G7 told to clear debt skeletons from the cupboard

As the G7 Finance Ministers meet in Germany, campaigners point out that getting serious about corruption, good governance and transparency has to include looking at their own past behaviour and cancelling any outstanding debts which result from corrupt or negligent lending practices.

Jubilee Debt Campaign has worked with other campaigners based in Canada, France, Germany, Italy, Japan and the USA - all the G7 countries - to release a report highlighting cases of illegitimate debts being claimed by their governments. These debts are the result of irresponsible or reckless lending in the past. G7 governments lent money to regimes they knew to be corrupt or repressive to buy political allegiance, or gave loans in order to help companies from their own countries do business abroad in unviable projects.

The report (available to download using the link on the right) argues that some debts simply should not be paid. This is because creditors bear a large part of the responsibility for having extended loans irresponsibly and negligently.

Dubious debts: the cases

• Germany exported warships to Indonesia during the Suharto regime despite concerns over how the vessels would be misused in internal conflicts.
• Japan supported the development of an aluminium project in Indonesia designed to serve the interests of Japan’s aluminium exporters and did not benefit Indonesians.
• Italy sold three hydroelectric turbines to Ecuador when only two were needed and despite evidence that the hydropower plant was unviable and had devastated the local environment and communities.
• France was complicit in the stripping of Congo-Brazzaville’s oil wealth by French banks and failed to stop it. ElfCongo benefited from loans from France’s development agency despite widespread concern that oil was disappearing.
• The United States supported the development of a nuclear power station on an earthquake faultline in the Philippines.
• The UK government guaranteed a commercial bank loan for a UK company which was providing consultancy services to Kenya at over five times the price these services should have cost.
• Canada supported the construction of the Yacyretá dam in Argentina and Paraguay despite widespread allegations that the military dictatorships were siphoning off billions of dollars from the project.

Each case-study argues that these debts are illegitimate and should be investigated immediately via public and impartial audit processes. The report urges the G7 to follow the bold example of Norway, which recently accepted shared responsibility for debts arising from its own negligent lending in the past, and cancelled these debts.