Eric LeCompte spoke with National Catholic Report on a recent Vatican high-level seminar where Pope Francis urged the creation of new global debt and tax policies that can reduce inequality. Read an excerpt below, and click here for the full story.

Pope Francis gets involved in Argentina's debt relief

Eric LeCompte, the leader of Jubilee USA, a network of religious and development groups that argue for international debt relief, praised Stiglitz's call.

"Bankruptcy is a big deal," LeCompte, one of those attending the Vatican conference, told NCR. "If we had it, Argentina would have experienced limited crises, if any, and vulture funds wouldn't have been able to swoop in."

"As speakers today note, a global bankruptcy process is vital to address inequality and support countries to exit debt crisis and financial crisis," he said.

LeCompte also praised the Vatican for hosting the event.

"The Holy See continues a history of leadership focusing on the structural issues that cause poverty and inequality with this seminar," he said. "It's why this event pulls together the highest level of global decision makers to work on the biggest economic challenges of our time — economic challenges that impact all of our lives almost as much as the oxygen we breathe."

Read more here. 

Eric LeCompte spoke with the Dialog on a recent Vatican high-level seminar where Pope Francis urged the creation of new global debt and tax policies that can reduce inequality and end poverty. Read an excerpt below, and click here for the full story.

Game changers: Vatican opens doors to leaders ready for finance reform

The leading “global decision-makers” all agree on the root causes of unsustainable inequality and are adamant about wanting to prevent yet another global financial crisis, said Eric LeCompte, executive director of Jubilee USA Network and an observer invited to the Vatican gathering.

He told Catholic News Service the problem comes in finding consensus on the solutions, “the ways forward for countries to get out of debt crisis and financial crisis and also for building an economy that’s more inclusive and where there is less of a distinction between the haves and the have-nots.”

....

LeCompte said, “Pope Francis really led his country as they were battling a type of predatory finance known as vulture funds,” so while he is continuing the same social teaching as his papal predecessors, “we see the Holy See talking more about very technical economic policies like derivatives and taxation and illicit financial flows.”

“There’s a real sense from this Holy Father that if we really want to change the structures that govern our economy, we need to be able to address these technical issues head-on,” he said.

The pope, in fact, made a point to stop by the pontifical academy in the early afternoon. And his lengthy and detailed written speech continued to hammer home basic and reasonable ethical principles: an end to money laundering, the arms industry and tax havens that drain billions from national economies; stopping repeated tax cuts for the wealthy; and relieving crushing, unsustainable debt burdens, to name a few.

LeCompte said many of the solutions put forward “are ones that Jubilee has advocated for over 20 years, and we’ve worked very closely with the Holy See on developing those positions, as well as with all other major religious institutions around the world.”

Just as the pope’s encyclical, “Laudato Si’,” sets a clear way to examine current structures and advocates for the values of global solidarity and environmental and economic justice, the Feb. 5 gathering was a continuation of that call for a more just world.

“We actually have a very clear path that needs to be taken,” LeCompte said, which begins with God’s creation of a rich and abundant world.

And, he said, the path leads toward that “jubilee promise that Pope John Paul II was the first to exclaim — that we all deserve to live in an economy where we all have enough.”

Read more here. 

Eric LeCompte spoke with Catholic Philly on a recent Vatican high-level seminar where Pope Francis urged the creation of new global debt and tax policies that can reduce inequality and end poverty. Read an excerpt below, and click here for the full story.

Eric LeCompte spoke with Crux on the Vatican high-level seminar, New Forms of Solidarity Towards fraternal Inclusion, Integration and Innovation Seminar, where Pope Francis addressed a small group of Finance Ministers, the head of the IMF and noted economists urging the creation of new global debt and tax policies that can reduce inequality and end poverty. Read an excerpt below, and click here for the full story.

Pope’s direct experience of financial crisis informs views on economy, expert says

ROME - When Pope John Paul II decided to tackle communism and help bring down the Berlin Wall, he did so not only because he saw it as a global problem, but because he had first-hand experience of the impact of the communist system due to his Polish upbringing.

Similarly, according to American layman Eric LeCompte, executive director of Jubilee USA Network, when Pope Francis goes against “vulture funds,” and calls for a new economic model, it’s because he has first-hand experience of the financial crisis these institutions caused in his home country, Argentina.

Hence, it’s both extraordinary but not surprising, LeCompte says, that a Feb. 5 summit in the Vatican will bring together some of the world’s most important players when it comes to finances, including the head of the International Monetary Fund, Kristalina Georgieva and several Nobel laureates. Argentina’s finance minister, Martin Guzman, will also be present.

Guzman, appointed by newly inaugurated Peronist President Alberto Fernandez, needs to restructure $100 billion in sovereign debt with its creditors, $44 billion of it with the IMF, amid a steep recession and more than 50 percent inflation.

Guzman and Georgieva are due to have a meeting about the debt on the sidelines of the Vatican conference, titled “New forms of solidarity: Towards fraternal inclusion, integration and innovation,” organized by the Pontifical Academy of Social Sciences, headed by Argentine Archbishop Marcelo Sanchez Sorondo.

Crux spoke with LeCompte in Rome, ahead of the meeting, about the impact it can have not only on Argentina’s economy but global finances.

“Pope Francis also comes from a very special perspective,” he said. “He is the first pope that we know of in modern history who came from a country that was dealing with a deep financial crisis, austerity. It’s a big part of the reason why ‘vulture funds’ has become part of the vocabulary of the Catholic Church.”

The idea of this small, high-level seminar, LeCompte said, is to bring together thinkers and world leaders and build a more inclusive financial system: “One that can have new mechanisms to deal with the debt problems that Argentina has suffered, but also Puerto Rico, El Salvador, Zambia are all struggling with, as well as to look at issues such as taxation: The developing world loses a trillion dollars a year because of tax evasion and corruption.”

Jubilee, the network he works for, was founded after a call from Pope John Paul II and other major religious leaders in the mid-1990s, in an effort to create a more inclusive economy. Jubilee USA, LeCompte said, is interfaith, working with Jewish, Muslim and Christian groups.

What follows are excerpts of LeCompte’s conversation with Crux Feb. 4.

Crux: Pope Francis has a book-length interview that has as its headline, “this economy kills.” Do you agree?

LeCompte: I think the strong words of the Holy Father are accurate. There is a reality that we have a global economy that lifts some but leaves many behind. And I think that’s why we’ve seen the Holy Father have such an emphasis on inclusion in the economy.

Pope Francis also comes from a very special perspective. He is the first pope that we know of in modern history who came from a country that was dealing with a deep financial crisis, austerity. It’s a big part of the reason why “vulture funds” has become part of the vocabulary of the Catholic Church.

The Argentine media covering the Vatican has been focusing a lot of attention on the fact that Argentina’s Minister for the Economy and the head of the International Monetary Fund will be in Rome for this meeting that you’re attending. And I know you have focused on Argentina since 2010. What can you tell us about this specific element of the meeting?

My organization became the primary organization to focus on the struggle between Argentina and a group of predatory hedge funds, also known as vulture funds. But Argentina had a deep debt crisis and had been able to restructure 90 percent of that debt, exchange it for new, cheaper debt. And then, about 7 percent of the debt, the bond owners and creditors were holding out, employing aggressive tactics. There’s a small group of this seven percent that became publicly known as “vulture funds” because whether it be the Dominican Republic or other countries, these predatory hedge funds buy debts for pennies on the dollar, and then use aggressive tactics for collection.

This kind of predatory finance has been a concern of the Catholic Church for over 20 years. And essentially, every world leader, the G20, the G7, have all called for the ending of the hedge funds.

That said, Argentina had dealt with a deep crisis, it couldn’t get new borrowing and financing, and was dealing with deep austerity problems because of its problems with the vulture funds. This has been a very big issue and has been at the forefront of the previous Argentine financial crisis. When Argentina got out of that crisis, it settled fully with the vulture funds, made a big payout, and it’s also part of the reason why Argentina is again in crisis. It paid out the funds instead of restructuring the crisis, and again Argentina is not having access to enough resources.

The International Monetary Fund negotiated a new plan for Argentina, and unfortunately, it was terrible, and IMF recognizes that at this point. We are meeting here in Rome, and it’s pretty amazing that you have the leaders from Argentina, an Argentine pope, and the head of the IMF all spending a day together here in Rome.

The idea of this small, high level seminar is to bring together thinkers and world leaders and build a more inclusive financial system. One that can have new mechanisms to deal with the debt problems that Argentina has suffered, but also Puerto Rico, El Salvador, Zambia are all struggling with, as well as to look at issues such as taxation: The developing world loses a trillion dollars a year because of tax evasion and corruption.

But this meeting is also taking place at a key moment when Argentina is negotiating its financial crisis and attempting to restructure its debt again and facing a deadline this week.

You mentioned that Argentina is, once again, in crisis, once again in this situation. And even though the IMF acknowledges that their plan was bad, one has to wonder, is it worth it for Pope Francis, even as an Argentinian himself, to spend some of his political capital seeking to bail out a country that is cyclically in a crisis, when many say it shouldn’t, since Argentina is not a poor country?

That’s when you get to the reality that this event is about much more than Argentina. We have, going back to the mid-1990s strong Catholic teaching on the need of negotiating to solve debt issues, transparency issues and corruption issues. At this point, it’s a core part of the teaching of the Catholic Church. I think that, when we are talking about Argentina and its recurring and cyclical financial crisis, we are actually talking about much of the world. Right now, 40 percent of the developing world, according to the IMF, is either in debt crisis or facing severe financial crisis.

It’s wealthy countries, middle income countries and developing countries that are struggling with these recurring issues. The financial crisis which affected all of us in 2008, there were strong warnings by the IMF and the UN that we are approaching another financial crisis, even making comparisons to the Great Depression.

And when you look at inclusive economics and the mechanisms needed to solve financial crisis, whether it’s a global crisis, Argentina or Zambia, it’s the same mechanisms that are needed for the financial system. And this is what leads us to this meeting. To our knowledge, this is the first time that the Holy See is convening at this level, on these issues.

Argentina is important, yes, but it’s not an aberration of the problem, but a clear illustration of the global problem. That’s why the meeting has leaders from all over the world coming, including the finance ministries of a dozen major countries, to talk not only about what we agree are the solutions, but to start to put in place mechanisms that could move the solutions forward.

Do you think there’s actual good will at this meeting?

I think there is. I think a lot of that is because of Pope Francis and the leadership that he has shown on economic issues. This goes back to his personal situation when he was living in a country that was on the other side of the gun barrel of these vulture funds. He has a great sense of the challenges that face the financial system. It’s why we’ve seen in Laudato Si’ and other documents a higher level of debate and discussion and actual financial mechanism. We’ve always seen in the Church strong words regarding debt issues, taxes and corruption. But in this pontificate, we see a higher level of specificity on these issues, and this is in part because he lived them.

On your point regarding good will, I think that it’s remarkable that the head of the IMF and the World Bank are coming to Rome for this high level seminar, because, again, where we have broad agreement on what are the causes of financial crisis, what are the causes of debt crisis and challenges within the financial system, we haven’t moved to the corrective measures yet, which is, to be able to work out of that crisis, to be able to correct risky and predatory financial behavior, when those are seen as the causes.

This gathering is important because it’s bringing together the actual people who could move mechanisms to change our financial systems, mechanisms that the Holy See has been advocating for 20 years.

But the vulture funds will be missing…

Yes, but they are missing from all the global tables. I just want to be clear, yes, they are a concern, but it would be a mistake to think that this event is about vulture funds. It’s about creating an inclusive economy. About challenging inequality and ending extreme poverty. It’s about tackling the fact that - according to UNICEF - 22,200 kids under the age of five die every single day due to extreme poverty. That’s about these particular policies, and that’s what this event is about.

The IMF is coming, the World Bank is coming, and they promote some issues Pope Francis has often accused them of tying to financial aid, the “price tag” or ideological colonization that he often speaks about. Do you think that it’s good that he’s sitting at the table with them?

I think that what Pope Francis is doing is continuing the high level of diplomacy that the Catholic Church has been recognized for and it’s something that Pope Francis himself is really good at. His words have been some of the most striking, challenging and powerful on how the international financial system operates. And some of his major documents, even though he doesn’t mention the IMF by name, he is critiquing its policies. With one hand he’s critiquing and with the other, he’s trying to open the can to have a conversation.

I think that with the new leadership of the IMF there’s a possibility to look in a new way at these issues. It’s also important to know that, in some ways, we’ve been here before. We might not have experienced the Argentine financial crisis or we might not have experienced the global financial crisis of 2008 if a process known as the sovereign debt resolution mechanism had been implemented by the IMF in the early 2000s. It was very close, but it failed, largely because of the private sector and some other concerned. But because it failed, it allowed for the conditions for the 2008 financial crisis.

So, even if the IMF had these kinds of ideas, mechanisms on the table before, that’s why it’s so important that the IMF, the World Bank and Nobel laureates are coming together in a neutral place, where the pope has been affected by these policies first hand. He spoke critically about them, but has also extended an open arm to help us get to the next level.

And even though there’s a lot of things on which the Church and these players disagree - population control, abortion - there are others in which there’s a common ground, like in the protection of the environment…

Right. I think that’s also something we’re going to see emphasized during this gathering. The impact of climate as we talk about poverty and inequality. Climate can no longer be removed from the equation of financial crisis, debt crisis or countries not being able to raise the revenue they need to be able to take care of their own people and fight the consequences of climate change.

Why should Catholics care about this?

For Catholics, this is foundational teaching. If we really want to understand this event, it’s important to start from the point of view that we should love our neighbors as ourselves. As Catholics, we know we are called to be in solidarity with one another, to be able to work for the common good as a part of Catholic teaching, and be able to participate in making the world better. This is foundational Catholic teaching.

This is not Pope Francis being a Communist?

No… If we didn’t have Pope Francis, the teaching would still be the same. I don’t know if we’d be having the meeting without him, but the reality is that this teaching pre-dates Pope Francis by decades.

As an economic expert, what’s, in your opinion, Pope Francis’s most important speech?

When we talk about the views of Pope Francis on the economy, I like to refer to what I believe is the most important speech Pope Francis ever gave but that many of us never understood. And that’s his remarks to the United Nations in New York. Yes, he talked about climate, he talked about human rights issues, but he didn’t talk about any of those issues without first talking about the economy, like he does in Laudato Si’, it’s this idea that we have to frame all the other issues and understanding an economy that creates immense wealth for a small group of people leaving everyone else behind.

In his speech to the United Nations, Pope Francis talked about the need for international institutions to create exits from debt. We see some very high institutions in this Feb. 5 meeting working on creating mechanisms that move us towards bankruptcy and that can fight tax avoidance and corruption.

Read more here. 

Eric LeCompte spoke with Salon on the links between debt and climate change. Read an excerpt below, and click here for the full story.

The convergence: Third-world debt and the climate crisis are intimately connected

Eric LeCompte is a noted United Nations finance expert and executive director of Jubilee USA, a non-governmental organization that presses for debt relief for the world's developing nations to enable them to direct their financial resources to social needs like public health, educations and infrastructure — in order to stave off the ill effects of climate change, like rising sea levels and the loss of farmland. In an interview, LeCompte said that the world has a tangible example of debt relief making a major difference.

"Because of some of the debt relief campaigns we have won over the years in the 2000s we relieved a lot of debt that African countries were holding and because of that it led to  great economic growth that in 2008 insulated Africa from much of the rest of the financial crisis," he said. "In sub-Saharan Africa this meant that 54 million kids went to school who would have never seen the inside of a classroom."

LeCompte makes the case that the connection between debt, wealth inequality and accelerating climate change is not abstract.

"All we have to do is look at Ecuador, that's in the throes of a massive debt crisis," he said. "Right now, they are auctioning off about a third of their rainforest, and China is buying it because Ecuador is deeply indebted to China . . . it is essentially transferring in wealth [from] the vital rain forest" to ready it for oil exploration.

He continued: "This is happening in countries across the world. Right now, according to the IMF more than 40 percent of developing countries are either in debt crisis, or in serious debt distress."

Read more here. 

The Guardian cited Eric LeCompte on the IMF Head Kristalina Georgieva's recent speech on global inequality and financial crisis. Read an excerpt below, and click here for the full story.

IMF boss says global economy risks return of Great Depression

Eric LeCompte, the head of debt charity Jubilee USA, said: “The IMF delivered a stark message about the potential for another massive financial disaster that we last experienced during the Great Depression.

“With inequality on the rise and concerns of stability in the markets, we need to take this warning seriously.”

Read more here. 

Common Dreams quoted Eric LeCompte on the IMF Head Kristalina Georgieva's recent speech on global inequality and financial crisis. Read an excerpt below, and click here for the full story.

IMF Head Gives 'Stark Message' of Looming Inequality-Fueled Global Financial Disaster

According to Jubilee USA director Eric LeCompte, it would be unwise to let Georgieva's comments fall on deaf ears.

"The IMF delivered a stark message about the potential for another massive financial disaster that we last experienced during the Great Depression," said LeCompte, also a United Nations finance expert. "With inequality on the rise and concerns of stability in the markets, we need to take this warning seriously."

"Trade problems and climate-driven weather events pose additional risks at this time," LeCompte added. "It's imperative that we ensure the financial sector is free of risky behavior and corruption if we want to protect ourselves from another global financial crisis."

Read more here. 

Friedrich-Ebert-Stiftung recently published an essay by Eric LeCompte entitled “Keeping our Promises to Finance Development.” Read an excerpt below or find the full text here.  

MACROSCOPE: Keeping our Promises to Finance Development

According to UNCTAD, the Sustainable Development Goals (SDGs) could be achieved with a 5-7 trillion US dollar investment. If we fund the SDGs, the Business and Sustainable Development Commission notes that 12 trillion US dollars of new market opportunities and 380 million new jobs could be created. Yet we know that the developing world is losing a trillion dollars a year, and according to the IMF’s latest report - 15 trillion US dollars is held in tax havens and financial secrecy havens.

UNCTAD notes that debt sustainability in developing countries is “deteriorating fast”, and the IMF states that as of last August, 47 per cent of low-income countries were in debt crisis or facing high debt distress. Human beings are suffering. In too many poor countries, high debts mean people don’t eat, people don’t see doctors and communities are unprepared to deal with the havoc caused by tsunamis, hurricanes, earth quakes and other extreme weather events.

Because of high unsustainable debts, corruption, a lack of public budget transparency, tax evasion, tax avoidance and bad trade deals – countries are losing revenue, and this real revenue loss becomes a theft from the poor. According to UNICEF, 22,000 children under the age of five are dying every single day.

If these numbers aren’t frightening enough, these same structural causes of poverty are also why we have extreme inequality, why 80 individuals have more wealth than 3.5 billion – or half the world’s people, people who live in poverty.

High debts, illicit financial flows and these other structural issues are why the IMF and UNCTAD are warning all of us that we could experience another global financial crisis.

This frightens all of us as we ask whether debts are hindering development and whether high debts and financial secrecy are creating the conditions for another global financial crisis.

Jubilee USA Network, whose members include the US Conference of Catholic Bishops, American Jewish World Service, Islamic Relief, the United Church of Christ, The Evangelical Lutheran Church, The Episcopal Church and most mainline Christian Churches – as well as the international debt and development network that coalesced around resolving debt crisis in the poorest countries of the world over 20 years ago – is well positioned to respond to these issues because of our unique history in creating and supporting policies that successfully resolve unsustainable debts, raise revenue, promote good governance and prevent financial crisis and diminish poverty.

Together we move forward global policies that address the root causes of poverty and inequality related to debt, tax, trade and transparency issues. Congressional Quarterly cites the work of Jubilee USA as some of the last truly bipartisan efforts in the United States.

In the 1990’s – we began our work together to address inequality and finance development by addressing the global debt crisis. Working with governments around the world, 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 US dollars 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 54 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. Former World Bank President Jim Kim cites debt relief as one of the main reasons we saw sustained economic growth in some countries across Africa.

It was out of these initiatives that concepts around achieving debt sustainability were born. 

Unfortunately, as successful and important as HIPC and MDRI were, we now realize that those solutions were not enough to entirely address the problem. Out of the 38 very poor countries that benefitted from the HIPC and MDRI initiatives, 31 – out of 38 – again face debt distress, financial crisis or unsustainable debts. At this point only Somalia is able to qualify for this existing process. Eventually two other countries may be able to utilize this process.

But for every other country in the world, this door is now closed.

While the door is now closed for almost every country in the world on this process, we acknowledge that it was only because of the political will of UN delegates and their finance, development and foreign ministries back home that this happened. In 2016 we saw that political will again in the United States under the Republican led US Congress when a super bankruptcy process was created to deal with Puerto Rico’s 72 billion US dollar debt crisis. It was the first act of the US Congress to stop predatory “vulture funds.” After Haiti’s tragic earthquake, we saw world leaders and the IMF create a process to relieve Haiti’s debt. Just a few years ago, we saw that political will again when the IMF moved forward a debt relief process and innovative grant process to respond to the three Ebola affected countries of Guinea, Sierra Leone and Liberia.

We also see the US government and the G20 working to stop “vulture funds,” promote sustainable development and prevent financial crisis with the Operational Guidelines for Sustainable Development. Political will mobilized again to create new contract clauses to stop predatory “vulture funds.” 

Now we need that political will again, from all of us, to ensure that debt is a vehicle for sustainable development, not a hindrance to development and a cause of human suffering. We need to make debt sustainable and restructurings predictable to stop another global financial crisis.

While the problems are great, there are solutions we can move forward now.

In Addis Ababa in 2015 we gathered with heads of state, our finance ministers and foreign ministers and we forged a consensus. We forged a consensus more powerful and more important than the consensus we achieved for HIPC and MDRI.

We are halfway there – we have a consensus already. By comparison – the HIPC consensus took decades to achieve. But we already have a consensus. Now we must focus on implementation.

We’ve done it before, we can do it again.

In the Addis Ababa Action Agenda we agreed:

1.) We must implement principles of responsible lending and borrowing, promote good governance and public budget transparency. This implementation costs nothing but would raise hundreds of billions of dollars a year. It means exporting the laws we rely on for our domestic economies. Not implementing means corruption goes unchecked and the Mozambique crisis situation, which could have been prevented, is just the tip of the iceberg.

2.) We created the first international agreement to stop vulture funds. There is no way to separate the current economic condition of a G20 country, Argentina, and its battle with vulture funds.

3.) While the important work and efforts of Monterey foresaw the challenges of illicit financial flows, the Addis Ababa Action Agenda was the first to define them and call for tax evasion and corruption to be curbed as a matter of development. Additionally, curbing tax avoidance was also noted as essential for development and good governance. I would offer one of the gifts of the financing for development process was that we all learned together how startling all of our economic losses are because of illicit financial flows and also legal tax avoidance.

4.) In line with the types of debt restructuring and bankruptcy regimes we rely on in our domestic economies and the Doha and Monterey agreements, we agreed that debt restructuring must be improved to arbitrate debt comprehensively, fairly and neutrally. After the Asian financial in the late 1990s we came close to implementing the SDRM, or the Sovereign Debt Resolution Mechanism. We were so close, but it didn’t move forward. The next moment we saw global political will was after the global financial crisis of 2008. We have an agreement to move this forward – we will we wait until the next financial crisis to build political will again?

5.)  Finally – the Addis Ababa Action Agenda, took aim at debt risks of Small Island Development States (SIDS) and Caribbean countries. It is critical that we focus on this one area to help us leverage and grow political will.

With political will growing, we can tackle some of the debt problems of the SIDS. Across the world, many of these islands have poverty rates that range from 30 per cent to 50 per cent. These so-called Middle-Income Small Islands are now facing crisis. Of the 25 highest debt per capita countries, more than half are SIDS.

Unsustainable debts mean that these small islands don’t have resources to deal with the shock of a hurricane or a financial crisis that stops tourists from visiting their countries. When hurricanes decimated Caribbean islands in the last five years, we saw countries like Dominica and Antigua and Barbuda make debt payments within days of a hurricane ravaging their country. It is imperative to move forward proposals that can restructure debt when countries face shocks or natural disasters.

We see the success of proposals like this, when debt relief was successfully used as a crisis response tool for the three African countries hit by the Ebola epidemic.

When disaster strikes, when famine spreads and when economic crisis impacts the poor, we need to be able to reevaluate these situations. In line with our previous thoughts on improving debt restructuring and looking at Chapter 9 and 11 styles of bankruptcy – it seems the Caribbean and SIDS could be good candidates for a regional or focused initiative. This post HIPC initiative, could be an initiative with the high debt distress many Caribbean countries and SIDS are experiencing. It can utilize the principles of bankruptcy for a regional or focused mechanism. When a disaster strikes, a debt moratorium would allow breathing space and debt payments to be used for rebuilding. This would also be a time to reevaluate debt sustainability and possibly trigger a bankruptcy restructuring process.

We’ve done it before, we can do it again. We will do it again.

For small islands, on a smaller scale, we can test solutions that can build resilient, sustainable communities, address inequality and lift the vulnerable. Starting here, we can build more political will to finally resolve debt crisis, stop global financial crises and curb illicit financial flows.

We’ve done it before. We will do it again.

Read more here. 

The National Catholic Reporter quoted Eric LeCompte on the legacy of the Bretton Woods agreement. Read an excerpt below, and click here for the full story.

In New Hampshire, engaged voters revisit the Bretton Woods legacy

"In part what resonates with many workers around Trump's America first policies is that we've seen the 'multilateralism' of the World Bank, the IMF and the World Trade Organization or the 'Bretton Woods' institutions, promote a financial system that enriches a few and forsakes most of us," Eric LeCompte, executive director of Jubilee USA, told me in an interview. 

Read more here. 

Jubilee USA's Director Eric LeCompte spoke at the United Nations in Geneva, Switzerland for the UN Conference on Trade and Development ‎12th Debt Management Conference. Read his remarks on debt, tax and transparency policies that address the root causes of poverty. Read the speech below or linked here. 

The 12th United Nations Conference on Trade and Development (UNCTAD) Debt Management Conference:
Making Debt Work for Development
United Nations
Geneva, Switzerland 

Building Resilient, Sustainable Communities, Lifting the Vulnerable, Addressing Inequality and Mitigating Natural Disasters

Eric LeCompte, Executive Director, Jubilee USA Network
November 19th, 2019
Remarks As Prepared for Delivery

I want to extend my gratitude to all of the organizers of the 12th UNCTAD Debt Management Conference: Making Debt Work for Development. This convening comes at a critical, frightening moment. While the title of these UN Meetings encourages debt to work for development, we need to ask the question: is debt hindering development?

With UNCTAD noting that debt sustainability in developing countries is “deteriorating fast” and the International Monetary Fund stating in August that 47% of low-income countries are in debt crisis or facing high debt distress, human beings are suffering. In too many poor countries, high debts mean people don’t eat, people don’t see doctors and communities are unprepared to deal with the havoc caused by tsunamis, hurricanes, earthquakes and other extreme weather events.

Because of high unsustainable debts, corruption, a lack of public budget transparency, tax evasion, tax avoidance and bad trade deals – countries are losing revenue and this real revenue loss becomes a theft from the poor. According to UNICEF, 22,000 children under the age of five are dying every single day. 

If these numbers aren’t frightening enough, these same structural causes of poverty are also why we have extreme inequality. Why 80 people have more wealth than 3.5 billion or half the world’s people, people who live in poverty.

High debts and these other structural issues are why the IMF and UNCTAD are warning all of us that we could experience another global financial crisis. This frightens all of us.

This convening comes at a critical, frightening moment and we ask are debts hindering development, are high debts creating the conditions for another global financial crisis? 

My organization, Jubilee USA Network is well positioned to respond to these issues because of our unique history in creating and supporting policies that successfully resolve unsustainable debts, prevent financial crisis and diminish poverty.

Jubilee USA is part of the broader community of global organizations that coalesced around resolving debt crisis in the poorest countries of the world over 20 years ago. Jubilee USA moves forward global policies that address the root causes of poverty and inequality related to debt, tax, trade and transparency issues. In the United States, Jubilee USA’s founders and members include the US Conference of Catholic Bishops, American Jewish World Service, Islamic Relief, the United Church of Christ, The Evangelical Lutheran Church, The Episcopal Church and most mainline Christian Churches. 

Congressional Quarterly cites the work of Jubilee USA as some of the last truly bipartisan efforts in the United States.

In the 1990’s we began our work together to address inequality and finance development by addressing the global debt crisis. Working with many of you in this room and governments around the world, 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 54 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. Former World Bank President Jim Kim cites debt relief as one of the main reasons we saw sustained economic growth in some countries across Africa.

It was out of these initiatives that concepts around achieving debt sustainability were born. 

Unfortunately, as successful and important as HIPC and MDRI were, we now realize that those solutions were not enough to entirely address the problem. Out of the 38 very poor countries that benefited from the HIPC and MDRI initiatives, 31 again face debt distress, financial crisis or unsustainable debts. 31 out of 38. At this point only Somalia is able to qualify for this existing process. Eventually 2 other countries may be able to utilize this process. 

But for every other country in the world, this door is now closed.

While the door is closed now for almost every country in the world on this process, we acknowledge that it was only because of the political will of the people in this room and our countries that this happened. In 2016 we saw that political will again in the United States under the Republican led US Congress when a super bankruptcy process was created to deal with Puerto Rico’s $72 billion debt crisis. It was the first act of the US Congress to stop predatory “vulture funds.” After Haiti’s tragic earthquake, we saw world leaders and the IMF create a process to relieve Haiti’s debt. Just a few years ago, we saw that political will again when the IMF moved forward a debt relief process and innovative grant process to respond to the 3 Ebola affected countries of Guinea, Sierra Leon and Liberia.

We also see the US Government and the G20 working to stop “vulture funds,” promote sustainable development and prevent financial crisis with the Operational Guidelines for Sustainable Development. Political will mobilized again to create new contract clauses to stop predatory “vulture funds.”  

Now we need that political will again. 

We need that political will from all of us to ensure that debt is a vehicle for sustainable development, not a hindrance to development and a cause of human suffering. We need to make debt sustainable and restructurings predictable to stop another global financial crisis.

While the problems are great, there are solutions we can move forward now. 

With political will growing, we can tackle some of the debt problems of Small Island Developing States or SIDS. Across the world, many of these islands have poverty rates that range from 30% to 50%. These so called Middle-Income Small Islands are now facing crisis. Of the 25 highest debt per capita countries, more than half are SIDS.

Unsustainable debts mean that these small islands don’t have resources to deal with the shock of a hurricane or a financial crisis that stops tourists from visiting their countries. When hurricanes decimated Caribbean islands in the last five years, we saw countries like Dominica and Antigua and Barbuda make debt payments within days of a hurricane ravaging their country. It is imperative to move forward proposals that can restructure debt when countries face shocks or natural disasters. 

We see the success of proposals like this, when debt relief was successfully used as a crisis response tool for the three African countries hit by the Ebola epidemic. 

When disaster strikes, when famine spreads and when economic crisis impacts the poor, we need to be able to reevaluate these situations. In line with our previous thoughts on improving debt restructuring and looking at Chapter 9 and 11 styles of bankruptcy – it seems the Caribbean and SIDS could be good candidates for a regional or focused initiative. This post HIPC initiative, could be an initiative with the high debt distress many Caribbean countries and SIDS are experiencing. It can utilize the principles of bankruptcy for a regional or focused mechanism. When a disaster strikes, a debt moratorium would allow breathing space and debt payments to be used for rebuilding. This would also be a time to reevaluate debt sustainability and possibly trigger a bankruptcy restructuring process.

We’ve done it before, we can do it again.

For small islands, on a smaller scale, we can test solutions that can build resilient, sustainable communities, address inequality and lift the vulnerable. Starting here, we can build the political will to finally resolve debt crisis and stop global financial crises.

Thank you.