"We join our call to the appeals of the Holy Father, our brother bishops around the world, and so many other people of good will, in urging debt relief as a sign of genuine solidarity as the world approaches the millennium."
Shouldn't the Church stay out of the world of economics?
Quite the contrary. What the Church brings to this issue are experience and an ethical and moral voice. Through our mission efforts as well as Catholic Relief Services and its counterparts around the world, the Catholic Church works every day with poor families, women and children affected by international economic policies. Our expertise comes from knowing the effects of these policies on the poor all over the world. What the Church offers are something different, and in the long run, something more valuable than mere technical expertise unconnected to the human condition. We also bring a moral perspective to the debt issue. A key moral principle outlined in the U.S. bishops' pastoral letter Economic Justice for All is that economic life should serve the people, not the other way around. Catholic teaching on the dignity of life, the preferential option for the poor and vulnerable, the common good, solidarity, and care for the earth offers a framework for analyzing the debt issue. It also compels us to act. We cannot stand idly by while the life and dignity of millions of families and children are threatened by debt.
Shouldn't everyone have to pay their bills? Why should some countries be granted debt relief?
Yes, normally everyone should pay their debts. But debt repayments should not come at the cost of basic human survival and dignity. The tradition of jubilee first expressed in the Hebrew Scriptures declares the moral conviction that debts should be forgiven before people are driven to misery and hopelessness. Christians are called to forgiveness and to care for the poor and weak. In addition, most societies have long recognized the prudence and justice of bankruptcy protections, as well as their benefit to the common good. A way must be found to forgive debts when they become so large that they cause suffering among people who never chose to borrow in the first place and who may not have benefitted from the loans.
Won't debt relief encourage economic mismanagement and reckless policies?
This is the"moral hazard" argument. While it would be impossible to ensure that no one takes advantage of debt reduction, steps can be taken to improve accountability. The risk is worth taking for the sake of people living in poverty. And there are reasons to believe that debt reduction need not foster irresponsibility. First, experience shows that in other bankruptcy situations, most debtors do not rush again into debt. It will be in the interest of the debtors' governments to avoid overwhelming debt in the future, not only so that they avoid the dire circumstances they are now in, but because they will want to become participants in a global economy, a process that will be difficult under the best of circumstances but impossible without prudent economic management. Debt relief legislation and programs have protections to prevent countries from piling up new unsustainable debts.
If the foreign debts of the poorest countries are reduced or canceled won't lenders be unwilling to make loans to them in the future?
Without debt relief, the great majority of highly indebted poor countries will never be able to pay off their foreign debts. In this condition they cannot attract private investment. Debt relief could hardly make them less creditworthy. In fact, it is likely to make them more able to attract private sector investment and loans since they will have more money to put into business and other development. Investors and lenders will go where they can make money. Their investments will be profitable where people have the means to buy goods and services, where governments have the financial resources to build essential infrastructures and to provide the education to build a skilled labor force. Economies, no longer dragged down by a crushing debt burden, will have the opportunity to grow and develop.
Has the U.S. ever provided debt relief before?
Yes. In the past, the U.S. government has substantially reduced debts owed by Poland, Jordan, Egypt, and some very poor countries. U.S. commercial banks have also written off some debt. After World War II, Germany's debt was substantially reduced in order to allow it to rebuild. The same political will is needed for the world's poorest countries, which are rebuilding after their own wars, collapse of their economies, and natural disasters.
Can the average person really do anything on an issue as large and complex as international debt relief?
Debt relief is similar to many other issues in that the U.S. government can have a major impact if members of Congress and the Administration believe the issue is important to the American people. Unfortunately, most government leaders believe that citizens of the U.S. don't care much about international debt. This means that every letter written, every e-mail sent, every phone call made is important because it helps to build momentum behind U.S. action on international debt. It's important to keep in mind that the Catholic Church, along with other churches and organizations, is working on this issue at every level and in countries throughout the world. While one letter or phone call to a policymaker doesn't seem like much, when it is combined with letters and phone calls from Catholics and others throughout our country and around the world, it can have a huge impact.
Sources for this handout include Vatican statements, statements of the U.S. Catholic Conference, the October 1998 Seton Hall Conference on The Ethical Dimensions of International Debt, The World Bank and the International Monetary Fund, Jubilee 2000/USA, and the Diocese of Lansing Jubilee 2000 Commission and Social Justice Commission. For more information, contact the United States Catholic Conference at (202) 541-3199; (website: www.usccb.org/sdwp) or Catholic Relief Services at (410) 625-2220; (website:www.catholicrelief.org).