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The Magazine of The Evangelical Lutheran Church in America

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Can we cancel developing nations' debts?

Jubilee 2000 gathers support and raises questions among Lutherans

As the year 2000 approaches, some worry about computer problems and prepare for the worst. Others plan festive celebrations. For churches and religious organizations, the millennium offers an occasion to provide a new start for millions of people in the world's poorest nations.

The Evangelical Lutheran Church in America is participating in Jubilee 2000, a worldwide campaign calling for debt cancellation and a process to "prevent recurring destructive cycles of indebtedness" for poor countries.

The ELCA Church Council, the Division for Global Mission board and the 1997 Churchwide Assembly passed resolutions affirming the campaign. The name Jubilee 2000 arises from biblical references to a jubilee year every 50th year, when slaves were freed and debts canceled.

Not everyone, of course, agrees with debt cancellation. A Lutheran professor in the political science department at the University of Southern Mississippi in Hattiesburg, Jerry Waltman, asks: "If the loans are forgiven, will policy be put into place to prevent a debt buildup by those countries again? If we give charity and don't make provision for people to become self-sufficient, have we really helped them?"

Waltman believes Americans should be willing to foot some of the bill. But he wonders how that bill would be shared among the countries concerned and among their taxpayers.

Answers to that are still being worked out. But Jubilee 2000 can help developing countries address the "health, education and welfare needs of their citizens by eliminating the burden of debt currently carried by these countries," said Charles S. Miller, executive director of the ELCA Division for Church in Society. In Tanzania, for example, nine times as much has been spent on debt servicing as on basic health and four times as much on debt as on primary education, according to studies conducted by the Evangelical Lutheran Church in Tanzania. The denomination began monitoring the debt burden in 1986.

"Millions are hungry and poor because of unpayable debt," said David M. Beckmann, an ELCA pastor and president of Bread for the World. "Financial obligations are important but basic human needs take precedence."

Arguing for debt cancellation, Archbishop of Canterbury George Carey said, "If it is argued that these debts to other nations can't simply be waived overnight, then let the rich countries of the world show the moral courage to at least make a start. It would lift a huge burden from the shoulders of the world's poor, send a message of hope and offer the prospect of a new start."

Demonstrations and symbolic actions are planned. Petitions are circulating. Education and discussion materials have been developed. Washington, D.C.-based Bread for the World is sponsoring an offering of letters to members of Congress, asking them to "break the chains of debt" with legislation that would reduce the debt of poor nations and see that the benefits go to the poor people of those countries, Beckmann said.

Women of the ELCA is joining the letter campaign. At the July women's triennial convention in St. Louis (see page 47), an offering of letters will be part of the theme "Live God's Justice."

Working with the people of Nicaragua and Honduras who suffered devastating losses from Hurricane Mitch last fall gave Lutheran World Relief staff a "clear example" of the problems of international debt for poor nations, said LWR's Jonathan C. Frerichs.

Before the hurricane, Honduras and Nicaragua spent more than half of all government revenue on debt servicing — more than twice their combined health and education budgets. As they struggle to recover from the hurricane, the possibility of paying off these debts "becomes ridiculous," Frerichs said. "The debt is never going to be paid. People may understandably say you should pay your debts. But when you look more closely, you have to pause. Wealthy people can declare bankruptcy. Why can't the same opportunity be available to poor people?"

Much of the $220 billion debt of the poorest countries is owed to the World Bank and the International Monetary Fund. The United States holds the largest share of these institutions. A U.S. decision to cancel the $6.8 million owed would trigger parallel action by other creditor nations, according to Bread for the World.

Responsibility for the debt crisis lies with lenders as well. Former U.S. Treasury Secretary Robert Rubin said Africa's debt burden is "the result of a lot of mistakes made by too many countries and by too many lenders." The Jubilee 2000 education kit notes, "During the Cold War, donor governments often lent money to strategic allies with little concern for whether these allied governments were democratically accountable to their citizens or whether the money was directed to productive purposes."

The U.S. government has canceled debts in the past. Poland received $2.7 billion in debt relief in 1991. After Desert Storm, the United States canceled $7 billion owed by Egypt. Since 1990, this country has provided more than $2.3 billion in debt relief to poor countries.

Who foots the bill?

Even with precedent for debt cancellation, supporters agree it's a complicated issue. "It's a good thing to have debts canceled for these developing countries," said Annette Citzler, an economist and professor at Texas Lutheran University, Seguin. "But I do have some misgivings. We don't know who will pick up the responsibility for those debts. If it's international lending agencies, the taxpayers of the countries that foot the bill for those lending agencies will pay. If it's private banks, it's the stockholders or depositors who will pay higher fees.

"The poorest of the poor have got to have a break here. But unless some of us contribute to a fund to buy off this debt, others will suffer the consequences. The buck is going to stop with whoever foots the bill. And there will be a bill to foot."

An education packet being distributed by the ELCA Lutheran Office for Governmental Affairs, Washington, D.C., tries to answer some of these questions (see box). Bread for the World also has material. "We aren't saying we have the answer to the economic workings of the world, but we are shining a light on one of the worst examples of how it's working to the disadvantage of poor people. It needs attention and action," Beckmann said.


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