APPENDIX 17
Memorandum from Jubilee 2000 Coalition
UK
GENERAL COMMENTS
1. Jubilee 2000 Coalition believes that
there are two fundamental issues concerning ECGD that are unacceptable.
The first is that the ECGD is tasked to maximise returns on existing
debts, regardless of the situation in the debtor country. The
Chancellor of the Exchequer has personally campaigned for greater
debt relief on the world stage, and it makes no sense for a government
department, over which the Treasury has considerable influence,
to be maximising returns from the same countries that require
urgent debt relief. The ECGD must make an objective analysis of
a country's capacity to pay when assessing its existing debt portfolio,
and this must include considerations of human need in debtor countries
as well as the currently-used economic criteria. The ECGD must
have the power to cancel up to 100 per cent of debt—including
pre-cut off date, post-cut off date and previously rescheduled
debt—on the basis of such an assessment.
2. Second, it is totally unacceptable for
the ECGD to underwrite the sale of arms to countries where they
may be used in oppressing the people of that country or in aggression
against another country. It is outrageous that British taxpayers
have bailed out British Aerospace for the sale of Hawk jets to
Indonesia. As is now universally accepted, these aircraft were
used by the Indonesian military to terrorise the people of East
Timor. The fact that Britain should give export licences for such
a sale runs completely counter to government claims of an ethical
foreign policy, and the fact that British taxpayers have through
ECGD bought them for the Indonesian military is scandalous. Comparison
between ECGD support for British arms and the development budget
for Indonesia illustrate the Government's skewed objectives, and
the incoherence between the policies of different government departments.
In February 1998, Margaret Beckett, then President of the Board
of Trade, stated that in 1996 the sale of Hawks to Indonesia had
been guaranteed by ECGD to the tune of £280 million. This
sum had risen with interest to £362 million in February 1999.
War objectives appear higher priority than development objectives.
In total bilateral funding through DFID for Indonesian development
projects amounted to £7.1 million in 1998-99 and will be
£10 million in 2001-02.
3. Jubilee 2000 Coalition believes that
no ECGD cover should be extended for arms exports. The President
of the World Bank, James Wolfensohn, expressed support for this
principle when applied to Export Credit Agencies (ECAs) world-wide
at the Annual Meetings of the World Bank and IMF 1999.
THE MISSION
STATEMENT
4. As it currently stands the Mission Statement
says it "supports as much export business as possible".
This should include a statement that only exports for civil use
will be supported, and that these must meet rigorous environmental
standards. Institutions such as the World Bank have developed
their own internal environmental assessment criteria. The ECGD
must likewise realise that it does not operate in a vacuum, and
its work needs to be coherent within the aims of an ethical foreign
policy of the Foreign and Commonwealth Office (FCO) and the development
and environmental goals of the Department for International Development
(DFID) and the Department of Environment, Transport and the Regions
(DETR).
The requirement to break-even should be dropped
from the Mission Statement. It should be acceptable for the ECGD
to record a loss, if this is as a result of progressive action
on cancelling the debts of a debtor country in need.
5. The section under "Existing portfolio"
should be re-written. It should state that management of the existing
debt portfolio will take as its overarching influence the state
of human development in the debtor country and the country's capacity
to pay. Within this assessment must be included the level of debts
to other creditors and the level of domestic debt. The ECGD must
have the power to cancel debt on the basis of human needs in the
debtor country, and it must have the power to act independently
or unilaterally from the other creditor government ECAs.
Responses to specific questions
6. Jubilee 2000 Coalition would be prepared
to see a tax increase to cover the cancellation of debts for countries
that require comprehensive debt cancellation. As we have pointed
out in "In Our Own Backyard"[30],
given the worthless nature of much of the debt, cancellation of
the debt of the poorest countries could be effected at low cost
to the taxpayer. After the ground-breaking announcement of President
Clinton to cancel 100 per cent of debt owed to the USA by the
poorest countries at the 1999 IMF/World Bank Annual Meetings,
US Treasury Secretary Larry Summers said that "the cost to
the Government of relieving the debt would be less than the face
value, because it is carried on the books at a lower value."
7. Jubilee 2000 would also be prepared to
support tax increases to extend the range and volume of ECGD's
activities, provided that they met the rigorous standards on development,
human rights and the environment outlined above.
STRIKING THE
BALANCE
Responses to specific questions
8. As stated above, the current break-even
Financial Objective should be relaxed, given the need to take
into account the capacity to pay of severely indebted poor countries.
9. Promoting sustainable development should
be one of ECGD's key priorities, with its policy consistent with
targets agreed at the Kyoto summit. Jubilee 2000 Coalition recognises
that this will limit the ECGD's ability to help all classes of
UK exporters and investors. We see this as positive.
10. Jubilee 2000 Coalition attitude to debt
relief is well-known. Cancelling debt may have negative implications
for the UK taxpayer in the short term, however these will be easily
manageable, and the long-term benefits of stability in debtor
countries, although impossible to assess accurately, will also
have positive impacts on the UK budget.
11. The aims of an ethical foreign policy
must influence decision-making at the ECGD.
ECGD STATUS AND
STRUCTURE
12. Jubilee 2000 Coalition believes that
there is a role for an export credit department, however it needs
to act within a framework of rigorous human rights, development
and environmental standards. We believe that the ECGD should remain
a government department, rather than a privatised agency. We believe
that DFID should have a significant influence over the management
of the ECGD debt portfolio.
THE PARIS
CLUB
13. The ECGD is the main representative
of the government at Paris Club meetings. As far back as September
1997, the Chancellor, Gordon Brown called for "a stronger
debtor voice" in his speech now known as the Mauritius Mandate,
however the Paris Club has shown no sign of reform in this direction.
14. Instead it remains part of a system
that is dominated at every stage by creditors. One of the fundamental
tenets of international law is that you cannot be a judge in your
own case. Creditor governments who argue tirelessly for transparency
and the establishment of the rule of law in debtor countries undermine
this central tenet in their own relationship with the debtor countries.
This is an outrageous injustice.
15. Jubilee 2000 Coalition calls for an
independent process to assess the capacity of debtor countries
to pay. This assessment must be based on objective criteria of
a country's ability to pay. It must consider the human development
situation, the per capita income, the incidence of poverty in
each country in addition to the currently used export and fiscal
criteria. Decisions on the level of debt relief must be made by
an independent Debt Review Body, where both debtor and creditor
are equally and fairly represented. The process should adopt the
good practice of national bankruptcy legislation, such as the
US Chapter 9, which details bankruptcy procedure and protects
essential social expenditure in the case of a municipality going
bankrupt. The Jubilee 2000 Coalition paper "Concordats for
debt cancellation" sets out clearly how such a process should
develop. The Debt Review Body would work with debtor and creditor
representatives to draw up a plan or concordat which would:
(a) outline how much debt is to be cancelled:
this must include all categories of debt, and debt that has built
up after the so-called "cut-off-date", which currently
does not form part of any Paris Club Agreements;
(b) set up auditing and monitoring processes
to ensure that money released from unpaid debt goes into economic
recovery, reconstruction and poverty reduction;
(c) establish a poverty Action Fund to facilitate
the flow of freed up resources to the poor.
16. Finally, there would be a public and
highly publicised signing of the Concordat, ensuring a widespread
understanding of what has been promised and agreed. A fuller analysis
can be found in Ann Pettifor's Concordats for Debt Cancellation,
30 March 1999, and Professor Kunibert Raffer's "What's Good
for the United States Must be Good for the World—advocating
an International Chapter 9 Insolvency". We wish these two
papers to be considered as part of the Jubilee 2000 Coalition
submission.[31]
SECTION B
Paragraph 11
I am responding to the ECGD Questionnaire in
my capacity as Director of the Jubilee 2000 Coalition UK. The
Coalition is made up of over 100 organisations: they include Actionaid,
Tearfund, Oxfam, ChristianAid, Save the Children Fund, the World
Development Movement, UNISON, the TUC, UNICEF, the British Medical
Association, the Cooperative Bank, all major religious faiths,
and other trade unions, development agencies and community groups.
For several years Jubilee 2000 Coalition, and
its predecessor the Debt Crisis Network, have campaigned for the
ECGD to cancel the debts owed to it by the poorest indebted countries,
and for the ECGD to cease subsidising arms exports. Two reports
summarise the viewpoint of Jubilee 2000 towards the ECGD: The
UK as a Creditor, 1997, and "In Our Own Backyard", 1998.
Jubilee 2000 Coalition UK
October 1999
30 In Our Own Backyard, Jubilee 2000 Coalition publication,
September 1998. Back
31
Not printed. Back
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