Millions of people’s lives are being destroyed by financial giants trapping their countries in unjust debt. A new UK law could change that.
We’re facing the worst global debt crisis in over twenty years. People in countries like Ghana and Zambia are being robbed of an education and healthcare, their governments unable to deal with climate change because greedy private lenders are trapping them in debt.
As we head towards a UK general election, we have a rare opportunity to get debt cancelled – because 90% of lower income country debts owed to private lenders are overseen by UK law. At a time when politicians will be keen to hear from voters, this is our chance to win a new debt justice law.
And never has the need been more urgent – right now, 54 countries are in debt crisis. Ghana has paid over $7 billion in interest alone on debts to western lenders since 2010. Financial giants like BlackRock – the largest investment company in the world – are trapping lower income countries in debt and it’s ruining people’s lives.
In the words of Ghanaian debt campaigner Bernard Anaba:
“The debt crisis has led to a higher cost of living, escalating food prices, high cost of transportation, high cost of water and electricity, and making life very difficult for people. People barely get two meals a day… lives are being destroyed because of the debt crisis.”
In Ghana, Zambia and other countries in debt crisis, people are resisting – taking to the streets, organising strikes and demanding an end to the unjust debt. As we approach a likely UK election in 2024, this is our chance to call for a new debt justice law from whoever is next in power. Together we can help win justice for countries in debt crisis.
Right now, countries in crisis are unable to get debt cancelled because private lenders are refusing to agree to the same terms as other lenders, instead holding out for big profits – at the expense of millions of people living in countries in debt crisis.
Because 90% of the debt contracts for lower income countries are overseen by UK law, Parliament could pass a debt justice law that would force private lenders to take part in debt cancellation.
This law could:
- Make sure that no private lender could sue a country for more than they would have got if they had taken part in debt restructuring through existing agreements
- Allow the courts to force private lenders to take part in debt cancellation if other lenders, like governments, have agreed to it.
The other place which governs debt contracts is New York. The New York Assembly is already considering bills that aim to achieve the same outcomes as a debt justice law in the UK. We are working closely with allies in New York to push for reforms that would win justice for all countries in debt crisis.
Governments can borrow from various types of lenders – private lenders like hedge funds, asset managers, banks and oil traders; multilateral creditors like the International Monetary Fund and the World Bank and other governments.
Private lenders make up by far the biggest portion (46%) of projected debt repayments between now and 2029. These financial giants – like BlackRock, HSBC, JP Morgan, and UBS – continue to demand debt repayments from lower income countries in debt crisis, including those like Ghana and Zambia whose governments have defaulted on their debts.
In the case of Zambia, BlackRock – one of Zambia’s biggest lenders – refused in 2020 to suspend debt repayments during the pandemic, alongside other big global banks.
At the time of the last major global debt crisis in the 1990s and early 2000s, millions of people around the world demanded action on debt. In 2005, after years of tireless campaigning, debt campaigners won a new debt relief scheme which led to $130 billion of debt being cancelled by multilateral and government lenders for 36 countries. This was a clear demonstration that international powers can take action on unjust debt when under enough pressure to do so.
But private companies were excluded, so in 2010 Debt Justice won a law which made private lenders with debts governed by UK law take part in the debt cancellation scheme. However, that debt cancellation scheme has now come to an end – we need a new law to make private lenders take part in all internationally agreed debt relief.
Not since the last major debt crisis of the 1980s and 1990s has there been such an urgent need for debt cancellation. We’re serious about winning debt justice – we think that naming this a debt justice law is the best way of describing what we want this legislation to do.
