By Dionne Jackson Miller

Debt cancellation is necessary for Third World development, agreed the panellists at the WSF conference on External Debt yesterday, but they stressed that civil society must be prepared to monitor the process.

The critical issues raised included the legitimacy of the debt owed by the South, the need for auditing to determine which debts are illegitimate, and the use of debt as a tool by the North to control the South.

Panellists Lidy Nacpil, Freedom from Debt Coalition, Philippines; Eric Toussaint, Committee for the Cancellation of Third World Debt; Jack Jones Zulu, Jubilee Zambia; Luis Miguel Ramos, CEDDAL, Peru; and Paul Samangassou, Cameroon, made it clear that change is needed.

Toussaint, in the position paper (co-authored by Arnaud Zacharie) presented at the conference, noted that the United Nations Development Programme and UNICEF have estimated that 80 billion dollars per year for ten years is enough to guarantee basic education, health care, food, drinking water and sanitation for the population of developing countries.

He stated that 80 billion dollars represents 'about three times less than the sum repaid on its external debt by the Third World, or about a quarter of the US defence budget… and half the accumulated wealth of the four richest people on Earth.'

Toussaint's proposals include debt cancellation and the establishment of a development fund into which money previously spent on debt repayment would be channelled. He also calls for raising official development aid to at least 0.7 percent of GDP of the most industrialised countries, to about 150 billion dollars a year.

He also suggests removing the rule of bankers' secrecy, eliminating tax havens, implementing the restitution of 'stolen property' to the citizens of the Third World, and taxing global financial transactions.

'A 0.1 percent tax is estimated to provide revenues of 100 billion dollars annually,' he told the WSF conference. 'This taxation of capital should go to a development fund.'

His envisages an end to structural adjustment policies, widely believed to weaken countries by making them more vulnerable to external fluctuations, such as major shifts in the global markets, and the actions of speculators.

Peruvian activist Ramos also strongly criticised the impact of structural adjustment policies.

'We shouldn't worry about how to renegotiate the debt or credit lines; our objective is the total annulment of debt. We must build the objective conditions to achieve this. There are tons of paper and diagnoses showing that structural adjustment generates more poverty, inequity and goes against the human rights of the population,' he said.

Zambia's experiences also reflect this, according to Jack Jones Zulu, Jubilee-Zambia's policy analyst.

He said that even after qualifying for debt relief in 2000, Zambia's problems persist.

'There was a lot of excitement, but civil society was cautious, we called on the government to be careful, we knew it was not going to work. Unfortunately, we were right.'

According to the panellists, civil society must put pressure on governments not just to press for debt cancellation, but to then use those funds for effective and transparent development mechanisms that have the consensus of the people.

'Poverty reduction involves the reduction of debt in the short term,' said Cameroon's Samangassou. 'If we do not consult the people, poverty will continue.'