Tag Archives: illegitimate debt

Norway takes a bold step towards debt justice: First creditor ever to carry out a debt audit

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Brussels, 15 August 2012

Today the Norwegian Minister of Development Heikki Holmås announced that Norway will make an assessment of the legitimacy of developing countries’ debt to Norway. This means that the Norwegian government will be the first to ever carry out a creditor’s debt audit.

Gina Ekholt, Director of SLUG, the Norwegian Coalition for Debt Cancellation, said: “This is a historical day! Not only for debt campaigners who have been fighting for this for years, but also for the people across the world that are suffering from unpayable and illegitimate debt burdens. This is an important tool to promote responsible lending and to take responsibility for past loans. We hope that other creditors will be inspired by Norway’s debt audit.”

Since being elected in 2009, the Norwegian government has promised to carry out a debt audit, as well as working to establish binding guidelines for responsible lending. Today, Holmås promised that the audit will now be launched, to be followed up with new and stronger guidelines for responsible lending. 

Øygunn Sundsbø Brynildsen, Senior Policy and Advocacy Officer at Eurodad, said: “The ongoing global financial crisis is only one example of the devastating consequences of reckless lending. Today’s initiative has the potential to be a game-changer in the move towards more responsible finance. We hope other countries will be bold enough to follow Norway’s lead towards policies that can help avoid future unjust debt burdens.”

The Norwegian government has previously admitted their responsibility as a creditor for dirty debts attached to a particular set of loans for developing countries to buy Norwegian ships. In 2006 the government announced that they would cancel debts for seven countries because the original loans had been a “development policy failure”.

The Norwegian Coalition for Debt Cancellation (SLUG) has done its own investigation of debts owed to Norway. The research reveals that a part of Indonesia’s current debt to Norway is clearly illegitimate. SLUG shows that the people of Indonesia is still paying for a wave power plant that was never built, and failed technology for sea monitoring systems.

In the UK, the UK All-Party Parliamentary Group is conducting an inquiry into UK Export Finance, part of the Department for Business, which backs loans to foreign companies and countries to buy British exports. Norwegian Christian Democrat MP Hans Syversen MP gave evidence to the inquiry, saying of the ship export loans: “we had to acknowledge that this procedure was quite hurtful to the people that we thought we did something good to and even the ships that were built were not of good quality.”

Tim Jones, Policy Officer at Jubilee Debt Campaign in the UK, said: “Norway is yet again setting a fantastic precedent that lenders are responsible for the debts they create. The Liberal Democrats have similarly pledged to carry out an audit into debts owed to the UK. But Vince Cable has refused to do so, despite being in charge of the department responsible. People in Iraq, Indonesia and Egypt are today repaying loans to the UK government given to past dictators for military equipment.” 

Norwegian initiatives have led to the establishment of international principles for responsible lending and borrowing in the UN Conference on Trade and Development (UNCTAD). The principles will be applied in the Norwegian debt audit. In April, the UK government unsuccessfully tried to stop UNCTAD working on responsible lending and borrowing principles.

Jostein Hole Kobbeltvedt, Eurodad representative at the UNCTAD expert group on responsible sovereign borrowing and lending, said: “To apply the UNCTAD Principles in the Norwegian debt audit is a solid way of showing that the Norwegian government takes the Principles seriously and that they take their responsibility as a creditor seriously.”

Development Minister Holmås announced that the plan is for the audit to be concluded within a year.

Read more:
Breaking new grounds: International perspectives on a creditor audit in Norway. SLUG, 2011
Eurodad’s Responsible Finance Charter, Eurodad 2011
Is Indonesia’s debt to Norway illegitimate? By Magnus Flacké (SLUG) and Nikmah Khoirun (INFID)
Unctad’s Principles on Promoting Responsible Sovereign Lending and Borrowing, UNCTAD 2012.
Norway makes ground-breaking decision to cancel illegitimate debt (October, 2006)
Creditor Responsibility and the Norwegian Ship Export Campaign, By Kjetil G. Abildsnes (SLUG and FORUM)

Contact:
Oslo: Gina Ekholt, Director of SLUG, the Norwegian Coalition for Debt Cancellation:
+47 959 70 226
London: Tim Jones, Policy Officer at Jubilee Debt Campaign:
+44 (0)20 7324 4725 or +44(0)7817 628196
Brussels: Øygunn Sundsbø Brynildsen, Senior Policy and Advocacy Officer at Eurodad:
+32 (0)2 894 46 44

 

Argentina still ‘owes’ UK dictator debt for Falklands arms

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Eurodad member Jubilee Debt Campaign has uncovered documents which show that Argentina still owes debts to the UK government based on arms sales to the Argentine junta in the years leading up to the Falklands War.

The archives, which include a letter from then Foreign Secretary David Owen, show the British government keenly aware of the odious nature of the Argentina regime  - describing it as ‘worse’ than Pinochet’s Chile – and that conflict over the Falkland Islands was possible. However, Owen states that “complete consistency in our approach” towards Argentina was not possible.

Argentina’s £45 million restructured debt includes loans for two Type 42 Destroyers and two Lynx helicopter which were used in the invasion of the Falklands.

The debt overhang left by Argentina’s military junta was not cancelled, despite a court case in 2000 finding that loans to Argentina under the dictatorship were part of “a damaging economic policy that forced on its knees through various methods … and which tended to benefit and support private companies – national and foreign – to the detriment of society”. These loans ultimately helped fuel Argentina’s economic crisis in the early 2000s.

Nick Dearden, Director of Jubilee Debt Campaign said: 
“Lending the military junta money to buy British weapons was illegitimate and odious. The newly uncovered documents show that then Foreign Secretary David Owen knew the UK government was lending money for arms to an abhorrent regime. The Liberal Democrats must stick to their pledge to rule invalid loans recklessly given to dictators”.

“This is not the only occasion in which debt has been run up supplying arms to a regime which British soldiers would soon be fighting. The anniversary of the Falklands War should force the government to question the way it does business. Business Minister Vince Cable must implement Liberal Democrat policy and stop subsidising war through the backing of loans to other governments to buy weapons.”

A briefing on Argentina’s debt to the UK and the arms sales is available here.