Several organisations and society groups across the UK had been planning this event for the last couple of months, focusing on the multiple crises worldwide. This event was one of over 40 events across the UK and Ireland. The march in Edinburgh featured various stops focusing on different issues around the world, where groups and organisations shared their concerns about the environment and climate change, human rights, the living cost and debt justice. It aimed to highlight that the crisis mostly impacts people and places that are not responsible for it. 

The six stops on the march were; 

St. Andrew Square: International Climate Justice: Make Polluters Pay

HSBC, Hanover St: Cancel the Debt for Global South Countries

Santander, Hanover St: End Fossil Fuel Finance

Market St: Solidarity with Egypt: Free All Political Prisoners

UK Government Office, Sibbald Walk: No New Fossil Fuel Projects

Scottish Parliament: End the Cost of Living Scandal – Just Transition Now

Since COP26 in Glasgow last year we haven’t seen a lot of action around the mentioned crises.  A lack of action from governments at home and abroad compelled us to attend this event to create a greater focus on these problems and their consequences.  

Jubilee Scotland, together with Global Justice Now, created a stop outside HSBC focusing on debt justice. We were protesting outside the bank because they have debt bonds in a number of African countries, which they continue to charge high interest rates for. We were calling on them to cancel the debt in order to free up funds to pay for climate adaptation – climate change is hitting African countries first and worst, and this is a crisis that African countries did least to cause but are paying a high price for. 

With help from stilt walkers, dressed up as bankers, we created a scenario where a map of Africa was squeezed by the bankers to emphasise that the country is suffering from the consequences of both a climate and debt crisis.

As COP27 comes to a close in Egypt, we hope that this mass mobilisation against government and corporate inaction in relation to the climate, social and human rights crisis has helped create more focus and energise them to make a change and find a solution.   

The post Marching For Debt Justice appeared first on Jubilee Scotland.

Let’s go back to COP26 for a moment of context. This time last year Glasgow was a hive of activity and we were preparing to march to highlight the vital link between climate and debt justice. Scotland led the way and was awarded for their efforts in bringing Loss and Damage to the fore in discussions. This year those efforts have accelerated and we are delighted (and relieved) to see that Loss and Damage funding is finally on the official agenda for COP27, happening in Egypt at this very minute. 

Well, that’s a win but let’s get more specific. In October this year the Scottish Government hosted a two day conference on Loss and Damage and along with perspectives from different sectors and from both the global north and (most importantly) the global south, our Executive Director Dr Line Christensen was invited to speak on the issue of international debt justice. She outlined how finance can be freed up for possible climate adaptation for those countries who have caused the least emissions but are paying the price for the climate crisis in homes, land, culture, livestock and most tragically, human lives. 

Last week, a Synthesis Report from the conference, ‘Addressing Loss and Damage: Practical Action’ was published by the Scottish Government with debt justice featuring prominently in the First Minister’s forward. Download report.

‘…it is clear that finance for loss and damage should not generate or compound debt for those it aims to support, leaving developing countries less able to respond to future climate impacts. Communities are already paying in loss of land, jobs, cultures, ecosystems and lives. Our support must break, not reinforce, this cycle.’ 

At the conference Line had presented the case for why debt relief is a key component in the mission to tackle climate change for vulnerable countries that are often suffering from unsustainable debt. This unsustainable debt cannot be properly restructured or canceled without the direct participation of private creditors in the debt restructuring negotiations – even if a country were willing to apply for initiatives such as the Common Framework. As such, often the country is left spending more on their debt servicing than public services, let alone climate change adaptation. 

Recognition of the issue went further as ‘No Additional Indebtedness’ was set out as one of the ten ‘Insights for Accelerating Action on Loss and Damage’. This section of the report sighted a case study submitted by Jubilee Scotland:

‘There is also growing recognition of the role of debt relief in achieving climate justice goals, underlining the structural inequity in the availability of existing finance. Examples provided by Jubilee Scotland in a case study included the Debt Service Suspension Initiative (DSSI) and the Common Framework for Debt Treatments. In November 2020 Zambia defaulted on interest payments to private lenders and in February 2021, Zambia applied for a debt restructuring through the Common Framework. However, no progress has been made in the negotiations as large private creditors have refused to enter an agreement for debt relief, highlighting the importance of private sector engagement for many types of finance to address loss and damage.’ 

It’s important to remember that climate finance is not a hand out or charity, as the main contributors to the climate crisis rich nations in the global north have an obligation to pay their fair share to help protect the countries and people most affected by it. This is just one reason why Line also outlined that climate finance should not be provided as loans, but as grants – helping to avoid perpetuating the unjust cycle of profiting from poor and indebted countries in the global south. This was partly recognised in the report: 

‘Grant-based rather than loan-based programme funding means that affected countries, communities and individuals are not driven further into debt by having to repay more than the value of the finance that is provided.’ 

As we continue to watch developments in Egypt we are delighted to know that the Scottish Government’s team at COP27 will be or have already put a copy of this report into the hands of leaders, experts, representatives and activists from countries across the world. Where Scotland has started to lead, we hope many other countries will follow, even overtaking us in their ambitions for climate and debt justice. 

Keep up with our updates and look out for the full report on our Twitter, Facebook, LinkedIn or Instagram. 

The post A win for Debt Justice on Loss and Damage appeared first on Jubilee Scotland.

Doel, Beveren, Belgium. Image by Frédéric Paulussen (fredography.be).

The post Nuclear RAB: Another aspect of Johnson’s toxic legacy – Jim Cuthbert appeared first on Jubilee Scotland.

Notes:

Audit Scotland’s report on PFI (PDF).

Jim Cuthbert’s review of the MIM model of PPP on the Common Weal website.

Common Weal’s model for a Scottish National Infrastructure Company.

The previous version of Eurodad’s History Repppeated report.

Listen to this and other episodes of the Policy Podcast on the Common Weal Website.

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Right now, the country is going through its worst financial crisis since its independence, in 1948. This situation is the result of the combination of several factors: decades of economic mismanagement, recent policy errors, and the massive hit of COVID-19 on the tourism sector and on remittances. The Sri Lankan government defaulted on its debt in April 2022, when it suspended payment on $12 billion, as it had run out of foreign currency.

The government’s bankruptcy also means that it became unable to pay for essential imports, such as food, fertiliser, medicines and fuel. Lines for gasoline can reach several kilometers, and civil servants have been asked to work from home to save fuel. Inflation reached 54.6% in June, and can be expected to get as high as 60%. At the moment, Sri Lanka would need at least $6 billion to stabilise its finances. Having no other choice than to print money to pay government salaries, there is a risk of even higher inflation. The government is planning to hold a conference with friendly nations, such as Japan or China, to try and find loans to keep afloat.

Talks are in progress with the IMF as well, and there reportedly has been “significant progress towards an aid program”. This would mean restoring debt sustainability as well as financing assurances from country’s creditors, but also tax reforms. But this process will be slow, and right now, a humanitarian crisis and political unrest are developing in the country.

However, just like in Zambia, a huge part (47%!) of Sri Lanka’s debt is owned by private creditors such as Blackrock, Ashmore, or Hamilton Reserve Bank. The latter has sued Sri Lanka in the state of New York for the full payment of principal and interest, as it considers that the default has been orchestrated by the government. 

It is key that private lenders take part in debt restructuring to ensure that debt is reduced to a sustainable level and to prevent a new build-up of unsustainable debt. Yet, there’s no mechanism to force them to come to the table. Their refusal puts all the restructuring effort in jeopardy, and the citizens are paying the price. 

Jubilee Scotland is extremely concerned about this situation. We have already partnered with allies to hold Blackrock accountable about Zambia, and more broadly to draw attention to the responsibility of the private sector in the debt crisis. 

Private lenders need to #CancelTheDebt urgently!

The post An Overview of the Sri Lanka Debt Crisis appeared first on Jubilee Scotland.

At the end of 2020, the combined external debt stocks of low- and middle-income countries were as high as $8.7 trillion, according to data from the World Bank. The average external debt payments of governments were 14.3% of governments revenue in 2021: in 2010, they only made up 6.8%. Yet, for most countries, this rise in external debt is not matched by a growth of gross national income and exports. Out of 69 low- and middle-income countries being assessed by the IMF for debt default risk, nine were already in default on some external debt, 30 were at high risk of debt distress, 23 at moderate risk and only seven at low risk.

These high levels of debt have a severe impact on development, as it prevents countries from spending the necessary resources especially within the areas of health, education and climate adaptation. Every day, $107 million leaves 68 countries in the global south to pay lenders, instead of being invested in social protection, economic recovery and climate adaptation. Lower income countries are spending five times more on debt payments than on adapting to climate change, which is a huge problem!

Prior to the COVID pandemic, many developing countries were already in a vulnerable fiscal position with elevated external debt, but COVID brought this debt to record highs. In 2020, the external debt stock of low- and middle-income countries rose on average by 5.6 percent, and sometimes even reached as high as a 20% increase. This is happening at the same time as the climate crisis becomes more and more pressing.  

The Debt Service Suspension Initiative, which closed at the end of 2021 was supposed to bring relief to some countries. Yet, deferred official debt payments under the DSSI are expected to be repaid in full between 2022 and 2024. The 46 countries that requested participation will be required to pay back not only the $5.3 billion of postponed payments, but also the $71.54 billion of pre-existing commitments, plus any other debt contracted after 2018. In 2020, only 44% of DSSI-eligible countries had a debt-to-GNI ratio at or below 60% and in seven percent of these, it exceeded 100%. In 2020, 21% of them had a debt-to-export ratio over 250%.

The Common Framework for Debt Treatment is replacing DSSI, but also failing to support the countries in need: Chad, Ethiopia and Zambia all applied for a debt restructuring in 2021, but none have obtained anything to this day. When a country applies for a debt restructuring under the Common Framework, a Debt Sustainability Analysis is undertaken by the IMF to assess how much debt needs to be cancelled in order to make it sustainable. However, the IMF has no clear definition of “sustainable debt”, which is a problem. Moreover, the Common Framework doesn’t provide any additional mechanisms for making sure private creditors cancel debt on the same terms as bilateral lenders. This can lead to a situation where willing creditors end up bailing out creditors unwilling to take part in the restructuring, or a situation where the debtor becomes unable to finalise a restructuring deal with anyone. The G20 has stated that private creditors should provide debt relief on at least the same terms as bilateral creditors, however the implementation of this is difficult.

Considering all of this, we are calling on the UK government to take action. Indeed, private lenders in the UK account for 30% of the debt owed by 73 countries eligible for debt relief under the G20 initiative during the Covid-19 pandemic: this is higher than both Chinese and US private lenders combined. Therefore, the UK has a key role to play in improving debt relief mechanisms and incentivising private lenders to engage in debt relief. We’re in a unique position to make a difference, since around half of international private debt contracts (with public information) are governed by English law and 90% of bonds of countries eligible for the Common Framework are governed by English law. Both the IMF and the World Bank have called on the UK to pass legislation to make collaboration with private creditors on debt restructuring easier. Jubilee Scotland join them in this call: the UK Government must use its unique position to act on debt, to make sure that countries are able to invest in climate adaptation rather than repaying unsustainable debt. 

The post What does debt have to do with climate? appeared first on Jubilee Scotland.

Below you’ll find Jim’s thought on the fiscal settlement and its limitations, which are big concern when it comes to PPPs. 

by Jim Cuthbert

The Scottish Spending Review, which Finance Secretary Kate Forbes released in May, cast a sombre light on the Scottish Government’s spending prospects over the next four years. While priority would be given to health, social care, and social security, the projected budget for other services will be flat in cash terms. Given the current high levels of inflation, this of course implies significant real cuts in these services. The Institute of Fiscal Studies, in their assessment of the implications of the Spending Review, estimated that there would be real cuts of 8% over the next four years in areas like local government, police, prisons, universities, and rural affairs: and of 16% in areas like enterprise, tourism and trade promotion. The IFS also noted that the Scottish Government is implicitly assuming a further rise in income tax rates relative to the rest of the UK: and, that, once the effects of these rises are stripped out, the underlying tax base growth in Scotland is forecast to be slow.

The mainstream press, of course, made predictable hay about the “black hole” in the Scottish Government’s finances, with the unionist majority laying the blame on the SNP’s supposed profligacy. But it was a letter on June 7 in the London Times from a former director of communications of the Scottish Conservatives which perhaps came closest to revealing what is actually going on. What this letter did was to claim credit for the Conservatives for imposing upon Scotland the financial arrangements we now have. And it virtually exulted that, because the Scottish Government had not chosen to adopt a policy of lowering income tax rates relative to the rest of the UK, but to raise income tax, this was leading to the financial stringency Scotland was now experiencing. As the letter said, “in reducing revenues by raising tax rates, it [that is, the Scottish Government’s tax policy] has provided a perfect case study for economics students for years to come.” And later on that “extending Holyrood’s tax-raising powers was a properly considered Conservative policy, with Conservative principles at heart.”

The Times letter is far from being just an after the event rationalisation of how the unionists expected the fiscal settlement to work. There was clear evidence even before the settlement agreement was reached in February 2016 that this is precisely what the unionists intentions were. But before we look at that, it is first of all necessary to give a little background on the design of the fiscal settlement.

Under the post-referendum fiscal settlement, there is a deduction, or “abatement”, each year from the block grant as calculated by the old Barnett formula, to allow for revenues which the Scottish Government would be raising by its own taxes. The abatement for income tax, (the dominant element), is indexed by the percentage growth in corresponding income tax receipts in England, adjusted for the relative growth rates of population in Scotland and England. This means that if Scotland grows its per capita income tax receipts at the same rate as England, then Scotland will receive the same funding as it would have done under the old Barnett formula. Scotland will do better if it achieves a higher growth rate. But if the rate of growth of per capita tax receipts lags behind England, Scotland is penalised. Effectively, the fiscal settlement thrusts Scotland into a fiscal race with England, where, if it wants to do as well as it would have done under Barnett, it has to grow its per capita tax receipts as fast as England. 

The problem is: this is an unequal race. First of all, the range of powers available in Scotland is actually very limited. The only really major tax which is largely under Scottish control is that on non-savings, non-dividend income. And it is also true that the non-tax levers available to the Scottish policy maker are also very limited: in particular, the areas of employment, and trade and industry, crucial to growing the economy, are largely reserved. Further, if Scotland lags in the growth of devolved tax receipts, we will be progressively penalised under the abatement mechanism. Moreover, Scotland is likely to be intrinsically weak in this income tax race. For example, even before devolution of income tax to Scotland in 2016/17, per capita receipts in Scotland of that element of income tax which was going to be devolved were just over 80 percent of the level of corresponding receipts per head in the rest of the UK.

The unionist side in the fiscal settlement negotiations clearly intended to use the system as a means of forcing the Scottish Government to adopt a neo-liberal, low tax fiscal policy. This became obvious at a seminar to discuss the emerging fiscal settlement, which was held at Nuffield College, Oxford, in December 2015: this was before the deal was actually signed, but when the key features of what was being proposed were already clear. At that seminar, I had pointed out the downside risks for Scotland that attached to the proposed deal because the Scottish Government did not have sufficient powers: and the danger that Scotland would then slide into a self-perpetuating cycle of relative economic decline and progressive penalisation under the abatement mechanism. Not so, replied a very senior Treasury official: Scotland did have enough powers to make the system work. What Scotland would need to do, he said, would be to reduce taxes on income, and out-compete the rest of the UK as an attractive destination, particularly for high earners: that was the way for Scotland to win the fiscal race with the rest of the UK.

In other words: once it agreed to the fiscal settlement, the Scottish Government found itself locked into the position of trying to make a system work, where that system was specifically designed to operate under a set of hard line, neo-liberal, low tax beliefs which are the direct opposite of the Scottish Government’s own belief set. This fatal inconsistency, together with the limited powers the Scottish Government has, and the poor design of the system itself, makes it well-nigh impossible for a Scottish government to develop a successful fiscal policy under devolution.

The Scottish Government was represented at the Nuffield seminar, and so had direct knowledge, from the horse’s mouth, of the Treasury view that operating a neo-liberal low tax policy was the only way the new fiscal policy could be made to work successfully. In addition, (and fully conscious that “told you so” is never a good read), before the deal was signed I myself pointed out its inherent risks: both in discussion with senior Scottish personnel, (both political and official), involved in the negotiations: in a technical paper on modelling the new settlement published in the Fraser of Allander Commentary: in evidence to a House of Lords Committee scrutinising the arrangements: and in a number of more popular articles. My own clearly stated position was that the risks involved were so great that the Scottish Government should refuse to sign up to the deal on the table.

While the future is, of course, intrinsically unknowable, there are very worrying indications that Scotland is already being gripped by the cycle of progressive penalisation through the abatement system whose danger was predicted. Consider, for example, the report produced in August 2021 by the Scottish Parliament Information Centre, (SPICE), on the Scottish Government’s use of its income tax powers. What the SPICE report found was that over the three years 2017/18 to 2019/20, Scottish tax revenues were £900 million larger than they would have been, because of the increases which the Scottish Government had implemented in income tax rates, relative to tax rates in the rest of the UK. However, once the effects of the block grant abatement system were added in, this extra revenue was largely cancelled out: the overall benefit to the Scottish budget was only £170 million, because the increased revenue from the Scottish tax rises were largely offset by a slower underlying growth than the rest of the UK in per capita income tax. 

In effect, the Scottish Government has walked into the fiscal settlement trap set by the Treasury, and the jaws of that trap are now closing. The big mistake was in walking into a clearly visible trap in the first place, by signing up to the settlement. Now we are in this position, the damage will be serious, and is likely to occur in four main ways, as follows.

First, will be the direct damage to Scottish public services, and Scottish society, from the progressive squeeze on public expenditure which is in prospect.

Second, since the SNP took responsibility for making the system work, by agreeing to the settlement in the first place, it is the SNP who will incur the political damage of being blamed for its failure. This can already be seen in the general press reaction to the recent spending review. This will not merely damage the SNP, but the whole cause of independence.

Third, from a unionist perspective, the fiscal settlement is being a brilliant success. It is working exactly as predicted, and will seriously damage the cause of independence. So, in the review of the fiscal settlement which is now overdue, we can expect the unionist side to be emboldened, and to press for even harsher neo-liberal medicine for Scotland.

And finally, there will be a harmful effect on the way in which the SNP government exercises those powers which it does have. Budgetary pressure, and lack of adequate powers, are likely to force the SNP down the road of increasing reliance on market based measures like public private partnerships, and even privatisation. This is already happening. Faced by the financial constraints of devolution, the Scottish and Welsh governments are proceeding with the development of the flawed, PFI type, Mutual Investment Model for delivering public sector infrastructure: whereas the UK government, which does not face the same constraints, has abandoned this type of approach. And there are worrying indications that the Scottish Government may also be eyeing up privatisation options in areas like the provision of ferry services.

The famous quotation, “power without responsibility, the prerogative of the harlot throughout the ages”, was used by the Conservative prime minister Stanley Baldwin, with reference to over-weaning press barons. The modified version given in the heading of this note better describes the position the Scottish Government finds itself in, having walked into the trap of taking responsibility for operating the current devolution fiscal settlement without adequate powers. How, and whether, they can extricate themselves from this trap is unclear: but given their propensity for government by wishful thinking, one should not be too optimistic.

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The European Network on Debt and Development (EURODAD) is a network of 52 European NGOs and 7 statutory allies from 29 countries, that Jubilee Scotland is a part of. The network leads on debt-related research, advocacy and campaigning and so was the ideal host to bring together people who share Jubilee Scotland’s beliefs and objectives in order to reflect on this year’s theme; Reboot the System: Defining Joint Strategies for Economic Justice.

We began with the multiple and interconnected crises happening throughout the world since the beginning of the Covid pandemic: debt, climate change, energy-scarcity… It seems overwhelming, but what can Jubilee Scotland actually do? 

To answer this really vast question, we attended several sessions and various workshops, with topics varying from vaccine inequality to green recovery, but also human rights and gender issues, to try and gain a better understanding of the roots of the problem and the options we have going forward. We listened to a great variety of speakers, from every continent, and very diverse organisations (some examples being the office of the Belgian Minister of Development cooperation, Reality of Aid Africa, CNCD-11.11.11, but also anthropologists and writers) and we left feeling inspired by all their input on the ways we can challenge the current system through different perspectives. You can rewatch the sessions here.

So, in looking ahead, Jubilee Scotland will work with allies to make sure economic justice is at the heart of discussions at the following events:

June

• G7 Summit
• UN Media and Climate Negotiations
• Climate Finance Goal Restructuring
• IAFFE Conference

July

• High-level Political Forum on Sustainable Development (HLPF) 2022

August

• Private Finance Consultation
• AFCODD II 2022 (African Conference on Debt and Development)

September

• Loss & Damage Summit in Scotland with CSO Awareness Day

October

• Brazilian Climate Summit
• Autumn IMF Reviews

November

• COP27 in Egypt
• 16 Days of Activism Against Gender Based Violence

December 

• International Human Rights Day
• International Debt Management Conference, 13th session

The post Jubilee Scotland attend EURODAD conference in Brussels: Reboot the System – Defining Joint Strategies for Economic Justice appeared first on Jubilee Scotland.

PPPs are far from an issue limited to Scotland. Despite a lack of a clear definition and the difficulty to find exact data about the extent of the issue, these kinds of contracts are more than likely to multiply in the years to come, all over the world. 

According to the OECD, its members will need to invest over US$40,000 billion on infrastructure before 2030 to fulfill the needs of their populations. Yet, it also warns about the limited capacity of these states to finance barely half of this amount. In Africa, especially, the gap of infrastructure investment is estimated at US$ 48 billion. This is part of the reason why PPPs are so commonly used. The gap between infrastructure needs and resources is also part of why PPPs are in use in Scotland too. 

The use of PPPs is presented by the OECD, as well as the World Bank, as the ideal solution to fill in this gap. However, we are working to prove that these contracts have a lot of downsides that usually fall back on the public. These side effects are the same everywhere: PPPs are expensive, they lead to declining service standards, mean a loss of accountability but also unsafe and unusable buildings (read more in our report Rethinking Private Financing).

PPPs should not be promoted in the way they are, especially in countries who can’t guarantee a strong governance to ensure the sustainability of the project, and ensure that the economic and social benefits are greater than if the project had been publicly funded. 

The economic crisis has increased the rate of failure for PPP projects from under 5% to over 8%. In developing countries, attempts to save these projects often end up with the state owning them, as efforts to reprivatize them don’t succeed. In some cases, these projects might even prove to be unsustainable: if the market isn’t developed enough the project will simply not be profitable for private companies. 

In the case of Lesotho, a hospital was built in 2008 by a private company. It was supposed to be a new model to be promoted all over the continent, and cost as much as the old one for the government. However, in 2013-2014, 41% of the government’s health budget was going into this PPP, and the cost was 2 or 3 times higher than the old hospital. The volume of patients had also been miscalculated, resulting in high costs of treatments for the patients. As highlighted in Eurodad’s report “History RePPPeated”, there had been changes to output specification, financial structure but also the price of the contract during the preferred bidder stage without any competition: this would have been unlawful in most countries with developed PPP markets. 

Having the experience of the effects of PPPs on public services here in Scotland, we know the risks of developing these contracts in other parts of the world. This is why the conversation about PPPs needs to keep going, and alternatives to these contracts need to be found. 

In order to do so, several things can be done, according to Eurodad’s report, the PPP model needs to stop being promoted and the risks must be acknowledged; we need to support Global South countries in finding alternatives to finance their public infrastructure and public services, to meet the SDGs and we must implement good and democratic governance as well as rigorous transparency, especially regarding the use of public money. 

The fight to stop the use of PPPs starts at home: we need to discredit the use of PPPs in Scotland as part of the international movement to fight them everywhere. We need to develop and implement alternatives, to show other countries that it can be done. We cannot allow this to continue, neither in Scotland nor in any other country. 

The post PPPs: An international issue appeared first on Jubilee Scotland.

The two organisations came together to create a BlackRock pinata that was smashed open by campaigners outside of the BlackRock building in Edinburgh: symbolism for the money that could be released in order to help Zambia crawl out of it’s current Debt Crisis. 

Take a look below at some of the pictures from the protest, and read more about it here.

Campaigners signing the petition which you can digitally sign here.

Smashing the BlackRock pinata outside of the Edinburgh branch.

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