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Africa Policy E-Journal
Africa: Debt Arbitration Africa Policy Electronic Distribution List: an information service provided by AFRICA ACTION (incorporating the Africa Policy Information Center, The Africa Fund, and the American Committee on Africa). Find more information for action for Africa at http://www.africaaction.org +++++++++++++++++++++Document Profile+++++++++++++++++++++
Region: Continent-Wide SUMMARY CONTENTS: This posting contains two new documents calling for approaches to debt cancellation not exclusively dependent on creditor-dominated decision-making mechanisms. The first consists of excerpts from a new paper on debt arbitration, by the African Forum and Network on Debt and Development; the second is a statement from a workshop hosted by Jubilee Netherlands. The Jubilee Debt Campaign in UK (http://www.jubileeplus.org) and Eurodad (http://www.eurodad.org) have also just released substantive new reports ("The Unbreakable Link" and "Going the Extra Mile" respectively), documenting the inadequacy of existing creditor debt reduction measures. Both reports, available in PDF format on the websites noted) call for additional debt reduction (Eurodad says "more" and Jubilee Plus 100% cancellation), as well as new additional resources in official development aid. +++++++++++++++++end profile++++++++++++++++++++++++++++++ FAIR AND TRANSPARENT ARBITRATION ON DEBT Issues Paper No. 1/2002
AFRODAD African Forum and Network on Debt and Development
Box MR 38, Marlborough, Harare, Zimbabwe
[Excerpts only: Full text, including Section B with legal
commentary, available at Preface: This Issues Paper is an attempt to help move the debate on Debt in Africa beyond the unfulfilled demands made by the severely indebted low income Debtor countries and by global civil society for Debt cancellation. Total debt cancellation of both bilateral and multilateral Debt will provide finance for economic and human development. For Africa this could mean a minimum of US$13 billion per year. The legitimate demands for Debt cancellations have not met with a genuine and positive response by Creditor governments and institutions. As donors, creditor governments and institutions continue to dominate the decisions regarding the Debt relief initiatives. Their perceptions to the issues of Debt tend to have the interest of safeguarding the existence and well-being of the international financial system rather than have any concern for the development of the people of the indebted countries. This reflects a lack of fair and transparent global governance that should protect the interests of the weak debtor nations and their people. A structural change is now required to reshape the global relations around the Debt crisis. Global civil society, the African Governments and the intergovernmental institutions are called upon to demand and work towards the establishment of a Fair and Transparent Arbitration mechanism under the United Nations as part of a sustainable way of finding a solution to the Debt crisis. Various options are available at the global level to deal with the problem. In the final analysis, we suggest that an International Arbitration Court is long overdue and is feasible. This Issues Paper is in two parts; the first provides the introduction and rationale for Arbitration and the second part provides a summary of the opinions sought from African Lawyers from the East, Southern and West Africa on the arbitration process. These were Dr. Halima Noor-Abdi (Kenya), George Kunda (Zambia), Quentin Tannock (Zimbabwe) and Dominic Ayine (Ghana). We thank the contributors for their good efforts. AFRODAD takes full responsibility for the content of this document. Their specific contributions are available at AFRODAD as Discussion Papers. ... We take this opportunity to thank The World Council of Churches (WCC) for enabling AFRODAD to undertake this work. We also thank Dr. Rogate Mshana for his encouragement in our ongoing search and advocacy for sustainable paths to development in Africa. Opa Kapijimpanga AFRODAD Coordinator. Introduction The persistence of the debt crisis faced by the severely indebted low-income countries and the inability of the international community to find both immediate and sustainable solutions has raised concern and the need for structural changes at the global level to resolve the problem. There are many facets to the debt crisis but the fundamental weakness is that the Creditors, who constitute the donors, continue to dominate the decision making regarding how to resolve the Debt crisis. ... Part A Background and rationale for Arbitration: Arbitration is one of the alternative methods of resolving a dispute outside the traditional court system. In this process a third independent party would provide a final decision on a dispute. Dispute in the arbitration process can be defined to include the existence of divergent or opposite views which cannot be reconciled by two parties and which therefore requires a third party, to make a decision on which view should prevail depending on the arguments presented by the two parties. Arbitration agreements allow for settlement or final decisions to be made on grounds other than purely legal principles, such as considerations of justice, equity and human rights. In the case of the Debt problem faced by heavily indebted low income countries all over the world, there are the divergent or opposite views between the Debtors and the Creditors that should be subjected to Arbitration. These include the following: a). The absolute need for cancellation of official bilateral and multilateral debts: While the debtors have made undisputed and legitimate claims and demands for debt cancellation, the creditors on the other hand claim that debt cancellation is not the action needed to resolve the problem. So whether or not there should be debt cancellation is a subject of arbitration. The Calls for debt cancellation have been made in the following contexts (to name a few):
b). Reassigning the responsibility for the Debt crisis and burden partitioning where that might be necessary. Currently, the assumption of the current Debt relief Initiatives is that the Debtor countries are solely responsible for the crisis. While accepting part of the responsibility, due to lack of proper debt management, corruption and other shortcomings, the Debtors point to the large impact of the external factors that have been identified to have contributed to the Debt crisis including the existence of a global trade regime in which the Debtor countries continue to suffer declines in terms of trade and ongoing lack of global market access; natural disasters and factors introduced by inappropriate policy advice by IMF and the World Bank as well as the push factors in lending, to mention a few. Creditors never seen to be part of the problem, which they obviously are. c). The way to resolve the debt crisis remains a point of divergence too as reflected in the fact that Creditor initiated and imposed Debt Relief Initiatives such as HIPC do not address the Debt crisis adequately. ... d). There is a need for Arbitration on specific types of Loans or debt in particular the odious and illegitimate debts which are categorised to include the following: - Debts that cannot be serviced without causing harm to people and communities. It is a violation of human rights to repay debt at the expense of meeting human development needs. - Debts incurred by illegitimate debtors and creditors acting illegitimately which includes odious debts and loans stolen through corruption. - Debts incurred from illegitimate uses such as projects that did not benefit the people as were intended. - Debt incurred through wrong policy advice or a result of external factors over which debtors have no control. - Debt in which the money was actually stolen and banked in the North e). Return of wealth stolen from developing countries and held in the rich countries. f). One of the major reasons for the lack of political will to resolve the debt crisis is that the Creditors see the protection of the international financial system as the basis of decision. Debtors on the other hand argue that a human rights criterion would better reflect the so-called partnership that is expected to exist between the developed countries and the developing countries. ... Instruments and institutions: There is a need for finding an appropriate instrument and institution to deal with the special case of the Debt problem. Existing instruments such as the Permanent Court of Arbitration based in The Hague, the United Nations Commission on Trade could either have its mandate extended to include Debt issues or a new Commission specifically for Debt could be established. We also argue that in the end, the optimal solution is to set up an International Arbitration Court on Debt through a Treaty. Part B: Issues raised by the Lawyers [section not included in this posting.]
Statement by Parliamentarians and Civil Society Representatives on Debt and Financing for Development Amsterdam, 1 March 2002 Jubilee Netherlands is a coalition of Dutch organizations. Organizations on the steering committee include Both Ends, Cordaid, the Evert Vermeer Foundation, NIZA, NOVIB, Oikos, and Wemos. For more information see: http://www.oneworld.nl/jubilee The Jubilee Netherlands secretariat is hosted by Oikos:
Jubilee Netherlands p/a Oikos The need to find a solution for the debt problem should remain high on the international agenda for reasons of international justice, human rights, stability and development needs. Major reforms of current debt relief mechanisms are needed, which are fair and transparent, and identify the responsibilities of both debtors and creditors. We regret that the Financing for Development Draft consensus has not set a more ambitious agenda to resolve the debt crisis. We urge the UN member states to take the following statementinto consideration during the discussions in Monterrey. A fair and transparent framework for debt relief The current decision making process, in which creditors play the role of plaintiff, judge and jury, needs urgent revision. The draft Monterrey Consensus rightly encourages 'exploring innovative mechanisms to comprehensively address problems of developing countries, including middle-income countries and countries with economies in transition'. We call on our governments to further discuss with parliaments, civil society and at international fora the proposals for a new mechanism, considering the following elements:
We call for the recognition of debt reduction as a vital and necessary condition to achieve social and sustainable development. It frees resources to be used for essential development activities, including but not limited to the strengthening of the economy. We urge UN member states to endorse the need to develop an international framework to identify, track and facilitate the recovery of illegally acquired wealth to the country of origin. We urge governments to take concrete steps to further develop the UN comprehensive convention on corruption as mentioned in the Draft Consensus for the Financing for Development conference, as well as regional conventions on corruption. Debt relief to enable social and economic development We call on the UN member states to endorse in Monterrey the following principles for determining, within a fair and transparent framework, how much debt relief is required:
There is an urgent need to arrive at international agreements to provide faster, deeper and broader debt relief, including multilateral, bilateral and private debts, under a fair and transparent process. These efforts should not replace nor delay unilateral debt reduction by creditor countries. Debt service payment from HIPC countries not eligible for international debt relief should be placed in a separate fund, until the reasons for non-eligibility are removed. We call upon creditor countries to immediately cancel illegitimate and odious bilateral debts. We also call upon creditor countries, as the major shareholders of the IFIs, to accept co- responsibility for 'failed' IFI lending, i.e. loans that have not contributed to social and sustainable development. Enhanced quality of future borrowing, lending and spending We emphasise that increased scrutiny by parliaments and civil society in both creditor and debtor countries enhances political and financial accountability and helps to ensure that civil society concerns are reflected in lending and borrowing. We call upon debtor and creditor governments and the IFIs to limit future lending and borrowing to relevant developmental purposes and increase transparency in the decision making process. This implies on:
We urge OECD governments to open their markets for developing countries products and avoid market distorting subsidies. We recognise that parliaments have a crucial responsibility to enhance political accountability and monitor the quality of the lending, borrowing and spending processes. We strongly call for increased information disclosure and involvement from an early stage in the loan contraction process, both in debtor and creditor countries, and including lending from multilateral institutions. The capacity of parliamentarians to fulfill this responsibility should be strengthened through e.g. international networking and sharing of information, among parliamentarians and civil society organisations.
Mr. Pius Anyim, President of the Parliament, Nigeria
Documents previously distributed in the e-journal are
available on the Africa Action website: To be added to or dropped from the e-journal subscription list, write to e-journal@africaaction.org. For more information about reposted material, please contact directly the source mentioned in the posting.
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Africa Policy E-Journal
