Bretton Woods Project
June 19, 2006
Norway has reportedly established a $20,000 fund for the Bank to undertake a study of odious and illegitimate debt. Norway’s development minister Erik Solheim has also committed to more closely examine the debts claimed by Norway relating to the export of Norwegian-built ships to countries such as Ecuador, Peru and Jamaica between 1977 and 1980. Solheim has conceded that these loans were made to prop up an ailing shipbuilding industry, and may take unilateral action to cancel the claims. Eurodad asserts that “Wolfowitz must recognise that any comprehensive approach to corruption must necessarily involve a frank and open critique of past Bank lending practices leading to the cancellation of debts found to be odious and illegitimate.”
In the wake of a devastating May earthquake in Indonesia, NGOs are calling on world leaders to cancel Indonesia’s $134 billion debt burden, much of which “was contracted under Suharto and can be classified as ‘odious’ and illegitimate.” The government spends about $2.5 million per day on interest payments alone, with debt service accounting for almost a third of the government’s budget. Currently, only around $500 million in the country’s budget is set aside for emergencies such as the recent earthquake.
An international civil society conference on the cancellation of illegitimate debts was held in Jakarta in May. Participants worked on national and international strategies for illegitimate debt cancellation, including debt repudiation and debt audits.