Stop the war, support impacted countries and cancel the debt

The wars and genocide, as unlawful acts of aggression and breach of the UN Charter, must stop. We urge all parties to pursue a peaceful and negotiated outcome that preserves peace and stability in MENA. We call on governments and institutions worldwide to stand up for peace and the respect of international law, firmly and unequivocally opposing those who promote war and destruction for their own economic and geostrategic benefits. This includes not engaging with – or withdrawing from – the Board of Peace.

Beyond the immeasurable losses of life and infrastructures in the MENA region, the impacts of this war are already being felt worldwide, particularly in the Global South. The recent escalation of US and Israeli military violence has sharply intensified disruptions across energy, fertilizer, and commodity markets, with cascading effects on economic prospects, and energy and food security across the globe. The International Energy Agency has characterised this disruption as the ‘greatest global energy and food security challenge in history,’ and the largest supply disruption to the oil market since the energy crisis of the 1970s – which led to the debt crisis of the 1980s-90s.

Skyrocketing oil, gas and fertilizer prices are causing food prices to rise, leading to higher inflation. This means energy and food insecurity for millions of people in the Global South. It means a rising cost of production and transportation, energy cuts – and therefore hospitals not working properly and schools closing – and disruptions in the supply route for critical goods, including fertiliser, grains and other food supplies. Ultimately, it means famine.

As a whole, these interconnected shocks will make it even more difficult to pay for external debt service, which was already at record high levels before this new shock. Countries with both high external debt service and low reserves will be especially at risk. Global South countries dependent on imported energy and agricultural commodities will face a double burden, as escalating import costs risk depleting foreign reserves and triggering widespread hunger, impoverishment, and economic contraction. To sustain essential imports and basic economic functioning, many will not only be unable to make existing debt repayments but will also be forced to take on additional debt. Under these conditions, the continuation of existing debt obligations will only deepen the crisis and push these economies into a spiral of stagflation.

The threat of inflation will likely lead to increasing interest rates that, together with markets’ aversion to risk, is already increasing capital outflows, spreads and therefore borrowing costs for Global South countries. They will have to reach out to lenders of last resort like the IMF and the World Bank, with conditionalities attached, and increase their debt stocks even further. Furthermore, there will probably also be a reduction in remittances from workers in the Gulf countries targeted by strikes. This not only affects households in these workers’ countries of origin, but also their economies and US dollar reserves.

Such impacts are exacerbated by structural imbalances that have historically deepened dependencies in the Global South. Dependencies that make the economic spillovers of the war even more impactful.

In this bleak outlook, the IMF and World Bank seem to be waiting to see how the situation unfolds. While highlighting the challenging situation, the Bretton Woods Institutions, whose major shareholder is the US, have limited their offerings to the usual toolkit of capacity development, neoliberal policy advice and more lending. The uneven response of the IMF and World Bank to global conflicts also raises serious concerns about double standards. While they reacted swiftly and with clarity to the Russian invasion of Ukraine, their delayed and muted response to the current crisis in the Middle East and Asia – despite warnings from the International Energy Agency – undermines their credibility and surveillance mandate.

We, the undersigned civil society organisations, demand that governments around the world and international financial institutions:

• Take immediate action to stop wars of aggression against Iran and the MENA region and stop the genocide in Palestine.
• Support countries impacted by the war and spillovers with unconditional non-debt creating finance.
• Suspend all debt payments to all lenders from countries directly impacted by the military attacks and those affected by the increase of energy, fertilizers and food prices, at least until the conflict is over and prices are stabilised. Any debt relief initiative must be enforced for all lenders, including private, bilateral and multilateral, in order to avoid bailing out private creditors.
• Assess the debt sustainability, taking into account the impacts of the war and spillovers in the borrowing countries’ economies, and considering the financing needs for reconstruction and recovery, and unconditionally cancel all unsustainable and illegitimate debts.
• The IMF and World Bank could make use of existing tools, such as the IMF Catastrophe Containment and Relief Trust (CCRT) or sales of gold reserves, to provide multilateral debt cancellation.
• Suspend the IMF surcharges.
• Agree on a new Special Drawing Rights (SDR) allocation to support countries in need including by re-channeling SDRs through non-debt creating mechanisms.
• Fundamentally overhaul the international multilateral system to make it truly inclusive and rights-based. This requires, above all, reforming economic decision-making processes and shifting them away from exclusive and unequal institutions toward more inclusive and democratic formats. This includes advancing towards the UN Tax, Debt and ODA conventions.
• Looking forward, and ahead of future shocks, governments must commit to the establishment of an automatic debt payments cancellation mechanism, to offer relief in the wake of external catastrophic events, followed by enhanced debt stock restructuring and cancellation*. This mechanism  should be created, under UN auspices, in parallel to the establishment of a multilateral debt resolution mechanism**. A UN Framework Convention on Sovereign Debt*** could facilitate discussions and decision-making on both mechanisms, with both creditors and debtors participating on an equal footing.

LIST OF SIGNATORIES 

International Organisations

1.  ActionAid International, Global (HQ in South Africa)
2. CADTM International Network, World
3. Center for Economic and Social Rights (CESR), Global
4. Christian Aid, United Kingdom
5. International Network for Economic, Social and Cultural Rights (ESCR-Net)
6. Global Call to Action Against Poverty (GCAP), International
7. LDC Watch, Nepal
8. RIPESS – Intercontinental network for the Promotion of Social Solidarity Economy, SPAIN
9. Society for International Development, Global
10. Third World Network, Malaysia

MENA and rest of Africa

11. Arab NGO Network for Development – ANND, Lebanon,
12. MenaFem Movement for Economic Development and Ecological Justice, Morocco/SWANA,
13. African Forum and Network on Debt and Management – AFRODAD, Zimbabwe
14. Africa Development Interchange Network (ADIN), Cameroon
15. African Parliamentary Network on Illicit Financial Flows and Tax Zimbabwe Caucus, Zimbabwe
16. African Sovereign Debt Justice Network, Kenya
17. Association Nigerienne des Scouts de l’Environnement (ANSEN), Niger
18. Climate Action Network Zimbabwe, Zimbabwe
19. Economic Justice Forum-Kenya., Kenya
20. Emonyo Yefwe International, Kenya
21. Grassroots Development Initiatives Foundation-Kenya, Kenya
22. Institute for Economic Justice, South Africa
23. NGO ADEJ-Mali, Mali
24. Tanzania Rural Development Forum, Tanzania
25. The Initiative for Climate Action and Development Strategies, Malawi
26. The Kenya Human Rights Commission, Kenya
27. WoMin African Alliance, South Africa 

Asia and the Pacific

28. Asian Peoples’ Movement on Debt and Development – APMDD, Philippines
29. Asia Pacific Forum on Women, Law and Development – APWLD, Pakistan
30. Alternative Law Collective, Pakistan
31. Bangladesh Krishok Federation, Bangladesh
32. Centre for Environmental Justice (Guarantee) Ltd, Sri Lanka
33. Food Sovereignty and Climate Justice Forum; Tax and Fiscal Justice Alliance, Nepal, Nepal
34. Institute for Social & Economic Justice, Pakistan
35. KRuHA, Indonesia
36. Missionary Society of Saint Columban, japan
37. Nash Vek PF, Kyrgyzstan
38. National Fisheries Solidarity Movement, Sri Lanka
39. NRDS Bangladesh, Bangladesh
40. Pakistan Fisherfolk Forum, Pakistan
41. Pakistan Kissan Rabita Committee (PKRC), Pakistan
42. Reality of Aid – Asia Pacific, Philippines
43. Rivers & Rights, Southeast Asia
44. Roots for Equity, Pakistan
45. Rural Reconstruction Nepal, Nepal
46. SAAPE, Nepal
47. Samata, India
48. Sawit watch, Indonesia
49. We Woman Lanka Network, SriLanka

Latin America and the Caribbean

50. Red Latinoamericana y del Caribe por Justicia Económica, Social y Climática – LATINDADD, Peru
51. Gestos – Soropositividae, Comunicação e Gênero, Brazil
52. Reacción Climática, Bolivia

Europe and North America

53. European Network on Debt and Development – Eurodad, Belgium
54. ACEP, Portugal
55. Bretton Woods Project, UK
56. Centro de Estudios e Investigación sobre Mujeres, Spain
57. Debt for climate, sweden
58. Debt Justice Norway, Norway
59. Debt Justice UK, United Kingdom
60. Financial Justice Ireland, Ireland
61. Global Social Justice, Switzerland
62. Observatori del Deute en la Globalització (ODG), Spain
63. World Economy, Ecology & Development – WEED, Germany
64. Transparency, Accountability, and Participation (TAP) Network, USA
65. WEDO, USA

Notes:

* In the wake of a destructive storm, massive floods, prolonged drought, epidemic or pandemic, earthquake or tsunami, foreign military aggression, or external economic shock (including a sudden change in commodity prices), debt payments would be automatically cancelled for an established period of time. After a period for assessing the impacts of the shock, a debt sustainability analysis should be conducted, considering the losses and damages, as well as the financing needs for recovery and reconstruction, providing the debt restructuring and debt stock cancellation needed in each case, again involving all creditors.

** A permanent multilateral debt resolution mechanism, under the auspices of the UN, should ensure the primacy of human rights over debt service and a rules-based approach to orderly, fair, transparent, and durable debt crisis resolution, in a process convening all creditors.

*** A UN framework convention on sovereign debt should encompass global consensus on the rules, principles, and structures needed throughout the different interdependent stages of the debt cycle.