Debt Relief and Jubilee 2000
The Religious Action Center of Reform Judaism's work on these international issues is supported by a generous contribution from Marilyn Herst Karsten.
"Every child in Africa is born with a financial burden which a
lifetime's work cannot repay. The debt is a new form
of slavery as vicious as the slave trade."
—All Africa Conference of Churches
Background
In the 1970's, the banks in the United States, Europe and Japan were flooded with deposits — the so-called "petro-dollars" made by oil exporting countries after the rapid rise in oil prices. The banks became desperate to find new clients to take these deposits and started lending heavily to middle and low-income countries. At the same time the World Bank and the International Monetary Fund (IMF) increased their lending to the poorest countries particularly in Africa. The conditions of these loans were very attractive, with low interest rates.
Much of this money was used responsibly to fund social reconstruction projects. But some of the money was used to fund ambitious and ill-conceived projects, to buy armaments, or to build up the wealth of the richest politicians, landowners, contractors, and manufacturers. In the early 1980's interest rates rose rapidly and the world entered a recession. The prices of many raw materials — the main exports of most poor countries (such as sugar, cotton, tin and copper) — collapsed dramatically.
Many countries began to run out of hard currency to pay the interest on their large foreign debts. Most tried to postpone default for as long as possible by borrowing more heavily. But the bubble burst in 1982 when Mexico announced that it could no longer service its debt. Many other countries followed.
Essentially, poor countries have gone bankrupt. But there are none of the provisions for these nations that there would be for an individual or company who goes bankrupt and is, thereby, protected from creditors. The IMF and World Bank stepped in to make more loans to ensure that the financial institutions would not collapse, but these new loans have also been eaten up in interest payments. At the same time countries were forced to accept "structural adjustment programs." These packages of measures focus on control of inflation and reduction of public expenditure while the cost of living is allowed to rise to market levels.
The whole approach was based on the assumption that the debtor nation brought the crisis on itself and must find its own solution to the problem. The poorer nations were being punished for the results of international factors completely beyond their control.
The bankers and lending governments saw structural adjustment as a success, as it averted a world-banking crisis. But, the results of the structural adjustment programs have been the abandonment of health, welfare and education spending in many countries. According to Oxfam International, Uganda's debt was $193 million in 1998, which is equivalent to six times the national health budget. In Bolivia, the $241 million debt in 1998 is equivalent to double the national health budget and seventeen times projected spending on rural clean water and sanitation under the Government's poverty reduction program. Individuals are left to fend for themselves and the effects have been increases in poverty and deaths from malnutrition across the world.
According to the Social Action Committee of the Reform Synagogues of Great Britain, each year these poorer countries are paying the rich lending countries three times more in debt repayments than they receive in aid.
Recent Events
The poorest nations are being pushed further into poverty due to the international debt burden. By the end of the decade over half of the population in Sub-Saharan Africa — some 300 million people — will be living in poverty, which the United Nations Development Program defines as those living on less than $1 a day. The poorest countries are caught in a cycle of debt they cannot escape, borrowing more money to make payments on old debts. In some cases, debt payments consume 30-40% of countries' budgets. In 1997, before the devastation of Hurricane Mitch, Nicaragua spent more than half of all government revenue on debt payments to rich countries and international lending institutions.
The human cost of these large debt payments is most alarming. Scarce resources are diverted from health care, education, food assistance, and economic development in order to pay interest on huge debts. For example, Mozambique spends four times more on debt service than on health care, and one in four children die from preventable infectious disease before age five. According to the Catholic Aid Agency, forecasts show that in the years 1999 and 2000 21 million children will die as a result of this debt burden.
In a speech to the 1999 Annual meeting of the International Monetary Fund and World Bank, President Clinton pledged to forgive ?100 percent? of the $5.7 billion debt owed to the United States, if the countries could show the savings were being used for education and fighting poverty. If they are willing to meet the conditions, almost 40 nations would benefit from the President's plan. The only country President Clinton did not include in his plan is Russia, which is deeply indebted to the IMF.
Legislative Summary
Relief for Poverty Reduction Act of 1999 (H.R. 1095 /S. 1690)
In March 1999, the "Debt Relief for Poverty Reduction Act of 1999" (H.R.1095) was introduced by Representative Jim Leach (R-IA). The legislation would require the United States to provide bilateral debt relief, and improve the provision of multilateral debt relief, in order to give a fresh start to poor countries. This bill currently has 123 co-sponsors — 105 Democrats and 18 Republicans — and has been in the Committee on Banking and Financial Services since March 1999.
A related measure (S.1690) was introduced by Connie Mack (R-FL) on October 5, 1999 and was referred to the Senate Foreign Relations Committee. This legislation would forgive most of the debt owed to the United States by the world?s poorest countries and would reduce their debt to the World Bank, the International Monetary Fund (IMF) and other financial institutions. The measure would cancel debts owed by such countries for concessional loans or credits given through U.S. foreign assistance or agricultural development programs. The bill would give debt relief priority to countries that have demonstrated a sustained commitment to alleviating poverty or have recently suffered a natural disaster. Under this bill, countries that support international terrorism or have excessive military spending, gross violations of human rights or drug trafficking would be excluded.
On November 16, 1999 Congressional leaders approved an agreement appropriating $123 million in relief of debts owed to the U.S. government. While this is a major step, the agreement is one third of the $370 million requested by the administration. In addition, the plan includes International Monetary Fund (IMF) reform measures and Congress will revisit progress on these reforms next year.
FY2001
In the FY2001 budget proposal, President Clinton requested $435 million to finance the fiscal year 2000 and fiscal year 2001 contribution to the Cologne Debt Initiative, yet the Senate Appropriations Committee approved a mere $75 million for debt relief programs. The Religious Action Center supports funding $810 million over a three-year period to fulfill the United States portion of an international debt relief plan. Specifically, we request $435 million in the FY2001 Foreign Operations Appropriations bill, and the remainder for FY2002-2003. Congress authorized full bilateral debt cancellation last year.
Interestingly enough, the Senate Foreign Relations Committee, under the chairmanship of Senator Jesse Helms (R-NC), unanimously authorized $600 million for debt relief for the poorest counties of Africa, Latin America and Asia. The House Banking Committee also authorized full funding for the debt relief initiative. In addition, members of the Meltzer Commission (a bipartisan Commission established by Congress in the fall of 1998 to consider the future of the major international financial institutions) unanimously called for immediate debt cancellation "in its entirety" for 42 nations.
Judaism and Debt Relief
Jewish tradition has always been aware of the importance of allowing poorer people access to loans. Indeed, in Maimonides - famous description of the eight levels of charity, the highest level is lending money to, or going into partnership with, a poor person so that they can become self-supporting.
In biblical times, the laws of the sabbatical year and the jubilee were created. In the sabbatical (seventh) year there was to be a remission of debts and in the jubilee (50th) year, land, which had been sold to pay of debts, was to be returned to its original owners, and slaves were to be freed. There may be academic debate about the degree to which the sabbatical year and jubilee were a regular part of life in ancient times, but there is no doubting the principles that underpin them. That is, people find themselves in debt for various reasons, often no fault of their own, and it is the duty of an ethical society to ensure that these people are not permanent social outcasts.
The sage Hillel maintained a spirit of this tradition in Talmudic times, even as he radically altered the law. He created the law of the prosbul to ensure that commercial credit would still be available even just before a sabbatical year. The great academies of the time accepted that the poor needed to have access to credit, but also that lenders were right to expect it to be paid back. But through all this legislation, biblical and rabbinic, it is clear that one aspect of lending and borrowing money was completely forbidden — the charging of excessive interest. We must assume that the sages recognized how easy it was for interest to escalate and ruin people. In modern times we know that reasonable rates of interest are essential to enable normal financial life to continue. But punitive rates of interest that ruin families, businesses and countries, are completely unacceptable.
The following texts demonstrate that the forgiveness of debt is not only important in human terms, but a divine duty:
- "The spirit of God is upon me, because God has anointed me; The Eternal One has sent me to bring glad tidings to the lowly, to heal the brokenhearted, To proclaim liberty to the captives and release to prisoners, To announce a year of favor from the Eternal One." (Isaiah 61)
- "At the end of every seven-year period you shall have a relaxation of debts, which shall be observed as follows. Every creditor shall relax his claim on what he has loaned his neighbor; he must not press his neighbor, his kinsman, because a relaxation in honor of the Holy One has been proclaimed."(Deuteronomy 15).
Jubilee 2000
A worldwide movement is working to address this unpayable debt under the banner of Jubilee 2000, drawing inspiration from the Book of Leviticus (25:8-55):
You shall count off seven weeks of years — seven times seven years — so that the period of seven weeks of years gives you a total of forty-nine years. Then you shall sound the horn loud; in the seventh month, on the tenth day of the month — the Day of Atonement — you shall have the horn sounded throughout your land and you shall hallow the fiftieth year. You shall proclaim release throughout the land for all its inhabitants. It shall be a jubilee for you: each of you shall return to his holding and each of you shall return to his family. That fiftieth year shall be a jubilee year for you: you shall not sow, neither shall you reap the aftergrowth or harvest the untrimmed vines, for it is a jubilee. It shall be holy to you: you may only eat the growth direct from the field.
In the biblical Jubilee year, social inequalities are rectified; slaves are freed, land is returned to original owners, and debts are canceled. The Presiding Bishop of the Episcopal Church Frank Griswold described, ?The essence of Jubilee is related to suspending patterns- patterns of work, patterns of domination, patterns of acquisition. It recognizes the need for things to rest, to restore "right relationships' and recover equilibrium in the world."
Following the adoption of a new resolution on the "Commitment to Africa" at its 65th General Assembly in December 1999, the Union for Reform Judaism officially endorsed the Jubilee 2000 campaign. Jubilee 2000 is an international campaign calling for the elimination of the debt of the poorest countries, without conditions that will further harm people living in poverty or the environment.
The European region of the World Union for Progressive Judaism supports debt relief and adopted a Resolution calling for the cancellation of the "unpayable debt of the world's poorest countries." In Britain, Reform and Liberal Social Action, part of the Jubilee 2000 Coalition, has made the Jubilee 2000 Campaign the focus of its work in 1999.
Jubilee 2000 National Mobilization Day in Washington, D.C.
Citizen action groups, religious organizations, students, and others concerned about justice for impoverished countries in Africa, Asia, and Latin America gathered on the Mall in Washington, D.C. on April 9, 2000 and made their voices heard. Rabbi David Saperstein addressed the impressive crowd at the event. In his remarks, Rabbi Saperstein extended a plea to "come together as a nation, as a people, as the wealthiest most affluent country in the history of the world and forgive this debt in the Jubilee year. Let us work with our brothers and sisters in debtor nations to develop economies that do not return to debt - educational systems that prepare for the future and health care systems that save lives." The Sunday event was followed by Monday lobby visits to request members of Congress to voice their commitment to debt cancellation.
Sample Letter to Key Decision Makers
Dear _________,
I am writing to express my concern about the terrible burden of debt on the citizens of many impoverished countries around the world and to add my voice to their call that this burden be lifted. The lives of people in many impoverished nations struggling to pay back their foreign debt are made a misery by their poverty, which grows from year to year. I think it is a crime that many nations in Africa now spend four times as much on debt repayment as on health care.
I support the Jubilee 2000 movement, which proposes to cancel the backlog of unpayable debt owed by impoverished countries by the end of the year 2000. Carried out through a fair and open process that makes both lenders and borrowers more accountable to ordinary citizens, Jubilee 2000 would give a fresh start to those deep in debt.
I am grateful that in November 1999 congressional leaders appropriated $123 million in relief of debts owed to the U.S. government. Unfortunately, this amount is less than one third of the $370 million requested by the Administration and does not fully realize the international plan.
I urge you to take action to cancel the debt of the most impoverished countries, giving nations in Africa, Latin America and Asia a chance to invest in their peoples. I support budgeting resources to pay for debt relief, and I believe increased spending for debt relief should not be traded off against reductions in development assistance or in lending programs for developing countries. I look forward to hearing from you on this very crucial issue.
Respectfully,
(Your Name/Congregation)
Please address letter to:
President William J. Clinton
The White House
Washington, DC 20500
The Honorable Lawrence Summers
U.S. Department of Treasury
1500 Pennsylvania Avenue, NW
Washington, DC 20220
The Honorable (Your Senator's Name)
United States Senate
Washington, DC 20510
The Honorable (Your Congressperson's Name)
United States House of Representatives
Washington, DC 20515
You can find the names, committee assignments, and e-mail addresses of your members of congress by contacting the House of Representatives and the Senate.
Programs for Congregations
A Debt Dinner
Invite people to attend a Debt Dinner. Make sure they know the focus will be on the world debt. Sell inexpensive tickets beforehand, to make sure you know how many people will attend. Mark half the tickets debtor and half creditor. Prepare a tasty meal for half the people who come, and for the other half have ready a bowl of rice and a glass of water. Ask people to hand in their tickets at the door. Those who have the debtor tickets get only a bowl of rice, while those who have creditor tickets get a tasty meal. Explain to them that this is how the world looks to those in the world?s poorest countries. They are burdened with unpayable debts, and terrible poverty, simply because they live in one country instead of another.
Follow the meal by a game, talk or discussion on Third World debt, and encourage people to write letters to policy makers before they leave. Also encourage the participants to sign the Jubilee 2000 petition.
Breaking the Chains
This exercise helps people think about the chains of debt. Start with a game of human chains. Ask people to get into groups of about eight. The group starts in a circle and each person puts his or her hands in the middle and takes hold of two other hands belonging to two other people. When everyone is holding hands, ask them to begin to unravel themselves into a circle without letting go of each other's hands. It can be done but may take some time. Then play the game again, but this time as they unravel, two people can let go of the hands they are holding. The process is much quicker. In the same way, it only takes a few people to unravel the tangled chain of Third World debt.
Talk about the Third World debt and how it enslaves people. Then give each person a narrow strip of paper. Ask each person to write on their paper one way in which debt harms people in the world's poorest countries. Then make a paper chain by folding each strip of paper into a ring and linking the rings. Display the chain somewhere prominent and ask people to think of one thing that they can do to help break the chain.
Finish the session by thinking about a chain reaction- ask each person to think of someone else they could tell about Jubilee 2000 and sign the petition!
Injustice and Justice
Put chocolate bars on the chairs on one side of the room, and a small piece of candy on each chair on the other side. People enter the room, insist that they sit where you show them. Once people have settled, tell those with the small pieces of candy to give them to the people who have chocolate bars. Then ask the people on each side how they felt doing the exercise. Ask people to think about a time when they had been treated unjustly. Talk about who treated them this way, how it made them feel, and what they did about it. Ask people to define what justice means, and what its place is in the world. Use this exercise as a lead-in to discuss the injustice of people living in poverty having to transfer scarce resources to the rich in debt payments.
Zenithou's Story
Incorporate the following story as an example of the affects of the debt crisis on real people:
Sitting with her father on a wicker mat, three-year-old Zenithou has dark curls and a face that has been destroyed. She is fighting a disease, caused by ordinary mouth bacteria, that eats through her facial muscles, tissue, and bones. Her father, Ali, a sieve maker, had to sell 150 sieves before he had the money to take her to the hospital. He comforts his daughter as best he can. Ali, with tears in his eyes, tells a reporter, "When she's in pain she takes my hand and puts it against the part of her face that hurts and says to me, "Daddy, it hurts." I just stroke her and comfort her but my heart is thumping and thumping."
In Niger, Zenithou's country, there is no war, no famine-just constant, crippling poverty. Children whose immune systems have been weakened by chronic malnutrition have nothing with which to fight any disease. Simple antibiotics and mouthwash may have saved Zenithou if her illness had been caught early.
Niger — the poorest country in the world-cannot afford these luxuries. Niger spends three times more money paying off its debt burden than it spends on health and education. According to Oxfam International, debt relief today would save 475,000 children in Niger, children like Zenithou.
