G8 Summit: Voices from “Indebted Countries” Warn Current Plans Insufficient

3 July 2005 by Jubilee South


DEBT ACTIVISTS PUT G8 ON NOTICE: “MAKING HISTORY” REQUIRES ENDING ECONOMIC & POLITICAL DOMINATION OF GLOBAL SOUTH

As protesters, advocates, and government officials begin to make their way to Scotland for the G8 G8 Group composed of the most powerful countries of the planet: Canada, France, Germany, Italy, Japan, the UK and the USA, with Russia a full member since June 2002. Their heads of state meet annually, usually in June or July. Summit in Gleneagles, prominent debt activists from across the Global South said that despite the June 11th announcement that the wealthy countries would support debt cancellation for 18 countries, the G8 risks squandering a key opportunity to transform global structures that perpetuate poverty.

Nothing less than the unconditional cancellation of all debts claimed from all South countries will liberate the peoples of the South from debt domination,” said Lidy Nacpil, the Manila-based coordinator of Jubilee South, an alliance of economic justice campaigns in Africa, Asia-Pacific, Latin America, and the Caribbean.

Demba Moussa Dembele, coordinator of the Forum for African Alternatives, a Jubilee South member organization in Senegal, said, “My country is one of the 18 that has been promised debt cancellation. We have heard so many promises over the years, only to learn later of the fine print, the devastating conditions, attached to the offers. If the G8 wants to prove it is serious about ’making poverty history’ it can this week renounce its perpetuation of economic and political structures that benefit investors and corporations from their countries while preventing South countries from determining their own policies. They have created this poverty that violates our peoples��� basic rights; they can end it by releasing their grip on our countries.

Dembele’s concerns were corroborated in Nicaragua, where Alejandro Bendana, of the Center for International Studies and Jubilee South International Coordinating Committee reported that “Any illusions held by Nicaraguan officials as to the practical effect of the G8 plan were dispelled when a high-level IMF IMF
International Monetary Fund
Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.

http://imf.org
delegation in Managua said any cancellation was conditioned on improved compliance with IMF measures.

Beverly Keene, coordinator of Dialogo 2000 in Argentina and of Jubilee South/Americas, pointed out “The June 11th offer from G8 Finance Ministers was made only to governments that have endured a minimum of six, and often fifteen or more, years of devastating policies of trade and investment deregulation, curtailment of labor rights, forced privatization, skyrocketing prices and interest rates Interest rates When A lends money to B, B repays the amount lent by A (the capital) as well as a supplementary sum known as interest, so that A has an interest in agreeing to this financial operation. The interest is determined by the interest rate, which may be high or low. To take a very simple example: if A borrows 100 million dollars for 10 years at a fixed interest rate of 5%, the first year he will repay a tenth of the capital initially borrowed (10 million dollars) plus 5% of the capital owed, i.e. 5 million dollars, that is a total of 15 million dollars. In the second year, he will again repay 10% of the capital borrowed, but the 5% now only applies to the remaining 90 million dollars still due, i.e. 4.5 million dollars, or a total of 14.5 million dollars. And so on, until the tenth year when he will repay the last 10 million dollars, plus 5% of that remaining 10 million dollars, i.e. 0.5 million dollars, giving a total of 10.5 million dollars. Over 10 years, the total amount repaid will come to 127.5 million dollars. The repayment of the capital is not usually made in equal instalments. In the initial years, the repayment concerns mainly the interest, and the proportion of capital repaid increases over the years. In this case, if repayments are stopped, the capital still due is higher…

The nominal interest rate is the rate at which the loan is contracted. The real interest rate is the nominal rate reduced by the rate of inflation.
, and erosion of health care and education facilities.

Nacpil said, “We recognize that the June 11th announcement, if it is implemented, represents some progress from previous schemes and proposals. 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.

She added that, “The G8 plan covers at most just 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.

Contact

- (in Edinburgh at G8): Lidy Nacpil: +63-917-834-2298 (English), Arjun Karki: +44-7886-11-2625 (English) and Demba Moussa Dembele: +44-7951-33-0707 (French, English)
(in Buenos Aires, Argentina): Beverly Keene: +54-9-11-5612-3198 (Spanish, English)
- (in Managua, Nicaragua): Alejandro Benda̱a and Carlos Pacheco: +505-2-785-413, Saturday and Sunday: +505-2-660-500 (Spanish, English)
- (in Port-au-Prince, Haiti): Camille Chalmers: +509-244-4727 / 509-210-0353 (French, Spanish)

Nacpil & Dembele, plus Arjun Karki, will be in Scotland July 3 - 7 and available for interviews.




Other articles in English by Jubilee South (17)

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