MIM Notes 191 August 1 1999 Jubilee 2000 movement to cancel Third World debt grows On June 19 35,000 people, led by the Jubilee 2000 coalition, formed a human chain at the G8 summit in Cologne, Germany to protest the chains of debt that keep Third World countries impoverished and unable to develop self-sufficient economies. 17 million petition signatures calling for the cancellation of this debt were also turned over to the G8 at the summit meeting. (The G8 is the Western imperialist countries and Russia.) At the last G8 meeting, on May 16, 1998, over 70,000 people formed a human chain around the summit in Birmingham, England and at that time the G8 had proposed canceling $55 billion out of a total of $2.5 trillion in Third World debt in 1998. The Jubilee 2000 movement calls for a "debt-free start to the Millennium for a billion people" demanding the cancellation of unpayable debts for the world's poorest countries. The campaign, inspired by the scriptural idea of the Jubilee Year during which slaves are set free and debts forgiven, represents an excellent way to celebrate the end of a millennium of exploitation and oppression of the majority of the world's people for the benefit of the minority. In response to the protests around the world, the imperialist countries that make up the G8 proposed increasing the amount of debt canceled to $70 billion. While it is progress to see the imperialists forced to respond to the progressive demands of the people, cancellation of this small an amount of debt will not make any dent on the poverty of the Third World countries, especially not with all the strings attached to debt cancellation which will further harm the economies and social programs of the indebted countries. MIM believes that the pressure of the Jubilee 2000 movement caused this particular loan forgiveness package. However, it's also the imperialists facing up to the fact that these particular loans weren't ever going to be repaid. So here we have the imperialists with a very limited response to a tremendous problem. The action of imperialism, as usual, was to make itself look good and lengthen the life of its rotten system. Previously, Third World governments got loans for pro- imperialist projects under coercive conditions. Now some loans the imperialists consider hopeless are being forgiven with even greater coercive, anti-people conditions. And when that's over, the imperialists will be making more coercive loans to the comprador leadership of the Third World with the idea of the masses paying them back. In MIM's view, the imperialists installed the comprador governments of the Third World, and then forced the loans on these governments. As a result, Amerika grew richer first from purchases fueled by the loans, then by the interest, and then from the cheap goods made possible by the loans. Since the imperialists already got wealthy from the loans, they should just take the "loss" on these loans and not be demanding more concessions from the Third World. Adding up all the offers for debt cancellation by imperialist countries and their financial institutions, the total on the table this month comes to $100 billion. In practice there is already at least $100 billion in debt that is considered un-repayable by the imperialist countries. This debt is written off to some degree in their book keeping. For instance, the U.$. counts the $6 billion of loans to the worlds poorest countries at about 10% of their value, $600 million, on the books because they know the full amount will never be repaid. As Jeffrey Sachs pointed out in an editorial in the New York Times, "The World Bank and I.M.F. take great pride in claiming that their loans never go bad. So instead of recognizing reality, they lend the poorest countries new money to repay the old debts, claiming the loans are still sound."(1) In addition, imperialist countries have an interest in keeping these loans on their books to keep an additional control over the countries that owe the debt. It's important to point out that cancellation of this debt owed to imperialist countries is not charity. First we have to add up all the raw materials and labor stolen from the Third World countries which are run by puppet governments who will do whatever the imperialists want (or which are bombed and invaded and forced to do what the imperialists want). Then to this we can add the loans that have been repaid and the interest on these loans that was paid and the total leaves the imperialists owing a huge debt to the Third World. Imperialist plan for debt relief will not help Even before the Jubilee 2000 protests against the debt became a sizable movement, the IMF and World Bank had a plan to supposedly relieve the poorest countries of debt. They have admitted that this plan, aimed at the Highly Indebted Poor Countries (HIPC), did not change the debt service payments for the countries that received this assistance. In fact, only six countries will have received this debt assistance by the year 2000, adding up to 1% of the debt service paid each year by the 93 poorest and most indebted countries. In addition, when some debt is canceled by the IMF and World Bank the indebted countries are then forced to return to paying back other creditors who were neglected because the IMF and World Bank insist on being paid first. So overall payments do not decrease but other capitalist institutions do make more money. Similar to the HIPC plan, the small amount of debt involved in the G8 plan is not expected to have an impact on the Third World countries suffering under the repayment of huge debts. And this debt relief is not being offered without strings. Following the IMF history of requiring Structural Adjustment Programs for countries which can not pay off debt, these new economic plans will come with a mandatory Enhanced Structural Adjustment Program which will be evaluated over a three year period before debt relief is offered. These SAPs force governments to cut social spending, turn production to focus on exports, and require laws against unionization and other repressive measures. If anything, the SAPs exacerbate poverty in already poor countries. The "enhanced" programs will give the IMF and World Bank liberty to ensure that a government does not make "unproductive expenditure." In addition to increasing short term poverty within a country, the SAP required export production promotes dependency on other countries as was the case with Haiti which at one time was nearly self-sufficient in food production but after 30 years of U$ programs forcing Haiti's agrarian economy to shift to export production and Haitian markets being flooded by cheap foreign food, Haiti now depends on imports for half of its needs.(2) President Clinton has gone on record supporting the cancellation of $70 billion in debt by the G8, but while saying this, the u.s. budget for debt reduction in Africa has dropped from $245 million last year to $237 this year. And at the same time Clinton has made clear that he expects strict allegiance from any country receiving debt assistance. He qualified his support for relieving Third World debt by saying "no country committed to fundamental reform [should be] left with a debt burden that keeps it from meeting its people's basic human needs." This can be interpreted to mean that countries acting as good puppets for the u.s. can expect to be rewarded just as President Zedillo was rewarded with a $50 billion bailout aid package from the imperialists (mostly the U.$. and the IMF) right after he declared war on the Zapatistas in February, 1995. Debt is a part of imperialist-sponsored poverty and death Underscoring the importance of the debt issue in the context of world politics, An Pettifor, director of the Jubilee 2000 UK coalition said "There have been two subjects on the G8 agenda: Kosovo and debt. Since the start of the Kosovan war, 800,000 children in the poorest countries will have died from easily preventable diseases." Strengthening her point, the week before the June 19 protest six people died in riots in Jamaica protesting against increases in fuel taxes. Sixty percent of the Jamaican government's budget is taken up by debt payments and in 1998 the IMF was urging Jamaica to raise taxes and depreciate currency in order to pay back their debts. Jamaica's total foreign debt is $4.1 billion, 100% of their GDP. The people in Jamaica are protesting tax increases because they can not afford to pay for basic living expenses. Putting the debt in historical context, after the G8 cancel $100 billion in debt, the poorest countries will still be paying three times as much as Germany had to pay after its debt relief in 1953. This differential demonstrates the relative value the imperialist countries place on the solvency and economic viability of Third World countries. MIM held a number of educational events and protests the week of June 19th in conjunction with the Jubilee 2000 international call for action. At our events we stressed that this cancellation of Third World debt only represents a first step in the necessary struggle for total independence from imperialist domination. Some people questioned why we would promote the Jubilee 2000 idea of canceling debt in the year 2000 at all if we did not think it could bring about fundamental change. MIM supports the struggle for progressive, anti- imperialist reforms such as the cancellation of Third World debt, or the elimination of censorship within u.s. prisons. But we do not fight for these reforms without placing them in the context of the need for revolution. If all debt was canceled tomorrow that would not eliminate the imperialist domination of the world at the expense of the majority of the world's people. Only a communist revolution can achieve that kind of progress. But MIM does support reforms that improve the quality of life of the world's oppressed and exploited. Many such reforms will hasten the death of imperialism by giving the people greater ability to organize revolutionary movements. To truly eliminate imperialist dependency on the Third World (dependency in the form of exploitation of labor and theft of raw materials) the people of the world will have to overthrow imperialism. Notes: 1. NYT June 11, 1999. 2. Boston Globe, Feb 13, 1997. P. A12 article on Grassroots International report entitled "Feeding Dependency, Starving Democracy: USAID Policies in Haiti." 3. Where not otherwise noted facts were taken from the Jubilee 2000 UK coalition web site at 222.jubilee2000uk.org.