European Network on Debt and Development (Eurodad)
June 6, 2006

Civil Society Statement on the Paris Club at 50: illegitimate and unsustainable by European Network on Debt and Development (Eurodad), Belgium

Distributed at an event organized by the French Treasury on June 14, 2006, to celebrate the 50th anniversary of Paris Club.

For at least the past 30 years much of the developing world has been crushed under a mass of foreign debts that – amongst other injustices and distortions – has put a stranglehold on its growth and poverty-reducing opportunities. This continued crisis, contrary to creditor governments’ overemphasized claims, has never been dealt with systematically. Rather, wealthy nations have imposed – through the IMF, World Bank and the Paris Club – a protracted state of unsustainability and emergency. As a consequence, a permanent exit from the debt trap has been consistently and willingly impeded, keeping debtor countries in a state of effective domination and dependence. This is clear from the number of negotiations that a large number of countries has had to endure over the years: we can count 14 visits for Senegal, 11 for Democratic Republic of Congo, 9 for Cote d’Ivoire, and 8 for Gabon. Moreover, one of the greatest concerns about these prolonged strings of restructurings is that loans that were often odious or illegitimate, get consolidated and relabelled and are subsequently extremely difficult to track down to their real origin.

The Paris Club is a cartel of official creditors whose role is to maximize overall returns on their loans. During its 5 decade-long tenure the Club has proven to be a highly efficient tool for the smooth restructuring and for the effective recuperation of loans extended through aid agencies and – most importantly – export credit agencies. By privileging creditors’ interests it has done little to guarantee a fair and transparent setting or sustainable outcomes for debt crisis resolution.

This “non-institution”, as it conveniently likes to call itself, is a blatant example of non-democratic rules and processes. It encompasses only creditors and its decisions are taken on the basis of unanimity, granting full veto power to the one member sticking to the least favourable terms. It bases its efforts merely on a capacity of payment derived from internal (and highly secretive) calculations. These are all clear indicators of an absolute absence of truly accountable, open and transparent processes. Moreover, the manifest arbitrariness of its concrete practice, which tries to hide geopolitically-driven decisions behind the seemingly “technical” country-by-country tailored approach, is entirely unacceptable and proves the lack of credibility characterizing this entity. For instance, the different treatment of countries like Nigeria (60% cancellation), Serbia and Montenegro (67%), Poland (50%) and Iraq (80%) – just in recent years – clearly indicate a level of political arbitrariness defying all common sense of justice and fairness.

In the Paris Club the creditors act as judge in their own case: the greater part of the negotiating process is concerned with decision-making amongst creditors alone. The delegation from the debtor country is only able to play a passive role in the process, accepting or declining the offer advanced by the creditors. Compared with domestic insolvency laws and procedures in Paris Club member countries, the Club is a medieval institution. Compared with systems governed by constitutional law, international debt management negotiations lack an impartial body to oversee the process, ensure both parties voices are heard, and reach a judgment to which the two parties are bound.

Paris Club representatives claim they are not a development agency and therefore cannot deal with issues other than mere debt recovery. Yet around the table at Bercy can be found the official representatives of those very governments who have solemnly pledged to contribute to the achievement of the Millennium Development Goals by 2015. Thus it must also be that when they make decisions on debt management, they must necessarily fully and comprehensively assess the consequences of their actions, and behave accordingly.

As it is today, the Paris Club does not have any legitimacy. Civil society organizations from the South and the North demand a radical change of the current state of affairs in international debt management. Governments – and in particular those from creditor nations – must provide for comprehensive, fair and impartial based mechanisms for cases of unsustainable debt. To this end, we call on creditors to accept that they need to abandon their role as both party and ultimate judge, accepting a neutral instance to evaluate their requests against the debtors’ situation and needs. The governments represented in the Paris Club must take the opportunity of the 50 years to end current practices and move decisively to a new framework.

European Network on Debt and Development (Eurodad), Belgium
Christian Aid, UK
Jubilee UK Debt Campaign, UK
CRBM/ Mani Tese, Italy
Jubilee USA Network, United States
Observatorio de la Deuda en la Globalización, Spain
AEFJN (Red Africa-Europa-Fe-Justicia) – Antena de Barcelona, Spain
erlassjahr.de, Germany
Dikonia, Sweden
Jubilee Netherland, Netherlands
Both ENDS, Netherlands
SLUG, Norway
Norwegian Church Aid, Norway
Plate-forme Dette et Développement, France (25 NGOs and trade unions)
CNCD, Belgium
11.11.11 – coordination of the Flemish North South movement, Belgium
CADTM, Belgium
KOO, Austria (24 member organisations)
Debt and Development Coalition, Ireland (over 100 organisations)
Africa Action, United States
The Freedom from Debt Coalition – Iloilo Chapter, Philippines
LOKOJ Institute, Bangladesh
GRAPR, Congo
NAD, R.D. Congo
African Network for Environment and Economic Justice (ANEEJ), Nigeria
Ecowas Network on Debt and Development (ECONDAD), Nigeria
Urban Rural Mission, Hong Kong
Tanzania Association of Non-Govermental Organisations (TANGO), Tanzania
Jubilee Kyushu on World Debt and Poverty, Japan
The Public Services Labor Independent Confederation, Philippines (an umbrella organization of 350 unions)
ATTAC, Japan
SDK Philippines – Democratic Association of the Youth, Philippines
US Network for Global Economic Justice, United States
Community Development Library (CDL), Bangladesh
The Alternative Information and Development Centre (AIDC), South Africa
AGEZ, Austria – Platform of development cooperation NGOs (32 members)
African Forum and Network on Debt and Development (AFRODAD), Zimbabwe
WEED, Germany
Halifax Initiative Coalition, Canada
Jubilee South Asia –Pacific Movement on Debt and Development
World Development Movement, UK
ONG SOLIDAIRES/ à Pointe Noire: CONGO-BRAZZAVILLE
RNDD-Niger