Kairos Hearing 1994.
Witnesses/experts introduce questions and proposals:
Mr. Marcos Arruda from Brazil will be the first one to speak for 10 minutes. And I hope that he also will introduce himself. Mr. Arruda, you have the word.
Ladies and gentlemen, dear friends, good morning. I am a Brazilian economist, currently living in Geneva, and working as coordinator of the NGO Working Group on the World Bank which is a network of NGOs around the world. And I work in close collaboration with two institutes in Brazil who are related to the social movement and who helped me to prepare the presentation that I will make now.
Between 1964 and 1985 Brazil was ruled by a military dictatorship, whose main purpose was to "create a favorable climate for foreign investments". During those two decades the military governments irresponsibly borrowed from foreign banks largely to finance huge infrastructure projects, disregarding social and environmental constraints. During the 1980s Brazil paid US$ 90 billion as debt service to Northern creditors. Yet, its debt stock increased from $ 64 billion to $ 120 billion. In fact, the more Brazil pays, the more it owes.
Latin America is generally trapped in the same vicious circle of indebtedness. Between 1990 and 1994 the continent will have paid $ 291 billion to the international creditors. Yet, and due to debt swaps and privatisation, its debt stock is estimated to increase by almost 10%, reaching $ 463 billion by the end of 1994. European governments and banks, and the international financial institutions (IFIs) are partly responsible for the risky loans granted to undemocratic, socially unaccountable governments for purposes which were often economically, socially and environmentally unsound.
We request that you, members of the European Parliament and representatives of the EU Commission, urge your governments in the IFIs to adopt a more courageous policy of targeted debt cancellation, debt reduction, and renegotiation that include:
- accepting the notion that the creditors must share the responsibility, and therefore the costs, of bad and unsafe loans;
- agreeing on the need for an independent investigation or audit of the official debt contracts, seeking to identify those which were improper, illegal or harmful to the borrowing country's socio-economy;
- working towards the acknowledgement of the competence of the International Court of Justice to give verdict regarding debt-related causes;
- taking initiatives, such as the cancellation of bilateral debt and reduction of multilateral debt, aimed at curtailing and reversing the net financial and resource flows from Latin America to the North, overall and by creditor;
- acting within the IFIs to reduce multilateral interest rates on the debt of LACs by not less than five percentage points on current rates.
Under pressure from the creditors, mediated by the World Bank and the IMF, the Brazilian government adopted austerity policies aimed at overcoming the situation of insolvency. Adjustment policies failed to achieve most of their goals. Debt payments continued, as the country steadily increased its trade surplus while compressing domestic demand and generating a protected recession. The results were a negative net financial transfer of over $ 50 billion in the 1980s to the North, a dramatic increase in the number of people under the poverty line and a drop in per capita income of 9.5% between 1990-92.
In the whole of Latin America, neoliberal adjustment policies have achieved meagre economic results at enormous social and environmental costs. After 12 years of adjustment and almost generalized recession, inflation in Latin American countries was still 197% in 1992, as compared to an average 59% in the period 1975-84. The increase in poverty levels was particularly dramatic in Guyana (41.6%), Nicaragua (38.2%), Trinidad-Tobago (31.8%), Peru (28.3%), Bolivia (22.4%), Haiti (22.3%) and Argentina (20.3%). The real urban wage was reduced from 100 in 1980 to 56.2 in Brazil, 52.4 in Uruguay, 49.3 in Argentina, 41.6 in Mexico, 21.4 in Ecuador, 16.3 in Peru (cf. CEPAL). Social investment programmes are conceived as compensatory measures, disconnected from economy, so as to allow business to continue as usual. Latin America cannot continue to apply monetarist adjustment policies without aggravating impoverishment and endangering social cohesion and reducing the chances of democracy.
We request that you urge your governments and the IFIs:
In its Human Development Report of 1992, the UNDP indicated that the total cost of unequal access of developing countries to global markets in 1990 reached $ 500 billion, or seven Marshall plans. Restricted access to Northern markets for labour, manufactures, agricultural and resource-based products and technology were largely responsible for that loss. Latin America is an outstanding victim of inequitable trade and finance relations.
- to make a conscious political choice to abandon neoliberal adjustment policies and related conditionalities on loans to Latin American countries;
- to support (politically and financially) governments whose adjustment policies aim at responding to the needs of the poor and focusing particularly on women and children, subordinating the debt payment and export-oriented investment to domestic development priorities;
- to strengthen the political and institutional capacity of governments to orchestrate equitable human development (the socio-economy) with participatory democracy (the political economy) and environmental sustainability (the ecological economy).
We request that you urge your governments and the IFIs:
In a European Parliament Resolution dated December 14, 1993, it is recognised that speculation on investment and trade create uncertainty as regards exchange rate fluctuations; that globalised markets have restricted the scope for capital controls; that financial globalisation negatively affects macroeconomic policies; and that the relative strengthening of the private sector and the corresponding weakening of the public sector in the conduct of monetary policy are factors of instability. We add that they are also factors of global income and wealth concentration and of diversion of investment from production to speculation.
- to recognise equal rights and grant equitable opportunities in trade for Latin American countries, by suspending protection against manufactured exports from the region such as progressive tariffs on products according to their degree of manufacturing;
- to accept that the principle of non-reciprocity is a valid instrument for Latin American countries to correct inequitable relations in international trade, access to resources and technology, and income distribution.
Transnational firms and banks have been important beneficiaries of these processes. According to the United Nations Commission of Trade and Development (UNCTAD), in 1992 they controlled 70% of world trade, of which 40% were intrafirm transactions. Neoliberal adjustment has forced Latin American countries to open their economies even further to the activities of transnational firms and banks.
We request that you urge your governments:
Recent estimates by Nobel Prize Jan Tinbergen indicate that, with the current level of development assistance — 0.35% average of donor countries' national product — the developing countries would have to wait 908 years (as of 1990) to reach an equal income per head as industrial countries. If the proportion of assistance were increased to 29.9% of donors' GDP, developing countries would still have to wait 420 years for income per head equalization.
- to encourage European-based corporations and banks operating in LAC to abide by the same principles that rule their operations in their home countries;
- and to work toward the recognition of the need for a more consistent body of international law and efficient international institutions to regulate and control the activities of transnational firms and banks, and to curtail unethical and illegal activities such as tax and profit evasion, money laundering, illegal trade in drugs and weapons, and capital flight. Such norms and regulations should include mandatory codes of conduct, transparency about TNC costs, prices and profits, cooperations among States to enhance the quality of corporate behavior.
We request that you urge your governments:
Finally, we request that you urge your governments:
- to pioneer the effort to increase substantially their transfers of development assistance to the South. However, increased development assistance will be ineffective unless the EU member countries immediately act upon the factors of structural drainage of capital and resources from the South which according to the UNDP were responsible in 1990 for transfers to the North that amounted to almost ten times of the value of official development assistance that year.
- to recognise the right of developing countries to choose alternative development paths and develop innovative ways of organizing their economies and societies, in syntony with their cultural and social diversity and their right to create synergy through regional agreements based on principles such as: collective self reliance, complementarity and solidarity;
- in particular, to support politically and financially governments in Latin America and the Caribbean who are chosen by their people on the basis of a platform whose socio-economic policies are aimed at human and social development, the genuine democratisation of the State and the promotion of popular participation as key principles for good economic, social and ecological governance.
Thank you, Mr. Arruda. I am now glad to give the floor to Mrs. Danuta Mitrega, the Polish economist sitting next to me.
Ladies and gentlemen, I would like to contribute to this hearing from a Polish perspective. Geographically Poland and Brazil as well as the Philippines a very far away, but the same indebtedness mechanisms can be observed in the countries of Central Europe, South America and the Far Southeast. Poland belongs to the most indebted countries in Europe. Encouraged by western banks, we began to take loans in the 70s. We have incurred loans in order to finance various sectors of our economy, especially industry, transport and communication infrastructures. From that time our foreign debt has continued to rise. Now it is more than 45 billion US-dollars. This amount means 2.5 times more than we actually borrowed.
I have to emphasize that we were good debtors. We repaid what we had borrowed many years ago. Owing to the mechanism of indebtedness and the capitalisation of interests, our foreign debt continues to rise. The debt-service burden is a heavy load and strongly limits our opportunities for economic development. Having such a huge foreign debt, Poland cannot move forward to meet the economic and social needs of her people. Dependence on multilateral financial institutions and their harsh, anti-people conditionalities can be easily recognised everywhere in Poland.
Negotiations on rescheduling and debt reduction agreements at the Paris Club could not have started without IMF support. To have the door opened to World Bank structural adjustment loans, our reformed programme had to be first positively appraised by the IMF. The message is clear: the creditor-countries will only help those who are really committed and who are making radical reforms. Nobody bothers about the social content and results of the programmes which are very painful for the people. Prof. Kenneth Galbraith recently wrote: "We propose the East European countries such a model we would never accept in our own countries." High unemployment, increasing poverty, the destruction of some branches of industry and agriculture are the results of our neoliberal programme of reform. One has to know that these very programmes have been highly praised by both IMF and World Bank.
We paid a high price and suffered greatly for being politically and economically separated for fourty years. We started the liberation movement in Eastern Europe and paid the most for this. We have to go the way nobody has gone before — from a centrally planned economy to a market one. Our transition process is not the application of a verified theory, but rather fraught with trial and error. This is costly.
The political walls in Europe collapsed. The new economic ones appeared almost at the same time and place. Once again we are behind the wall. And, I think, this wall is even more difficult to abolish. How can we talk about the European Union when half of Europe is outside this organisation whose mechanisms make the rich richer at the expense of the poorer ones?
We do not ask for help. We are a rich country, rich by our well-educated society, the industrial infrastructure and natural resources. We, and I mean not only Poland but all the post-communist countries, we call for equal partnership and genuine cooperation, which will help to relieve us of the burden of our past and will benefit our common future.
Thank you for your attention.
Thank you for your excellent contribution. We will now hear a voice from Africa, namely Tanzania, by Rogate Mshana.
I work with the Evangelical Lutheran Church of Tanzania Department for Development. And we have been responsible for monitoring Structural Adjustment Programmes and their impact in Tanzania.
Ladies and gentlemen, it is now likely that Africa will drop out of the world financial and economic system, unnoticed. It can not cope with the global exploitative financial and economic system any longer. Today Africa is under the firm grip of economic neo-colonialism characterised by devastating Structural Adjustment Programs (SAP), designed by the IMF and the World Bank, and fully supported by the Western countries as a condition for financial assistance, development cooperation and debt relief. The imposition of these extrogenous programs to Africa are first and foremost contravening the rights of the people of Africa to design and implement their own models of development.
There is increasing evidence that Structural Adjustment Programs have aggravated the conditions of the poor in Africa, made difficult the road to real democracy, led to further social and ecological destruction, endangered the sovereignty of African countries while separating further the states of these countries from their civil societies, by excluding them in the formulation of their own development plans as reiterated in the African Charter for popular participation. Instead, states in Africa are made to be accountable to the Bretton Woods institutions, rather than their own people.
Linked to the Structural Adjustment Programs is the African debt burden which has increased three times since 1980, to 183 billion US$ in 1992. Servicing this debt drains the region of 10 billion US$ annually or around a quarter of all export earnings. The average ratio of debt stock to exports continued to rise to a staggering 442% in 1993. The net financial transfer from Africa to the World Bank and the IMF is still great in comparison to the net financial transfer to Africa by these institutions. Poverty is expected to increase as a result of implementing SAPs and debt payment. The number of poor people will increase by 50% by the year 2000. The EU and the member states already know that SAPs have failed in Africa. There is enough evidence on this conclusion. We can not continue to see the deaths of several thousands of children every day because of lack of medicine. A father cried at the death of his daughter. He commented "They kept telling us to buy drugs from chemists but because of lack of money my daughter died." This hospital is a huge mortuary. This father enjoyed a good healthcare before SAPs were introduced in Tanzania for instance.
We request the European Union and its member countries to immediately abandon the Structural Adjustment Programs in Africa and instead respect and promote the UN-Economic Commission for Africa "African Alternative Framework for Structural Adjustment" which emphasizes both short and long-term measures for development in Africa. This framework was rejected by the IMF and World Bank in the 90's. Support of such internal alternative frameworks for development in Africa is one step towards sustainable development on the continent. In order to ensure the successes of such programs, debt relief should be fully administered by cancelling all multilateral debts. Intervention and pressure should be avoided.
The solutions to the present African problems should therefore be derived from the participation of the African people themselves in designing their own indigenous Structural Adjustment Programs which address their social and ecological problems.
Thank you for listening.
This was a voice of Africa. We now go to the Philippines. Mr. Ronaldo Llamas will especially speak about the relationship of migration and debt. Mr. Llamas, you have the word.
I am Ronaldo Llamas, representing "The Freedom from Debt Coalition" and one of the conveners of the "Asian Coalition Against Structural Adjustment".
The Philippines provides one of the most glaring and scandalous examples of a very rich country with a very poor and marginalised people, but it continues to be one of the top 20 biggest producer of food in the world including the 12 richest in aquatic resources. It continues to have one of the highest infant mortality rate in the Asia-Pacific-region because of the lack of nutrition. But it continues to be one of the 10 most literate countries in the world with the second most productive workers in southeast Asia according to the Asian Development Bank. And the seventh best worker in the world according to the New York based Business and Bargaining Risk Information. It continues to be the lowest paid in the whole southeast Asia.
Indeed, the Philippines is a country of contradictions: Massive poverty and unjust regulations have destroyed our rich natural environment. Out of originally 16 million hectares of original primary forest less than 600.000 ha remained. Out of 5 million ha of mangrove forests which protect our watersheds in the 1950s only 30.000 ha remained. 60% of our corals have been totally destroyed. And 96% of all our rivers are dead. Every year 1 billion m3 of rich agricultural top soil is eroded because of unhampered deforestation. The destruction of the Philippine environment was so swift that even the secretary of the department of environment and natural resources declared four years ago that at the present rate of environmental destruction the entire Philippines will be a virtual desert within the next 20 years.
Increasing unemployment and underemloyment, high inflation and negligible social services have forced one of the most skilled, productive and intelligent labour force in the world to work as househelp in Hongkong and Europe, prostitutes in Japan and cheap labour in the Middle East. Such a migration is so massive that it now has to be considered as the greatest threat to the Philippine economy on the one hand, but also contributes to the Philippine economy by being the biggest source of dollar earnings in the country on the other hand. The migration of a rich human resource which together with our rich natural resources in a more viable poor people development framework would have really provided an example of people power and ecologically sustainable development in the region, but have instead created tremendous gaps in the needs of our people. E.g., while 70% of all Philippinos who die out of sickness never see a nurse or a doctor the Philippines continues to be the No. 1 biggest exporter of doctors and nurses in the world. Such a situation have also continuingly de-humanized our highly numerous, but vulnerable migrants by forcing them into inhuman working conditions like prostitution. According to the Council of Europe three years ago the Philippines is now one of the biggest exporters of prostitutes in the world.
The Philippines is a country of natural calamities: typhoons, vulcanic eruptions, earthquakes, tidal waves and drought. But all of them together cannot approximate the tremendous destruction in human cost brought about by a man made calamity — the IMF/World Bank. The two main sources of our insufferable plight is the hemorrhage of our capital by debt service payments and the structural adjustment policies which strangles our economy by the imposition of the IMF and the WB. The Philippine foreign debt most of which have been accumulated under the Marcos dictatorship through honourous and fraudulent loans and have been consistently enlarged by the Aquino and Ramos governments, this bars more than 57% of our total national budget. While conscientiously paying almost 18 billion dollars in that servicing from 1986 to 1992, our $ 26 billion debt grows to $ 30 billion in 1992.
Since the 1970s the Philippines has been almost continuously under a Structural Adjustment Programme (SAP), the main elements of which are export oriented industrialisation, liberalisation of external trade and investment, and deregulation, and privatisation. All these elements have been extrapolated from the experience of the Asian tiger economies or NECs as necessary conditions for economic growth. All these have been proven to be necessary conditions for economic underdevelopment, environmental destruction, and social disempowerment. SAPs have long ceased to have anything to do with achieving growth. Export oriented growth is mainly a strategy imposed on the Philippines to be assured that we earn enough foreign exchange to be able to service our $ 30 billion debt to Western banks. Liberalisation of external trade and investment is principally geared to integrate and subordinate the Philippine domestic market more tightly to the North dominated world economy. And deregulation and privatisation are meant to weaken and emasculate the Philippine state which, transformed into an instrument of the people, is the most important institution capable of developing and facilitating an alternative development strategy.
The debt and structural adjustment policies of the IMF and the WB have not only affected negatively the Philippines. It has also roared ecological hubbub as well as economic misery to the much flaunted growth centre of the world, the Asia-Pacific. And it's the much propagandised model for third world development, the newly industrialising countries (NECs), the tiger economies. Coupled by tremendous deterioration of the trade surplus which had sustained its economic growth in the past, because the protection is offensive of its own architects, the US and Japan, these countries in the Asia-Pacific are suffering from an environmental destruction unprecedented in the history of the world. Taiwan and South Corea have one of the most poisonous air, water and sea in the world. The remaining tropical rain forest which together with the Amazon provides more than two thirds of the world oxigene is quickly being destroyed. Of Thailand's primary forests, only 17% remain. 30% of the forest of the Malaysian state of Sarawak has been completely destroyed, and the rest will be completely destroyed within the next 20 years. The much flaunted neat model is a model of environmental disaster.
European governments, their various policy making agencies and politicians acting on their behalf must be held partially accountable for their co-responsibility in letting loose the unbridled profit-making of international financial institutions like the IMF/WB and the commercial private banks which feeds on the misery and suffering of millions of people. To the European Council of Ministers, the European Commission and the members of the European Parliament we hereby demand the following:
- negotiate with various European governments the 100% debt rate off, not as debt forgiveness, but as compensation for the ecological debt of the North to the South;
- press for the cancellation of fraudulent loans incurred from private commercial banks, especially those which were contracted under the Marcos dictatorship;
- lobby and pursue the adaptation of a development strategy which will support the genuine efforts of the third world, based on economic self-reliance, priority on rural development, synergy between agricultural industry and a strong orientation of trade into the Asia-Pacific region;
- support a participative alternative SAP in the Philippines and in the third world;
- legalise all undocumented migrant workers already in Europe and provide financial and other material support to the initiatives of migrant peoples to organise themselves and assert their equal and rightful place in a new Europe;
- enter into bilateral agreements with the Philippines and ratify and implement the "Workers United Nations International Convention" on the protection of the right of all migrant workers and members of their families;
- press for community legislations which will effectively combat the misinformation being propagated about migrants and recognise the valuable contribution of migrant labour for the development of the European society.
Thank you for your contribution. I am now glad to give the floor to Mrs. Judy Williams. She will speak from the perspective of the Caribbean.
Distinguished members of the European Parliament, representatives of the Commission of the EU, ladies and gentlemen, friends. I represent the Caribbean Policy Development Center (CPDC) and the Caribbean Conference of Churches, two NGOs in the Caribbean involved at the community level. I am pleased to address you today on behalf of the delegation from the Caribbean on matters which are of great importance to all our organisations and the people of the Caribbean whom we are privileged to work with and to represent.
Our presence here is largely because of the growing unacceptable situation in our region and other regions of the South because of the way in which the Bretton Woods institutions fashioned and supported a kind of development which marginalises and disempowers large numbers of our people, namely our women, youth, small farmers and other major social groups. We are here, too, because of growing collaboration with our partners of the North who are addressing these issues which in more recent times have been raising their ugly heads in your countries — issues of poverty, homelessness, unemployment, prostitution, drugs and crime.
After 50 years of pursuing a development strategy designed and dictated by governments, corporations and financial institutions of the North we are still to see the benefits trickle down to the people. Today we, the people of the Caribbean, Africa and the Pacific have decided that it is time to take a leading role in putting an end to the destruction of our regions' resources and to the steady deterioration of the quality of our lives. We believe that governments like yours which have a reputation for being responsive to some of the development dilemmas of our countries in the South and who today must face the same dilemmas at home, must seek to distance themselves from the strategies of structural adjustment that are bringing about such human suffering.
We believe that what has been called a strategy for development is but a strategy for growth, statistically measured by gross national product (GNP). And even with the best intentions, some of your own trade and aid policies and programs which have fallen victim to the structural adjustment "virus" will only result in creating more economic and ecological desaster in the countries that you hope to assist. On the other hand, sustainable development is predicated on the notion that our communities and local organisations must become intimately involved in conceptualising, planning and implementing policies and programs of development. This means action that empowers people of these regions to participate fully in economic decision-making. This new approach also means that the right of all countries to choose and pursue their own course of development must be respected by all. In this case, the case of the Caribbean, this means the right of the people of Cuba to choose the development strategy of their own, and that strategy must be respected by all. The countries of Europe have an important role to play here both as individual sovereign states and as the voting members of the powerful EU. We think and we know that there are options.
Firstly, we wish to make it quite clear that there is a better way! Secondly, we wish to make it equally clear that we know what the better way is! Not because we are arrogant. It is our work with our communities and organisations over the past 20 years or more that has informed our knowledge of what works and what does not work in our countries. Our experience and expertise has been developed as a result of the investment of time, energy and very scarce finances in sustainable farming systems. It has come from our sustained involvement in popular research and education methods that are most effective in bringing out the best in our people. Our capacity for self-development also comes from our years of work with groups of women and others in establishing use for agricultural raw materials which would otherwise have gone to waste, but which today create jobs and income for thousands of our people in our communities, particularly in rural areas. Our knowledge of what is best for us comes also from the experience we have of representing our own case to our governments and to international agencies in a way that others can understand the real possibilities for development and change, if the skill and the will of the people are mobilised, organised and supported. Based on these practical experiences of what works, we have distilled the proposals that we present to you today.
Distinguished members of the European Parliament, these proposals have been submitted in full in a Caribbean position. That document includes the full range of the proposals we wish to make to you. For purposes of this presentation, however, we wish to draw your attention to some of the more critical proposals which we believe require urgent attention. And we present this in the spirit of partnership and challenge:
[Because of shortage of time Judy Williams left out the following concrete proposals and demands from the Caribbean:
In conclusion, we remind you that in the 1970s and 1980s, Jamaica was held up as a success story by the international financial institutions suggesting that their programmes of structural adjustment had worked there. Today we know from the evidence that this is not so and that Jamaica is in a more difficult situation today after having followed the prescriptions of the Bank and the Fund.]
- The Members of the European Union should consider taking steps to replace GATT's undemocratic structure with a global World Trade Organisation based on the principle of "one state one vote";
- Members should encourage a global regime to oblige the transnational corporations to meet fully the ecological costs of their production activities now met by poor countries and a disciplinary regime to counter and prohibit transfer price manipulation by TNCs;
- The Members of the European Union should seek the establishment of a New International Financial Order (NIFO), with a managing institution based on the principle of one state one vote, to replace Bretton Woods institutions current anarchical exchange rate mechanisms;
- We encourage you to work for the establishment of a global Structural Development Fund, with democratic participation by all states, funded by a specified percentage of GNP of surplus countries, to replace the International Bank for Reconstruction and Development;
- We invite you to join with us in the effort to create an international regime which can declare states insolvent and determine equitable liquidation procedures so that states can start anew with a clean slate and international banks and multilateral banks meet their full share of the responsibilities and costs;
- We invite you to work with us to encourage debt forgiveness by rich countries and their financial institutions to poor countries for ecologically sound development programmes aimed at poverty reduction and consistent with the provisions of Agenda 21;
- We urge you to take steps to develop a regime which locates and repatriates flight capital back to the country of origin and which re-assigns funds seized in other illegal activities, for sustainable development processes among the poor of the North and the South.
We call upon you to join with us in the Caribbean and in other regions of the South in bringing an end to the imposition by the IFIs on poor countries of all conditionalities and structural adjustment policies attached to the grants and aid, and end other impositions in world trade.
The far reaching proposals we present to you will require all of us to accept a challenge and partnership that is the governments' and peoples' of Europe and the governments' and peoples' of the Caribbean.
I thank you.
Thank you for your contribution. The last person in this round will be Dr. Davison Budhoo. He will speak from the point of view of the Bretton Woods Reform Organisation.
Thank you, Mr. Chairman. Distinguished members of the European Parliament, Commission and Council, colleagues, friends, my name is Davison Budhoo. I am the executive director of the Bretton Woods Reform Organisation (BWRO), a southern based global coalition for IMF/World Bank accountability to peoples of the South. For 17 years previous to my present position I was a staff member of both, the IMF and the World Bank (WB), and had undertaken over 50 missions in Asia, Africa and Latin America, negotiating Structural Adjustment Programmes (SAP) on behalf of these institutions. For two years in the early 80s I was the resident representative of the IMF in Guyana.
In third world countries as diverse as Venezuela, Egypt and Zaire citizens' only mechanism in confronting the economic dictatorship of IMF/WB conditionalities has been street protest. Hundreds of citizens have been shot by their own governments' security forces who feel they have no option but to implement the economic SAPs forced upon them by the Bretton Woods institutions. Guyana, however, in 1994 is blazing a new path and has seized upon the new international economic mechanism created by BWRO International, the alternative structural adjustment programme (ASAP) for economic and social development with equity. Utilizing the economic expertise of BWRO International, the citizens and government of Guyana are creating the world's first ASAP serving as a model for developing countries worldwide, attempting to escape the destructiveness of IMF/World Bank conditionalities.
On August 7th, 1993 the people of Guyana joined forces with BWRO International at a national seminar held in Guyana's capital of Georgetown to establish a National ASAP Committee to oversee the design of a democratically derived economic programme for short term financial stabilization and long term economic and social development. In effect the ASAP formally expresses the aspirations of the people of Guyana in a technical economic programme, acceptable to international financial institutions, creditors and bilateral donors. Subsequently, on February 25th, 1994 BWRO and the National ASAP Committee for Guyana held a second nationwide seminar, generating a tremendous surge of interest and intensified national press coverage on the Guyana ASAP. With the Guyanese press corps and a large European NGO delegation in attendance to witness the historic events surrounding the creation of the world's first ASAP, over 57 representatives of 17 organisations presented their positions on the urgency of the ASAP for the people of Guyana.
Under IMF and WB conditionalities and other political dictates from major world powers, Guyana has been transformed from one of the more highly developed, high income Caribbean Commonwealth countries to the Western hemisphere's poorest nation, eclipsing even Haiti in this respect. According to the United Nations Development Programme (UNDP) the majority of the population live in absolute poverty with malnutrition, infant mortality, lack of access to rudimentary health care, skyrocketing unemployment, crime, and the emergence of homeless street children, resulting form a series of currency devaluations, wage cuts and a forced 40% decline in GNP.
After extensive consultations between BWRO International, the Guyanese National ASAP Committee and senior officials of the government including the President, the Prime Minister, the Minister of Finance and Cabinet officials, the Guyana ASAP Committee in May 1994 passed a resolution proposing extensive government cooperation with BWRO International and the people of Guyana in designing the ASAP, declaring the IMF programme for Guyana "massively flawed and inappropriate" and requesting that President Cheddi Jagan of Guyana postpone singing of the imminent IMF Enhanced SAP for 90 days until BWRO's first draft on the ASAP is finalised.
After receiving BWRO's Debt Strategy Paper, in an unprecedented matter, Guyanese President Cheddi Jagan wrote IMF Managing Director, declaring Guyana's debt situation unsustainable and, subsequently, declaring that the government would cancel the existing IMF programme and re-negotiate a new programme on the basis of the democratically derived ASAP.
The Guyana National ASAP Committee is comprised of the widest cross-section of the Guyanese people including the Manufacturers' Association, the Trade Union Congress, religious organisations, women's groupings, environmental organisations, the Cane Farmers Association, the National Consumers' League and others. The ASAP National Committee, in designing the economic programme with BWRO, facilitates local and national forums for discussion and action of economic objectives associated with the peoples' ASAP and conducts town meetings with every major constituency of the Guyanese people to derive massive popular inputs in the alternative programme. The sectors of the economy prominent in the peoples' alternative programme are reflected in nine subcommittees of the Guyana National Committee including Women in Development, Rice and Cane Farmers, Bauxite and Gold Mining, Manufacturing and Services, Health and Education, Crime and Social Services, Privatization and Public Ownership, Macro-economic management and external debt.
In addition to technical work associated with designing a democratic economic programme suited to the specific requirements of Guyana, BWRO-Guyana is establishing an International Debt Tribunal comprised of seven eminent persons internationally to adjudicate and propose an equitable solution of Guyana's foreign debt crisis. Each man, woman, and child in Guyana owes the IMF/WB, bilateral donors, and commercial banks, US$ 2.400, an amount that, at current wage rates, would take an unskilled worker well over 15 years to repay. In fact under IMF/WB SAPs, imposed since 1988 virtually 100% revenue collected by the government goes to servicing and repaying foreign debt. As such, finding an equitable and viable solution to Guyana's debt crisis is absolutely critical in framing the economic policy options for finding long term sustainable development in Guyana.
Instead of simply condemning the debt status of Guyana, the International Debt Tribunal will systematically examine each loan and aspect of the country's debt and make recommendations balancing the legitimate demands of creditors and the realistic capacity of the government and people to repay the debt. The International Debt Tribunal is another significant innovation in the ASAP which could serve as a model for adjudicating equitable solutions to the debt crisis of other third world countries. We are asking you to support the Tribunal as a legitimate and, indeed, necessary people's response to the debt crisis.
As a complement to the critical work of the International Debt Tribunal, BWRO International, in cooperation with the government, is lobbying to get Guyana classified as a Least Developed Country (LDC) by the United Nations and the Development Assistance Committee (DAC), a classification which has been denied Guyana due to intolerable political pressures despite its status as the poorest and the most heavily indebted nation in the Western hemisphere. Such a classification would entitle Guyana to substantial debt relief and other confessional economic/financial facilities not currently available.
Another tragic consequence of Guyana's debt situation and IMF/WB conditionalities in Guyana has been an unjustifiable push for exploitation of Guyana's rainforests and mineral resources (diamonds, gold, bauxite and others) coupled with a dismantling of environmental controls. Though mired in financial poverty, Guyana is a country rich in natural resources. With abundant reserves of bauxite, gold, diamonds, other minerals, timber, and one of the largest remaining rainforest areas in the world, Guyana is a prime target for powerful multinational corporations. According to Marcus Colchester, director of the Forest People's Programme of the World Rainforest Movement, approximately 80% of the forest has been carelessly leased out over the past 5 years and is ripe for exploitation by transnationals.
Given the immediate danger to Guyana's vast natural treasures, the people of Guyana and BWRO International are also appointing an International Rainforest Tribunal composed of international environmental experts to renegotiate the government's agreements with multinational logging and mining interests. This environmental component of the ASAP is designed to prevent the near total destruction of one of the world's last remaining rainforest preserves in Guyana's Amazon, create adequate environmental controls and ensure a fair rate of compensation for sustainable use of Guyana's resources.
What of the ASAPs immediate future? Once the ASAP is finalised in 90 days, September 1994, BWRO and the people of Guyana will present the ASAP and the International Debt Tribunal's report to the government of Guyana. At this point Guyana will cancel the IMF agreement and renegotiate with the IMF to completely restructure the IMF programme using the major components of the people's ASAP and the Debt Tribunal's recommendations. Additionally, at the end of 1994, an international team of independent economists and experts will be asked to issue an objective analysis of the Guyana ASAP as a model of a technical programme for economic growth with sustainable development.
BWRO will strongly urge all agencies and donors to examine the economic programme on its merits as a means of addressing both the needs of the Guyanese people and structural financial imbalances in the country's economy. The Guyana National Committee and BWRO International will subsequently present the final ASAP to the IMF and World Bank, the Paris Club for official debt relief, Guyana's creditor commercial banks, international human rights organisations and other NGOs, the United Nations agencies including UNICEF, UNDP, UNCTAD, IFAD, FAO, and ECLA, the Carter Center, the Organisation for Economic Cooperation and Development (OECD), the European Commission and Lome IV signatories, and various Parliaments and Northern governments sponsoring or supporting the pathbreaking and innovative development of Guyana's ASAP.
In implementing the world's first alternative structural adjustment programme on the 50th anniversary of the Bretton Woods system, Guyana is the birthplace of a new hope to fundamentally restructure IMF/WB conditionalities in relation to a new paradigm of development — a people driven system of international development financing, utilizing the insider knowledge and economic expertise of BWRO International. The significance of Guyana's action will be no less than the undermining of the negotiating stance of IMF SAPs with all developing countries. BWRO International, in collaboration with national organisations, is also actively implementing ASAPs in India, the Philippines and Trinidad and Tobago. NGOs and mass organisations in several other countries have expressed interest in getting ASAPs stated in their countries.
However, one constraining factor in preventing a faster implementation of ASAPS is lack of financial resources. In this respect I wish to urge the organs of the EU to consider the possibility of supporting this southern initiative through funding another means. Over the next few days I hope to meet relevant officials of the European system to discuss this and related matters.
Thank you. (applause)
Thank you so much. We will now change the floor so that the representatives of the European Parliament can bring their point of view in our midst. These are the representatives of the European Parliament in their own new building. Each of them will speak about 10 minutes in response to what has been said before and in relation to the questions which have been prepared and asked. The first who I can give the floor is Christa Randzio-Plath. She took the initiative for a motion in the European Parliament in relation to international financial stability. So we are glad that you can be in our midst, and you have the floor.