ACTION ALERT! Support the Jubilee Act (H.R. 2634 and S2166). Join people of faith and conscience around the United States by asking your Senators and Representative to support the Jubilee Act – H.R. 2634, a bill which calls for the cancellation of the burdensome debt of impoverished countries.
We may ask how were these huge debts amassed? And why are governments still making so little headway in the struggle to pay them off?
Unfortunately, it was the United States that precipitated the situation. In the 1960s the U.S. government had spent more money than it earned and to make up for this decided to print more dollars. So the world's stocks of dollars fell in value. This was bad news for the major oil-producing countries, whose oil was priced in dollars. The money they made from exports now bought less. So in 1973 they hiked their prices. They made huge sums of money and deposited it in Western banks. Then the trouble really began. As interest rates plummeted, the banks were faced with an international financial crisis. They lent out the money fast, to stop the slide, and turned to the Third World, whose economies were doing well but who wanted money to maintain development and meet the rising costs of oil.
Banks lent lavishly and without much thought about how the money would be used or whether the recipients had the capacity to repay it. Third World governments, for their part, were pleased to take advantage of loans at very low interest rates - below the rate of inflation. Some countries took out loans to repay previous debts. But for others, this was the first time they had borrowed from commercial banks. Many intended to use the money to improve standards of living in their countries.
In the end, little of the money borrowed benefited the poor. Across the range, about a fifth of it went on arms, often to shore up dictators. Many governments started large-scale development projects, some of which proved of little value. All too often the money found its way into private bank accounts. The poor were the losers. Also, in the mid 1970s, developing countries, encouraged by the West to grow cash crops, suddenly found that they weren't getting the prices they were used to for the raw materials they sold, like copper, coffee, tea, cotton, cocoa. Too many countries - advised by the West - were producing the same crops, so prices fell.
Also, interest rates began to rise, pushed further by an increase in US interest rates. Meanwhile oil prices rose. The trap was sprung - Third World countries were earning less than ever for their exports and paying more than ever on their loans and on what they needed to import. They had to borrow more money just to pay off the interest. The amount of the original loans was paid many times in interest.
This pattern was repeated over and over in the following years. Debts have continued to rise, and new loans have added to the burden. The poor counties have been hit the hardest. They cannot even provide for the basic needs of their own citizens because of the exorbitant interest they have to pay.
In the late 1990s, a broad network of people of faith and conscience came together under the banner of Jubilee 2000, engaging their communities and challenging policy makers to address the international debt crisis. This mobilization brought the issue of debt to the global stage, but it did not end the debt crisis.
In 2005, pressure from the Jubilee movement, together with the Global Call to Action Against Poverty, again pushed the issues of debt and global poverty onto the agenda of world leaders. But once again, while significant steps were taken, the debt crisis was not ended. The imperative to finish what was started remains: to lift the excruciating burden of debt that continues to siphon resources from impoverished countries that should be used for health care, education and clean water.
Inspired by the Jubilee vision of liberation and fullness of life for all, people of faith and conscience around the world are calling their political leaders to observe a Sabbath Year in 2007, seven years after Jubilee 2000.
Seven years after the beginning of the new millennium, we live in a world that is seriously out of balance. Every day, 13 percent of the world’s population goes hungry. Every day, 30,000 children die of easily preventable diseases due to malnutrition and lack of adequate medical care. The Jubilee vision that we find in scripture calls us to challenge this horrible reality. In the Gospel of Luke, Jesus declares proclaiming God’s liberation for all oppressed and impoverished people. This jubilee vision was the cornerstone of Jesus’ ministry and gives us hope that life can be made new and can be redeemed in our own time.
In our time, the central event of the 2007 Sabbath year will be the 40-day Cancel Debt Fast calling for debt cancellation and an end to global poverty. Individuals, congregations, and local organizations can participate by contacting their Member of Congress, (Ron Paul for those in District 14) asking the congressperson to support the Jubilee Act, H.R. 2634. People across the United States and around the world will be engaging in this powerful act of solidarity with those who are bound by the chains of unjust and oppressive debts. The Jubilee Act cancels impoverished country debt and moves forward with more responsible lending practices. The Jubilee Act will cancel the debt of approximately 67 impoverished countries in the Global South.
We can participate by contacting our U. S. Representative and our U.S. Senators and asking them to support H.R. 2634 and S 2166:
The Honorable Ron Paul (Representative District 14)
203 Cannon House Office Building
Washington, DC 20515
202-225-2831
www.house.gov/paul/
Senator John Cornyn
517 Hart Senate Office Building
Washington, DC 20510
202-224-2934
cornyn.senate.gov/contact/index.html
Senator Kay Bailey Hutchison
284 Russell Senate Office Building
Washington, DC 20510
202—224-5922
hutchison.senate.gov/contact/index.html
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Update on the Jubilee Act
Congresswoman Waters Calls for Poor Country Debt Cancellation at a Hearing on Her Legislation November 8, 2007
Washington, DC - Today, the House Committee on Financial Services held a hearing on H.R. 2634, the Jubilee Act, which was introduced by Rep. Maxine Waters (CA-35). The Jubilee Act is cosponsored by 86 Members of Congress and supported by the Jubilee USA Network, along with over 60 development, religious, environmental, and labor organizations. Companion legislation was introduced in the Senate by Senator Robert Casey (PA) and Senator Richard Lugar (IN). At the hearing, Congresswoman Waters made the following statement:
I would like to begin by thanking Chairman Barney Frank and Ranking Member Spencer Bachus for organizing this hearing and for their support for the Jubilee Act. I also would like to thank the Jubilee Movement for all of their efforts over the past ten years to cancel the debts of the world?s poorest countries.
The Jubilee Movement is one of the most outstanding humanitarian efforts I have seen in my career. Over the past ten years, Jubilee has convinced Members of Congress, officials of the Clinton and Bush Administrations, and political leaders from around the world to cancel poor country debts. I am so proud of my affiliation with the Jubilee Movement because it brought the needs of the world's poorest people to the attention of the world's most powerful leaders.
I introduced the Jubilee Act to cancel the debts of additional needy and deserving poor countries and to ensure that the benefits of debt cancellation will not be eroded. Because of the tireless efforts of Jubilee Movement activists, the Jubilee Act now has 86 cosponsors.
Existing debt cancellation programs have freed up resources to reduce poverty in some of the world?s poorest countries. Cameroon is using its savings of $29.8 million from debt cancellation in 2006 for national poverty reduction priorities, including infrastructure, social sector and governance reforms. Uganda is using its savings of $57.9 million on improving energy infrastructure to ease acute electricity shortages, as well as primary education, malaria control, healthcare, and water infrastructure. Zambia is using its savings of $23.8 million to increase spending on agricultural projects and to eliminate fees for healthcare in rural areas. However, there are many needy and deserving poor countries that have yet to benefit from the cancellation of their debts.
The Jubilee Act will make up to 67 of the world's poorest countries eligible for complete debt cancellation by the United States, the World Bank, the International Monetary Fund (IMF), and other bilateral and multilateral creditors. In order to receive debt cancellation, the governments of these countries will be required to allocate the savings from debt cancellation towards spending on poverty-reduction programs. They will also have to engage interested parties within their societies, including a broad cross-section of civil society groups, in the spending allocation process; produce an annual report on this spending; and make it publicly available.
Countries would be excluded from receiving debt cancellation under the Jubilee Act if they have an excessive level of military expenditures; provide support for acts of international terrorism; fail to cooperate on international narcotics control matters; or engage in a consistent pattern of human rights violations. Countries also would be excluded if they lack transparent and effective budget execution and public financial management systems to ensure that the savings from debt cancellation would be spent on reducing poverty.
The Jubilee Act will establish a framework for responsible lending in order to preserve the benefits that debt cancellation has provided to poor countries and their people. The Jubilee Act requires the Secretary of the Treasury to take action to end the predatory practices of ?vulture funds,? private investment funds that buy up the debts of poor countries at reduced prices before these countries receive debt cancellation and then sue these countries to recover the original value of the debts plus interest. Finally, the Jubilee Act will require the Secretary of the Treasury to develop and promote policies to prevent bilateral, multilateral and private creditors from eroding the benefits of debt cancellation through irresponsible or exploitive lending.
I look forward to hearing the views of the witnesses on how the Jubilee Act can be effectively implemented and how it will benefit the world's poorest countries and their people.
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