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Michael
T. Seigel, SVD INTRODUCTION
I
would like to present the main ideas that have guided the SEDOS World
Debt Working Group, the main insights we have come to, and the direction,
with regard to the debt crisis, that we see as necessary not only
for ourselves, but for all religious. We began, of course, with the
conviction that the debt burden of many poor countries is an injustice
of such serious proportions that to ignore it would be to abandon
any claims to have made a preferential option for the poor. In fact,
the debt crisis is a prime example of the poor being punished for
the failures, the mistakes, and sometimes the wrongs, of others.
In spite of our limitations, our lack of expertise in economics, and our lack of confidence in our own abilities in this matter, we have learned that we (and I refer here to all religious, not just the members of the Debt Group) do have our own expertise, and that we do have something to bring to the debate on the debt issue. Our expertise is not necessarily in economics. More than anything else it derives from our commitment to and experience with the poor. Most of our con-gregations have made a preferential option for the poor. In fact, that is implicit in following Christ. That option means that when we look at issues such as the debt, we do so from the standpoint of the poor. That and, even more, our experience with the poor are our real resources. Many of us have lived for many years with the poor, and those of us who have not, normally have close contact with others who do. Perhaps more than any other group addressing the debt issue (or other economic issues) we have the capacity to look at these from the standpoint of the poor. This is what we have to bring to the debate.
I myself have spent all of my working life in Japan - perhaps not
the ideal place to achieve the perspective of the poor. But throughout
my time in Japan, I had a significant degree of involvement in establishing
relationships between Church groups in Japan and others in the Third
World. Most particularly, for more than ten years, I have had a relationship
with a particular village in the northern Philippines. When I look
at economic issues, I make a conscious effort to do so from the perspective
of that village. I think that consciously or unconsciously, the majority
of religious do something similar. We all look at these matters from
the perspective of the people whose lives have become one with our
own. Perhaps the fact that there is a large representation of women
among us, means that we are also in a position to promote awareness
of the feminisation of poverty.
A. OUR BASIC APPROACH
I
think it is fair to say that there have been two ideas that have guided
us. The first idea is the one that I have already described, namely
that the perspective we seek to take is the perspective of the poor.
The second idea is also important. We are convinced that it is a mistake
to simply treat the debt as a problem in its own right. Rather, it
is an integral aspect of a complex world economic situation, and it
should be seen as a window through which to look at the whole economy
and bring to light its structures, its imbalances, and its biases.
Another way to look at this is to say that the debt crisis should be seen as a symptom of a more fundamental disease in the economy, rather than as a disease in itself. If a person is bleeding, it is important to stop the bleeding. But it is also important to know why the person is bleeding. If the person has an injury that will heal on its own if the bleeding is stopped, then that is all that needs to be done. But if the person has a disease that is causing the bleeding, then stopping the bleeding is only one of the things that needs to be done. The cause needs to be treated. I think that there are three different kinds of possibilities, and we may use health and disease as an example to explain them. There may be times when it is enough to treat the disease, and the symptoms will clear up on their own. There may be other times when the self-healing powers of the body are enough to treat the disease, but the symptoms (such as bleeding) are dangerous in their own right, and need to be treated. But there will be many cases in which both the symptoms and the disease need to be treated. We in the Debt Group believe that the problem of the external debt of the poor countries is of this third kind: both the symptom and the disease need to be treated. The symptom, the debt itself, places a severe burden on poorer countries, diverts funds needed for social welfare and economic development, and puts creditors in a position to dictate the policies of the indebted countries, thereby overriding their autonomy. Therefore the debt itself is a problem that needs to be solved. However, the debt crisis did not come about just as some kind of fluke of history. It has causes in economic practices and structures. And unless these are addressed, even if the debt is cancelled, it will only be a matter of time before a new debt crisis, or an equivalent situation, emerges. Many analyses of the causes of the debt crisis, attribute the escalation of the debt to the so-called "oil-shocks" of the 1970's. I think that this is the most common explanation for it. Large amounts of petrodollars flowed into the banks at a time when the developed world was in recession. The banks did not have adequate avenues for investment of these funds in the developed world, and consequently sought the opportunity to make loans in the Third World. There is no doubt that this is a contributing factor to the debt crisis. Missionaries and religious from Third World countries have told us that they witnessed aggressive lending practices by banks at that time. However, on its own, it is not an adequate explanation for the debt crisis. Normally, loans are meant to be invested, and to generate income with which they can be serviced and repaid. To know the real causes of the debt crisis one must ask why these loans did not generate such income. We have tried to address these issues in our position paper. One reason we have given is the collapse of commodity prices at the end of the 1970's. The green revolution and an escalation of investments in agricultural development had led to a large increase in agricultural output, and this, coupled with recession, led to a collapse in commodity prices. Behind this historical incident (the collapse in commodity prices) is a structural one: in a market economy, primary produce has a weaker position than manufactured goods. When primary production increases, prices tend to decline. This weakness must be seen as one of the structural problems behind the world debt. Another historical causal factor of the debt is the corruption of many Governments in the Third World in the 1970's (and since). Again, behind this historical phenomenon lie structural issues: the absence of an international insolvency procedure and the fact that creditors could lend to Governments, no matter how corrupt, with the confidence that debts would be passed on to subsequent Governments when the corrupt Government inevitably collapsed. Creditors have been protected from the kind of accountability that would exist if they were making loans to a private borrower who could go bankrupt as a result of mismanagement, bad judgment, or corruption.
In our position paper, we have noted such other causes as the adoption
of floating exchange rates, the application of variable interest rates,
and misguided models of development that led to inappropriate attempts
at industrialisation in the developing countries. One of our main
conclusions, therefore, is that to respond seriously to the debt crisis,
we must look way beyond the debt, and must undertake what can only
be a long and ongoing process of analysis and of campaigning and advocacy
both to appeal for an understanding of the economy from the perspective
of the poor and to work for the changes, on various levels, that are
needed to realize a more just global economy.
B. SUPPORT FOR THE JUBILEE 2000 CAMPAIGN
The
SEDOS World Debt Working Group has opted to support and promote the
Jubilee 2000 Campaign. I will not go into detail about this campaign,
because Ann Pettifor will be speaking later. Put briefly, what the
campaign seeks is a cancellation of the backlog of unpayable debt
of the world's poorest countries by the year 2,000. The campaign calls
for a transparent and independent procedure to carry this out, and
calls on the leaders of the lending nations to "take effective
steps to prevent such high levels of debt building up again".
As I said before, the debt crisis is both a symptom of a deeper problem and a problem in its own right. By calling for a cancellation of the debt and for effective steps to avoid a similar situation recurring, the Jubilee 2000 Campaign is calling for a resolution both to the immediate problem and to the causes of the problem. It does not, of course, promote specific structural changes. In a petition of this nature, I think it is appropriate not to.
I would like to dwell for a moment on the idea of cancellation: what
is it likely to achieve.
Will cancellation of the debt bring relief to the poor?
Some
may ask: How can we be sure that money released by the cancellation
of the debt will actually reach the needy? I think it is important
that we not be naïve about how much money is actually going to
be released by a cancellation of the debt. Remember that the request
is for a cancellation of the backlog of unpayable debt, not of the
total debt. It would not necessarily bring an immediate influx of
wealth. If my net worth is -$1,000 dollars and I get some debts cancelled,
so that my net worth becomes -$100 dollars, I still do not have a
lot of money to throw around.
The write-off of $900 dollars, however, would make an important difference. If I owe $1,000 and there is no way in the world that I am going to be able to pay more than $100, then I am permanently at the mercy of my creditors. Cancellation of the $900 debt that I cannot pay may not immediately put money in my pocket. But it will put me back in control of my own life. I think that this is the really important thing in debt cancellation: the restoration of autonomy to the poorer countries.
Once autonomy is restored, then the country should have the potential
to work for its own development, and here indeed is the risk of the
corruption emerging that was a contributing factor to the debt crisis
in the first place. This, I think is why the Jubilee 2000 Campaign
calls for debt relief under an independent, transparent procedure.
There could and should be measures taken to see that the benefits
that would accrue from debt cancellation benefit the whole country.
But it should not be creditors who determine what these procedures
are. Nor should it be Governments of developed countries that have
a vested interest in seeing that they have access to the material
resources of the debtor countries. It should, indeed, be independent
and transparent.
Will cancelling the debt let corrupt governments off the hook? Some
may argue that cancelling the debt will simply let corrupt governments
off the hook. The reality is that they are already off the hook. It
is not the Marcoses and the Mobutus that the creditors are going after
to get their debts serviced. They are not beating down the doors of
the Swiss Banks. It is the people of the country who have been left
impoverished by these governments who are being asked to pay. This
is one of the reasons that we think a cancellation of certain portions
of the debt is, in fact, morally obligatory - although we would not
object to the bill being sent to those who are really accountable
for the debts.
If the debt is cancelled, will banks become unwilling to lend?
Some
may argue that cancelling the debt will make it unlikely that banks
will be willing to loan to these countries again. There are two responses
to this. Firstly, the reality is that these countries already cannot
get loans from commercial bankers. As I have already stressed, we
are talking about the cancellation of unpayable debt. Much
of the debt of the Third World is unpayable - in other words, it can
never be, and will never be, repaid. This very fact is enough to make
commercial creditors shy away. It is now the multilateral creditors
and to some extent bilateral creditors who are lending to these poorest
countries. Cancellation of the debt will not do any damage to the
capacity of these countries to borrow, that has not already been done
by the very unpayability of the debt.
Secondly, precedents indicate that debt cancellation does not make creditors unwilling to make future loans. Germany had its debt cancelled in 1953, but one does not hear today of Germany having difficulty borrowing money. The fact is that creditors need to lend as much as borrowers need to borrow, and they will lend if they see a reasonable possibility of return, and this depends on the prospects for the future, not on whether or not there has been debt cancellation in the past. The procedure for determining what is unpayable debt, and the establishment of an independent transparent procedure - these are matters of logistics and must be worked out fairly and transparently. But the essential goal of the Jubilee 2000 Campaign is one that we feel should be supported.
We have another reason for supporting the Jubilee 2000 Campaign, apart
from our support for its expressed goals. We are convinced that the
single most important thing for the resolution of the debt crisis
is political will. People must be made aware of the debt crisis, they
must take a position on it, and governments must be made aware of
the position people are taking. We see the Jubilee 2000 Campaign as
a vehicle for promoting that political will. We have noted too, that
other NGOs, even when they might quibble about the exact formulation
of the Jubilee 2000 Campaign's goals, are well aware that a successful
Jubilee 2000 Campaign will help all activities toward a resolution
of the debt crisis, because it will represent a powerful voice of
the people.
C. WHERE TO FROM HERE?
As
I have already noted, we are convinced that just a cancellation is
not enough. There are important structural and procedural changes
that need to be made if there is to be a real change. Based on an
overview of the causes of the debt crisis, it is not difficult to
say, in a general way, what the needed changes are: a resolution to
adjust the disparity between primary and manufactured products in
the market, clear structures of accountability for creditors, a priority
for governments to respond first to the real human needs of their
people, and meeting their debt obligations second, an independent
and transparent system of resolving problems in captial flow, etc.
These things are easy to say. But how are they to be achieved? And
what role might there be for religious in achieving them?
The fact is that these suggestions do not constitute a recipe for change. At best they give certain directions. I do not believe that we should think in terms of developing some idealised image of society and trying to realize it. I do not think that we are capable, nor do I think that such approaches work. Rather, I think that we need to work within the system, in collaboration with others, in order to achieve change in an incremental and evolutionary way. By this I do not necessarily mean "slow change". Quite the contrary, I think that changes need to be made quite rapidly. But they must be changes that, as much as possible, build on and work through the structures that already exist. What is the role of Catholic relgious in this? As I noted before, we religious have an enormous resource. That is our close relationship with the poor of the world, our years shared with them and the fact that our faith has often motivated us to share in their lives as much as possible. This is an enormous resource. We are probably in a better situation than any other large group in the world, to see that the voice of the poor is heard, and that the viewpoint of the poor comes into play, in the search for a solution to the debt crisis and the other structural problems we have referred to. Unfortunately, I do not think that we have become expert at bringing this experience to bear where it is needed. We talk too much to each other and to the converted. We get too much of a sense of achievement from developing documents and statements that are very meaningful to us, but lose their impact when read by outsiders. And I think that we feel too inexpert to face skilled economists and politicians. That is one reason why I think it is important that we recognize that we have our own expertise and that we have an important voice. So we need to make that voice heard in all the places that it needs to be heard. There are many actors in this drama of the debt crisis: Governments, the Bretton-Woods institutions (the World Bank, the IMF, the development banks; they may be considered to include the World Trade Organisation), and the United Nations, NGOs (non-governmental organisations). There are also the communications media, the general public; at times such other institutions as the legal systems in the countries in which we work can be important. There are also people such as scholars and experts from whom we can learn much but to whom we can also bring our own particular perspective. With regard to NGOs, there is such an enormous variety of these that it is probably not appropriate even to lump them together as one group. Some work so closely with governments that they have a semi-official status. They include religious groups like ourselves, lobbying groups, groups involved in social and political projects and campaigns; and they include grassroots groups. Many of these NGOs have developed networks and are in fact working for change, lobbying governments, the World Bank, the IMF, etc. These networks have established relations with governments and international institutions and they are a powerful force for change. Many of us know from experience that there is often a large gap between the grassroots NGOs in the developing world and the NGOs in the developed world. The grassroots groups often see the NGOs of the developed world simply as "rich kids doing their own thing". They may have a point, but this is something that weakens a coalition that could be a powerful force for change in the world. We religious may be in a position to bridge this gap. As has been said, the SEDOS World Debt Working Group began with a SEDOS symposium. One of the speakers at that symposium was Dominick Coyle, an editor and writer for the Financial Times. I would like to refer back to some of the things he said at the end of his talk, some of the concrete suggestions that he made. The last four or five minutes of his talk was an urge that we "raise our profile". He recommended that we address ourselves to governments and government agencies, to the major donor countries, and multilateral agencies, that we seek advisory consultative status with these, and bring before them our views on what is happening and what is necessary. He urged that we train ourselves more in the relevant disciplines, so that we can address these institutions with greater professionalism. And he urged that we rely more on the expertise of lay professionals. Here I think is an important point. I have said that we are experts. I must also say that our expertise on its own is not enough. We need to develop our own expertise, but we also need to be able to work and collaborate with others, bringing our knowledge and insights to the discussion, and listening to the knowledge and insights of others. Dominick Coyle said one other thing that I think was important, and he said that it was the key to his whole address. He said, "you are not alone in wanting change, in your concern for the poor, in your worries about the policies of the major aid and loan agencies" ("The World Debt", SEDOS Seminar, Rome, 11 October 1994, in SEDOS Bullettin, 1994, pp. 313-319). In the World Debt Working Group, we have focussed on the debt as it relates to the poor and consequently on the relationship between the debt and the conditionality for debt relief such as structural adjustment programmes, market liberalisation, etc. We remain convinced that an important role for ourselves is to maintain a stance that is at the same time both prophetic and collaborative in relation to the actors that I have mentioned above. This role, in addition to promoting the Jubilee 2000 Campaign, will be the focus of the Working Group from now on.
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