Cancel the unjust debts of Third World countries by creating an international debt tribunal
“We need a Tribunal to stop rich countries enslaving the poor countries in chains of unjust and unpayable debt. ”
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2. How does it fit with Compass’ core beliefs of equality, solidarity, democracy, freedom, sustainability and well being?
Developing countries still owe rich countries $2.9 trillion. For every £1 we give in aid, developing countries still give us back £5 in debt repayments. Much of this is based on loans that were made ‘unjustly’ – Did you know the debts of General Suharto, President Mobutu and Apartheid South Africa are still being repaid? Moreover these debts are used by rich countries to force economic policies on poor countries. No global equality, freedom, democracy or well-being is possible while the rich profit from the debts of the poor.
3. How does it build the institutions of social democracy, like social groups and collective and cooperative forms of ownership and control?
A Debt Tribunal would be like a court at an international level which would investigate and arbitrate on developing country debts. It would enshrine, with legal enforcement powers, the right to basic standards of livelihood, ahead of the right of the creditor. It would give equal status to creditor and debtor – something which would in itself make lending more responsible in future. It would involve trade unions and social movements, allowing ordinary people to get more involved in the financial affairs of their country and encourage accountability.
4. How much will it cost or raise and where will any cost come from?
It would essentially be set up as a UN agency and would operate in a similar way to the International Court of Justice, except with greater powers of jurisdication. We estimate that legal fees etc would cost several million dollars every year. Funds would come from UN contributions.
5. Which groups in the electorate are likely to support or oppose this measure? Is there any polling evidence you have on this?
We haven’t done recent polling, but the history of the Jubilee movement is proof of the anger generated by international lending and debt system. The Jubilee petition for the cancellation of debts was the biggest petition in history generating over 24 million signatures from 166 countries. In particular it has helped bring people from faith backgrounds together with those from trade union and traditional ‘left’ backgrounds (it was a forerunner of Make Poverty History).
6. Is there a place or country where it’s worked? Please provide some information.
Obviously this could only work internationally, but there are two recent examples of creditor and debtor working on similar initiatives:
- Ecuador recently became the first country in the world to audit its debts, with a view to not paying unjust debts. It involved civil society in a major way. Since Ecaudor has defaulted on some of its debts.
- In 2006 Norway cancelled 5 developing country debts after it found that they were based on loans that had benefited Norwegian industry more than the country receiving the loans.
Auditing and cancellation are key components of the Tribunal.
7. What are the three main arguments in favour/against it?
1. It is immoral to profit from the debts of others, particularly when the debtors cannot afford to sustain life at a reasonable standard. Ecuador spends more repaying debts than on education.
2. It creates a ‘moral hazard’ if countries and companies can go on making reckless and unjust loans in the full knowledge that the loans will be repaid. It encourages reckless finance. Why is South Africa still repaying Apartheid debts?
3. The international community has accepted the need for Tribunal system but it has never fulfilled its promises to create one.
The poverty of the indebted countries is as much in the government as in the money-flow. Had these governments been aware of how else they could have become prosperous without incurring debt, then they would have fared better. The reason for borrowing was theoretically so as to acquire more capital goods needed for efficient production. This could be better achieved in all countries by a strong control of speculation particularly on land values. With taxation of land values the speculation would have been eliminated and the money been found available for the same purchases abroard, whilst permitting the greater use of land which could no longer be treated as capital goods (which it is not). Land speculators take national infrastructure utillity for free and then don’t use it properly.
TAX TAKINGS NOT MAKINGS.
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