Jubilee 2000

A Pastor's Reflections on Debt Forgiveness:

Jubilee 2000 is a worldwide movement seeking to cancel the international debts of the poorest countries by the new millennium so that they can get "a fresh start." Jubilee 2000/USA is a coalition of over 40 religious and not-for-profit organizations working as a part of the worldwide Jubilee 2000 movement. Gary Campbell, the preacher at our 8:30 a.m. service on July 18, is coordinating the PC(USA) involvement in Jubilee 2000. Gary spoke to us about the causes of this massive debt and the mistakes by many people on both sides of the debtor-creditor relationship.

Why should we care? Because in our Biblical tradition, the Jubilee Year (every 50th year) calls for release of debts and the slavery caused by poverty.

The Easter/Pentecost relationship in the Gospel of John is strikingly different from the Easter/Pentecost division lived in the liturgical life of the church (with Pentecost coming 50 days after Easter) as described in Luke-Acts. There is no 50-day separation in John 20:19-23. In the Fourth Gospel on Easter evening, the Holy Spirit is breathed into the believing community by Jesus himself. Gail R. O'Day reminds us that "the gift of the Spirit and the articulation of the community's mission are intimately and inseparably tied to the resurrection and ascension of Jesus." That is, when the church celebrates Easter, it also celebrates the coming of the Holy Spirit and the beginning of the church's mission in the world. Wow! What an idea!

John remembers Jesus saying: Receive the Holy Spirit. If you forgive the sins of any, they are forgiven them; if you retain the sins of any, they are retained. vv. 22-23. According to John, one of the church's central missions is forgiveness. We have been given God's Spirit to help us forgive. This reminds us of The Lord's Prayer, when we ask God to "forgive us our debts (or sins) as we forgive our debtors (or those who sin against us). (NRSV). God's mercy to us is somehow connected with the mercy we show to others. We will be forgiven in the same measure that we ourselves forgive.

Where did Jesus and John get such strange ideas about forgiveness? My guess is the 25th chapter of Leviticus. It extends the command of Sabbath keeping (a day of rest on the 7th day) into a sabbatical cycle in which the land is rested every seven years -- years 7, 14, 21, etc. to 49. And then, the 50th year is the Year of Jubilee. Leviticus 25 unites the concerns of religion and the concerns of society. It tells us that religious people need to care for those who have fallen into life-destroying debt.

Today 20% of humanity has 85% of the wealth. At the other end, another 20% of humanity owns 1.4% of the wealth. Of the 32 countries classified as severely indebted low-income countries, 25 are in sub-Saharan Africa. Africa spends four times as much on debt repayment as it does on health care.

God has blessed us so that we might be a blessing. And forgiving!

From February through August of 1999, the Rev. Gary Campbell will be coordinating PC(USA) participation in Jubilee 2000. Gary, who recently retired from over 30 years of missionary service in Central America, will be working with the Presbyterian Hunger Program and the Presbyterian Washington Office to encourage Jubilee 2000 activities at the presbytery and congregational levels. He brings direct personal experience of the devastating effects of debt on Nicaragua, the western hemisphere's most heavily indebted nation. He will be available for consultation by phone and a limited number of speaking engagements. You can reach Gary Campbell at (502) 569-5626.

Action Alert -- March 19, 1999
from the Presbyterian Washington Office

The following action bulletin was sent out to members of the Stewardship of Public Life "Hunger and Human Needs" network. It contains a background article, action alert, biblical/theological note on debt, and instructions for using the Jubilee 2000 USA petition. Copies of the petition are available from:

Jubilee 2000 222 East Capitol Street, NE Washington, DC 20003-1036 Tel. (202) 783-3566 E-mail: coord@j2000usa.org Web: www.j2000usa.org

The following action bulletin with the Jubilee petition enclosed is also available through Presbyterian Distribution Service at 1-800-524-2612 (ask for item # 74360-99-321). A Jubilee 2000/USA education packet is available as item # 74360-99-322.

For more information on Presbyterian efforts around poor-country debt relief, please contact Walter Owensby at (202) 543-1126 or by e-mail at wowensby@pcusa.org.

The U.S. economy continues to confound naysayers. Europe follows suit as it puts the final touches on its economic union. Even some Asian countries show signs of recovering from their economic swoon. But the poorest countries of the world are not sharing in all this good news. One major reason is that debts accumulated from unwise, unproductive or corrupt uses over decades continue to strangle economic progress. The ordinary people of these impoverished countries suffer great deprivation as their governments slash education, health, sanitation and subsistence programs while orienting their economies ever more toward exports to generate funds for debt repayment. Only major shifts in national economies will alter those realities, and only ending the burden of crushing debt will make such changes possible.

How We Got Here

The less developed countries owe some $2.3 trillion to other governments, international financial institutions, and private banks. The vast majority of that amount, however, is owed by middle-income countries such as Mexico, Brazil and Argentina. The 40 heavily indebted poor countries, as identified by the World Bank and the International Monetary Fund (IMF), owe less than one-tenth of the total-about $220 billion. That is not an insignificant sum, but in the global financial scheme of things it is not tremendous. Lifting the burden would certainly be manageable.

The present situation results from a mix of good intentions, bad luck and bad policies over many years. These include:

1) Global economic factors. Most of the debts were originally incurred in the 1970s. Developing countries were encouraged to build their economies quickly, using borrowed money, on the assumption that they could pay off the loans with earnings from rising commodity prices. While petroleum prices remained high, other commodities tumbled in the 1980s. With export earnings falling, poor countries were unable to meet debt payments, so they borrowed still more to keep their economies afloat and their international creditors at bay.

Borrowers and lenders alike lived in denial. Creditor governments and financial institutions rolled over loans rather than writing them off as the bad debts they really were. Leaders of debtor governments seized on the opportunity to avoid hard decisions and in many cases used funds to build private fortunes.

2) The Cold War. For decades, both Washington and Moscow sought to increase their international influence by extending generous loans, often with indifference to the corruption of the regimes receiving them or the validity of projects proposed. Making loans to fund proxy wars or support favored dictators, the two superpowers often paid little heed to development results.

3) Unwise loans. Money was frequently extended without the investigation and oversight that prudent banking policies normally require. Shoddy projects often resulted, and funds were diverted to the private accounts of dictators and their cronies as the cases of Marcos in the Philippines, Suharto in Indonesia and Somoza in Nicaragua clearly document. Nevertheless, all such loans have been regarded as the responsibility of governments that have followed and ultimately of the masses of ordinary people, who had no part in deciding about the loans and no opportunity to control or even influence their corrupt leaders.

4) Structural adjustment policies. When governments and banks were faced with the inability of countries to make loan payments, the IMF assumed the new role of economic disciplinarian. As the price of rolling over old loans and keeping alive the fiction of financial viability, the IMF exacted commitments from poor countries to adjust their economies to generate more funds to repay international loans. Although each such program is supposedly designed independently, the requirements are generally the same: cut government employment and subsidies; reduce government spending on social services such as health, education and transportation; slash imports; increase exports. Exporting more generally means reducing wages and shifting agricultural resources from local food production to growing products for foreign markets. Whatever the intent of such policies, their result has been to make life harder for the poor majorities in these societies in order to transfer money to wealthy nations and the international financial institutions that represent their interests.

5) Creating a cycle of debt. When countries fall behind in debt payments, it has become common practice to add the unpaid portion of interest into the original loan. New loans are extended for debt service, that is to cover payments on interest without making any progress on repaying the original loan. Indebtedness thus increases without providing new resources or making the future more hopeful.

The pressure on the poorest countries to continue paying the accumulated debt of decades is requiring a level of human sacrifice that is morally unacceptable. Consider Mozambique. Its per capita annual income is just $90; its per capita debt is $333. Life expectancy is 47 years; 15 of every 100 children die before they reach their first birthday; 60 percent of adults are illiterate; over a third of the people have no access to safe drinking water.

Mozambique's debt amounts to half of the national government's annual budget. In an attempt to meet its international obligations, according to Oxfam International, the government spends roughly twice as much on debt payments as on education, and four times as much as on health care. That is a recipe for extending human and economic disaster through the next century.

Getting History Straight

For the past two decades, as the debt burden of poor countries grew, international creditors did little more than insist that "a debt is a debt and must be paid in full." That, of course, is not always true.

In 1997, 1.3 million Americans declared personal bankruptcy, erasing more than $40 billion in debt. Each year thousands of companies in the United States also declare insolvency and receive protection from unreasonable demands by their creditors.

States, counties and municipalities in this country have a long history of defaulting. In the 19th century, Mississippi refused to honor its debts. In the 1940s nine states suspended interest payments on loans used to build railways and canals when commodity prices collapsed. Early in this decade, Orange County, California declared bankruptcy due to financial mismanagement and received relief from creditors.

The same logic has often applied to international debts. After World War II, Britain was granted the right to waive or cancel payments under certain circumstances. Germany in 1953 negotiated an accord that required the government to set aside only 5 percent of export earnings for debt repayment. (Contrast that with the IMF's current expectation of 20 percent for today's less developed countries.) In the 1960s both Poland and Indonesia were exempted from the normal payment of international debts. More recently, after the 1991 Gulf War, the United States canceled outright $7 billion owed by Egypt for military purchases.

It is important to note that all these concessions occurred without doing damage to the economic system or to the underlying concept of debtor responsibility. They simply recognize that, under certain circumstances, it makes no sense to continue talking about normal debt repayment. Instead a line is drawn and relations begin again.

What Can and Should Be Done?

After years of avoidance, the IMF and World Bank have for the first time set in motion a coordinated debt relief program. Forty "highly indebted poor countries" (HIPC) have been identified, 32 of them in Africa. Twenty were judged to have unsustainable debt loads. Seven countries have been declared eligible for relief, but only one so far has actually received help. The World Bank and the IMF have said they will decide about 15 other countries by the year 2000.

Under the HIPC plan, if an eligible country demonstrates three years of positive economic reform, it may receive up to a 67 percent reduction of the debt owed to individual countries. After another three years of good performance, that could rise to 80 percent. Following those six years, if the country has exhausted all bilateral and commercial debt reduction and still cannot manage its debt load, it could be eligible for relief from the IMF and the World Bank.

While the HIPC program is a step in the right direction, it takes too long to deliver too little help to too few countries. In the meantime, countries are shifting resources from health, education and development programs under the pressure to meet debt payments. More can be done. It is not dollars but political will that is lacking. About 90 percent of the debt of the poorest countries is owed to governments and to the international financial institutions funded by them and acting on their behalf. Changed government policies can make all the difference.

The Presbyterian Church (U.S.A.) is among the more than 40 U.S. religious and secular groups that have launched Jubilee 2000/USA. It is part of an international campaign that embraces the vision of total debt cancellation for impoverished countries by the beginning of the new millennium. Toward that end, legislation will be introduced in the new Congress to direct the U.S. government to write off the debt it is owed directly by the poorest countries. It is estimated that the HIPC countries owe only about $2.9 billion to the U.S. government in bilateral debt. That is less than this country has donated in aid to Israel each year for decades.

The legislation will also direct the Administration to urge other creditor governments to adopt a similar debt-reduction policy. Some have already declared a willingness to do this. Others can be influenced by the U.S. example.

Finally, the legislation will direct the Administration to use its weight and influence in the IMF, the World Bank and other international institutions to reduce dramatically the multilateral debt of the poorest countries. They owe about $100 billion to such institutions, of which the U.S. share is estimated to be between $16 billion and $35 billion. Those figures correspond to approximately 1 percent to 2 percent of the federal budget for one year. If the relief were spread over a few years it would hardly be noticeable, particularly in this time of budget surpluses.

The purpose of debt relief is not to make life easier for debtor governments, but to make life better for people who are suffering. Few would argue with that goal, but many worry that funds will simply be misused again. Clearly the past problems of both creditors and debtors must be corrected. In making loans, governments and international institutions must take greater care to evaluate projects and programs as well as the intentions of the receiving governments.

Desmond Tutu, the Anglican Archbishop of Capetown, South Africa, has called for countries to meet four conditions in receiving debt relief: democratization, respect for human rights, military reduction, and a commitment to use the money realized from debt relief for the needs of ordinary people. These are good guidelines for canceling past debt in order to create a more hopeful future for vulnerable people in the most impoverished indebted countries.