Right of Reply
The director of Jubilee 2000 responds to a leading article in `The Independent' which questioned whether debt relief will reduce poverty effectively in the Third World
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.THE INDEPENDENT is right: kleptocrats could abuse debt relief, believing economic failures will be forgiven in the future. But why did British taxpayers guarantee them huge loans in the first place?
We need more transparency and accountability. And a new international financial architecture to rein in reckless international lending and borrowing. Western governments, their Export Credit Guarantee Departments, the IMF and World Bank make bad loans to corrupt dictators without fear of loss. They're confident money can always be squeezed out of taxpayers in debtor nations.
Our domestic financial system imposes discipline through bankruptcy law. Badly-judged loans lead to losses. For bankrupts, the stigma and losses are damaging. However, through arbitration by a receiver, debtors are protected from creditors. Creditors are protected from other creditors, ensuring equal treatment of all.
There is no such legal framework for international debtors and creditors. Instead creditors, all represented by the IMF, are in charge. They make bad loans; grudgingly re-schedule payments from effectively bankrupt nations; and can never agree to write off debts. The IMF plays the role of plaintiff, judge and jury in the court of creditors. They drive debtor nations into the ground.
We need to stop this reckless international lending and borrowing. We need to discipline both. We could do this by giving debtor nations the right to declare effective bankruptcy. A small independent and transparent court of arbitration would then negotiate between debtors and creditors. It would do so transparently, introducing accountability to taxpayers in both debtor and creditor nations.
Corrupt dictators would lose the oxygen of new loans; and Western financial institutions would be disciplined for bad loans. Both sides could put past mistakes behind them, and enjoy a fresh start.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments