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At the United Church of Christ's General Synod meeting in Hartford this past June, I attended a workshop entitled "Becoming A Jubilee Congregation." A Jubilee Congregation is a congregation that advocates for the cancellation of the debt of the world's poorest countries.
Here is the issue as far as I understand it. In the 1960s, the United States spent more dollars than it earned so it printed more dollars, which lowered the value of the dollar. This was bad news for oil producing countries, whose oil was priced in dollars, so in 1973 they increased the price of oil, thereby accumulating lots of dollars and depositing them in Western banks. This was bad news for Western banks because they now had too many dollars--dollars wealthy countries did not want to borrow because they were in a recession. So the banks turned to the governments of the poorer developing countries and encouraged them to borrow these dollars at low but variable interest rates, meaning the interest rates could rise if economic conditions changed. The dollars that these governments borrowed were put to a variety of uses. Some governments spent money on development projects--projects with mixed results in terms of benefiting the citizens of these countries. Some, especially the unpopular dictatorships, purchased weapons. The more corrupt leaders spent the money lavishly on themselves or deposited it in private bank accounts. Some spent the money purchasing the oil that was now more expensive. The economies of these developing countries were largely dependent on export crops or raw materials, and the debt crises began in earnest in the mid 1970s when export prices went down and the variable interest rates on their loans went up. These countries were suddenly earning fewer dollars through exports, and spending more dollars on loan repayment at a higher interest rate. Banks encouraged them to borrow more dollars so they could keep up with the interest payments on their previous loans. By the early 1980s, a number of heavily indebted countries faced a financial crisis and could not continue repaying their loans. The International Monetary Fund and the World Bank intervened by restructuring their debt payments and lending them money to pay back the banks, but only under the condition that they restructure their economies with Structural Adjustment Programs. Structural Adjustment Programs included cutting back government spending on health, education, and social services, devaluing the national currency, cutting back or eliminating food subsidies, cutting jobs and wages in government industries and services, privatizing government-run industries and services, and replacing small-scale subsistence farming with large-scale agro-export farming. The Structural Adjustment Programs hit the poor the hardest in these countries. Because these indebted countries spent more money on interest to western banks and lending intuitions than they did on education, health care, and food security, because the lack of schools, clean drinking water, health care, and food security was having such a negative impact on poor people in these countries, and because it was clear these countries could never pay off their debts, a number of justice advocates in the 1990s began advocating for the forgiveness of debt, arguing that the money spent paying a never-ending debt would be better spent funding programs that benefited the poor, especially since some of these countries paid out more every year to service their debts than they received in foreign aid. Debt forgiveness, though a controversial idea at first, gradually caught on as more people realized that it was a moral issue and one that made some economic sense. In 2005, the leaders of the eight wealthiest industrialized nations--the G-8 leaders--announced a plan to cancel some of the debts owed to the World Bank and the International Monetary Fund by eligible debtor nations. However, eligibility was contingent upon the debtor nation's willingness to carry out more Structural Adjustment Programs, a plan justice advocates didn't like, and the debts canceled represented a small percentage of the total debts owed. In 2006, the total outstanding debt stood at $3.24 trillion, which generated $550 billion of debt service a year to foreign creditors. By 2006, a total of $36 billion of multilateral debt had been canceled for 21 countries. A new campaign called Jubilee 2007 is currently underway. The Jubilee 2007 campaign argues that debt cancellation has successfully redirected money from debt payment to development programs that benefit the world's poorest people, and that debt cancellation should therefore be expanded. The campaign cites examples like:
OK. I know. This is a complex issue, and I have given you the simple and one-sided explanation from the point of view of those who advocate for debt cancellation. To be honest, I have not yet read a convincing counter-argument. The current issue of the journal Foreign Policy features an article critical of the debt cancellation movement. The article argues that some indebted nations do have the ability to pay their debts and that they are simply abusing the banks and the rule of law. The article cites Argentina as an example of a nation with a huge debt that has a fairly robust economy and is able to pay. What the article fails to mention is that Argentina is not included in the list of 67 countries that would be eligible for debt cancellation under the Jubilee Act. The article also quotes an un-named source from an international hedge fund saying, "Debt relief advocates should recognize that the beneficiaries of debt relief are often corrupt or incompetent regimes that squander their nation's assets and then cry poverty to avoid legitimate debts." But everything I have read indicates that debt relief advocates do recognize that corruption and incompetence are major problems. That's why they advocate directing money through transparent and legitimate mechanisms like trust funds to ensure the money is not squandered by corruption and inefficiency. If any of you can provide me with a good critique of debt cancellation, I would appreciate it, because I think this is a fascinating issue. I'd like to tie the debt forgiveness issue in with the Biblical Sabbath for a moment since the Biblical Sabbath Jubilee serves as an inspiration for the Jubilee campaign. There are a number of traditions associated with the Biblical Sabbath. For today's purposes, let's just look at the one having to do with debt forgiveness. In agrarian societies like Israel of the Old Testament and the New Testament, the cycle of poverty often began when a poor family with a little land had to borrow money from the only person who had money to lend--the local landlord. The only collateral the poor family could put up was their land and their labor. More often than not, the wealthy landowner was not interested in getting his money back. He wanted the family's land and labor. If the poor family couldn't service its debt, it was forced to hand over its land to the landlord, and to turn family members over to him as bonded labor or debt slaves. This was an all too common practice in the prophet Isaiah's day and in Jesus' day. We find the Sabbath Jubilee Code in the Book of Leviticus, and it is arguably the most comprehensive attempt to protect the poor and restore justice that we find in the entire Bible. During the year of Jubilee, the people are instructed:
What the Sabbath Jubilee seeks to prevent is the establishment of a political-economic hierarchy that permanently locks families into wealth or poverty, advantage or disadvantage, for generations to come. The Sabbath Jubilee seeks to prevent the formation of a permanent elite class and a permanent impoverished class. Every fifty years, the slate is wiped clean, everyone returns to GO, and the game starts over again on a level playing field. Today, the poorest indebted countries are locked into a position of disadvantage vis-à-vis the wealthy countries, international financial institutions, and private banks. And the poorest people living within these poorest countries are locked into a state of poverty because their governments are collectively paying billions of dollars to the wealthiest countries, institutions, and banks. Collectively, the debtor countries of Africa pay four times more on debt repayment than they pay for health care. Every year, Africa spends about $13.5 billion for debt repayment while at the same time it struggles with a massive HIV/AIDS epidemic. Jesus claimed the Spirit of God was upon him to announce good news to the poor and to proclaim the year of the Lord's favor, which many interpret to mean the year of Sabbath Jubilee--the year of forgiveness of debt and release from bondage. I think we, as Christians today, must ask ourselves the question: what constitutes good new for the poor when it comes to the international debt issue? Even though this is a complex issue, I believe advocating for the forgiveness of debt for the world's poorest debtor countries constitutes good news for the poor who live in these countries. The United Church of Christ firmly supports the Jubilee 2007 campaign and it is encouraging local UCC congregations to advocate for the cancellation of this debt. Specifically, the UCC is encouraging congregations to do several things:
Jubilee USA network Jubilee Research American Friends Service Committee Church World Service Cancel Debt Fast |
