Jubilee South, a network of debt campaigns, movements and people’s organization from Africa, Latin America and the Caribbean and Asia and the Pacific, stands firm in its position that no less than the unconditional cancellation of all debts claimed from all South countries will liberate the peoples of the South from debt domination.

The financial burden of debt servicing is staggering. It results in the violation of our people’s basic rights and impoverishes our countries. The injustice is magnified even further when we examine the onerous and often odious nature, terms and purposes of many of these debts and the negative consequences of numerous debt-financed projects, for which northern lenders and authoritarian and corrupt South governments are responsible.

Even more fundamental is how the debt is used as an instrument to perpetuate the powerful hold that rich nations, international financial institutions, and global corporations have over our people’s lives. They use this power to continue the long history of exploitation and plunder that is one of the central causes of the problem of the debt in the first place.

Ever since the explosion of the global debt crisis in the 1980’s, we have been witness to a series of debt relief programs by G8 governments and international financial institutions. Time and time again, these schemes succeeded not in releasing our people from debt bondage, but in keeping our countries on the debt treadmill, and creating even more favorable conditions for wealth concentration and extraction by foreign investors. In many instances they were poorly disguised initiatives to bail out international banks and financial institutions.

Since last year, G8 governments, led by the US and the UK, started discussing proposals for 100% multilateral debt cancellation. Debt campaigns took this as a challenge and an opportunity to fight for what may be partial but nevertheless important gains, and outlined the terms in which a 100% multilateral debt cancellation would truly represent a significant step forward in the struggle against debt domination.

On June 11, the G8 Finance Ministers released a statement on “Development and Debt” which includes a proposal for multilateral debt cancellation that would be put to the Annual Meetings of the IMF, World Bank, and African Development Bank by September 2005.

We cannot join our voices to those publicly hailing the G8 debt agreement as a “historic” victory for the following reasons:

1. The multilateral debt cancellation being proposed is still clearly tied to compliance with conditionalities which exacerbate poverty, open our countries further for exploitation and plunder, and perpetuate the domination of the South.

The G8 agreement includes the cancellation of US$ 40 billion multilateral debt claimed from 18 HIPC Completion Point countries. The cancellation of US$ 40 billion, if it were to push through, will mean a significant change from the current situation of many of these countries. But we should not forget that these 18 countries paid and will continue to pay a terrible cost for this US $ 40 billion —compliance with HIPC conditionalities required to reach “Completion Point,” the impact of which will be felt for many years to come.

The proposal also mentions that 100% stock cancellation will be delivered to those “on track with their programmes of repayment obligations...” implying that countries currently in arrears will have to catch up on their payments before they are eligible for the cancellation.

It remains unclear as to whether new conditionalities will be imposed on these countries in the guise of ensuring “good governance, accountability and transparency.”

The proposal is also understood to include US$ 11 billion claimed from 9 HIPC Decision Point countries, and US$ 4 billion claimed from 11 HIPC countries that have not yet reached decision point. This US $ 15 billion comes with the same price — the 20 other countries will only become eligible for cancellation after they implement HIPC conditionalities.

The total US $ 55 billion in multilateral debt cancellation will definitely not be enough to compensate for the devastating effects of these policies, which include privatization of services and utilities, indiscriminate trade and market liberalization, the further opening up of economies to foreign investments (especially targeting extractive industries in Africa), export-oriented policies at the expense of domestic needs. The impact of these policies includes the undermining of sovereignty and democracy, the intensification of repression and militarization, and war.

The cancellation of multilateral debts will not automatically mean these countries would finally be free from the hold that the International Monetary Fund, the World Bank and the African Development Bank have over their economies. These international financial institutions are not only lenders — their assessment and ratings of country performances heavily influence the behavior of international investors and other lenders. These countries will continue to be vulnerable to these institutions as long as the governments of these countries insist on chasing after foreign investments, aid and loans.

2. Even if the debt cancellation were without conditionalities, the proposal falls far too short in terms of coverage and amounts to demonstrate a bold step towards justice by any standard:
o It does not cover the debts claimed by the Inter-American Bank and the Asian Development Bank from at least 6 of the 38 countries considered for multilateral debt cancellation. No logical explanation is evident and none offered by the G8 statement.
o It covers only 38 out of more than 160 South countries burdened by debts claimed by international financiers. By being silent on the rest of the South, the G8 continues to perpetuate their self-serving myth that debt is a problem only for “the most impoverished” countries.
o Even granting that the G8 aims to start with the most urgent of situations, the proposal does not even attempt to respond to the critical conditions of tsunami-hit countries in Asia and other countries experiencing severe crisis, such as Haiti.
o The amount of US$ 40 billion is shameful compared to what G8 governments are willing to spend on their annual military budgets — for the year 2004: US$ 400 billion for the US and a US$ 191.4 billion for 6 other G8 countries combined (excluding Russia).
o These comparisons becomes even starker considering that as per the proposal, the contributions of donor countries to the US$ 55 billion debt cancellation will be spread over many years (i.e. the duration of repayment of the cancelled loans).
o Their annual contribution to the debt cancellation is estimated to be only at about US$ 1 billion per year. This is a pittance compared to what the G8 governments and the international financial institutions collect annually in principal and interest payments from South countries. In 2003, more than US$ 23 billion dollars were collected for interest payments alone on multilateral and bilateral debts claimed from the South.

3. Like its predecessors, the proposal does not address the issue of odious and onerous debts.

Even by the narrowest legal, political and ethical parameters, most if not all debts claimed from the South are patently illegitimate. Indeed many of them have been shown to be outrightly illegal. Northern governments and international financial institutions have refused and continue to refuse to address this issue squarely.

Most historical precedents of restructuring, cancellation or repudiation of odious debts were opportunistic maneuvers by colonizing powers and occupying forces to free up resources in the South for their own interests, the most recent example being the Iraqi debt restructuring.

4. The G8 statement does not express any measure of acknowledgment of the historical and structural causes of debt and poverty and their own culpability. Without this recognition, the G8 governments cannot make poverty history. Instead, the G8 statement is a re-affirmation of their collective commitment to push poverty-inducing and debt-creating policies in the South.

We recognize that the G8 agreement on cancellation of multilateral debt stock claimed by these Institutions from 18 to 38 countries is some progress from previous schemes and proposals for limited relief from debt payments. It is also notable that debts claimed by the IMF are included, an official recognition that IMF debts can be cancelled after years of rejecting this notion. The fact that the G8 governments have been forced to address the sham and inadequacy of their various debt relief schemes would not have been possible if it were not for the unceasing and tireless efforts of debt campaigns and social movements across the world.

But we must not lose sight of the over-all nature and impact of these agreements. The G8 debt agreement is a clever effort to use positive elements to project an image of generosity, but embeds these elements in a package that is firmly consistent with and in furtherance of their economic agenda and control over the South.

We reject this renewed attempt to manipulate the hopes and demands of millions of people around the world.

We urge all debt campaigns, social movements and people’s organizations to step up the pressure and demand that leaders of the world’s richest and most powerful nations take immediate and decisive steps towards:

o The unconditional cancellation of all debts claimed from all South countries;
o The end to the imposition of policies on the South using loans, aid, debt relief and debt cancellation programs, other economic leverages, political pressure, military aggression
o Restitution and reparations for slavery and colonization, the plunder of our wealth and natural resources, exploitation of our labor, the human, social and ecological destruction in the South caused by their economic activities, military operations and wars.

We remind the leaders of the world’s richest and most powerful nations that in truth, the North owes the South. The accumulation and concentration of wealth in the North has been largely at the expense of the South - our land, our minerals, our forests and waters, our labor, our communities, our economies, our cultures, our governments, our lives.

We challenge South Governments to exercise the political will to repudiate all debts claimed from the South by the North and chart an independent path towards genuine development and self-determination.

June 14, 2005