Debt Crisis Far from Over

Canadian Church Coalition Challenges G7 on Debt Cancellation

Canadian churches are challenging the G7 leaders to take immediate steps towards cancelling the debts of the poorest countries. "The debt crisis is far from over, yet the G7 leaders are acting as if they have resolved a crisis that has actually worsened," said Marjorie Ross, Chair of KAIROS: Canadian Ecumenical Justice Initiatives, a newly formed church-based organisation. The theme for this year's G7 Summit is 'Beyond Debt Relief,' which calls on highly indebted poor countries to further liberalise their trade and capital markets. This has prompted the Jubilee South network to issue a scathing rebuke of the G7 leaders: "What lies exposed is the failure to fulfill even your own meagre promises. Just 1.2 percent of the debt of the most impoverished countries has been cancelled and even that, with few exceptions, is accompanied by unacceptable conditions."

The Canadian Ecumenical Jubilee Initiative, whose work is continuing in KAIROS, mounted one of the largest campaigns in history with its global counterparts, gathering over 645 000 signatures in Canada among the over 24 million signatures worldwide, calling on G7 leaders to cancel the debt of the poorest countries. While there have been very minor reductions on the bilateral debt front there has been little or no movement from two of the largest creditors, the World Bank and International Monetary Fund. "What is desperately needed now is for the G7 leaders to direct these institutions to cancel their portion of the debt," notes Kirsten Mercer of the Primate's World Relief and Development Fund, who is in Genoa. "We will be meeting with our Southern partners to support them in their campaigns against debt and to renew our call for Canada to cancel the illegitimate debt of all developing countries."

The World Bank and IMF could easily write off the debts owed to them by the poorest countries with no effect on their credit rating either by drawing on their reserves or by selling some gold in the case of the IMF. The issue boils down to one of control over the world's poorest economies. "As long as the International Financial Institutions have the poorest countries in a debt stranglehold they can continue to impose their economic policies," notes John Dillon of KAIROS. It is these policies, often referred to as structural adjustment programmes, which have been the cause of tremendous poverty and environmental destruction in much of the South. "Instead of re-examining their blind adherence to a flawed economic model the G7 leaders are recklessly forging ahead with a globalisation agenda that is a clear threat to the entire planet and its citizens," he added.

If the G7 leaders are serious about addressing the problems of poverty, disease and environmental degradation they should begin by directing the World Bank and IMF immediately to cancel the debt of the poorest countries and to stop imposing an unworkable and unsustainable economic model on the rest of the world. "If they continue to turn a blind eye to the growing gap between rich and poor then they can expect to see the worldwide protests against their policies only intensify," warned Jennifer Henry of KAIROS, who is also in Genoa.

Note:  Richard Renshaw, CSC is a member of the interim Board of KAIROS