As the United Nations General Assembly debate began earlier this week, Eric LeCompte spoke at a high-level event on improving global debt, tax, trade and transparency policies to address poverty. The event, focused on financing development, was organized by the government of France and the International Leading Group on Social and Solidarity Economy. Read the speech below or the attachment here.
72nd United Nations General Assembly
‘Focusing on People: Striving for Peace and a Decent Life for All on a Sustainable Planet’
UN High Level Event:
INCLUSIVE, PARTICIPATORY, INNOVATIVE: FINANCING FOR SOCIAL AND
SOLIDARITY ECONOMY AT THE CORE OF THE SDGS
United Nations, New York
“Promoting Debt, Tax, Trade and Transparency Policies that
Finance Development, Ensure Natural Disaster Relief, Build Peace
and Protect our Planet”
Eric LeCompte, Executive Director of Jubilee USA
September 19, 2017
Remarks As Prepared for Delivery
I want to extend my gratitude to all of the organizers, the Government of France and the International Leading Group on Social and Solidarity Economy. It is an honor to be with you today
My organization, Jubilee USA is part of the broader community of organizations that coalesced around the Financing for Development process that promoted a global agreement in Addis Ababa in 2015. The Financing for Development community includes women’s organizations, religious and political groups as well as global development organizations. During the Financing for Development process, our community asserted that we can meet the Sustainable Development Goals, ensure human needs are met and protect our planet by improving global debt, tax, trade and transparency policies. The International Monetary Fund notes that several of these issues are the basis of global inequality.
Jubilee USA moves forward global policies that address the root causes of poverty and inequality. In the United States, Jubilee USA’s founders and members include the U.S. Conference of Catholic Bishops, American Jewish World Service, Islamic Relief, the United Church of Christ and most mainline national Christian Churches.
My remarks are focused today on utilizing existing and potential revenue streams that can finance development, relieve human suffering and protect our environment. There is no way to discuss these issues, without acknowledging the great human suffering caused by recent natural disasters from India to the shores of the United States.
We can’t reach our partners on the island of Dominica and all initial reports note that the island is devastated by Hurricane Maria. Bishop Gabriel Malzaire who leads the Catholic Church on the island and is the President of the Caribbean Catholic Antilles Episcopal Conference, sent a letter to the International Monetary Fund just days ago. His letter on behalf of Caribbean Catholics, called on the IMF and other creditors to temporarily delay debt payments for islands like Antigua and Barbuda recently ravaged by Hurricane Irma. Sadly, his letter is now relevant for his own island nation of Dominica. It’s imperative that the IMF, World Bank and other creditors delay payments or grant a debt payment moratorium to provide financing and relief in the face of human tragedy.
When disaster strikes, when famine spreads and when economic crisis impacts the poor, we have immediate tools at our disposal. Too often simple, common sense financing to address crisis are not used. Whether it is a hurricane or famine, delaying debt payments and debt relief can provide immediate aid, when aid is needed most.
More broadly we currently live in a global financial system where 80 people own as much, have as much wealth, as more than half of the entire global population. We live in a global financial system where we know one out of five people in the world lives on less than a dollar a day.
In the 1990’s we began our work to address inequality and finance development by addressing the global debt crisis. Together we won two great debt relief and financing initiatives to address global poverty and promote children’s education and health: The Heavily Indebted Poor Country Initiative (HIPC) and the Multilateral Debt Relief Initiative (MDRI). Because of these initiatives, over $115 billion was won in debt relief to benefit some of the world’s poorest countries. Because of that debt relief we know in sub-Saharan Africa that more than 52 million kids went to school who never would have seen the inside of a classroom. We know that school fees were cancelled, hospitals were opened, because of this historic initiative, because of this relief and the international accountability laws that we won, all of this money had to go into building social infrastructure.
Unfortunately, as successful and important as HIPC and MDRI were, we now realize that those solutions were not enough to entirely grasp the problem. Out of the 38 very poor countries that benefitted from the HIPC and MDRI initiatives, 31 again face debt distress, financial crisis or unsustainable debts. 31 out of 38. 3 But not only has that crisis impacted and returned to some of the world’s poorest countries, we have also seen it impacting middle-income and even developed countries. From 2009 to 2014, debt service in Africa nearly doubled. While at the same time in the same countries in Africa, we saw spending on health care decline. As we talk about Dominica, we are currently seeing a tragic situation on Small Island Developing States or SIDS across the world, many of these islands with poverty rates that range from 30% to 50%. These so called Middle-Income Small Islands are now facing crisis, just as so-called middle-income countries in Africa are facing similar crises.
These new crises have become more complicated. Debt itself has changed and the instruments of debt have changed. Where debt was relatively quarantined to a rather small group of lending facilities, international financial institutions, governments and bonds, now we see more complicated instruments.
With this new reality and this lack of debt sustainability there is a small group of exploitative hedge funds that are trying to benefit from countries wrestling with financial crisis. These so called “vulture funds” are responsible for predatory behavior in Detroit, in Greece, in Argentina and were recently stopped in Puerto Rico by an act of the US Congress. So called “vulture funds” buy debt for pennies on the dollar and then sue in full using aggressive litigation tactics to collect the full amount. These types of funds have successfully collected aid monies that were intended to provide development financing in the developing world.
We and the religious organizations that we represent, believe public budget transparency and responsible lending and borrowing are essential. Beyond preventing predatory financial behavior, public budget transparency and responsible lending and borrowing can provide financing of billions of dollars annually for the developing world. These conservative stewardship policies cost nothing and can raise billions in the developing world. It is why we support improved debt restructuring at the International Monetary Fund. It is why we supported the United Nations General Assembly process to create a legal global bankruptcy framework. Similar to Chapter 9 or Chapter 11 in the United States, global bankruptcy can provide the same kind of stability we rely on in domestic economies into the global financial system. Pope Francis supports such a system to provide financing to end poverty. Adam Smith the father of modern economics believed global bankruptcy is critical for global stability.
Beyond debt, addressing trade, transparency and tax issues can also provide the needed financing to meet human needs. There is no way that we can separate these 4 issues when we discuss financing human development. The same predatory hedge funds that took Argentina to court in New York, that benefited off of crisis in Detroit, small island states and Greece, are also using trade resolution mechanisms such as the Inter-Settlement Dispute Mechanisms, to try and collect monies that countries need to meet the needs of their people. Most recently we see this in Peru, where old military debt that had propped up the dictatorship was bought for pennies on the dollar and is being sued for in full.
More concerning is that many trade negotiations make it difficult for vulnerable populations to get financing and access for life saving medicines. We need trade policies that lift and protect human beings. We need trade policies that ensure proper financing to meet the needs of vulnerable populations.
We also acknowledge the growing issues around tax evasion, illicit financial flows, anonymous shell companies and corporate tax avoidance. As the President Mbeki report noted, one of the greatest diversions of financing for human needs is because of tax evasion and corruption. Last year the UN Conference on Trade and Development (UNCTAD) released a study on five countries that showed how much money they were losing because of “trade mis-invoicing.” Currently we believe that 80% of all illicit financial flows are because of trade mis-invoicing at borders and port authorities. This is actually a relatively easy problem to tackle, and this particular problem if tackled could secure more than $1 trillion a year to provide financing in the developing world. Addressing corruption, tax evasion, corporate tax avoidance, anonymous shell companies and related issues must be addressed. The Financing for Development Community of development groups continues to call for vehicles like a global tax body to help settle these issues and raise financing for the development world.
In closing, by addressing structural economic issues, we can finance development, human needs and address economic crisis. In an era where aid streams are being debated, it’s essential that we harness revenue streams by promoting better global policies on debt, tax, transparency and trade.