Africa: Unions Call for Debt Cancellation, 04/12/05

Africa: Unions Call for Debt Cancellation

AfricaFocus Bulletin
Apr 12, 2005 (050412)
(Reposted from sources cited below)

Editor's Note

"In spite of positive rhetoric ... concrete actions [on new debt relief] have been delayed from meeting to meeting, in part because of disagreements between donor countries on the specific elements of an expanded debt relief initiative." In a new statement released in March, global unions joined other campaigners for debt cancellation in calling on international financial institutions to stop delaying and act for full debt cancellation for developing countries fighting poverty. But the prospects for action at this week's meeting of the World Bank and IMF remain uncertain.

In the World Bank's Global Monitoring Report released today, debt relief does not even figure on the five-point agenda presented to accelerate progress on achieving the Millennium Development goals ("country-owned" strategies, more private investment, more human services delivery, more open trade, and more aid). See http://www.worldbank.org/globalmonitoring

This AfricaFocus Bulletin contains excerpts from the statement from a coalition of global unions representing more than 145 million members in 154 countries. The statement not only calls for debt cancellation, but contains specific critiques of conditions imposed by international financial institutions. The web version of this Bulletin, at http://www.africafocus.org/docs05/debt0504.php, also includes the section on debt relief from the World Bank's Global Monitoring Report 2005, released on April 12.

The statement from global unions is in accord with the prevailing consensus among African governments, civil society, debt campaigners, and development analysts, calling for urgent action for more debt cancellation. If the Bank's latest report is taken as an indicator, however, neither the international financial institutions nor the donor countries have yet absorbed the message In these circles, the assumption still seems to prevail that only minor incremental adjustments in debt relief are required.

For a recent restatement of the critique of HIPC and call for full debt cancellation, see the article by Demba Moussa Dembele, "G7 leaders and the debt trip to nowhere, " in the March 10 issue of Pambazuka News (http://www.pambazuka.org/index.php?issue=197).

For additional background on debt and the campaign for debt cancellation, see http://www.africafocus.org/debtexp.php

For news on debt relief in Zambia, which recently became the latest to gain approval of a package under the creditors' Heavily Indebted Poor Countries (HIPC) program, see http://www.africafocus.org/country/zambia_irin.php and
http://www.africafocus.org/country/zambia_news.php

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Statement by Global Unions to the 2005 Spring Meetings of the IMF and World Bank (Washington, 16-17 April 2005)

Global Unions International Confederation of Free Trade Unions (ICFTU)
Global Union Federations (GUFS)
Trade Union Advisory Committee to the OECD (TUAC)

March 15, 2005

[excerpts: full version available in http://www.africafocus.org/docs05/debt0504.php]

The ICFTU represents unions in 154 countries with a total of 145 million members. The ICFTU works closely with the Global Union Federations (GUFs), representing workers in different sectors, and with the TUAC. All the above organizations are on the Global Unions web site: http://www.global-unions.org

Advancing the Global Call to Action Against Poverty

Statement by Global Unions to the 2005 Spring Meetings of the IMF and World Bank (Washington, 16-17 April 2005)

...

New initiatives for debt cancellation and improved development assistance

2. Global Unions and their affiliates have been advocating more generous debt relief and its expansion to a greater number of countries for many years. Affiliated trade union organizations in some low-income indebted countries have witnessed the beneficial impact of partial debt relief received through the Heavily Indebted Poor Countries (HIPC) programme and have joined other organizations in calling for full debt cancellation so that governments can further expand public services that are essential to attaining the MDGs. Global Unions' affiliates in industrialized countries have lobbied their governments to support full debt cancellation and to allocate the public funds necessary to finance additional resources for low-income countries, including for debt relief. The IFIs' own HIPC progress reports, which have shown that debt levels have remained unsustainable even for countries having received full HIPC assistance, have amply demonstrated the need for expanded debt relief. However the trade union movement has been disappointed that, in spite of positive rhetoric at the last several IFI biannual meetings, concrete actions have been delayed from meeting to meeting, in part because of disagreements between donor countries on the specific elements of an expanded debt relief initiative.
   
   
3. Recent statements by the G7 countries expressing support in principle for up to 100 per cent debt cancellation have been encouraging. However Global Unions believe that the new initiative must not be limited by the constraints of the HIPC programme, which severely restrict the number of countries considered eligible for debt relief. ...
   
   
4. Global Unions believe that an important new debt cancellation initiative must be adopted in 2005. This can be financed by a re-evaluation of IMF gold stocks, some transfer of resources from the IBRD (the Bank's non-concessionary lending arm), and additional contributions from industrialized-country development budgets. Global Unions' affiliates in industrialized countries have campaigned jointly with other organizations in favour of increased development aid. These campaigns have already had positive results in some countries. However trade unions will continue their campaigns as long as the 0.7 percent official development assistance target is not reached. Debt relief should be extended to all low-income countries respecting human rights that have a shortfall of resources to meet the MDGs. It should consist of 100 per cent cancellation of debt owed to the IFIs, not be dependent on structural adjustment conditionality, and not reduce concessionary assistance from the IFIs or other international assistance. Global Unions furthermore support new mechanisms to increase financial flows to developing countries, such as those included in the joint Brazilian-French-Chilean-Spanish initiative, and also endorse the British proposal for an International Finance Facility (IFF). In the medium term, new forms of international taxation should be implemented to avoid a shortfall in aid as IFF loans become repayable. ...
   
   

7. In a report published last year on Reforming Insfrastructure, the World Bank spoke of the IFIs' previously exaggerated enthusiasm for privatization as a solution for various problems and characterized their pro-privatization stance as "irrational exuberance". Constructive self-criticism is a positive trait, on condition that it leads to correction of the identified misconduct, which in this case was an unjustified bias in favour of privatization and against public sector solutions. Unfortunately, various IMF and World Bank policy documents, both on the international and country level, still show a strong bias against public provision. ...
   
   
8. In the case of the IMF, a number of recent Article IV Consultation and other surveillance reports, such as those for Algeria and Nigeria (both February 2005) recommend an accelerated pace of privatization, even while recognizing the social costs. A January 2005 IMF/WB Joint Staff Assessment of Kenya's Poverty Reduction Strategy Paper (PRSP) berates the Kenyan government for not giving more emphasis to privatization in the country's PRSP implementation report. ...
   
   
9. A recent British government policy document, Rethinking Conditionality (DFID, March 2005), notes that IFI and other donor conditionality on issues such as privatization and trade liberalization have frequently had negative social impacts; have been forced on developing countries "regardless of whether these were in the countries' best interests"; and have prevented poor countries from incorporating lessons from successful development models, notably in East Asia. The British policy paper states that suspension of assistance, which is sometimes carried out by the IMF for misdemeanours as slight as temporarily going "off target" from budget expenditure guidelines, should only occur in three

circumstances

violation of human rights, corruption, and diversion of aid to unintended purposes such as military expenditures. Global Unions endorse the call for a substantial reduction of conditions placed on loans and grants, and in particular the elimination of structural conditionality that imposes measures of doubtful benefit to receiving countries, such as service privatization and trade and investment liberalization. Global Unions will continue to argue for a strong public sector, particularly in vital services areas, and to defend the interests of workers adversely affected by privatization. ...

Need to correct IFIs' push for labour law deregulation

10. Even though a specialized intergovernmental body, the International Labour Organization, exists to establish international labour standards and provide expert advice to countries on labour issues, a growing number of IFI country-level reports include recommendations on labour markets questions. ...
    
    
11. Most World Bank CAS [country assistance strategies], as well as other country-level reports, also advise governments to attack identified problems of labour market "rigidities" or "inflexibility". Some recent examples are the CAS for Bosnia (August 2004) and India (September 2004) and the PRSP Joint Staff Assessment for Kenya (January 2005). The CAS for these countries and several others announce ongoing World Bank research for formulating changes to the countries' labour legislation. While trade unions are frequently engaged in national dialogues in view of modernizing national labour legislation, they have been very critical of the fact that the Bank's main input to national labour reforms has been based on the simplistic premise that any kind of labour regulation, other than those strictly limited to the core labour standards, is inherently bad for development and should be removed. ...
    
    
12. Confronted by the impact of globalization and economic restructuring on national labour markets, trade unions have lobbied governments to put in place or expand social protection measures so as to better protect workers and their families in case of job loss or other eventualities that could lead to sudden reduction of income, and to ensure that women workers have a full opportunity to benefit from employment. While the Bank has agreed in principle with these proposals, on a country level the Bank frequently discourages such initiatives or even works to undermine those social protection programmes that exist. ...
    
    
13. Global Unions believe that the IMF and World Bank should encourage and assist countries to develop and maintain comprehensive social protection programmes. These should include old-age pensions, unemployment benefits, child support, maternity, and sickness and injury benefits. Furthermore, the IMF and World Bank must support labour market policies that underline the importance of decent work, that is, policies for maximizing employment creation within a framework of properly implemented labour laws that recognize workers' rights to earn an adequate income, work in safe conditions, combat discrimination, and be protected from abuse, with full application of the ILO's core labour standards. Trade unions need to be fully consulted on proposed amendments to labour legislation.

Measures to make IFI operations consistent with core labour standards

14. On the theme of the core labour standards Core labour standards are internationally-agreed fundamental human rights for all workers, irrespective of countries' level of development, that are defined by the ILO conventions that cover freedom of association and the right to collective bargaining (ILO Conventions 87 and 98); the elimination of discrimination in respect of employment and occupation (ILO Conventions 100 and 111); the elimination of all forms of forced or compulsory labour (ILO Conventions 29 and 105); and the effective abolition of child labour, including its worst forms (ILO Conventions 138 and 182). (CLS), trade unions have welcomed the World Bank's recognition of their positive development impact and the agreement to promote them when the Bank deals with labour issues. Global Unions have encouraged the Bank to go beyond rhetorical support and to ensure that the Bank's own operations are consistent with the standards. An important step was taken by IFC management in 2004 in their proposal to include the principles of the CLS as "performance requirements" for all IFC loans. These new safeguard standards are currently under consultation. Global Unions have recommended that the standards make direct reference to the relevant ILO conventions and also include clearer mechanisms for implementation and enforcement. Global Unions will make further representations to the IFC on these matters.
    
    
15. The other divisions of the World Bank group, as well as the IMF, should also take measures to ensure that, at the very least, the projects and programmes that they fund do not violate CLS. ...

Genuine country ownership of Poverty Reduction Strategy Papers

16. Since the Poverty Reduction Strategy Papers (PRSP) approach was introduced in 1999, trade unions in the PRSP countries have worked to overcome many obstacles to their participation, including instances in early PRSPs of unions being excluded from consultations. Following campaigns by Global Unions and national affiliates, an increasing number of unions have been invited to participate, as documented in the World Bank's Trade Union Participation in the PRSP Process (August 2004). However, with a small number of exceptions, positions put forward by unions are not reflected in finalized PRSPs, most notably recommendations with regards to employment creation and labour conditions, despite the obvious importance of these issues for poverty reduction. In addition, proposals of unions and many other civil society organizations on macroeconomic and structural policy choices are frequently ignored in the final PRSP, something that was confirmed last year in assessments prepared by the World Bank's OED and the IMF's IEO, and also in a joint IMF/WB Concept Note: 2005 PRS Review (February 2005).
    
    
17. Meetings have been planned in April 2005 between the IFIs and trade unions and other civil society organizations in the framework of the review of the PRSP process that is currently underway. Unions will highlight the fact that, when given the opportunity to do so, they will take part in national PRSP processes to the extent that their participation has an impact. In countries where trade union proposals on employment, labour and structural policies have been completely ignored or superseded by IFI loan conditions, unions question the usefulness of continuing to take part in the process. Genuine country ownership means that countries are allowed to develop policy option in PRSPs that incorporate broadly shared national priorities, which can be expressed through civil society and also through national parliaments. Parliaments must be given an opportunity to debate on and adopt the PRSP. The IMF and World Bank must encourage borrowing countries to develop policy options in PRSPs that truly reflect national priorities to reduce poverty, rather than standard IFI prescriptions to prioritize market-oriented economic liberalization. A requirement for civil society recommendations to be taken up seriously needs to become a part of the IFIs' approach to attaining the MDGs in countries implementing PRSPs.

Democratization of development strategies and IFI governance structures

18. The IFIs have given much emphasis in recent years to the importance of country ownership over policy choices, whether through the PRSP process or other instruments. As the IFIs have stated to be one of the aims of the PRSP process, this should entail taking the policy choices out of the exclusive hands of the finance ministry or the executive, and allowing the government as a whole and national parliaments to have their say. Unfortunately, the Bank and Fund frequently do not live up to the "country ownership" rhetoric when it comes to formulating lending agreements. For example, beginning in 2002 the IMF has pressured Zambia's executive to renege both on the country's PRSP and decisions of the national parliament by including specific privatization conditions in PRGF loans, even after the PRSP and parliament had rejected these measures. ...
    
    
19. The issue of democratic control over development decisions is also frequently raised with regards to the IFIs' own outdated governance structures, where developing countries are severely under-represented. Recently, the ICFTU joined with a number of other civil society organizations to object to the most visible demonstration of the democratic deficits at the IFIs, namely the selection process for the top positions in the IMF and World Bank. The non-transparent manner in which the managing director of the IMF and president of the World Bank are chosen, and the unwritten convention which reserves the decision to one country or a specific group of countries, are in flagrant contradiction with the IFIs' demands on borrowing country governments that they operate in a transparent and accountable fashion. Global Unions call on the IMF and World Bank to establish transparent and accountable processes for the selection of the heads of the institutions, and move forward on proposals to improve the representation of developing countries on the executive boards of the IFIs.

...

World Bank
Global Monitoring Report 2005

Debt Relief

[see http://www.africafocus.org/docs05/debt0504.php]

Africa: Unions Call for Debt Cancellation

Page Editor: Ali B. Ali-Dinar, Ph.D.