Jubilee Debt Campaign responds to minister on Sudanese debt
Tim Jones, JDC's policy officer responds to Stephen O'Brien MP on aid and debt cancellation in letters in the Independent.
See below, the original letter, Tim's response and a statement by JDC on Sudan's debt.
Forgiving debt is part of our aid
Your story makes the case for forgiving Sudan's debt with money that does not come from the development budget (" 'Made-up money' padding aid budget, critics claim", 30 December). Debt cancellation has always been part of Britain's official development assistance and related aid targets, and is totally consistent with the internationally recognised definition of aid monitored by the OECD.
By freeing countries such as Sudan of these outstanding arrears, we are making sure that their own resources are released from repayments into productive investment to support much-needed development in their own country.
If critics think it a practical proposition given Britain's generous and principled stance on international development to take this funding from another budget – perhaps education or state pensions – at such a difficult time for hard-pressed families in Britain, then they should have the courage to say so rather then issuing liverish press releases on a slow Christmas news day.
Stephen O'Brien MP
Parliamentary Under-Secretary of State, Department for International Development, London SW1
Letter in the Independent 03/01/12
Cancelling Sudan's debt won't cost taxpayer anything
Stephen O'Brien asks where the axe should fall if cancelling Sudan's debt (letters, 3 January); the answer in this case is, nowhere. Sudan has not made any repayments for more than 25 years. Debt cancellation would not save Sudan money nor cost the UK.
This is even more the case, given that most of Sudan's £678m debt to the UK is interest from the ridiculous 10 to 12 per cent annual interest rates charged since 1984. It is made-up money, not aid. The cancellation of other unjust debts would cost the UK only if they are being repaid. For example, the Egyptian people are repaying debts on loans for General Mubarak to buy British military equipment.
Such debts should be cancelled because they are unjust, though the government does not intend to do so, and UK Export Finance refuses to even release the documents on where the debt comes from. The cost to the UK of cancelling all Third World debt still owed would average £66m a year; less than the running costs of the House of Lords.
It is disgraceful to weigh the interests of impoverished people in the UK against those in the developing world. The fact is both are suffering from more than 30 years of recurrent debt crises caused by unregulated global finance.
Bringing wild capital flows under control, for example through reintroducing capital controls, is one of the main ways to prevent debt crises, reducing inequality and cutting poverty in the UK and overseas.
Tim Jones
Policy Officer, Jubilee Debt Campaign, London N1
Letter in the Independent 14/01/12
Jubilee Debt Campaign: Statement on Sudan’s debt
Sudan’s foreign debt is believed to stand at more than $35 billion. £678 million of this ($1 billion) is owed to the UK. Sudan has not been repaying debts to the western world since it defaulted on payments in 1984.
Although this is old debt, the issue of Sudan’s debt has not been high profile because of the repressive misrule of the Bashir government. However, with the independence of South Sudan, the debt issue has again come to the fore, largely because of the possibility that South Sudan could inherit some of Khartoum’s debt.
To date, north Sudan has offered to keep all the debt of the former state of Sudan. In return, both countries are requesting that north Sudan is allowed to enter the Heavily Indebted Poor Countries (HIPC) initiative within two years. If this happened, Sudan could have a substantial amount of its debt cancelled within a further two years; ie, four years in total. It is important to re-state that this process has not yet begun.
If the process fails, a negotiation will take place on how the debt should be split between the two countries. If South Sudan does receive any of this debt, we call on creditors to cancel it immediately. The people of South Sudan should not inherit any debt from Khartoum-based dictators. The people of South Sudan should not inherit any debt from Khartoum-based dictators.
To complete the Heavily Indebted Poor Countries (HIPC) initiative Sudan would have to implement conditions set down by the IMF and World Bank. These would include economic conditions. Jubilee Debt Campaign and our allies have always opposed economic conditions being put on debt cancellation, such as privatising water supplies, selling off grain reserves and cutting public spending.
Sudan would also have to start meeting repayments on some of its debts - primarily those owed to the IMF and World Bank - prior to getting any debt cancelled. Therefore, debt relief under the HIPC process would actually cost the country money. the country money.
The advantage to the Sudanese government of debt cancellation is that it might enable the regime to borrow from the IMF, World Bank and western government’s again. This should not happen whilst the current regime is in power. Jubilee Debt Campaign opposes any new lending to the current Sudanese regime, and calls for much more responsible lending by western governments and institutions to all countries. , and calls for much more responsible lending by western governments and institutions to all countries.
The £678 million debt owed to the UK comes from loans to dictator Gaafar Nimeiry during the Cold War. The vast majority of the debt is interest, due to the extortionate 10-12 per cent interest rates charged on it since 1984. Any debt cancellation by western governments such as the UK is an accounting exercise, writing off debts that any private company would have written off many years ago. Whilst we are not calling for debt cancellation for Sudan happening at this time, by itself debt cancellation would not bring material benefit to the Sudanese regime.
None of Sudan’s illegitimate debt must be held against a future legitimate government of Sudan. Rather than undergoing the HIPC process, a future Sudanese government should implement a debt audit process, to find out where the debt comes from, how legitimate it is, and learn lessons to guide future responsible borrowing. A debt audit would increase economic democracy within the country. Lenders must make clear that they would support the auditing of Sudan’s debt and the cancellation of illegitimate debt upon the accession to power of a legitimate government in Sudan. Moreover, when this made-up debt is finally written off, none of it should be counted as ‘aid’, as currently planned by the UK and other western governments., as currently planned by the UK and other western governments.
Jubilee Debt Campaign are currently supporting campaigns for debt audits in countries such as Zimbabwe, and are willing to work with civil society groups in Sudan wanting to push for an official audit and/or implement a citizens audit. However, we recognise that under the current circumstances, this may be challenging for Sudanese activists.
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