ALERT!!!

Improve Debt Legislation: No Structural Adjustment, No Added Power For The IMF

October 14, 1999

Next week -- on October 19 and October 21 -- two committees of the U.S. House of Representatives are expected to "mark up" legislation calling for debt relief for the world's most impoverished countries. That legislation, known as the Debt Relief for Poverty Reduction Act (HR 1095) or the "Leach Bill" (after its lead sponsor, Rep. Jim Leach), will most likely receive its first hearing in the International Relations Committee on Tuesday, to be followed on Thursday by the Banking Committee (which Leach chairs).

With your help, we can make the Leach Bill a vehicle for economic justice. We need to pressure members of these committees to amend some of its key provisions.

In the mark-up process, legislators on the relevant committees can suggest amendments and deletions to a bill (which are then subject to a vote) and, finally, vote for or against bringing the agreed-upon final text to the full House for a vote.

The 50 Years Is Enough Network does not endorse HR 1095. Our major objections concern its provisions for multilateral debt relief. It works within the framework established by the International Monetary Fund (IMF) and World Bank in their joint Heavily Indebted Poor Countries (HIPC) Initiative. Although that scheme has been slightly refashioned by the G-7 (with approval of the changes taking place a couple weeks ago at the IMF/World Bank Annual Meetings), and would be subject to further recommended reforms in the Leach Bill, we have concluded that those changes do not go nearly far enough.

The Treasury Department is pressuring the Congressional committees to further weaken the legislation, by adding structural adjustment conditions to the bilateral debt relief it would offer (a part of the existing bill we fully support) and even by making the debt relief "optional" (and therefore meaningless). Pressure in the opposite direction from progressive activists is urgently needed!

Background

The HIPC Initiative is designed to reward countries that stick to the structural adjustment programs (SAPs) of the IMF and World Bank -- the tremendously destructive austerity packages that have thrown people out of work, raised prices and interest rates, devalued currencies, caused cuts in health and education programs, mandated privatization, and shifted emphasis from food crops to export production (including sweatshops). The newly-revised HIPC Initiative insists on "up to six years" of structural adjustment for countries to receive debt relief. The Leach Bill would shorten that period to three years. For countries that have in most cases already endured many years of catastrophic IMF austerity, three years is far too much; moreover, since the IMF can, and with 75% of its SAPs does, "stop the clock" on countries not meetings all its requirements, its three-year programs frequently take over five years to complete.

The HIPC Initiative also does not require that the IMF or World Bank simply write off the debts owed them, but rather that richer member countries contribute funds to pay off the institutions for the debt of the impoverished countries that would be forgiven. Taxpayers of the U.S. and other wealthy countries are thus paying the IMF and World Bank so that these institutions will no longer demand as much money from the world's poorest peoples . . . despite the fact that they have ample resources to write off the debts (like an ordinary bank would) without feeling significant pain. The IMF has been given permission to "re-value" part of its gold through a complex transaction in order to finance part of the "cost" of debt reduction. But only the **interest** earned from investing the surplus gleaned in this re-valuing will be used, and even then the bulk of the funds will actually go to supporting new structural adjustment loans rather than canceling old ones. The Leach Bill does not address these problems.

Fortunately, many legislators, particularly on these two committees, have begun to learn more about the debt issue, and know that the Leach Bill must be improved. The case against the IMF's prescriptions is strong, and has been made by experts across the ideological spectrum (even Pat Robertson and the Christian Coalition have lately begun to stir on this question). Because the Leach Bill would authorize funds to go to the HIPC Initiative, many Republicans and Democrats are looking for guarantees that it will not **increase** the power of the IMF.

Chances to Change the Leach Bill

Several amendments have been prepared for consideration in the mark-ups that would limit the powers the Leach Bill would hand the IMF and, if accepted in their entirety, would make the resulting legislation a genuine step forward in canceling debts and extricating the IMF from the fate of impoverished people in many countries.

The three most important amendments would do the following:

1. Require the IMF to cancel all debts owed to it by the 42 heavily indebted poor countries and Haiti. This amendment would withhold further U.S. appropriations to the IMF until the institution has used its own resources to cancel those debts.

2. De-link debt relief from structural adjustment. This amendment would bar the conditioning of debt relief on any SAP designed or monitored by the IMF.

3. (Banking Committee only) Limit the IMF's ability to use its gold reserves for its own purposes. This amendment would condition the required Congressional approval for gold transactions on the IMF canceling all debts owed it by the HIPC countries and abiding by more comprehensive requirements for transparency and accountability.

We urge you to call the Representatives listed below immediately to request that they support these amendments, which are vital to making the Leach Bill's multilateral debt relief provisions worthy of support.

If you are a constituent of any of these Representatives, please call -- but even if you do not live in one of the districts in question, feel free to call a legislator from a nearby district, or one (or more!) you have some plausible connection to.

In the Banking Committee, Rep. Bernie Sanders of Vermont, and possibly others, will be introducing these amendments. In the International Relations Committee, we expect amendments to be offered to delink both bilateral debt relief (debts owed to the US) and multilateral debt relief (owed to international financial institutions) from IMF structural adjustment programs. For those receiving this alert via e-mail, we will post an update with amendment sponsors in that committee (probably on Friday, Oct. 15).

Banking Committee members should also be urged to express their support for these measures to Rep. Spencer Bachus (chair of the relevant subcommittee and a key player on this matter), and, if Democrats, to Rep. Maxine Waters (Bachus's counterpart) as well.

Call Your Representative through the Capitol Switchboard: 202/224-3121

On the following committee lists, cities are provided to give approximate location of the Represenative's district. Representatives are Republicans unless a "D" or "I" (for Independent) follows their name.

House International Relations Committee

Alabama: Hilliard (D-Selma)

Arizona: Salmon (Phoenix)

California: Gallegly (Oxnard) , Rohrabacher (Huntington Beach), Royce (Fullerton), Campbell (San Jose), Radanovich (Fresno), Lantos (D-San Mateo), Berman (D- Mission Hills), Martinez (D-Alhambra), Sherman (D-Sherman Oaks), Lee (D- Oakland)

Colorado: Tancredo (Denver)

Connecticut: Gejdenson (D-Norwich)

Florida: Ros-Lehtinen (Miami), Hastings (D-Ft. Lauderdale), Wexler (D-Boca Raton), J. Davis (D-Tampa)

Georgia: McKinney (D-Atlanta)

Illinois: Hyde (Addison), Manzullo (Rockford)

Indiana: Burton (Indianapolis)

Iowa: Leach (Iowa City)

Louisiana: Cooksey (Monroe)

Massachusetts: Delahunt (D-Cape Cod)

Missouri: Danner (D-Kansas City)

Nebraska: Bereuter (Lincoln)

New Jersey: C. Smith (Trenton), Payne (D-Newark), Menendez (D-Jersey City), Rothman (D-Hackensack)

New York: Gilman (Middletown), King (Massapequa), Houghton (Elmira), McHugh (Potsdam), Ackerman (D-Queens), Meeks (D-Queens), Crowley (D-Bronx)

North Carolina: Ballenger (Hickory), Burr (Winston-Salem)

North Dakota: Pomeroy (D-whole state)

Ohio: Chabot (Cincinnati), Gilmor (Bowling Green), S. Brown (D-Lorain)

Pennsylvania: Goodling (Gettysburg), Hoeffel (D-Norristown)

South Carolina: Sanford (Myrtle Beach)

Texas: Brady (College Station)

American Samoa: Faleomavaega (D-whole territory)

House Banking Committee

Alabama: Bachus (Birmingham), Riley (Auburn)

California: Campbell (San Jose), Royce (Fullerton), Ose (Sacramento), Waters (D- Los Angeles), Sherman (D-Sherman Oaks), Lee (D-Oakland)

Connecticut: J. Maloney (D-Danbury)

Delaware: Castle (whole state)

Florida: McCollum (Orlando), Weldon (Melbourne)

Georgia: Barr (Marietta)

Illinois: Manzullo (Rockford), Biggert (Hinsdale), Gutierrez (D-Chicago), Schakowsky (D-Chicago)

Indiana: Carson (D-Indianapolis)

Iowa: Leach (Iowa City)

Kansas: Ryun (Topeka), Moore (D-Kansas City)

Louisiana: Baker (Baton Rouge)

Massachusetts: Frank (D-Newton/New Bedford), Capuano (Cambridge)

Minnesota: Vento (D-St. Paul)

Montana: Hill (whole state)

Nebraska: Bereuter (Lincoln), Terry (Omaha)

New Jersey: Roukema (Ridgewood)

New York: Lazio (Long Island), King (Massapequa), S. Kelly (Mt. Kisco), Sweeney (Saratoga Springs), LaFalce (D-Buffalo), C. Maloney (D-Queens), Velazquez (D-Brooklyn), Ackerman (D-Queens), Meeks (D-Queens)

North Carolina: W. Jones (Greenville), Watt (D-Charlotte)

Ohio: Ney (Zanesville), LaTourette (Parma Hts.), Tubbs-Jones (Cleveland)

Oklahoma: Lucas (Oklahoma City & west)

Oregon: Hooley (Salem)

Pennsylvania: Toomey (Allentown), Kanjorski (D-Wilkes-Barre), Mascara (Washington)

Rhode Island: Weygand (Warwick)

Texas: Paul (San Marcos), Bentsen (D-Houston), Sandlin (D-Marshall), Gonzalez (D- San Antonio)

Utah: Cook (Salt Lake City)

Vermont: Sanders (I-whole state)

Virginia: Goode (D-Charlottesville)

Washington: Metcalf (Bellingham), Inslee (D-Bainbridge Island)

Wisconsin: Ryan (Racine), Green (Green Bay)

For any further questions, please contact Soren Ambrose or Njoki Njehu at 50 Years Is Enough: U.S. Network for Global Economic Justice 202/IMF-BANK; wb50years@igc.org

Please tell us about your contacts with Congressional offices!