The Caribbean Debt Network meets in Grenada. Credit: Bernard Lauwyck

By Eric LeCompte
WASHINGTON, May 5 2014 (IPS)

Last Fall, I witnessed the Grenada Council of Churches insert themselves into negotiations between their government and the International Monetary Fund (IMF) around the island’s debt restructuring and presumed austerity policies. Religious leaders called from pulpits across the tiny island for a “Jubilee” or national debt cancellation.

When I recently returned to the Spice Isle, I was awed by what I saw – the religious experiment in Grenada was spreading like wild fire to other Caribbean countries."Our churches are on the front lines of fighting poverty in the Caribbean. We see how the debt crisis is hurting the poorest people on the islands." -- Presbyterian Minister Osbert James

At Blessed Sacrament Catholic Church, overlooking the Caribbean Sea, the Caribbean Council of Churches, four Catholic Dioceses and various religious leaders from across the region gathered to launch the Caribbean Debt Network.

They came from St. Vincent’s and The Grenadines, Barbados, Dominica, Trinidad and Tobago, Jamaica and Grenada, knowing their unity is more vital than ever.

Out of the 20 most heavily indebted countries in the world, six are Caribbean countries.

The islands are dotted with makeshift shacks, where depending on the island, 20 percent to 50 percent of the population lives in poverty. Various islands see high unemployment rates from 30 to upwards of 50 percent.

Like dominoes, island after island is going through International Monetary Fund IMF debt restructurings that demand austerity policies that hurt millions of people living in extreme poverty.

Among most Caribbean tourist areas, you can’t avoid the working poor.

In fact, the plight of the vulnerable along with infrastructure challenges are so palpable on the small islands, you scratch your head wondering why the IMF calls these countries “Middle Income.” When a poor country is defined as Middle Income, they cannot apply for existing debt relief processes such as the Heavily Indebted Poor Countries Initiative or HIPC.

The process by which economists define a country as Middle Income is by averaging the total income of everyone in the country (per capita). In other words if 99 people make one dollar and one person makes 100,000 dollars, the average income per person is 1,001 dollars.

In a place like Grenada, where the poverty rate ranges from 38 to 50 percent, the income levels are skewed. The religious community uses the words “social sin” to describe how income inequality is hidden from us as struggling Caribbean economies are denied relief because of what they are called.

Even with HIPC, any poor country will tell you it’s not a walk in the park. The IMF and other international financial institutions acknowledge that the process offers too little debt relief, too late, with too many benchmarks. However, when struggling economies go through the painful act of debt restructuring without even the framework of HIPC, it’s wrangling a hurricane.

And real hurricanes are real threats. In 2004, 200 percent of Grenada’s GDP was wiped out in three hours by Hurricane Ivan. With powerful hurricanes landing every 10 years and financial crises in other parts of the world impacting the Caribbean’s primary industry of tourism, countries across the region seem destined for never-ending cycles of austerity and debt.

“Our churches are on the front lines of fighting poverty in the Caribbean. We see how the debt crisis is hurting the poorest people on the islands,” notes the new chair of the Caribbean Debt Network, Presbyterian Minister Osbert James.

James’s historic cathedral, among many structures unrepaired since the 2004 Hurricane, still lacks a roof.

While it’s still too early to assess Grenada’s debt restructuring, we can see that the Jubilee model is opening up shop on other Caribbean islands.

At Blessed Sacrament Catholic Church, the regional Caribbean religious leaders launched the new coalition in a conference room aptly named The Upper Room. For Christians, it evokes Pentecost when the Holy Spirit empowered religious leaders to inspire others. Pentecost is derived from the more ancient Jewish holiday, Shavuot, which celebrates the gift of our covenant with God and God’s abundance.

At the founding conference last week, the religious community sought to spread Pentecost and Shavuot. They resolved the following:

1. To raise the awareness of the effects of the sovereign debt on Caribbean Countries

2. To establish a structure within which our countries can resolve indebtedness fairly

3. To build a Jubilee coalition to achieve debt resolution, sustainable development and fiscal responsibility at all levels

4. To illustrate how sovereign debt impacts issues of concern, such as human trafficking, drug trafficking, climate change and HIV/Aids.

5. To work with governments and with our international partners on all aspects of debt

6. To encourage the Governments of Grenada and Antigua & Barbuda to champion the cause of a special initiative for resolving Caribbean indebtedness to achieve a sustainable debt level

Eric LeCompte is the Executive Director of Jubilee USA Network and serves on UN expert working groups that focus on debt restructuring and financial reforms. He recently returned from Grenada where he supported the launch of the Caribbean Debt Network.

As the International Monetary Fund shares initial proposals for Grenada’s debt restructuring during the Washington DC meetings this week, the Caribbean island could gain a reputation for more than nutmeg, calypso, beaches and the 2012 gold medal sprinter Kirani James.

Because Grenada is listening to the nation’s religious leaders, it may become famous for a debt resolution deal that includes the participation of its citizens, protects the most vulnerable from austerity programmes and keeps current employment on the island intact.The religious leaders, themselves long astute in Sunday School lessons on human dignity, became experts in the concepts and terminology that economists and lawyers utilise when negotiating debt restructuring.

Part of what could make possible protecting jobs and the island’s social safety net is curbing corporate and professional tax avoidance in Grenada.

The most interesting part of what propelled this debt deal is that the churches of this tiny island have staked a place at the negotiating table. On this island nation of 100,000 people, where most people on the street are debating any debt deal, religious institutions have taught or served a significant portion of the island’s government leaders.

As in so many parts of the world, often religious groups are the primary social service providers and in the case of Grenada they’ve earned the people’s respect.

Before Grenada defaulted on some of its debt this past March, the Conference of Churches in Grenada had called for a biblical Jubilee or national debt cancellation. The island’s various religious bodies didn’t stop there, and they strategically inserted themselves in the government and IMF discussions.

In fact, from almost every pulpit across Spice Isle last week, pastors and ministers asked for the faithful to pray for their national religious leaders who would meet for two days of discussions with the government, its parliamentary leadership, and an observer from the IMF. The Churches invited their own international partners and experts to support them in their discussions on Grenada’s debt deal.

The religious leaders, themselves long astute in Sunday School lessons on human dignity, became experts in the concepts and terminology that economists and lawyers utilise when negotiating debt restructuring. The meeting was opened by the head of the Conference of Churches in Grenada where participants heard what may be the first prayer on poverty that included the word “debt restructuring.”

For a place that is perhaps wrongly faulted for a Mayberry carefree attitude, one stands in awe when you see how savvy the religious leaders are. They know any reforms they move forward that protect people in Grenada could mean better IMF deals for millions of other poor people around the world who are always the most affected when a country restructures its debt.

In their discussions, the Conference of Churches set and discussed their expectations with their government and the IMF to judge the success of both the actual debt restructuring and transparency in the process. Here they are:

– The IMF should publicly recommend an upfront debt stock reduction of at least two-thirds in line with suggestions made in recent IMF staff papers and other analyses

– The Grenadian government should continue its spirit of openness. When the government of Grenada receives IMF proposals for debt restructuring it should share those documents with the broadest possible public constituencies for discussion and to seek national consensus before Grenada signs

– Grenada should seek an impartial financial assessment in addition to the IMF assessment

– Any deal should be comprehensive and include all external creditors to prevent holdout creditors from exploiting Grenada’s economic recovery or targeting public services for collection

– There must be accountable and transparent processes for the citizens of Grenada to monitor future lending and borrowing of their government

– Current employment and social protections for the poor and vulnerable should be maintained in any IMF supported agreement

Since the global financial crisis moved more than 70 million people, mostly women and children, into extreme poverty, it does not seem like the IMF has learned its lessons on austerity promotion. Perhaps, the tiny Grenada IMF Sunday School will shift how future debt restructurings take place and whether or not there are necessary protections for the poor in place.

If you ever find yourself on Grenada’s world renowned Grand Anse Beach on a Sunday, consider wandering into Sunday School at Blessed Sacrament Catholic Church; you’ll walk away with an unforgettable lesson in international economics.

Eric LeCompte is the Executive Director of Jubilee USA Network and serves on UN expert working groups that focus on debt restructuring and financial reforms. He recently returned from Grenada where he supported the Conference of Churches in Grenada during their recent debt restructuring negotiations.