Sovereign debt workouts for debt justice

As we wait for final election results, potentially facing another five years of austerity it is hard not to think of Greece.

During its months of negotiations with creditors the Greek government has dealt with on-going assaults to its democratically elected mandate to reverse austerity. The ECB continues to hold critical relief funds to ransom even as the country faces an on going humanitarian crisis.

These protracted negotiations with creditors should be a visceral reminder that debt is about power. For far too long creditor countries have been unaccountable for irresponsible lending while debtor countries are at the mercy of their creditors when it comes to attempts to restructure or cancel debts.

As part of the international debt justice movement we have been part of the decades long call for the creation of an international forum for dealing with the resolution of sovereign debt. Last September the UN General Assembly passed a resolution calling for the creation of a multilateral legal framework for sovereign debt workout.

Momentum for this process at the UN is a huge step forward for the debt justice movement but the UK, US and the EU bloc among other rich nations are refusing to participate in negotiations to further develop the framework. They want any sovereign debt workout mechanism to fall under the remit of IMF where they hold significantly more power. While not perfect the UN is still a far more legitimate forum for a sovereign debt workout that is fair, impartial and takes human rights and environmental considerations into account.

It should not take a financial crisis or natural disaster before governments are given the opportunity to fairly cancel or restructure debt to meet citizens needs and uphold human rights.

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