Amid the current budget showdown in Congress, Republicans and Democrats are finding little common ground. Yet for all their tooth-and-nail scrapping over domestic priorities and overall lack of interest in spending to help foreign countries, there's a very good chance that they will reach agreement on one surprising initiative -- allocating nearly $1 billion to reduce or write off debts owed by some of the world's poorest countries.
The idea has caught hold with some of the most conservative members of Congress as well as with the most liberal. Much of the credit goes to a loosely knit, grass-roots global campaign based primarily in churches and anti-poverty groups.
Operating under the banner of Jubilee 2000 -- recalling religious traditions of "jubilee" years when debts are wiped out -- these citizen campaigns have argued that enforcing payment of the heavy debts of very poor countries is immoral. In many cases the debts were incurred by illegitimate governments, like Mobutu's dictatorship in Zaire or South Africa's apartheid regime, and they are paid at a price of great human suffering by people who never benefited from them. They argue that it's bad economics. There is no way that countries can grow or reduce poverty if they are sending so much of their income -- typically 30 percent of the national budget -- to rich creditors. Finally, nearly everyone realizes that the debts are not collectable. If the countries were businesses, they would have declared bankruptcy years ago, and creditors would have written off the loss.
But it has taken massive campaigning by a movement that teams such diverse spokespeople as the pope and Harvard economist Jeffrey Sachs to win over leaders of the G7 nations and big multilateral financial institutions like the International Monetary Fund and the World Bank.
Though the issue may not sound sexy, it has become the latest cause cilhbre. This Saturday, a star-studded concert, dubbed Netaid, is to be telecast on VH1 and broadcast over the Internet in the hope of raising $22 million for the cause. Sponsored by the United Nations Human Development Program and Cisco Systems, it will cover concerts in Switzerland, Britain and the United States. The shows will feature performers such as Bono, Sting, Sheryl Crow, Puff Daddy and Jewel. They will promote both contributions and action to end poverty in developing countries. Jubilee 2000 is one of the main collaborators and beneficiaries of the concert.
Three years ago, several of the world's richest countries promised roughly $12.5 billion to relieve some debt of about 41 "heavily indebted poor countries," or HIPC. The total debt of these HIPC countries is about $200 billion, but it costs much less to cancel the debt because it is typically worth less than 10 percent of its face value because of their inability to pay.
In the spring of 1998, despite protests that the debt relief programs weren't working, the G7 countries refused to expand debt relief. By early this year, the governments of those countries were floating new proposals. When they met in Cologne, Germany, last June, they agreed to more than double the program to reduce debt owed to multilateral organizations like the World Bank and up to 90 percent of much bilateral, government-to-government lending.
By late last month the member countries of the International Monetary Fund and World Bank, as well as the two organizations themselves, had committed nearly all the funding needed for the new, ambitious program. When the IMF and World Bank held their annual meeting in Washington in late September, President Clinton told delegates that he had asked Congress for $970 million to cover not only the U.S. share of multilateral debt but also the full cancellation of debts the HIPC countries owed directly to the United States. "It was a great symbolic gesture," said Oxfam spokesman Seth Amgott. "It put pressure on other countries to come up with more."
But some said Clinton's speech did not go far enough. "What's needed from the president is not just a strong speech to the IMF and World Bank but to speak in his radio address or prayer breakfast and educate the public on this issue," said David Bryden, communications director for Jubilee 2000/USA. In many ways, however, it's the public that has educated Clinton and other political leaders here and abroad.
A year ago there were no bills in Congress to relieve debt. Now there are at least four. A little over a year ago, the IMF wouldn't even meet with Jubilee 2000 representatives. Now it proposes that citizen groups be involved in drafting anti-poverty plans. What's brought about the change?
It's simple, said former Jubilee 2000/USA national coordinator Carole Collins: "grass roots mobilization and the cogency of the issue."
Much of that grass-roots mobilization has come from religious organizations. They have directed their appeals to Republicans normally skeptical of U.S. foreign aid. With Republicans in control of Congress, GOP support for the issue was critical. Convincing members like Rep. Spencer Bachus, a conservative Republican from Alabama, was an uphill battle. But a local chapter of Bread for the World, a largely church-based anti-hunger group, met with the congressman and explained debt's effects on poor countries. He was evidently moved; since then he has been speaking out passionately, making debt a moral issue among conservatives who tout their morality.
At a press conference during the IMF/Bank meetings, Bachus was joined in his crusade by Rep. Maxine Waters, one of the most liberal members of Congress. Bachus and Waters are among 117 co-sponsors of a debt-relief bill introduced by House Banking Committee chairman Jim Leach, R-Iowa, that requires recipients of debt relief to use their savings on education and health care. The plan excludes governments that sponsor terrorism or spend too much on the military. The Leach bill also grants the administration authority to support the IMF gold revaluation plan.
While the Leach bill has the best chance of passing, there are several other bills -- including one introduced by Waters -- that would expand debt relief or cancel debts outright. More important, unlike the Leach proposal or the present HIPC program, these alternatives would not require poor countries to submit to plans drawn up by the IMF's Enhanced Structural Adjustment Facility (ESAF). Such plans typically call for countries to take measures such as balancing budgets, opening to unregulated foreign investment, eliminating subsidies for the poor and imposing user fees for health care. Critics argue that they deepen poverty and do little to promote growth.
Despite Clinton's magnanimous gesture in canceling U.S. debt, the administration has been a staunch defender of multilateral debt reduction with strings attached. "Treasury says they don't want to get rid of the debt because we can use it as leverage over these countries," said Joanne Carter, legislative director of Results, an anti-hunger campaign. The debate over debt is "about money, but it's also about power," agreed Robert Naimann, an expert on the IMF at the progressive Preamble Center, a Washington think tank.
In response to the global debt critics, the IMF's "structural adjustment" arm has been revamped and renamed the Poverty Reduction and Growth Facility. It will be under the jurisdiction of the IMF as well as the World Bank, which has supported but increasingly criticized the IMF's policies in poor countries. Under the new proposal, poor countries are supposed to create the first draft of a plan for growth and poverty reduction, drawing on ideas of citizen groups, then negotiate with the new IMF/World Bank facility over the final terms. While that may look like progress, the big question will be which side will buckle when the austere macroeconomic policies that the IMF still defends conflict with a poor country's plans for reducing poverty or improving education and health care.
Campaigners against debt are divided over whether it's more important to get a half loaf of debt reduction (and some cancellation) or hold out for more comprehensive debt cancellation and elimination of the IMF role in dictating the development policies of poor countries. Although hostility toward the IMF comes from both the right and left in Congress, the decision on Clinton's $970 million request may be more critical than any of the bills giving direction about how to spend the money. According to insiders, that may only be resolved in final budget negotiations between the administration and congressional leaders.
But Joe Engelhard, senior counsel to the House Banking Committee, cautioned that the bill is still not guaranteed congressional approval. "It's still open whether Jubilee 2000 will have the momentum to create a groundswell where it will pass," he said.