wfn.org | Archbishop Njongonkulu Ndungane on International Debt

["Christopher Took" <storm@indigo.ie>]

ACNS LC048 - 25 July 1998

Remarks of Archbishop Njongonkulu Ndungane to the
Lambeth Conference on International Debt

Archbishop Njongonkulu Ndungane,
Archbishop of Cape Town

Let us proclaim our full humanity - It is a great honour for me
to have the privilege of leading the work of Section One of our
conference - Called to Full Humanity. I have come from Cape Town,
the most beautiful city in the world - and I will tolerate no
argument about that - at the southernmost tip of the continent of
Africa. 

Our continent is experiencing a new awakening in which its people
are determined to take their destiny into their own hands. I come
to this conference as a Church leader whose jurisdiction covers
countries like South Africa, Mozambique, Lesotho, Swaziland,
Namibia, Angola and the Island of St. Helena.

The crisis of International Debt

All of the countries of my Jurisdiction are affected and damaged
by the crisis of international debt. It is a crisis that has
become of the first magnitude in the world. We here at the
Lambeth Conference have a unique opportunity to address this
crisis. I want to assert from the start, that this is not a
financial crisis confined to Africa or Latin America. Countries
that were until recently described as economic tigers, today find
themselves toothless in the face of their own rising
indebtedness. As we meet here in the peaceful surroundings of
Canterbury, we should turn our minds to the struggling peoples of
Indonesia, Thailand and South Korea. All are trying, and many are
failing, to cope with the catastrophic consequences of reckless
lending and borrowing and their nations' rising international
debt. Severe indebtedness and turbulence in emerging markets are
de-stabilising the economies of Russia and Brazil --- and
impoverishing their people too.

The United States, the world's most powerful economy, itself has
a very high level of international debt - of $1.3 trillion. This
is twice as much as the US owed in 1994, and nearly triple the
1989 value. Although this debt does not pose a threat to human
life in the US, as it does in the poorest countries, it is
causing concern in international financial circles.

So let us be clear. The crisis of international debt that we are
debating here today is not just a matter for the poorest
countries. Nor is it a matter that only affects sovereign
governments. It affects all of us everywhere, all of us who have
become too dependent on credit cards. It affects those of us who
struggle to repay loans to pay for the very roof over our heads.
And those of us who live in fear of losing our jobs, and
therefore our ability to repay our debts. Those of us in hock to
the loan-sharks that prey on our poorest communities. We all live
in the grip of an economy which encourages over-lending and
over-borrowing. An economy which drives us relentlessly into
debt. But the poorest, those with very little income to depend
on, are not just in the grip of this economy. They are enslaved
by it. They live in bondage to their creditors.

Our International Economy is broken, is not working

It is therefore opportune, that at this moment when the crisis of
heavy indebtedness threatens to engulf not just the poorest
countries, but also South East Asia, that we, a global communion
of Anglicans, have gathered together in one place. We have an
opportunity to address the issues faced by our broken world, to
declare that our international economy is not working. To assert
that it is not working because the global economy is not allowing
God's people to achieve full humanity.

Jubilee and release from debt

And to proclaim that the only economy that will work is one based
on the beautiful vision of humanity which God in Jesus Christ
came down to show us. It's a vision of love and grace, of
compassion and equality. It's a vision, as the Archbishop of
Canterbury reminded us, of the possibility of transformation and
renewal. It's the vision of Jubilee, of the year of the Lord's
favour, in which Jesus brings "good news to the poor". In which
he proclaims "release to the captives and recovery of sight to
the blind" and lets "the oppressed go free". It's a vision that
releases the poor from the prison of indebtedness and dependent
poverty. It's a vision where God's people have all that is
necessary to live a human life - food, clothes, shelter, good
health, and a chance to expand their opportunities through
education. 

But it's not just a vision for the poor. It's a vision for the
rich too. It is a Jubilee for the powerful, who need a new vision
of the proper use of riches, and the true value of all people.
Through this vision we are called to our full humanity.

So let us rejoice in this gathering, and in the unique
opportunity given to our Church, to proclaim our full humanity.

The Church can make the poor present

Let us remember above all that we are here to give a presence and
a voice to the poor. The Church can make the poor present, can
bring the voice of the poor into the room, can make the poor
consequential. We are perhaps the only global, national and local
institution that will give a presence and a voice to the poor,
will defend the poor, will fight for the poor.

I have recently chaired the National Poverty hearings in South
Africa - an initiative of the South African NG0s, the Human
Rights Commission and the Commission on Gender Equality. We heard
up to 16 oral submissions each day of hearings over several
weeks. 

During these hearings I came into contact in real terms with the
many faces of poverty. For poverty is not just about low incomes;
it is about loss of dignity, being treated as nothing, lack of
access to basic needs - the faces of poverty can be found in
women, children, the elderly and people with disability.

Listening to peoples' stones of survival amidst squalor and
deprivation gave me a sense of the resilience of the human
spirit. 

Like the boy aged 12 who looked after his brother of 7. They had
no home and nothing to eat. They used dogs to sniff out food on a
rubbish dump. And the older boy always made sure that his young
brother had enough to eat before helping himself. One day they
were found by a woman, who took them home, scrubbed them clean,
gave them food and took them to a shelter.

A modern version of the Good Samaritan. The young boy was like
many others we heard. They spoke with the same voice: "We do not
want hand-outs. We do not want charity. We have brains. We have
hands - give us the skills. Give us the resources - give us the
capacity to work out our own existence in order that we may have
a fully human life. "

Money has more powerful rights than human rights

We live in a world in which it is not fashionable to speak of, or
for, the poor. Political par-ties are proud to proclaim that they
speak for business, enterprise and the free market; but
embarrassed to speak of fairness, equity and Justice for the
poor. We live in a world where the human family has become
increasingly divided - between the very few - those 20% who take
for themselves 83% of the world's income, and the many who
receive so little of the world's income. We live in a world in
which money and riches are worshipped. A world in which money has
more powerful rights than human rights. In a world governed and
dominated by Mammon. Only amongst the faith communities does
there seem to be any will to challenge Mammon. Only in our
churches, our synagogues, our mosques and our temples does it
seem possible to envision a different world and a different
economy. 

The Church in all parts of the world, can make the poor present.
I refer here not only to the Church in Africa, or Latin America,
or South Asia; but also to the Church in America, in Canada and
in Australia. For the world's broken economy is there too. The
poor are there too. In the US, in I965, the average worker earned
about 57 per hour. Her boss, the Chief Executive, earned about
$330 per hour. Today the average US worker earns about $7.40 per
hour, while her boss, the average Chief Executive earns $1,566
per hour - 212 time more!

The Trickle-Up Effect

This is the opposite of trickle-down. This is the effect that
defies gravity. It's the trickle-up effect. It's the transfer of
wealth from the poor to the rich. And it's the same effect that
lies at the heart of our broken international economy.

As this crisis has deepened, so poor indebted countries are
increasingly transferring their tiny wealth to rich countries.
They do this by paying interest, and then compound interest, on
loans they have sometimes repaid several times over. They do this
by using money given for aid and development to pay off debts.
For every $1 that rich countries send to developing countries,
$11 comes straight back in the form of repayment on debts owed to
the richest countries. So wealth is trickling up from the South
to the North. Countries of the South find themselves giving away,
virtually free, their precious commodities, like coffee, copper,
tea and sugar. This is trickle-up, not trickle-down. This is a
form of economics that denies us our humanity, rich and poor
alike. 

Each day the poorest countries transfer $717 million to the
richest countries

We are debating this issue today because trickle-up is not
working. Because enslaving the poor through debt is unjust.
Because each day the poorest countries transfer $717 million, to
the richest creditor countries. Because each year Africa transfer
$12.5 billion to Western creditors.

Double standards for debtor nations

Because once in debt the poorest nations lose their economic
independence, and have to bow to the advice of their Western
creditors. Where Japanese farmers enjoy subsidies on their rice
production, poor Zambian farmers are denied such support and
protection. Where European textile industries are protected from
competition, African and Indian textile industries are forced to
compete with the richest nations. While South Africa's markets
are opened up to the dumping of European beef, South African
traders find there are no level playing fields in Europe. These
are double standards - and their application is unjust.

Children in debtor nations face unlimited liability

We are debating this issue, because these debts cannot be brought
to an end. Because the children of indebted nations do not enjoy
the protection of the law, protection of the concept of "limited
liability" - so that they are born into debt, and are forced to
carry on paying the debts of previous generations. As we were
reminded in our Section the other day, when a company like
Eurotunnel gets into debt, and effectively becomes bankrupt, the
burden of debt does not fall on the children of the managers or
the workers. They are protected by the concept of limited
liability. But not so for the children of the indebted nations.
When Julius Nyerere asks, "shall we starve our children to pay
our debts?" - the creditors, led by the IMF, say: "yes, you shall
pay your debts before you feed your children. Yes, you shall
prioritise repayment of debts over expenditure on health,
education, clean water and sanitation. Yes, your children shall
face unlimited liability for the debts of their governments."

Philippine labor exported to help pay debts

We heard from our brothers, the bishops of the Philippines, that
in their country, the repayment of debt has been written into the
law - that 43% of government revenues must be set aside by law,
to repay debts, before the government can consider expenditure on
other, more productive sectors. They told us of the human cost of
this repayment. The human cost is the export of Philippine labour
all over the world to earn hard currency to help repay their
country's debts. So people of the Philippines can be found all
over the world, being exploited as servants, sailors and
prostitutes. 

The law on debt repayment was, in effect been written by Western
creditors. Unlike the creditors of Eurotunnel, these creditors
are not governed by a bankruptcy law, or by an independent
receiver. They act as plaintiff, judge and jury when it comes to
making loans, the repayment on debts owed to them, and the debt
relief they might give. It is this unfairness, this imbalance,
that lies at the heart of the injustice of international debt.

Odious debts
We are debating this issue because we are challenging "odious
debts" the loans given to dictators - like Marcos, like Pinochet,
like Mobutu, like Suharto. These were loans made by Western
governments that are quick to criticize corruption. Western
governments that cannot see the mote in their own eye. The
repayment of these odious loans and odious debts falls on the
shoulders of their people once those corrupt dictators are dead
and gone.

We must challenge the corruption at the heart of this lending and
borrowing. 

A Mediation Council

That is why I am proposing a Mediation Council. We need a strict
and neutral arbitration and monitoring process for agreeing debt
relief for the poorest countries.  Since 1982 and the Mexican
crisis, there have been endless re-schedulings of debt; a growing
number of Initiatives by creditors - the Houston Terms, the
Toronto Terms, the -Pn'nidad Terms, the Naples Terms. Two years
ago, creditors took another Initiative - the Heavily Indebted
Poor Country (HIPC) Initiative. But these negotiations are
dominated by creditors. We need an independent Mediation
Council.More fairness. More transparency. More discipline
The Mediation Council I propose would function as an
international bankruptcy court. Its purpose would be to give
countries that can no longer pay their debts, except at great
human cost, a fresh start. The Court would call on local elites
to explain why loans were taken out, how they were spent, and who
benefited. It would call for greater transparency. For
Parliaments, both in the developed and developing world to have
greater scrutiny both of loan-giving and loan-taking. We would
encourage governments to follow the example of Uganda, where no
loans are sanctioned without the authority of Parliament.

The Mediation Council would challenge corruption, in both the
lending and borrowing. It would take evidence from experts. It
would assess the country's capacity to pay. Above all it would
seek to protect ordinary citizens of the country - men, women and
children - from having to carry the full brunt of the country's
debts and losses. Resources for human development - like clean
water, sanitation, health provision and education - would have to
be allocated before governments could divert funds to
unproductive debt service.

Its purpose would be to give countries a fresh start - and by
disciplining both debtors and creditors, prevent countries from
over-borrowing in the future; and discourage lenders from making
reckless loans. It would stop the poorest people of a country
falling into a bottomless pit of debt in the future.

What I am saying here is that debt cancellation - far from being
an unjustified and wasteful handout - is really an opportunity to
return order, stability and discipline into the international
financial system of lending and borrowing. It will make creditors
think twice about making bad, and odious loans. It will make
borrowers think twice about signing contracts for loans they know
can only be repaid at a cost to the lives of their people.

The Heavily Indebted Poor Country Initiative (HIPC)

We recognise that the World Bank/IMF Initiative - HIPC the
Heavily Indebted Poor Country Initiative - which offers limited
debt relief to some of the poorest countries was a historical
break-through and a good beginning. But it is not enough. HIPC is
a remedy for the lender's problems, for problems faced by the
IMF, the World Bank and by OECD governments in getting their
debts paid. It's not a remedy for the debtor nations. If you
study the formulas it becomes clear that HIPC's present purpose
is to make just enough adjustment in the debt burden, for debtor
nations to repay their foreign creditors. That suits creditors,
not debtors. But that should not surprise us, for it was designed
by creditors, not by ally independent body.

HIPC is not really going to be effective. We know, because we
have seen how little it has done for a country in my region,
Mozambique. Mozambique's debt relief under this scheme, will make
virtually no difference to he r ability to reduce the appalling
poverty in that country - which is still struggling to recover
from the war fought against her people, by the apartheid regime
and its allies.

Outright cancellation needed
Substantial and permanent debt relief - including outright
cancellation is a necessary and early part of the remedy which
will enable these countries to thrive.

One consequence of changing the objective is that HIPC will cost
the multilateral lenders more. At the moment, the World Bank
estimates that, by the time settlements are made, the total cost
to all lenders in I996 dollars will be only about $7.4 billion.
Compare that to the $12.5 billion being promised to President
Yeltsin. Compare that to the $60 billion that was found, almost
overnight, to ball-out bankers that had lent foolishly to South
Korean private banks and companies. I know that the money for
South East Asia is different, because it is new loans, to be
repaid at high interest rates. Nevertheless, it is possible for
the G8 countries to find such money, where there, is the
political will. What is lacking is the political will to find
money to ball out the poorest people on earth.

Where we stand determines what we see
That is where we in the Anglican Communion, and other faith
communities come in. We know that where we stand, determines what
we see. In Section One, we have been hearing from each other
about the effects of international debt on the poor and
impoverished in our countries.

What will the Bishops give the world?

Observe, my brothers and sisters, that the world is waiting for a
word of hope, of encouragement. The world longs to hear good news
for the poor and recovery of sight to the blind, and to be told
that now is the year of the Lord's favour. What will the Bishops
give them? Bitter, distressing words of conflict over what it
means to be human? The world already has more of that than it can
bear. 
What the bishops can give them is one voice, a voice strong in
defence of the poor, bold in contradiction to the rule of money,
and full of the love of God.

I invite you, my fellow bishops, to take this matter prayerfully
into your own hearts. What is God calling you to say to the
Church in your own country - to the members of your Diocese; to
the rich and powerful in your country?

In conclusion, the thought I would like to end on is that our
primary concern must be for enhancement of the quality of
peoples' lives. This can only be done by the mutual will and
commitment of all institutions and interests. By developing and
developed countries together. And we need to recognise that what
we are doing is constructing, not just a global economy, but a
world of community.

I have a dream

I have a dream. That we will celebrate the birth of Christ our
Lord with a truly Jubilee celebration - by the cancellation of
the unbearable debts of the poorest countries. That we will give
a billion people a debt-free start. That the Third Millennium
will be a new beginning for the Third World.

Help us realise that dream. 

For further information, contact:

   Lambeth Conference Communications
   Canterbury Business School
   University of Kent at Canterbury
   Telephone: 01227 827348/9
   Fax: 01227 828085
   Mobile: 0374 800212

   http://www.lambethconference.org