The end of the 1999 Congressional session brought a flurry of debate and activity on the question of debt relief for impoverished countries. 50 Years Is Enough activists and their allies are to be congratulated for their response to our repeated alerts requesting calls to Congress in support of de-linking any debt relief package from structural adjustment programs. That's because we overcame some significant odds in getting the House Banking Committee to approve an amendment proposed by Reps. Bernie Sanders (I-Vermont) and Maxine Waters (D-California) to the debt legislation it was considering – HR 1095 – which mandated U.S. efforts to ensure that any debt relief it provided must NOT be linked to structural adjustment style programs of the International Monetary Fund (IMF) and World Bank. The 50 Years Is Enough Network felt that the greatest weakness of HR 1095 was its continued acceptance of the Heavily Indebted Poor Countries (HIPC) Initiative framework, designed by the IMF and World Bank, which (even with the revisions agreed to at the recent Cologne G7 Summit and IMF/WB annual meetings) insists that countries receiving any debt relief adhere to up to six years of new structural adjustment programs. The 21-14 vote in the Banking Committee demonstrated that there is substantial Congressional opposition to the destructive – murderous – structural adjustment programs; a sentiment which must be exploited in 2000. Several key members of the Banking Committee, including Barney Frank, made solid statements in support of the amendment.

The news is not all good on this front, however. The U.S. Treasury Department remains firmly devoted to structural adjustment. Partly because of this amendment, but mostly because of the perversities of the way the U.S. Congress does its business, the final provisions for debt relief were arrived at in closed-door, undemocratic negotiations between the Administration and Republican Congressional leaders. As has too often been the case in our fights on the IMF, it was the Republicans who resisted empowering the IMF, and the Democratic Administration that was determined to expand IMF powers – a determination that in this case led the negotiators to avoid honoring the Banking Committee's positions arrived at after open debate. The results of the negotiations were written into an omnibus appropriations bill passed shortly before Congress adjourned for the year. (It was with a similar maneuver that the IMF got an $18 billion appropriation last year, after no open debate or hearings.)

Before the back-room negotiations, Congress refused both to provide funding for the HIPC Initiative as agreed to in Cologne and to authorize the IMF to re-value its gold stocks, a cost-free way of providing the IMF with millions of dollars, supposedly to devote to debt relief. This was due in large part to the work of a group of progressive Representatives (including Rep. Dennis Kucinich, who appeared at the 50 Years Is Enough conference in September, and Rep. Sanders), which balked at approving an accounting trick that would end up giving the IMF more resources and power. In the end, the re-valuation scheme was approved, but with important safeguards to ensure that the funds are used for debt relief and not IMF expansion. And Congress held firm and refused to appropriate any U.S. funds for HIPC.

The final agreement bypasses the Banking Committee‚s determination to de-link debt relief from structural adjustment. It provided for the following:

• $123 million for bilateral debt relief for heavily impoverished countries [$13 million of that figure is actually for a rainforest preservation program linked to debt "swaps"]. This is what the Administration asked for, and will go to support President Clinton‚s pledge of 100% cancellation of some impoverished countries‚ debts owed to the U.S. (unfortunately that pledge also implied a requirement that countries will have to adhere to structural adjustment to be eligible). On the whole, this is a positive step.
  
  
• Calls – probably meaningless – that multilateral (IMF, WB, etc.) debt relief happen in the context of reforms of the IMF's Enhanced Structural Adjustment Facility (ESAF), the program that has now been renamed the Poverty Reduction & Growth Facility.
  
  
• No direct U.S. contribution to HIPC. This is good, as HIPC remains an inadequate vehicle for dealing with debt and, worst of all, has strict structural adjustment requirements. (The Administration originally requested $210 million.)
  
  
• Approval of the re-valuation of about 12.5 million ounces of the IMF's gold, in order to facilitate funding of the IMF's portion of HIPC debt relief. Good? Bad? While one can be glad that some IMF resources will be liberated for debt relief (without requiring further expenditure of taxpayer funds), there are substantial reasons to find the agreed-upon arrangement unsatisfactory: 1) the debt relief will still take place under HIPC and structural adjustment; 2) the approximately $3 billion made available as a result of the re-valuation does NOT go directly to debt relief; rather, the IMF invests it and only the interest on those investments, amounting to about $200 million a year, will be used for funding HIPC; 3) IMF rules mandate that in the process of re-valuation, the IMF will get the current "book value" of the gold; this gives the IMF an immediate bonus of about $500 million to do with as it pleases [the re-valuation is from about $47/oz. to about $280/oz. and is to be accomplished through a byzantine process in which the IMF sells gold to a country about to re-pay an IMF loan, which then uses the gold to re-pay the loan, which makes the gold technically a "new" resource that can be re-valued]. There are a couple good provisions that mitigate the bad a bit: 1) the interest proceeds will go into a separate account earmarked for HIPC debt relief only (an account which will have to be "monitorable" – whatever that means – and will require explicit Treasury Dept. certification to Congress that it is indeed providing money only for debt relief and not for other IMF functions); until very recently it looked as if about 60% of the those proceeds would go into the ESAF (PRGF) fund; and 2) Congress authorized the use of the proceeds from just 9/14 of the gold in question; they will have to approve the remaining 5/14 next year, which gives us a chance to weigh in on how the IMF and HIPC are doing.
  
  
• Authorization for the transfer of funds from an obscure IMF account called SCA-2 (for Special Contingency Account) for debt relief only, presumably to go through the same special account mentioned above (though that isn't made exactly explicit in the bill). Treasury and the IMF had wanted this money to go directly to ESAF, so this is an important distinction.

Those who would take comfort in the approval of the gold transactions that will allow HIPC to operate as agreed to in Cologne should keep in mind the inadequacy of the revisions the G-7 made to the HIPC program, even apart from the structural adjustment requirements. The small improvements made still do not lift the initiative anywhere near the half-way point in dealing with the suffocating debt burden of the most indebted countries. And it leaves out entirely countries that do not qualify as "heavily indebted and poor" – meaning the exclusion of some of the world's largest populations of people living in in great poverty who need resolution of the debt question even if they live in countries with slightly higher average standards of living – countries such as Brazil, Bangladesh, and Indonesia, now the world's leading debtor country.

 In addition, by making arrangements for some of the HIPC countries' debts to the IMF to be paid off, the HIPC program will actually have the effect of causing an inflow of funds into the ESAF/PRGF account, since that is the program through which HIPC countries have gotten their IMF loans and to which their payments will go. That means more ESAF/PRGF lending, and possibly even the accomplishment, through a back-door method, of the IMF's goal of making that facility "self-financing" – a goal Congress opposes (which opposition was one of the reasons for creating the special "debt relief only" account for interest proceeds from gold re-valuation).