RE: sweatshops and debt cancellation

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Mon, 21 Dec 98 13:58:07 -0500

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Subject: Fwd:sweatshops and debt cancellation
Author: witness
Date: 12/21/98 9:28 AM

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Subject: sweatshops and debt cancellation
Author: Campaign for Labor Rights <>
Date: 12/7/98 3:33 PM

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posted December 7, 1998

[Information provided by the Nicaragua Network: (202) 544-9355,; and 50 Years Is Enough: (202) 463-2265,]

See ACTION REQUEST at end of alert

When we organize against sweatshop abuses, we sometimes hear: "Yes,
sweatshops may not pay much and may not be pleasant to work in, but what
other options do these workers have?"

We should ask why there are no better options.

International lenders - such as the World Bank, the International Monetary
Fund, the Inter-American Development Bank, various foreign governments and
private foreign banks - have loaned billions for projects in underdeveloped
countries. While many of those loans ostensibly were for development, all
too often they have proved to be the prime reason that so much of the world
remains "underdeveloped," a cruel euphemism for economic desperation.

Loans negotiated in secret were frequently managed by governments known to
be headed by the corrupt and the despotic. Profits from the projects
financed by such loans went to corporations in the global north and elites
in the global south. But, while the profits were privatized, the obligation
to pay back those loans has been socialized. And it is those least able to
pay and who gained the least from the projects who have borne the cost of
repayment: workers and the poor.

Burdened with impossible debts, impoverished nations have been forced by
their international creditors to undergo structural adjustment programs as a
condition for rescheduling debt payments. Among the effects of structural
adjustment are:
* Ending credit to small businesses, causing massive bankruptcies, throwing
millions of workers into unemployment and creating a job force for sweatshop
* Ending credit to small farmers, with the same result as above
* Establishing tax-free, low-wage free trade zones for sweatshop operations

If we want to end sweatshop abuses, we need to end the basis for sweatshops.
Supporting cancellation of international debt for the Central America
nations devastated by Hurricane Mitch is a good step in that direction.

On December 10-11, governmental delegations led by the presidents of five
Central American countries -- Nicaragua, Honduras, El Salvador, Guatemala,
and Costa Rica -- will be in Washington, DC to meet with representatives of
donor nations and multilateral financial institutions to discuss assistance
in the wake of Hurricane Mitch. This meeting, called a "Consultative Group"
meeting, can be expected to result in pledges of relief aid and supplies for
the countries affected. Such pledges, although extremely important for the
hurricane victims, will be rendered meaningless unless accompanied by
complete and unconditional cancellation of these countries' foreign debts.
This alert requests that you put immediate pressure on the head of the U.S.
delegation to the meeting, asking that the U.S., as the host of the meeting
and the most influential player in making such decisions, take the lead in
urging cancellation of these debts.

To date, the international financial institutions (the IMF, World Bank and
Inter-American Development Bank) have made some vague promises of debt

relief. What they are promising is quite insufficient, but at least they are
talking about the right issues. The U.S. government needs to be pushed to
get into the game, particularly since only if it takes the lead will these
institutions be emboldened actually to cancel debts.


Please send the attached letter to Brian Atwood, the head of the U.S. Agency
for International Development, who will chair the U.S. delegation at the
Consultative Group meeting, December 10-11. Ask him to take the lead in
advocating for complete cancellation for Honduras, Nicaragua, Guatemala and
El Salvador. Debt cancellation is the only medicine that can save these
desperate economies.

Please note that letters should reach Atwood by the end of Wednesday,
December 9. If you can fax them, please do. If you use regular mail, please
send your letters as soon as possible.

Please also send the SIGNATURE PORTION of your letter (with your name and
address) to Campaign for Labor Rights via fax (541) 431-0523 or email
<> so that we can gauge the extent of the response to this alert.
Thank you!!!


Brian Atwood, Executive Director
U.S. Agency for International Development
1300 Pennsylvania Ave., NW Room 6.9
Washington, DC 20523
Fax (202) 216-3455

Dear Mr. Atwood:

With Hurricane Mitch, Central America has been hit by what may be the worst
disaster it has ever faced. On the eve of the meeting of the Consultative
Group of Donors for Central America, I call for the immediate and
unconditional cancellation of the external debt repayment obligations of
Honduras, Nicaragua, El Salvador, and Guatemala. I understand that you will
be leading the U.S. delegation to this meeting, and that in that position
you are uniquely placed to shape the U.S. response to this catastrophe.
Moreover, I understand that the U.S. response is key to determining the
response of the rest of the international community.

The disaster has ended the ability of these countries to repay external
debt. All available resources must be used to address the needs of the
population in this crisis. Recent press reports indicate that the
reconstruction effort will cost billions and take many years. Given these
circumstances, I believe that to give aid with one hand while taking more
with the other through debt service is nonsensical and immoral.

The bilateral debt of these countries owed to the United States should be
canceled immediately. Former Presidents Bush and Carter have both called for
immediate action on the debt issue in the wake of the crisis. Both France
and Cuba have already erased the debts owed them by these countries, and
other creditor nations are supporting debt cancellation. But the U.S. has
made no commitments for debt cancellation. This must change at the
Consultative Group meeting.

I strongly believe also that debt cancellation must not be conditioned on
compliance with IMF structural adjustment programs or similar demands.
Demands for government austerity are surely inappropriate in the face of
sudden and massive homelessness, disease and hunger. The current structural
adjustment programs in effect in Honduras and Nicaragua must also be
re-negotiated in light of the hurricane's impact.

This disaster will take the affected nations, already among the poorest
countries in Latin America, decades to overcome. Broad coalitions of social
organizations in Central America have called for cancellation of debt.
Half-measures such as debt re-scheduling or a "debt moratorium" would be
grossly insufficient. Anything less than cancellation of the monumental,
unpayable debt burden would extend and deepen the suffering of the victims.

It is disgraceful that the United States, the richest and most powerful
country in the world, and the most influential in terms of economic policies
such as debt relief, has made no commitment to cancel the Central American
debt in the wake of Hurricane Mitch. It is astounding that we could be
mounting international relief efforts while still insisting that these
countries pay back interminable debts. Please do what is necessary at the
upcoming Consultative Group meeting to make the United States a true leader
in making recovery possible for the people of Central America.




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From: Campaign for Labor Rights <>
Subject: sweatshops and debt cancellation

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