The Spanish Parliament this month approved a law to set up a new Fund for providing financial support to Spanish companies investing in developing countries. According to the campaign “Who owes Whom?” – gathering several Spanish development NGOs, including Eurodad member El Observatorio de la Deuda en la Globalización (ODG), the new law will contribute to worsening the debt crisis for countries in the global South, building up more illegitimate debt and contributing to the accumulation of ecological and climate debt.
“To date, the reforms of the [Spanish export credit agencies] FAD and the CESCE can only be described as disappointing and totally insufficient”
says Merche Valls from “Who owes Whom?”. “The Government shows its most hypocritical face in creating a law that allows them to continue to channel citizens’ money into private initiatives with a complete absence of public control, and at the same time cutting aid and social expenditures”.
Press release by Who owes Whom:
10th June 2010 – The Law for the Reform of the System of Financial Support for the Internationalisation of Spanish Corporations, approved this month by the Spanish Parliament, will lead to the creation of a new credit instrument, the FIEM, which will generate more external debt in poor countries, with the sole objective of supporting Spanish businesses in their operations beyond Spain’s borders. For “Who owes Whom?”, this new law will represent a serious setback in meeting Spain’s human rights and poverty eradication commitments, and it will most likely increase foreign debt in the South. It will deepen the lack of public control, transparency and evaluation of accounts.
“This law totally ignores the co-responsibility of the Spanish government in the debt crisis faced by many poor countries” affirms Gemma Tarafa, of “Who owes Whom?” and ODG. “The establishment of a new debt generating instrument totally contradicts the external debt management law, which was approved in 2006 and obliges the Government to reform the Spanish export credit agencies, FAD and CESCE”.
“Who owes Whom?” accuses the Government for seeking a way out of the economic crisis by supporting Spanish business at the expense of human rights in the global South. “The Law will further aggravate the already condemned disastrous failures committed by FAD over the past 30 years, such as supporting projects which violate human rights, encourage bribery and corruption or have serious detrimental economic, environmental and social impacts”,
said Rica Garcia from “Who owes Whom?” and the Human Rights Observatory DESC. “Who owes Whom?” also highlights the violation of policy coherence principles. “The result is hypocrisy. The government approves an instrument that will support companies which have been repeatedly condemned for their activities in the global South”
says Garcia. During the EU-Latin American alternative forum Enlazando Alternativas which took place last month, “Who owes Whom?” together with other CSOs, organised a session of the Permanent People’s Tribunal in order to expose human rights violations and malpractice of companies. As many as one third of the accusations presented before the recent session of the Tribunal were cases showing systematic violations of human rights and the rights of peoples caused by Spanish companies.
In theory, the new law rejects credits for companies which have contributed to human rights violations, participated in corruption or violated agreements such as workers’ or children’s rights. However, in practice, FIEM does not have specific mechanisms for transparency and public access to information, control of funds, participation of civil society and affected communities, impact assessment or evaluation of accounts. Nor are there provisions for legal sanctions.
Finally, the Spanish Government has failed to meet their obligation to reform the Spanish Export Credit and Insurance Company (CESCE). The new law does not include necessary modifications to guarantee that no more illegitimate external debt is generated or that socially and environmentally unsustainable projects are not supported. The lack of transparency and of citizen or parliamentary control of the CESCE has not been addressed.
Due to pressure from “Who owes Whom?” and other civil society organisations and platforms, some small improvements have been introduced to the law since the Government’s first proposal. CSOs have succeed in reverting the initial intentions of Prime Minister Rodriguez Zapatero’s executive and managed to ensure that the FIEM credits do not count as Official Development Aid. “At least we have managed to ensure that they are called by their real name and that support for Spanish business is not disguised as aid for Southern countries”, declared Merche Valls, from “Who owes Whom?”.
“To date, the reforms of the FAD and the CESCE can only be described as disappointing and totally insufficient“
concludes Valls. “The Government shows its most hypocritical face in creating a law that allows them to continue to channel citizens’ money into private initiatives with a complete absence of public control, and at the same time cutting aid and social expenditures.”
According to “Who owes Whom?” creating FIEM means a worsening of the debt crisis for countries in the global South, it means building up more illegitimate debt and contributing to the accumulation of ecological and climate debt. Faced with this situation and given that the Spanish Government is incapable of respecting its commitments, the “Who owes Whom?” campaign will continue to condemn and mobilise against the public funding channelled through the CESCE and the FIEM to Spanish transnational corporations responsible for serious violations of human rights and social and labour rights in the South.