The Role of Jubilee Debt Campaign in Finance World - Term Paper Example

JUBILEE DEBT CAMPAIGN Introduction The problem of world debt has been a major obstacle to the development of the world. Debt which the developing world owes to the rich nation has been one of the greatest obstacles that have made it difficult for the developed would to make good progress in addressing various issues that affect their development. The debt has interfered with the implementation of sustainable development in the world and has also interfered with security and political life of the people. But it is the extreme to which the developing world has been pushed by these debts that leave many of us wondering about the legality of these debts and how they have been issued. There have been claims that these debts have been a continuation of the legacy of colonialism in the way they are given out without looking at the way in which they will be repaid. 1 The jubilee campaign has been a debt calling for eth cancellation of more the $400 billion which the developing nations owe to the G8 countries. It is a campaign that has taken a moral direction on the way these debts have been issued and the legality of these debts in light of the world unequal distribution system of the world. The campaign has been calling for the cancelation of the debts in light of the fact that while the whole nation continue to be paying for the debts, most of them are not used to build the interest of the while nation but rather they are channel to build the interest of the few individuals who are in the leadership of these countries. These debts therefore have a lot of negative impact on women and children, education, climate change, heath sector and the general welfare of the society. The campaign has realized some progress as some debts totaling to $88 billion has been cancelled off but there is a lot that is to be done. The main assertion of the campaign is that most of the debts can be attributed to irresponsible lending decision. Although the developing nations have also been blamed for the increased debt developed nations bear the big part of the blame. Reckless lending by these nations has been the main reason behind the increase in the world debt. It has been a legacy of continuation of colonialism. This paper will look closely at the issue of these debts in light of how they have been given. The paper look at the case of the helping the poor nation and the moral issues that surrounds. Then it will look at how the developing world has accumulated these debts and the role that developed nation has played. Finally it will set the agenda on what could have been done in order to reverse the situation. Debt as a continuation legacy of colonialism The history of debt in the developing nations has been described as legacy of great siphoning off of their resource by the international financiers. It has been described as unjust process which is used by the rich and developed nation in order to siphon the resource of the developing nations and to ensure that the developing nations live under the shadow of their will. It is a process that has been designed in order to perpetuate itself using a diabolical mechanism where debt replicates in an even greater scale to create cycle that can only be broken by the use of debt relief mechanisms. 2 There have been claims that the process of debt creation in the developing world has been result from unjust transfer to them the debts that they have been accumulated in a colonizing state. To support this argument there is a lot of evidences that shows that a massive $59 billion in form of external debts to the developing world was transferred to the independent state when they were given independence in 1960. The debts have been increasing at a great rate of about 14 percent since then as a result of the unilaterally set rate. This has led to high rate of increase of these debts. Even before the new independent state got time to organize their economies, there were their lenders knocking on the door to get their money back. In order to understand the cycle of debt well, let us look at various forms of debts that are incurred by the developing world. Odious debts are the unfair debts which results from illegitimate loan. It is a debt hast is establish on legal principles. It results to an illegitimate loan to an illegitimate government that used this money in order to oppress these people. The loans also refer to the money that was given to a government but was used for the personal purpose. This accounts for most of the loans that have been given to the developing nations especially in Africa, which have been used by the leaders in power for their own interest. 3These loans can therefore be classified as nay type of money that was given to a country but which was not used for the purpose of developing the welfare of the citizen. If we take a good example, wee can give the example of the Iraq debt which was given to the country but which was used for personal interest of those in power. Another example can be given is that o the US when if seized the control of Cuba from Spain in 1898. Spain insisted that Cuba had to repay the amount of loan that it had been granted by the Spain. But the US declined to pay the debt arguing that the debt has been set against the will of the Cuban. When South Africa was granted independence it was handed an odious debt that had been incurred by the white regime. It is estimate that south Africa in inherited a debt of more the 298 million pound which is about $46 billion which was the money which was actually used for maintain apartheid. It was the money that was borrowed in order to suppress the uprising of apartheid. As South Africa sets to rebuild its economy, the western lenders are up on its heel in order to get back the money that it has lent it earlier. There are many other countries in the world like Kenya, Congo, Uganda, Haiti, and other which are considered to be paying odious debt. These are the debt which ought to be wiped off. But the system of administration of repaying of the debts has also been very unjust. After the Second World War, Britain had a big debt that it had incurred during the time of Second World War. However the United States allowed it to repay the loan very slowly in order to allow for economic reconstruction. In 1953, the allies who occupied a part of Germany met in London and decided to cancel most of the debts the Germany owed them. This was agreed on in order to give the country a chance to rebuild again. This is contradicting to what the western is treating other countries with their debts. For example most of the countries that are coming from an oppressive regimes that misappropriated public funds like Kenya and Uganda are not been allowed time like Britain was given in order to repay their loans and at the same time reconstruct their country. 4 There are many countries that are coming from dictatorial regime that are paying money which was not used in the internet of the public. They are debt that cannot be accounted for. It is therefore a reckless form of lending that was done by most lenders that continue to oppress many of these countries. It is not still understood why those who are running after South Africa afforded to give debts to dictatorial regime of apartheid. Most of these debts should therefore be considered as odious debts that should be cancelled. 5 In the international arena, the issue of ethics in governance is not new and it amazing how the same countries that called for the practice of ethics in governance are the same the used to support and loan most of these oppressive regime like the apartheid regime in south Africa. It beats logic how these regimes were able to access the loans despite the fact that most of them could not sustain to repay these loan. While many have argued on the course of the working for human rights, there were other best ways that these countries can use in order to alleviate human suffering. Furthermore giving loans to these regimes continued to bring more suffering to the citizens rather than mitigating the situation. This brings us to an ethical question of the rich nations helping the poor nations. There are some debts that have been given to the poor nations that have been against their will but due to that condition. For example the loan that was given to Cuba by Spain as we reviewed about. According to Peter Singer the system of the world has not catered for poor nations. Poor nation have been pushed to the debt extreme. He looks at different factors and postulates them with a theory, in which he explored richness and poverty. His argument was not the rig hot be rich or the right to be poor. He explored the moral duty of the rich nations to help the poor nations. The social justice system has failed to address the needs of the poor nation since they considered it is their right to be rich and in doing so they exploit the poor nations. 6 The social justice system has resulted to inequality in the distribution chain. The poor have not been given the same share in accessing resources and they only way in which they can access them is through debts.. This has been used by the rich nation while lending loans to poor nations as they have deliberation distorted by the resource distribution chain and turned it to money siphoning process. The poor nations have been left with no option except to accept loans from these nations. This contrasts the principle that ensures that there is liberty in the world in which all nations have equal access to resources. In light of the economic conditions in the world, singer looks at the economic order in the world using the Rawls maximum principle. 7 The principle has been show to be equal to the rule of few nations in the world. If we take taxation as an example in our society, the one who pay high taxes are therefore justified to keep as much as they want unlike those who earn less. Therefore there are some people in our society who would earn and keep more while some have less. At the end the worse-off becomes worse than before while the rich accumulates more. using the principle of maximum, those earning less will be obliged to pay the same to access medical services same as the rich. The price will be the same for all regardless of their social economic status. The redistribution law is the cause of all the debts that these developing nations have been accumulating which is not justified. Garret Hardin gave another broad look on how the rich nation and the poor nations relate. Garret illustrates using an example of lifeboat in the sea in order to justify the case against helping poor nations and against admitting their citizens to the nations. He argued that environmentalists required countries, industries and their people to take care and to protect our environment. Environmentalists take the earth like spaceship in which we are all bound. While the environmentalist believe that we are all bound that ship, there are question on the whether we all have the same share of these resources in the world. 8 According to his work, the rich nations are abounding a spaceship in the sea while the poor nations are drowning in the same sea and seeking admission in their boat. He looks at the capacity and the ability of the rich nations to admit the poor nations. If the rich nation's boar has a capacity of 50 people and an addition capacity to take in 10 people, it therefore cannot admit more than 10 people. Assuming there are 50 others who are drowning in the water and who are begging for admission or to be given life saving equipments, there has to be an ethical decision that will be made on who will be admitted or not. If they decide to admit only 10 people to its capacity and ignore the rest drowning then this would not be justified. It they decide to admit all the people the boat and it drown, this would be a justified but a big tragedy in which 150 people will be lost. The rich nations have the moral right to help the poor nations. The rich nations are not in a boat as was assumed but they are in the same boat as the poor nations. We are all carried by the same boat and when it will sink we will sink together with it. 9 There are other many incidences where the developing nations had to overpay the amount of money that they had borrowed originally. It has been shown that the odious loans have been repaid by the generations that bear the burden and it is also extended to the next generations which are also burdened by the cycle of debt. There are many cases which show that lack of a good structure to define the odious debts has made the developing nations overpay the debt more than three times the original money that had been borrowed. Let us review the following examples: Indonesia has been repaying odious loans that were given to dictatorial regimes in the country. The country has been has overpaid a loan of US$151 billons dollars. Analysts have shown that the loan has been repaid for more than two times the recorded debt. It therefore means that the country has made a cumulative transfer of more than US$138 to the North up to date. If this is compared to the GDP of the nations, the country has been repaid an amount which is equal to 90% of its GDP.10 Argentina has been another country that has been repaying a lot of money on odious loans. The country has repaid a debt amounting to US$77 billons which are related to odious loans. The loans have been repaid for more than 75% of the initial recorded debt. In the same way, Nicaragua has repaid a debt over five times the total GDP of the country. The economy has therefore been adversely stunted by the amount of resources that is committed to the repayment of these loans. These loans have been accumulating and hurting the economy of these countries. The net loss of the economy of these countries is allows far much exceeding the outstanding debt that they are supposed to have been paying.11 The overpayment of these loans not only hurt the economy of these country but they also lead to deterioration of the quality of life of the people. They are unjustified loans that are not supposed to be paid. They are awarded to oppressive regimes which usually benefit from these loans. The citizens of these countries therefore suffer in many ways. Fist they are oppressed by the regimes that are awarded these loans. They are usually mistreated despite being shouldered with the burden of repaying these loans. Second these people are impoverished by the cost of servicing these loans. They bear the burden that they are not supposed to be carrying. Third these people are oppressed by the penalties that are imposed on their countries by other nation due to the faults that were committed by the oppressive regimes. The citizens suffer due to the economic conditions that are always attached to the access to legal loans by the IMF which is usually under the influence of Paris and London Clubs which have a say on the condition of loans. These two clubs which form the largest lending institutions in the world work with the IMF in trying to put economic condition to poor nations. The debts should be cancelled These debts are illegal and therefore should be cancelled. These nations have been suffering due of these loans and therefore there is need to come up with a system in which all the loans that can be considered as odious loans are to be canceled. The rich nations have continued to impose a burden on the developing nations in order to ensure that they continue their colonialism legacy in these nations. Therefore it is time that these loans are cancelled off. The Jubilee campaign has therefore been advancing a legal campaign in calling for the cancellation of these debts. Most of the debts have resulted from illegal loans that cannot be justified. References ESAIDARM (2006): Performance indicators in debt management. Debt Review, May 2006 Hardin, G. (1974). Lifeboat ethics and the case against helping the poor nations. Psychology Today, September 1974. Jubilee Research, (2008): Cause of Debt Crisis. Retrieved from http://www.globalissues.org/TradeRelated/Debt/ExternalArticles/began.asp on 28th May 2008 Kaldenrin, L. (2004): Support to Debt Management in developing countries. A mid-term Review, UNDP, 2004 Klein, T. (2004): External Debt Management. The World Bank Report, 2004. Maynard, K. (2000). A tract of monetary reforms. Oxford University Miller, M. (1999): Resolving global debt crisis. United Nations, 1999 Nars, K. (1997): Excellence in debt management. Euromoney Publications. OXFAM (1996): Multilateral debt: The human costs. Position Paper, 1996 Singer, P. (1975). Does anyone has the right to be rich or poor New York Books, Vol. 23(2) Read More