Origins of the debt movement

A brief account of the origins of the debt movement, and early campaigning against poor country debt burdens.

Early campaigning and historical debt relief
The mobilisation of 70,000 people in Birmingham on Saturday 16th May 1998 was not a spontaneous event; nor did it take place in a vacuum. An international movement against debts had been in existence long before Jubilee 2000 gathered in Birmingham. The movement was of course strongest in the South. It had its origins in the resistance to colonialism; and in opposition and resistance to the IMF’s economic austerity policies, known as “structural adjustment programmes”. Campaigners in the South had long demanded debt cancellation. They were responding to a string of debt crises; crises which exploded in the 1840s, in the 1880s, the 1930s and the 1980s.

And the idea that debt cancellation was needed to kick-start economies emerging from conflict or crisis was not new either. In 1953, Germany was offered levels of debt cancellation that were beyond the wildest dreams of today’s heavily indebted poor countries. In the early 1970s, President Suharto of Indonesia, seen as a capitalist bulwark against the ‘marauding hordes’ of communist Asia, was offered a similarly generous deal – one which enabled Indonesia to defer payments by up to 8 years if they proved too onerous.

Debt crisis in the 1980s onwards
But it was Mexico’s threatened default in 1982 that triggered a crisis in western financial circles; cut living standards in Mexico and persuaded campaigners in the north to respond to appeals for solidarity made by campaigners in Mexico. Creditors did not meet the challenge. Indeed, their only response to the Mexican crisis was to offer a series of half-hearted debt rescheduling efforts which did much to maintain the balance sheets of western financial institutions and little to return poor countries to genuine solvency. The Brady Plan followed the Baker Plan; in the Paris Club group of rich country creditors, Houston Terms followed London Terms which followed Naples Terms. Each offered a smidgeon more debt rescheduling over a slightly longer timer period for a slightly larger group of countries. None came anywhere near to the massive scale of debt cancellation needed, especially for the poorest countries.

Meanwhile, interest rates were kept sky-high as a result of the monetarist experiment being played out in the US and UK – and by default, on the rest of the world. Commodity prices continued to plummet and debts continued to mount. Total debt owed by developing countries more than doubled between 1980 and 1990, and shot up by half as much again by 1995. Except for handful of ‘lucky’ middle income countries in South America, by the early 1990s it was clear the debt problem was far from being solved.

Debt Crisis Network
In the UK, a variety of individuals and organisations had been arguing for debt cancellation since the early 1980s, and a Debt Crisis Network (DCN) had been formed to co-ordinate their lobbying. In February, 1996, DCN launched a round-Britain tour of African leaders. They had decided to provide a platform for distinguished Africans, led by ex-President Kenneth Kaunda of Zambia and Archbishop Makhulu of Central Africa, to put the case for debt cancellation to the British people. That exhausting tour took place in the bitter winter weather of February, 1995. The African leaders spoke to large audiences, in London, Manchester, Edinburgh and Glasgow. A small group of students, of the Lloyds and Midland Bank campaign, arranged for the leaders to address an audience of no fewer than 1,000 students on a freezing, snowy evening in Manchester in that February. In Scotland the African leaders were greeted by hundreds of Scottish campaigners; and honoured by Scotland’s Regional Assembly. This helped open the door to meetings with politicians and officials, including a critical meeting with the IMF, involving Cardinal Hume, that led to the IMF agreeing to discuss a comprehensive debt relief programme with the World Bank.

This account is taken from Did the G8 drop the debt?, a report by Jubilee Debt Campaign, Jubilee Research and CAFOD.

Next: the birth of Jubilee 2000