November 10, 2006

GENEVA – The 14 Latin American member churches of the Lutheran World Federation (LWF) have welcomed the unilateral and unconditional decision of the Norwegian government to cancel some Euro 63 million (USD 81 million) of the illegitimate foreign debt of five developing countries. In a letter to Norway's Prime Minister Jens Stoltenberg, the moderator of the region's Lutheran church leadership body, Rev. Dr Gloria Rojas wrote that this "brave and totally unprecedented step" places the Norwegian government within "the vanguard of the topic of debt."

It is of particular importance that the Norwegian government explicitly mentions its "co-responsibility" as the "creditor country for the credit granted in what it defines as a failed development policy that lacked an appropriate evaluation of needs as well as an appropriate risk analysis," said Rojas in her letter presented on 10 November to Ambassador Wegger Chr. Strommen, Norway's Permanent representative to the United Nations Office and other international organizations in Geneva, Switzerland. Rev Federico H. Schäfer, president of the Evangelical Church of the River Plate (IERP) of Argentina, presented the COL moderator's letter at the LWF Secretariat in Geneva.

Rojas, president of the Evangelical Lutheran Church in Chile (IELCH), added that the cancellation being made without linking it to Norway's development aid funds came in positive contrast to other developments. In other cases, "supposed debt relief has gravely distorted the amounts actually granted to the poorer countries for their development." She said that the Latin American LWF member churches now hoped that the Norwegian government would continue to pursue debt studies and audits within the UN structures, the World Bank and other international institutions.

Debt Cancellation Could Serve as a Model

According to the IERP president Schäfer, the Norwegian government's decision is a positive step that supports the understanding that a large amount of foreign debt is negotiated unfairly and under questionable circumstances. This debt cancellation could be used as a kind of model for other governments to follow. Schäfer also supported the development of universally recognized international laws with acknowledged and enforceable minimum standards for fair trade, pointing out that injustices such as illegitimate foreign debt cannot be brought before a court until there are globally recognized rules to follow.

Ambassador Strommen stressed that the Norwegian government places great importance in receiving responses such as those given by the Latin American LWF member churches. He promised that the points made in the letter would be taken into account in the government's further deliberations on the question of international debt. He continued that the future was a common concern and that everyone would have to "work together, even if you live close to the South Pole and we live close to the North Pole."

According to the LWF General Secretary, Rev. Dr Ishmael Noko, the Latin American churches' letter represents a response of the whole federation. Noko, furthermore, asked Norway to take the lead in the establishment of an international tribunal dedicated to auditing debt. He said that Norway had shown that it was willing to listen to the voiceless, and that the LWF supported the establishment of an international court. The general secretary called upon other ecumenical organizations to join in the process.

Norwegian Campaign Was a Development Policy Failure

Following years of pressure by churches, non-governmental organizations, and social movements, the Norwegian government decided in early October to cancel the debt owed by Egypt, Ecuador, Jamaica, Peru, and Sierra Leone. This debt originated from the Norwegian Ship Export Campaign. It to lead the Norwegian shipyard industry out of a severe crisis, the Norwegian government provided 21 countries with credit to purchase ships and shipping equipment between 1976 and 1980. The government did not however, consider whether the ships delivered made developmental and economic sense for the developing countries in question.

A statement of the Norwegian government states that it "is now generally agreed that the Ship Export Campaign was a development policy failure." As a creditor, "Norway shares part of the responsibility for the resulting debts. By canceling these claims, Norway takes" up its responsibility in allowing these countries not to service the remainder of this debt.

Foreign Debt Destructive for Millions of People

In Rojas' letter, she mentioned that "according to the Conference of Bishops and Presidents of the LWF Member churches in Latin America," foreign debt is "destructive to the lives of millions of human beings and to societies and entire communities." She added that the countries of the South were generally forced to service debt that never provided their people with any particular benefit or any form of overall economic development. "In many cases, in Latin America as well as in other parts of the world, the debt is linked to dictatorial processes and state terrorism responsible for crimes against humanity," Rojas continued.

Reflecting on the reasoning behind the Norwegian decision, the Chilean church president remarked that while the term "illegitimate" was not expressly used to refer to this debt, the creditor did in fact admit responsibility for a failed loan project. In her letter, she wrote that this was a "very important step that will allow us to advance toward an open acceptance of the concept of ‘illegitimate debt.'." She continued that this "category must encompass the debts acquired by dictators, those acquired for unsuccessful or fraudulent projects," and those, whose "use has been tainted with corruption by the officials of one or both hemispheres." Advocacy Program

The LWF's Latin American member churches have been conducting an advocacy program since 2004 to focus on the illegitimacy of the region's foreign debt. The program supported by the LWF Department for Mission and Development and coordinated locally, aims to raise awareness about illegitimate foreign debt at various church levels in countries of both the North and South.

The July 2003 LWF Tenth Assembly in Winnipeg, Canada, stated in its "Public Statement on Illegitimate Debt" that, far from seeing an improvement in the situation, "the debt burden has increased and is today a major barrier against eradication of poverty and fulfillment of basic human rights for all." It continued that the international financial institutions "and the dominant nations in the world have to accept their responsibility for the bad policies, decisions and practices, which led to the current debt crisis." The statement concluded that "there is an urgent need to develop mechanisms at an international level in order to find ways" to introduce justice-oriented debt management.

The full text of the letter written by Rev Dr. Gloria Rojas can be accessed as a pdf file on the LWF Web site: Spanish: http://www.lutheranworld.org/LWF_Documents/Letter_Gloria_Rojas-11-2006-ES.pdf English: http://www.lutheranworld.org/LWF_Documents/Letter_Gloria_Rojas-11-2006-EN.pdf

Click here for a Compilation of Resolutions and Statements adopted by the LWF Tenth Assembly in Winnipeg, Canada: http://www.lwf-assembly.org/PDFs/LWF_Assembly_Resolutions-EN.pdf.

Lutheran World Information