In 1991, we proposed a way out of the Third World debt crisis. Now it’s happening.

Patricia Adams

September 21, 1999

In 1991, we proposed a way out of the Third World debt crisis. Now it’s happening.

In 1997, after hearing about Probe International’s campaign to enforce the doctrine of odious debts, a group of South African activists knew they had found the answer to their quest for a just and principled stand against the accomplices to apartheid. “The Doctrine matches the circumstances of the apartheid state so perfectly that it is almost as though Odious Debt was established in law with the express purpose of allowing the first democratic government in South Africa to repudiate the apartheid debt it inherited,” they said. Both the United Nations and the International Court of Justice had declared the apartheid state illegitimate, and the lenders – Chase Manhattan and Citibank to name just a few – knew it but had recklessly lent money nonetheless.

As a result, South Africa’s activists argued that Nelson Mandela’s government should refuse to repay the foreign debts incurred by the former apartheid regime on the grounds that those debts were odious – incurred by an illegitimate government to oppress the majority black population. They took their case – that apartheid couldn’t be properly investigated without also investigating the financing of apartheid – to the country’s Truth and Reconciliation Commission. The commission agreed, and its chairman, former Archbishop Desmond Tutu, now argues that the debts should be declared odious. His successor, Archbishop Njongonkulu Ndungane, has also embraced the issue and is now campaigning in South Africa and around the world to have much of the Third World’s debt declared odious and cancelled.

The massive, groundswell church movement known as Jubilee 2000 is following the archbishop’s clarion call by calling for the cancellation of some $600 billion in “odious debt and debt incurred by repressive regimes.” In June, it presented over 17 million signatures demanding debt cancellation to the G7 leaders in Cologne. The G7 agreed to cancel $100 billion – an important first step, although the G7 hasn’t admitted to the debt’s odiousness – so Jubilee 2000 is still collecting signatures. It now looks as if it may become the largest petition in world history.

We at Probe International are heartened and overwhelmed. When we did the ground-breaking research on this little known international legal doctrine and published it in Odious Debts: Loose Lending, Corruption, and the Third World’s Environmental Legacy in 1991, we knew we had found a compelling, moral, and fair solution to the Third World’s crippling debt. But the events of the last few years exceed our bravest hopes. World’s Environmental Legacy in 1991, we knew we had found a compelling, moral, and fair solution to the Third World’s crippling debt. But the events of the last few years exceed our bravest hopes.

In Latin America, the Latin American and Caribbean Jubilee 2000 Coalition is calling for cancellation of their countries’ debts, arguing that they are “illegitimate because, in large measure, [the loans were] contracted by dictatorships, governments not elected by the people, as well as by governments which were formally democratic, but corrupt. Most of the money was not used to benefit the people who are now being required to pay it back.”

In Brazil, citizens are demanding a public audit of the state’s foreign debt to determine if the people of Brazil are legally responsible for paying it back, on the grounds that dictators incurred the debts and the creditors acted as accomplices. The citizens also want to establish democratic rules to oversee future borrowing.

In Argentina, after an 18-year investigation, a federal court judge is expected to declare the debts incurred under the former military government illegal. Although the generals kept no record of the loans, a financial reconstruction and testimony from central bank officials revealed that most of the $9 billion borrowed by the state oil company was diverted to military uses.

In Nigeria, the new civilian government has started recovering some of the stolen money – spirited away into foreign bank accounts by previous dictators – to pay back the country’s $50-billion debt. President Olusegun Obasanjo said earlier this year that “the people who gave those loans knew that the money wasn’t being spent wisely. Perhaps they even took their own cut. Yet the ordinary people of Nigeria have to pay back that loan. This is the injustice of it all.”

Citizens groups in the Philippines have already successfully reclaimed some of Ferdinand Marcos’s stolen wealth out of Swiss bank accounts to compensate human rights victims of the regime.

Meanwhile, in Indonesia, pro-democracy groups and reformers are assembling legal teams to challenge the theft of public assets by ex-President Suharto and his cronies. Similarly, citizens in the Democratic Republic of Congo – formerly Zaire – are organizing to reject responsibility for the billions that their former dictator, President Mobutu Sese Seko, borrowed in their name and then deposited in his Swiss bank accounts to buy European châteaux, a Boeing 747, and at least 51 Mercedes.

At the same time, public pressure is forcing governments to get tough with corruption. Nigeria, once called “the most corrupt nation in the world,” has sent an anti-corruption bill to its national assembly, and in the tiny landlocked country of Lesotho in southern Africa, a ground-breaking bribery case against a dam-building official is about to begin. The official is charged with taking bribes from 12 of the world’s largest dam-building companies, including the Canadian company, Acres International. Switzerland’s supreme court has agreed to help Lesotho compile bank records of the charged official. Even the World Bank, which financed the scheme, has launched its own investigation and, under its new policy of zero tolerance for corruption, will bar guilty companies from bidding on World Bank projects. Other industrialized countries, including Canada, have also recently passed legislation prohibiting corruption of foreign officials.

It isn’t often that I see progress to alleviate the suffering of Third World citizens. But 1999 has been a good year. If we and our sister organizations around the world can keep up the pressure on our governments to treat corruption as a criminal offence and to make irresponsible lenders and despotic borrowers pay for the odious debts they visited on the people of the Third World, we will succeed in making the world a better place for the next generation.

The challenges are formidable and the responsibility falls largely on us. At a counterconference to the G7 meeting in Cologne, odious debt campaigners from Third World countries asked us to help them make their cases by assisting in assembling legal teams, by providing them with the research we’ve amassed over the last decade, and by setting up Internet communications systems to give everyone the best up-to-date information available.

Although this project requires a long and concerted effort, we immediately agreed because so much is at stake and because the prospects for success are so great. I hope you will join us in this all-important global campaign for freedom and justice. If you agree with me that the citizens of the Third World should not be saddled with odious debts, and that these courageous Third World citizens deserve all the support we can muster, please consider providing your gift on a monthly basis, to give us the means to maintain this campaign month in, month out – until every last odious debt is officially torn up.

Categories: Africa, Odious Debts

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