About half of this is owed directly to individual governments - mainly the G8. Most of the rest is
multilateral debt - owed to the World Bank and the International Monetary Fund, which are effectively run by the G8 governments. Only about ten per cent is owed to private banks.)
Finally, there is a disturbing pattern of arrogance in the latest WB proposals for how indebted countries should
qualify for debt reduction. The new WB concern for more responsive government in other countries looks like just one more attempt to control others, to dictate policies that are in fact for our own benefit. (Privatization of communal lands just makes it that much easier for our oil companies to get to their oil . . .)
It is this arrogance that makes me the most suspicious of the G8 and the WB/IMF. Inside and outside the IMF headquarters I have heard the bankers talk in the possessive about
your Angolas and your Haitis. This reference to a country as if it were one economic unit can’t possibly contribute to awareness of whether the policies being prescribed will increase or decrease inequality within the country. This is also part of the frightening blindness of the World Bankers to that fact that their Adjustment Programs take the repayment out of the flesh of people who never saw the loan or any of its supposed benefits.
So today Mel Loewen and the World Bank are crying about corrupt dictators? I’m sorry, this looks more like an excuse or a delaying tactic than true concern for the well-being of village women and children. Where was that concern during the years of additional loans to Mobutu, long after it was clear he was siphoning money into Swiss bank accounts? As long as he let our mining companies operate free of environmental and labor controls . . .
Furthermore, if the concern is for the poor, why are the richer southeast Asian economies quickly bailed out, while poor African countries are allowed to dwindle under the burden of debt? First, southeast Asian economies are much bigger markets for western exports. Second, the amounts of money they owe are far greater. If southeast Asian economies default on their payments, it threatens the stability of western financial markets. Nobody bothers to find any quick solution to poor country debt because no export markets are at stake and no financial stability is at stake - only the lives of the poorest.
So spare us the crocodile tears — and the HIPC initiative with its PRSP hurdles. Enough. We need to make our voices heard to convince our politicians to support a strong debt cancellation program, rather than the half-way measure of the HIPC initiative.