As household debt in the UK has become the highest it’s ever been on record,  many lower income households finds themselves unable to save money at all, increasing these households’ vulnerability in times of financial insecurity.  Households unable to make ends meet have been said by the Office of National Statistics  “to be living beyond their means”. 

Blaming of borrowers often occurs whenever the topic of household debt comes up. The notion that debtedness is the fault of the individual, is often fuelled by soundbites and stories in the media. Society promotes the idea that it is a self-inflicted punishment for something one person has done, because they’re the ones signing up to credit cards, taking out loans, repaying the mortgage. But most household debt isn’t because people are frivolous like many presume. Rather, it is caused by reductions of wages and benefits, redundancy, and illness. According to Stepchange’s Scotland in the Red Report, before COVID-19 the main cause of household debt was  ‘life events’, Life events are classified as unexpected shocks that put a burden on a person’s finances. In many cases, such events are costly burdens that complicate a person’s life, with no room for flexibility. 

With a third of people being affected financially by COVID-19, a wide range of people have experienced a ‘life event’ that has affected them financially.  An estimated 4 million people have been added to the number with substantial household debt since the crisis began. This begs the question of whether or not this will pave the way for people to talk about their debts and how it affects them.

At the same time, The Bank of England stated that £7.4bn of consumer credit was repaid during the first month of lockdown, the biggest net repayment in a month since 1993. A huge reduction in retail spending led to this, with the outstanding debts on credit cards remaining at £64bn. This positive sounding news demonstrates how the lockdown has added to the wealth divide in the UK. People who were able to keep working can see their debts cleared from a lack of incentive to spend, while many workers being hit by job losses and cut wages take on more debt while on furlough. If this trend continues we are unlikely to see a decrease in stigma associated with debt. It’s possible that these figures could be used by creditors to present a distorted version of events when payment holidays end, adding to the guilt of people who are unable to repay when so many others could.

A poll conducted by Citizens Advice Scotland this summer found that 1 in 4 Scottish people were concerned about their debt repayments. In response to these findings a spokesperson for the Scottish Government said that “We recognise the stress and strain debt can create and we would encourage anyone with concerns to contact organisations such as CAS to get advice and support.” While this statement acknowledges the fact that it’s a stressful time for people in debt, it passes the buck of having a conversation about debt back onto the charities that have already done so much to bring the issue to the foreground. Along with voting down the recent plans for rent controls, the Scottish Government hasn’t done much to address people’s heightened debt concerns. 

A reduction of the stigma around household debt is necessary to widen the conversation on the topic and increase the pressure on government and public lenders to make systematic changes to our flawed financial system. To make this happen  we have to harness the shared experience of COVID-19’s impact on household debt. People should not be treated like criminals for the chaotic circumstances that life throws at them. The conversation needs to be facilitated in a way where the Scottish government talks about personal debt, in a transparent way that makes people feel heard instead of at risk for speaking out.  If we don’t talk about the devastating impact of household debt openly and address the scale of the problem, we won’t build back as a better society. 

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The outbreak of COVID-19 has reminded us what is really important – looking after each other and our communities, our health and well-being, our public services. Now, as Scotland moves past a peak of infections, our attention turns to what comes next The choices made by the government now will affect our communities and our climate for generations to come. 

The recovery plan must lay the foundations of a greener, fairer Scotland for everyone. Where we reduce inequalities, strengthen public services and provide an adequate income for everyone. Where we do our fair share of climate action and restore nature. Where we all have a say in decisions that affect us.

We are proud to stand with over 80 organisations in Scotland calling for a Just and Green Recovery in Scotland. Together, we wrote to the First Minister outlining five steps for the recovery which you can read here.

This is just the beginning, we need to grow and show public support for a recovery that helps us transform our society for the better

Will you join Scotland’s movement to Build Back Better?

Sign the petition here!

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We need to assess the public health crisis that is about to explode in the Global South if debt is not outright cancelled. While most Northern countries are in the midst of fighting against the virus, the heaviest impact caused by the pandemic will be on countries in Africa, South & Latin America and Southeast Asia. With many of the Healthcare and social security systems of these countries being ill-equipped to handle the outbreak, the virus will have a devastating effect on the poorest communities. Jubilee Scotland has signed onto a new Debt Jubilee along with 200 other organisations, alling for the cancellation of debt payments paid out from global south countries to the World Bank and IMF during this time. This petition  is one of many calling on the government to take a stance on a pressing issue. It’s estimated by the Jubilee Debt Campaign that over $300 Billion in full debt cancellation is necessary for these countries to fight the virus over the next year. Some payments have been delayed so far, but by merely suspending debt payments, they only defer the problems of these countries for a little while. 

This approach ends up costing creditors nothing, but borrowing countries will have bigger repayments and higher debt risks down the line for many of these countries. Covid-19 has already led to falls in commodity prices and projected increases in borrowing costs in the global south, with limited resources at hand to handle a public health crisis. If these countries have to rely on more outside loans to fight the pandemic they will be stuck in high interest debt traps for decades to come.  One of the biggest risks that these countries are exposed to is the legal challenges that can be brought upon them for failing to keep up their payments. The G20 have called upon private creditors to delay payments, but they are not obliged to. Currently 77 countries are estimated to pay $9.4 Billion from May to December, as part of the G20 deal. Private lenders can sue governments in the UK courts for following the G20’s advice and suspending payments. But the Global South should not be pushed into this by the western institutions who have pledged to help them.

We need your help to call on Chancellor Rishi Sunak, to promote debt relief in these countries that are worst affected by the virus. By signing up to our petition, you help us put across the message that we need real debt cancellation and ways to work out debt in future that doesn’t put human lives at risk. 

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Written by Helen Mercer: Jubilee Scotland launch 29^th January 2020

There is a strong tendency among campaigners on PFI to see the problems with which we are all familiar – the high cost of finance, poor construction, excessive profits – as stemming from factors such as woolly thinking, incompetence, corruption, fraud, lack of transparency and weak monitoring. I argue first that while such factors may exist they are not the root causes: the problems with PPPs are systemic and structural in an environment deliberately created by governments.

A simple and curtailed history of PFI

1. By the 1990s Britain faced a pent up demand for renewed infrastructure. The IMF loan of 1976 agreed by the Labour government lead to major cuts in public expenditure, continued into the 1980s. By the 1990s major maintenance problems in public infrastructure were apparent, and often the preferred solution was to demolish the entire building and start afresh.

Pent up demand for investment in public infrastructure

2. However by the 1990s public authorities’ traditional access to public borrowing was limited by the Maastricht Treaty and its successors, together with severe unilateral targets adopted by Gordon Brown on levels of government debt and budget deficits. Central government has various tools to secure cheap borrowing rates, but these were no longer available to public authorities to address their infrastructure backlogs.

PFI BECAME THE ‘ONLY GAME IN TOWN’

3. Governments therefore gave the private sector a free hand in providing much needed public investment. Capital markets had been deregulated. Investors were seeking profitable outlets and Government was a willing tool in opening up the state sector as a source of profit. It passed legislation guaranteeing payments on PFI deals and offered special PFI subsidies to public bodies to ensure they could afford to pay the private premiums.

PROFITABLE INVESTMENT WAS UNDERWRITTEN BY GOVERNMENT

4. Public authorities were left to deal with predatory private investors and lenders. In forcing them down the PFI route the government deliberately set up a situation of asymmetric information. All the knowledge and experience was on the side of the private investors and lenders, on the public side was a urgent need for what only they could offer.

PUBLIC AUTHORITIES WERE SENT NAKED AMONG WOLVES

PFI schemes also became a key driver of the outsourcing of public services, as privately provided servicing and maintenance of the PFI building became part of the PFI contract. (This has not been the case for the variants PF2 and NPD/Hub projects but has re-appeared in the Mutual Investment Model (MIM’s) The PFI mix was a toxic one of heavy debt, outsourced servicing, together with a lack of control over the contractors themselves.

This mix of factors shows that the failings of PFI cannot be characterised as unintended or unfortunate. The solutions therefore cannot lie just in FOI requests, or judicial review or tax adjustments. These activities provide publicity and additional knowledge and are therefore useful in campaigning, but such actions cannot be paraded as solutions.

Hence the economic history of PFI shows a systemic, in-built purposeful failure in which even personal or corporate corruption, assuming it can be proven, is of minor importance in understanding the root of the problems. This picture of the system, the environment within which PFIs have developed needs to be complemented by considering the way PFI contracts are structured.

The structure of PFI contracts

To describe the structures set up through PFI and similar projects is again to broach a large and complex area so I want to focus on just one key point element – the role of the company which signs the contract with the public authority – the Special Purpose Vehicle or SPV.

It is the SPV which, in return for an annual payment, secures all sources of finance, pays building contractors and, where relevant, the service providers. They are private companies, whose shares are owned by private investors increasingly infrastructure investment funds, such as HICL, Dalmore Capital, Standard Aberdeen, 3i, Innisfree, Semperian.

The diagram shows an SPV sitting like a spider at the centre of a web of contracts – the primary contract with the public authority and then the various contracts with lenders and with the contractors.

The role of the SPV is effectively to pump public money to various private actors and most importantly to the shareholders themselves. The shareholders extend 10% of the finance needed for the project and their loan carries interest rates usually of around 10-15% and is one of the reasons why PFI is so expensive. In addition as shareholders they are entitled to dividends and these accrue from any difference between what the public body pays the SPV (in debt, payment for services etc) and the monies owed by the SPV to lenders, builders and service providers. In the case of the Scottish Non-Profit PFIs any such surplus does not accrue to investors.

The position of the SPV is the main reason why buyouts as the solution are to PFI are bound to be unsatisfactory. A buyout involves the public authority effectively ending a commercial contract under commercial terms, and as a result penalty clauses must kick in and investors and others will be compensated for the loss of anticipated earnings. They walk off with a lump sum from the public purse.

Solution: nationalise the SPVs as a way to end PFIs

It was recognition of the structural features of PFIs that prompted campaigners to look at the idea of nationalising the SPVs. It is not a buyout because no PFI contract is cancelled or ended: instead ownership of the SPV passes to the government and hence the parties to the main PFI contract are both publicly owned a situation which immediately opens new spaces for restructuring the relationship.

This has two effects which reverse the systemic problems referred to in the first part of this talk. First, control over the terms of borrowing returns to central government which can renegotiate debt with all the lenders. Secondly, the public authorities regain control over all the other contracts, including receiving the profits which had previously accrued to the owners of the SPV. Research with Dexter Whitfield has indicated that, using data up to March 2018, the elimination of SPV profits would reduce the costs to public authorities of their annual payments to the SPV by £1.4bn per year.ⁱ

Afterword

Many plans are being developed for publicly financed and provided infrastructure. However the question remains of how to deal with the toxic legacy we have inherited – from PFIs, PF2s, NPD/Hubs and now MIMs? The question cannot be continually ducked: nationalising SPVs is one option that merits serious consideration.

Read more about this in Nationalising Special Purpose Vehicles to end PFI: a discussion of the
costs and benefits.

The solution is in fact much more detailed than the outline provided in this talk and the full paper considers levels of compensation and the need to honour outstanding debts. It also considers the further changes that need to be made to move towards publicly financed infrastructure and insourced services.

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Last month at the Scottish Parliament we launched our report ‘Rethinking Private Financing’, the culmination of work from Jubilee Scotland over the past year researching PPP & PFI schemes. You can download and read it here. The launch was hosted by Neil Findlay MSP, who spoke to us about how passionate he was about this issue affecting Scottish people. In late January Neil Findlay had questioned Holyrood’s approach to many of the key issues the government have been quiet or unclear about when it comes to financing projects with private money, and what they plan to do in future.

Scandal at Holyrood

Derek Mackay MSP as the Finance Secretary of Scotland was the person answering these questions put forward to parliament, a mere fortnight before he was hit with a scandal that has put his career as a politican into disrepute. Mackay has been suspended from the SNP for sending inappropriate messages to a 16 year old, breaching a duty and care expected as a member of government, failing to  uphold a responsibility not to act in a way that puts young people at risk. In that context, these may be some of the last questions Mackay ever answers at Holyrood, but they still offer a snapshot of the Government’s current approach to these schemes that Jubilee Scotland are campaigning against.

Questions asked of the Scottish Government

Question S5W-27047: Neil Findlay, Lothian, Scottish Labour, Date Lodged: 21/01/2020 To ask the Scottish Government what its position is on whether local authorities could benefit from direct borrowing for public projects, rather than financing them through public private partnerships.

Answered by Derek Mackay (29/01/2020):Local authorities are entitled to use all resources available to them including their existing borrowing powers and support from the Scottish Government. It is however up to local authorities to decide how they wish to borrow and any commitments made by them are based on what they deem to be prudent and affordable.

The government’s approach to this is relatively Laisse-Faire as they have limited borrowing capacity themselves. Of course local authorities have to make financial decisions that are responsible, but the commitments that a PPP binds a council by are never prudent. They are at such high rates of interest that nobody can honestly say with what we know now, that they are affordable. They only seem that way in the short term. So by saying this, you are effectively shifting the blame onto councils for the debt they’ve accumulated, taking no moral responsibility while still introducing NPDs, a replacement model for the PFI.  What is forgotten here is while councils are allowed to use all resources available to them, there is no real alternative to PPPs supported on a national level in Scotland – there needs to be other options.

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The problem with PPP

At Jubilee Scotland we campaign for the cancellation of unjust debt worldwide. This year we have been focusing at one of the main causes of rising debt here at home and abroad, one that has long been criticised yet little has been done about. Public Private Partnerships (PPPs) are long-term contracts where the private sector designs, builds, finances and operates an infrastructure project.  This scheme in its various forms over the years has left local authorities across Scotland paying much more than needed for public projects and in some cases putting people at risk. Long contracts with high interest rates and poor building standards have left Scotland with flawed or unfinished buildings, the taxpayers sometimes paying double what they’re actually worth. It has created unjust debt problems and added unnecessary financial pressure on local services across the public sector.

The Oxgangs School catastrophe put PPPs on the map for a lot of people in Scotland. After the wall collapse 17 schools across Edinburgh that were built under the same PPP, ‘Edinburgh Schools Partnership’ were forced to close and undergo inspection and repairs. 2 years later, after the partnership told the council that all problems had been fixed, it was found that there was still issues with many of the buildings, forcing the council to undertake emergency repairs of their own. Because of the nature of these PPPs, the parties responsible are usually protected through corporate confidentiality contracts, but it’s the council that take all the blame for schools they were promised were built properly.

Private Profit over public safety

Recently two of the countries biggest hospitals have been in dispute with their own faulty PPPs. NHS Lothian is paying out £1.4m every month for the new unfinished Sick Kids Hospital with little oversight of how much of that money is going back into the public purse. The hospital hasn’t opened because of design flaws that make it uninhabitable, yet there’s nobody to take to task, nobody to answer questions why these mistakes have happened. NHS Greater Glasgow and Clyde have decided to take legal action against the contractor of both hospitals. Brookfield Multiplex were responsible for the construction of Queen Elizabeth University Hospital which opened in 2015 with many severe issues, leading to deaths in the children’s ward due to contaminated water. 

PPPs like these have led to a loss of accountability in our public services, because local councils and the government are rarely given any power to renegotiate when things take a turn. The country has a ballooning amount of debt that we have no control over as the contracts in a PPP are not usually transparent, last for decades and almost always favour the private contractor. Scotland has had issues with them, but has still has been involved in exporting PPPs to countries abroad through the UK’s Department For International Development. On an international level these Partnerships have led to corruption, environmental issues and inequality. It’s an unacceptable move for a country that committed to the Sustainable Development Goals to export schemes that undermine progress on them.

Finding a way forward

We need an alternative solution for Scotland’s problems with funding. On the 29th of January 2020, the fourth anniversary of the Oxgangs School collapse, we will debut our report at the Scottish Government. It examines Scotland’s relationship with PPPs, highlighting all the issues with the current system of private financing while presenting solutions to how we can fund infrastructure here in Scotland that the public have control of. By taking on an approach that serves the needs of local communities, we will be able to make their projects work for us instead of being being held ransom by private companies to access of our own public services.

Click here to download our report, Rethinking Private Financing of Scottish Public Projects

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Find out more about our campaign about rethinking private financing

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I don’t know what you were up to this Tuesday 11 June 2013 but I was demonstrating in front of the Edinburgh International Conference Centre. Well, almost. Because despite long negotiations with the police, we never made it through to the entrance of the building where the TEDGlobal Conference was taking place. No, we were not trying to get there without paying the £6000 admittance fee. We were rather chanting our opposition to George Papandreou giving a speech in the first session of the conference.

“Papandreou, who’s that?”, you ask. Well, you know, the former Prime Minister of Greece, elected in 2009 who served a two-year premiership during which time he was supposed to put an end to austerity measures. “Oh, so that’s why he was invited. To tell attendees how he managed that.”, you naively assume. Well, not exactly. By the way, I thought you were aware of the dreadful current situation in Greece! Mr. Papandreou “drew lessons from the Greek crisis”. I assume the many Greeks who took part to the protest were perfectly able to do that. “We know the lessons from the crisis firsthand. We don’t need lectures from the bosses”, their banner read [1].

Let us imagine anyway how George Papandreou’s speech sounded like.

“Ladies and Gentlemen, thank you for being here today. I understand you are expecting me to draw lessons from the Greek crisis. When I came into office in 2009, I inherited a fair amount of debt, to say the least. After meetings with my European colleagues and elected – but mostly non-elected – officials, I got convinced that the best way to tackle the Greek debt and deficit was to get the country into deep recession. The best way to achieve such a result was of course to implement austerity measures, designed in agreement with the Troika, that is the European Central Bank (ECB), the International Fund (IMF) and the people of Greece. I’m kidding, I meant the European Commission (EC).

Of course it did not matter whether or not the same people who had voted me in agreed with these measures. They were quite opposed to it by the way. As soon as we started reducing the minimum wage and pensions, cutting public spending, privatising and making civil servants redundant, they responded by organising massive protests and general strikes. I had a ready-to-use solution though. It was not the first time such policies were imposed against the will of the people. I could count on the IMF’s decades-old experience with Third World countries and on my own country’s history for that matter [2]. Now, if you find yourself faced with opposition, do not slow down the process and keep going. Ideally you would even buy state of the art military equipment and show no mercy for the protesters. Do not forget to criminalise workers’ ability to defend their rights. Naomi Klein calls this efficient combination the “shock doctrine”. In the end, your opponents should grow tired and look powerlessly at the social fabric of the country being ripped apart [3].

How can you assess my success? Not only Greece fell into a deep recession, it is now also facing a humanitarian crisis. Thanks to widespread poverty, people can no longer afford medication, to heat their home, to go to the hospital or to send their children to school. 21% of people now live in poverty and 62% of young people are unemployed. But it is the price they pay for the collapse of the international financial system, bank bail-outs, speculation, the euro and the failure of the successive Greek governments to implement a fair and effective tax system. As you know, “we’re all in this together”. In addition, we cannot be expected to cut on military expenditures, this money goes into the pockets of French and German military industries. So, in addition to reduction in wages for those lucky enough to have a job, we decided to sell out water, energy and railways and to increases taxes, for everyone. Isn’t it a brilliant idea? We ask the average population to pay more with less money. Hence the rise in the number of people committing suicide and the rise of the far right .

 I am happy to announce that Golden Dawn had Members of Parliament elected in the last elections. With massive support for the party within the police, racially motivated violence can go on with impunity. You can also add to my record that life expectancy is due to fall and the Greek debt to go up this year. Let’s be honest, the point of all that was not really to reduce it anyway. [4]“

Fair enough Mr. Papandreou. Now, I know most countries in Europe are tempted to follow suit. However, in a democracy, you should take people’s opinion into account before you go ahead with measures which seriously undermine human rights. If the only way you found to pay back the debt is to cut on healthcare and education and to increase poverty, then it certainly means it is unpayable. As such, it should not be repaid. All the more that if a debt audit is to publicly uncover where the debt came from, who benefited from it and whether and how it should be repaid. Should the Greek people pay for the 108 billion euro required to bail out the banks for instance? Finally, if force has to be employed to push the austerity measures through, this is another indication that the debt is illegitimate. Illegitimate debt actually builds on the concept of odious debt, presented for the first time in 1927 by an economist called Alexander Sack. Odious debt is also based on three prerequisites. First the loan has to be received by a government without the approval and knowledge of the people. Secondly the loan is not spent on activities beneficial to the people and finally the lenders know of this situation. Ironically, this concept has been used several times by the United States to repudiate debt, most recently in Iraq. That the members of the Paris Club asked for the concept not to be officially mentioned was not a reason not to appeal to the concept. Instead Mr. Papandreou, you gave up the sovereignty of Greece and defaulted on the Greek people.

You did not get out of the building Mr. Papandreou in spite of us chanting “Papandreou get out! We know what you’re all about: cuts, job losses, money for the bosses!”.

 You cannot deny you – and your successors – implemented the cuts and the job losses. As to the “money for the bosses”, two examples will speak for themselves: the national lottery was privatised despite the fact that it was highly profitable and one gold mine in the north of the country was sold for £9.5 million whereas it is believed to have gold and copper worth £8 billion. Other leaders showed more boldness than this though.

Some governments have refused to pay the debt. Countries such as Ecuador, Argentina or more recently Iceland defaulted, audited their debts or insisted their own terms for repayments. In Argentina, it took the President having to flee in helicopter under popular pressure. Not surprisingly, these countries all fare better than Greece, Spain or Portugal. Ecuador even went further and passed a constitution which prohibits the socialisation of private debts. Beforehand, an audit reviewing all debt contracts from 1956 to 2006, had proven the debt was odious, illegitimate and unconstitutional. During the 1980s and 1990s, Ecuador had spent 50% of its budget on debt repayments and 4% on healthcare. Rafael Correa, elected in 2006, decided debt repayments would no longer prevail on life. Thus, Ecuador declared the cessation of payment for 70% of Ecuador’s debt in bonds. But I guess you were not really willing to go against the neo-liberal agenda. People are though. They are prepared to take to the street. They already have in Scotland to call for the bedroom tax to be axed and it is no surprise people here were keen to hold you accountable Mr. Papandreou. It is not worth putting the blame on Brussels and financial markets [5], you also share some responsibility.

[1] Helen Walters, “Protesting Papandreou: Anti-auterity demonstrators at TEDGlobal 2013?, TED  Blog.

[2]  Katerina Kitidi and Aris Hatzistefanou, Debtocracy, 2011

[3] Nick Dearden, “Nick Dearden blogs from debt campaigner delegation to Greece”, Jubilee Debt Campaign.

[4] Nick Dearden, “Nick Dearden blogs from debt campaigner delegation to Greece”, Jubilee Debt Campaign.

[5] Helen Walters, “The failure of leadership in politics: George Papandreou at TEDGlobal 2013?, TED Blog.

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By Alice Picard, Jubilee Scotland Volunteer (All posts are the views of the author, not Jubilee Scotland as an organisation)

“Scotland 2013 and Beyond: Our values and principles for a just world” was organised by NIDOS, Network of International Development Organisations in Scotland, in Edinburgh on May 17th 2013. The sun was shining outside the Radisson Blu Hotel but it was still worth staying inside. Indeed, as most of the speakers put it at the end the event, it was inspiring.

It was good to have speakers from different horizons in the morning. International horizons as the speakers were from Scotland, the UK as a whole but also from Sweden and Zambia. Moreover, we could hear from the academic world as well as from the corporate and third sectors. It is important to reflect on the future of international development together, integrating different values and perspectives in the process. What I would remember from the morning speeches would be the idea of solidarity. Solidarity as one of the main values put forward by Judith Robertson from Oxfam for instance but also as a practical policy of the Swedish Government as presented by Peter Sörbom, EU Policy Officer at CONCORD Sweden.

Values were also the point of focus of the morning workshops. We were supposed to discuss the five guiding values and principles that we would like to see shape Scotland’s policy towards the outside world. My feeling is that even though each participants came to the workshop with personal values that he or she particularly valued, the exchange was enriched by the speeches that were delivered just before. At least, that is what happened in my case. The third three values I wrote on my sheet of paper were Social Justice, Equality and Sustainability. I would have chosen them anyway, with or without the input of the morning speakers because I believe in them. However, thanks to the speakers’ contribution, I went beyond that and started thinking about what other values were also critical to their implementation. The two last values I wrote down were thus Accountability and Coherence. Accountability because choices made at some point should be up for challenge at any time of their implementation. Accountability is essential whenever money is involved, it goes without saying. Coherence because you cannot give from one hand and take from the other. That is sending aid to developing countries whilst at the same time not requiring multinational companies to pay their fair share of taxes to the countries of which they exploit the resources. And that is only one example of the way money can flow away from where it is the most needed.

Again, the most inspiring part was the debate between the participants. The aim was to talk to as many people as possible in order to explain why we had chosen one value over the others. We were allowed to switch values if we found someone convincing. The discussions I had were stimulating and I have to say I was about to change my own values for two new ones: Empowerment and Interdependence. Empowerment because it is crucial to empower individuals and civil society in the Global North as in the Global South and Interdependence because it leads to considering development aid as in our own interest. Each group came out with a certain number of values that were written down and then stuck up in the main room during lunch break so that every one could vote for five values once again.

The choice was difficult to make and I was particularly aware that I was voting as the vast majority of the audience. The last vote I cast was then for free education as no dot appeared yet next to these two words. I could try to explain why but that might be too long, really. Just randomly think about two other values: Empowerment again but also democracy.

Later on, we had the chance to hear from Humza Yusaf, Scottish Minister for External Affairs and International Development. My apologies to the supporters of the status quo but what struck me the most in the Minister’s speech was the introduction. Mr Yusaf pointed out that external affairs and international development were a reserved matter. Its conclusion, not a polemical one, was that it was still worth discussing them, here in Scotland. Mine would be that it is an argument in favour of Scotland’s independence. The values we discussed throughout the day seem to me as an appropriate base to start afresh and adopt a complete new approach to external affairs. An approach that would be coherent – remember? – and would get rid of arms deals. Yes, it would be brilliant if Mr Yusaf had the real powers to put the values he mentioned into practice.

A lot is already being done in Scotland though, as I discovered during the afternoon workshop I had signed up to, on Fair Trade and Procurements. There are actually no little steps in this area. Once tea and coffee are fairly trade, people consequently start asking about other items, such as milk or even clothing. Interestingly, the discussion on fair trade also touches on local supply and transparency of the whole supply chain. Public authorities and bodies have undoubtedly a key role to play to set up guidelines and good practice. It is also through them that citizens could become well-informed customers, accustomed to fair trade products.

To conclude, I would say I was thrilled to witness people thinking together and actually working towards a common goal. Not only for the sake of exchanging experience and networking but also because beside people from organisations active in the field of international development, there were also a few politicians and people who were there on their own behalf. The discussion has to go on so that when it is time to change or improve Scottish policies, ideas will be ready to pick up.

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By Charlotte Snelling.

For much of the post-war period, Guatemala’s past has been a story of dictatorships, terror, and genocidal regimes. It is estimated that 200,000 people have died as a result of murder, torture, and extreme poverty whilst the country continues to be affected by a legacy of successive odious governments. It remains one of the most impoverished countries in Latin America and ranks at just 131 on the United Nations Human Development Index, out of a total of 187 countries. In the Americas, only Haiti ranks lower.[1]

A recent report by Jubilee Debt Campaign has been launched to investigate the build up of sovereign debt in Guatemala and the role this has played, and continues to play, in reproducing poverty across the country, particularly in its rural areas. It looks at how debt has been accumulated, the impact on the country’s economy, society, and population, as well as the steps needed to ensure the people of Guatemala are not left paying for the illegitimate actions and unfair treatment endured at the hands of their former leaders.

Guatemala has a long history of debt and exploitation by foreign powers. In the late 1970s and early 1980s, when the wave of terror was at its highest level, foreign lending to the country increased substantially. Successive loans of between $100 million and $300 million every year were granted from 1978 to 1982 and by 1985 Guatemala’s debt had reached $2.2 billion, an increase of over $2 billion in just 10 years. The majority of this debt was owed to multilateral institutions, in particular the World Bank, and today the country is still paying these institutions back over $400 million every year. This undoubtedly has important implications for Guatemala’s ability to rebuild and develop its economy alongside providing essential services to its citizens. Money which could otherwise be spent on moving people out of poverty and developing essential infrastructure is being shipped out of the country and into the pockets of Western lenders.

Guatemala, March 2009. Dozens gather to commemorate the 27th anniversary of the Rio Negro Massacre at Pak’oxom Peak in 1982. Photo: James Rodríguez / MiMundo.org

Significantly however, the loans granted to Guatemala were crucial in supporting the decades of terror its population endured, funding ill-conceived, unsustainable projects which impoverished families and led to displacement and destruction of rural communities. The Chixoy Dam is just one example but one which highlights some of the worst effects of the World Bank’s irresponsible lending. [2]In the late 1970s and early 1980s the Chixoy Dam project, $400 million of its budget financed by the World Bank and Inter-American Development Bank, acted only to exacerbate levels of violence and persecution against Guatemala’s indigenous people. In seeking to create a new reservoir as part of the project, the population of the Rio Negro region were threatened with eviction. When the local population resisted this pressure to move, their opposition was then exploited by the government as justification for counter-insurgency and increased violence against the Rio Negro community. It is estimated the project forcibly displaced more than 3,500 Mayan community members and led to 6,000 families suffering loss of land and livelihoods, with more than 400 people were massacred because of their opposition to the project. For the survivors the impact continues to be felt. A Probe International Report from 2001 states: “members of the Rio Negro community live in extreme poverty in comparison to neighbouring communities. However, before dam construction, the community enjoyed, relatively speaking, a high standard of living.”[3] Furthermore, World Bank loans for this project (and a second Chixoy Dam project in 1986) have cost Guatemalan governments $100 million in interest. The Chixoy Dam is a single example within a large back catalogue of odious debts originating from multilateral lending to Guatemala’s past dictatorial regimes. Worryingly the World Bank appears content to continue lending money to the country for new projects which threaten to exploit and impoverish even more communities.

A mural in Pacux, home of the Rio Negro survivors. http://upsidedownworld.org/main/guatemala-archives-33/1442-guatemala-the-forgotten-spirits-of-rabinal

As Barbara Rose Johnston at the Center for Political Ecology states, “the World Bank and Inter-American Development Bank… loans were the primary source of foreign aid to a nation ruled by a military dictatorship engaged in systematic state-sponsored destruction of Mayan peoples”[4]. Debt accrued in the period was loaned to illegitimate and unaccountable governments of which the lenders were well aware whilst only minimal, if any, token investigations into possible impacts of projects were conducted. It is unjust for new governments to be saddled with these debts and responsibility must be shared by the countries and multilateral organisations which funded and supported projects at the expense of the Guatemalan people.

The experience of Guatemala and this new report show that something needs to change. Not only should these illegitimate and destructive debts be cancelled, the accumulation of new odious debt has to be prevented. Lobbying for an audit of the debt in Guatemala and campaigning to force the World Bank to overhaul its current policy and apply ethical principles of justice, fairness, and sustainability to its future lending will be vital in this process.

Importantly though, we should also be looking closer to home. In the UK, UK Export Finance (previously the Export Credit Guarantee Department), a semi-autonomous government body existing to support UK exporters to enter in to international markets considered risky and where the likelihood of failure is high, has been responsible for numerous dodgy deals similar to that seen in Guatemala. Deals where UKEF is involved are typically made in the arms trade, aerospace or fossil fuel related industry (over 75 percent of UKEF’s observable transactions) and are often based in countries with unstable governments, despotic regimes, and areas of conflict, which further compounds their negative effects. Egypt, for example, owes the UK approximately £100mn which includes loans for arms made to the regimes of both Mubarak and his predecessor Sadat. Between 1985 and 1986 UKEF supported £250mn of arms sale loans to finance a tank factory near Cairo and a military city west of Alexandria.[5] As in Guatemala, the Egyptian people are now left paying for the actions of the governments which previously oppressed them.

Scotland has an opportunity to take a stand against unethical lending. It seems possible that, whatever the result of the referendum, Scotland will be given the powers to create export credits. We must campaign here to ensure that this agency will not follow the route of corrupt deals, human rights abuses and disregard for environmental considerations that has characterised UKEF, but instead lead the way in being a positive and socially responsible export agency, setting an example internationally of how exporters can be supported in a way that is ethical and fair[6].

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