US Jubilee Act rewards past
African leaders reckless behavior
Lagos, Nigeria (July 7,
2008): Ahead of the G-8 meeting in Japan, we
theundersigned write to announce our opposition to H.R.
2634, Jubilee Act forResponsible Lending and Expanded
Debt Cancellation of 2007.
Foreign aid is a key
component to impoverished nations' attempts toachieve
economic growth and development. Unconditional debt
relief, ascalled for in the Jubilee Act perpetuates
poverty rather than alleviating it. In fact, it rewards
past reckless behavior. It is akin to wiping out
aperson's credit card debt then allowing them to
continue to use it, withno penalties.
There are many tools
available to low income countries attempting to
easetheir debt burden. However, countries that choose to
rely solely on debt relief and loan forgiveness will
find themselves stuck in an endless cycle
of debt accumulation followed by debt relief.
While well intentioned, legislation like the Jubilee Act
only contributes to this cycle.
Africa has received more aid
than any other region in the world in thelast fifty
years, yet remains the poorest region in the world. To
breakthis cycle, debt relief must be reserved for
countries that meet
pre-determined conditions, including a democratic
government, commitment to transparency, accounting of
how aid money is utilized and commitment to eliminating
The Jubilee Act includes no
such provisions. In 2006, the Republic ofCongo, a
country with 5 percent annual growth and billions in oil
revenue,was granted Heavily Indebted Poor Country (HIPC)
status and received
approximately $3 billion in debt relief. Yet its
Sassou-Nguesso spent hundreds of thousands of dollars in
hotel bills, paying for most of it in cash. Still, the
country remains eligible for
debt relief under the Jubilee Act.
Providing debt relief to
countries which refuse to adopt political and economic
reforms only worsens irresponsible spending and
corruption. In1998 Ethiopia's total external debt
exceeded $10 billion, mostly to theWorld Bank and US and
European creditors. The next year the country
wasspending $1 million per day on a war with neighbor
Eritrea, while theaverage Ethiopian lived on less than
$1 per day. Under the HIPC initiativeEthiopia's external
debt was halved, yet only four years later its debtwas
back over $7 billion.
The U.S. government sponsors
numerous aid programs, such as the Millennium
Challenge Corporation, which require countries to
meet certain conditionsto qualify for debt relief.
Passage of the Jubilee Act would underminethese efforts,
providing unconditional debt relief to countries
withoutholding governments accountable for actions that
lead to theirindebtedness in the first place.
On its surface, the Jubilee
Act may appear to have the best interests ofaid
candidates in mind. However, history has shown that
unconditional debtrelief will lead to the same problems
resurfacing in the future. It isimportant that this
legislation not pass in its current state.
If the U.S. government truly
wants to alleviate poverty and fosterdevelopment in low
income nations, it must require candidates to
upholddemocratic principles, establish rule of law,
increase transparency, adoptfree and open markets and
eliminate corruption in order to be eligible fordebt
We encourage you to support
economic growth and development in Africa andwe
encourage you to help low income countries reduce their
reliance onforeign aid. A significant step in helping
these countries must be taken by voting against HR 2634
if no additional conditions are attached.
George Ayittey, American University, Washington DC
Initiative for Public Policy Analysis, Nigeria
Leon Louw, Free
Market Foundation of Southern Africa, South Africa
Richard Tren, Africa
Fighting Malaria, USA
Citizens Network for Democracy and Economic
Buckingham University, UK
Andrew Mwenda, The
Independent, Kampala, Uganda
Campaign for Fighting Diseases, London, UK
Imani Ghana, Accra, Ghana
Bethesda, MD, USA