The ongoing campaign to cancel the debt of impoverished nations can improve the lives and hopes for their people.
By Theresa Polk

Debt is a subject with which almost no American is unfamiliar. Household debt, including credit cards, student loans and mortgages, has reached record levels in recent years, for the first time surpassing household income in 2006. The U.S. national debt has been setting its own records, fast approaching $9 trillion. While economists make grim projections for overly indebted economies, and our personal debts may affect our daily decisions, the national debt seems very far away and has little effect on most Americans.

Unfortunately, this is not the case for many impoverished developing countries. Though their national debts are a small fraction of the U.S. debt, the repercussions of these debts are concrete and grave.

National debt is a lived and felt reality for people throughout Africa, Asia and Latin America. According to the All-Africa Council of Churches, every child in Africa is born bearing a debt that a lifetime of toil cannot repay. This debt creates a new form of slavery, every bit as vicious as the slave trade.

Developing countries owe more than $2 trillion to international financial institutions, such as the World Bank and International Monetary Fund, regional development banks, such as the Inter-American Development Bank, and to private lenders and other sovereign governments.

While this figure is not large as a share of world gross domestic product, it means that poor countries must decide between making debt payments and providing essential services, such as healthcare, clean water or education.

Debt-relief advocates estimate that at least 74 countries require immediate, 100-percent cancellation of debts just to meet basic human needs. Some of the countries where Columban missionaries live and work are particularly affected, including the Philippines, Chile and Peru.

How did countries find themselves so indebted? Throughout the 1970s, money was lent to developing countries without consideration of their ability to repay or to what purpose the money would be directed. Loans were given to corrupt or oppressive governments, who often pocketed it or used it to oppress their own people.

While the poor rarely saw any benefit from the huge debts accrued in their name, the burden of repayment now rests on their shoulders as stringent economic policies legislated by the lending institutions cause wages to stagnate and costs to rise, devalue currency and slash social safety nets.

The historic Jubilee 2000 Campaign brought this situation to light by showing how efforts aimed at relieving poverty throughout the world were being severely undermined by the situation of countries’ indebtedness, as for every dollar that developing countries receive in aid, $1.30 leaves those same countries as debt service.

Restoring Right Relationships
Faith leaders from many traditions joined together to declare the year 2000 as a Jubilee Year, echoing Pope John Paul II’s call to consider “reducing substantially, if not cancelling outright, the international debt which seriously threatens the future of many nations” (from Tertio Millennio Adveniente, no. 51).

Gains have been made in recent years as the idea of debt relief has become more widely accepted. The most-recent effort, the 2005 debt deal agreed to by world leaders gathered at the G-8 summit in Gleneagles, Scotland, led to some $36 billion of international debt being canceled for 21 nations. Notable benefits of this relief have included increased investment in rural infrastructure, health, education and anti-hunger programs.

For example: With the money freed up from debt payments, Zambia scrapped fees for rural healthcare; Burundi eliminated school fees; and Tanzania was able to import food for those suffering under a severe drought.

However, much remains to be done. The 2005 debt deal came with a great many strings attached, including more draconian economic conditions such as privatization of vital services, trade liberalization and further cuts in social spending, leaving the most vulnerable and impoverished even more at risk.

Nor did the 2005 deal include all the countries in urgent need of debt relief. As well, many countries are finding themselves dragged back into debt due to minimal aid contributions of developed countries, high oil prices and other factors.

Odious and illegitimate debts, those accrued by unaccountable, dictatorial and corrupt regimes that did not benefit the populations that must now repay them, are another outstanding issue.

In October 2006, Norway cancelled $80 million of illegitimate debt owed to it, acknowledging that it had lent the money (used to purchase Norwegian ships) to bolster its own economy, rather than help the recipient countries. Norway’s actions were a challenge to other creditor countries and institutions that have thus far refused to acknowledge their own complicity in the debt crisis through irresponsible lending practices.

The $20 billion debt that propped up the racist Apartheid government of South Africa, the $28 billion debt of the corrupt government of Ferdinand Marcos to the detriment of the Philippine people, and the debts accrued by Augusto Pinochet during his brutal dictatorial rule of Chile stand as glaring examples of irresponsible lending and odious debts.

The Jubilee Campaign is the prophetic call to restore right relationships throughout God’s creation. It is a triumphant invitation to reconciliation and liberation.

Based on Old Testament scripture, the traditions of Sabbath rest and Jubilee renewal require that the slaves be freed, the land lie fallow and that outstanding debts be cancelled at least once each generation.

In Christian theology, Jesus Christ’s sacrifice liberated us from the debt that we could not pay. Jubilee challenges us to join the struggle to break the chains that bind our global brothers and sisters and prevent them from realizing full and dignified lives.

Seven years after the historic Jubilee 2000 campaign, we claim 2007 as a Sabbath year: a year to reflect and recommit ourselves to this historic and essential campaign to free those who are bound, restore right relationships and create a fairer, more just world.

Theresa Polk is an associate in the Columbans’ Justice, Peace and Integrity of Creation (JPIC) Office in Washington D.C. The JPIC website is www.columban.org/JPIC .