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Jubilee USA Network aims to ease Grenada's debt crisis

  • Women harvest cacao on the Caribbean island of Grenada. (Newscom/picture alliance/Frank May)
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In March, the small Caribbean island of Grenada was invaded again. Unlike in 1983, however, this time there were no U.S. Marines landing on the beaches aiming to overturn the government. Instead, the invasion was led by Eric LeCompte and his team at Jubilee USA Network, a nonprofit advocacy group that seeks to help countries facing sovereign debt crises, and LeCompte was welcomed with open arms.

Grenada is one of several Caribbean countries facing debt-restructuring negotiations with the International Monetary Fund. Six of the most heavily indebted countries in the world are island nations in the Caribbean. The countries are also incredibly poor. Fifty percent of Grenada's estimated 110,000 people live in poverty. Every 10 or so years, a hurricane wipes out a significant percentage of these islands' gross domestic product, and the financial hurricane of the 2008 fiscal crisis in the U.S. cut deeply into the tourism trade upon which these small nations rely.

"All these nations were once colonized, where the natives were killed and slaves were brought in to work the plantations," LeCompte says. "The islands were big plantations really and they continue to be enslaved by wealthy countries and the IMF."

LeCompte worries that the IMF will demand severe austerity measures, requiring the sale of public assets, such as the public hospital, and cutting government budgets.

"Government is the predominant employer," he explains. "So these austerity measures like cutting the government payrolls only increase unemployment." Grenada's current unemployment rate hovers around one-third of the population, and for young people, it is above 50 percent.

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The islands are home to more than fiscal messes. "It is a very religious region," LeCompte says. "The churches have always been closest to those who struggle. The religious community is widely respected on the island because of their role in caring for poor people, education, and relief work after hurricanes."

The religious organizations have counterparts in other Caribbean islands -- councils of churches and Catholic dioceses and episcopal conferences -- all of whom have a stake in devising a strategy to prevent the IMF negotiations from further impoverishing their countries. Four Catholic dioceses in the Caribbean sent representatives to the meetings in Grenada.

LeCompte met with many of those religious leaders, where they had discussions in the happily named "upper room" at Blessed Sacrament Church in St. George's. In addition to the clergy and lay leaders, the minister of finance joined the meetings, as well as several parliamentarians and a representative of the IMF. LeCompte's goal for the meeting was: "How do we get the highest amount of debt reduction with the lowest amount of austerity?" Jubilee USA is looking at alternatives to cutbacks in government programs that assist the poor. For example, the group hopes the government and IMF will help create a plan to curb corporate tax avoidance rather than slash government jobs.

The biggest problem facing countries with sovereign debt obligations that outstrip their ability to repay, according to LeCompte, is the lack of international economic regulations. "Vulture funds," hedge funds that deal in sovereign debt, prey on these poor countries, buying public debt for pennies on the dollar and demanding full repayment. There is no equivalent of an international bankruptcy process for countries, so countries are at the mercy of these "vulture fund" creditors.

LeCompte hopes that the new round of negotiations with Grenada and other Caribbean countries will set precedents for the future and, hopefully, the enactment of an international regulatory framework that will permit countries, like corporations, to file for bankruptcy.

Jubilee USA was founded in 1997, when many countries worldwide were facing sovereign debt crises. Original founders of the group included the U.S. Conference of Catholic Bishops, the equivalent bodies of 10 mainline Protestant churches, American Jewish World Service, the AFL-CIO, and some 70 other groups, half of which were religious orders.

LeCompte calls the recently canonized Pope John Paul II "one of our international founders" because of the pope's repeated calls for cancellation of public debts at the time of the jubilee year 2000. "He was the same kind of spokesman that Pope Francis has become," LeCompte says. "They focused on shifting the system to protect the poor and recognize that these sovereign debt crises are symptoms of sickness in the international financial sector."

LeCompte acknowledges the issues are very complex, entailing re-examination of tax and trade policies, accountability and transparency for both government accounts and private sector financial activity.

What is not in doubt is that, currently, the rules are rigged for the rich and the powerful, many of whom are all too willing to make more money on the backs of the poor of the world. The IMF serves the interests of the G-8, the large industrialized nations whose banks and investors want rules that protect them. Still, LeCompte is hopeful that even the IMF is recognizing its previous austerity-first approach is unhelpful as well as unjust.

"The IMF staff is working on the issues," he says. "At the June IMF meeting, they are likely to request certain reforms relating to sovereign debt, such as limiting the role of predatory vulture funds." He concedes that he is not sure what will happen, as the members of the G-8, and the larger G-20, are divided about how to proceed.

The Grenada meetings were only part of Jubilee USA's advocacy work this year. In April, they filed an amicus curiae brief with the U.S. Supreme Court, urging the high court to hear, and overturn, a lower court ruling involving Argentina. The lower court sided with the vulture funds against Argentina. Even though all other creditors have reached an agreement with Argentina, a few of the vulture funds are holding out. It is worth remembering that when Argentina had its sovereign debt crisis in 2002, Cardinal Jorge Mario Bergoglio was archbishop of Buenos Aires. The pope knows something about just how crippling these crises can be and how the IMF's previous "solutions" can harm the poor.

In May, LeCompte met with Francis, Vatican Secretary of State Cardinal Pietro Parolin and Cardinal Peter Turkson, president of the Pontifical Council for Justice and Peace. LeCompte says, "Having this meeting with Pope Francis gives us credibility, it raises the profile of our efforts, and it will ultimately allow us to move forward legislation on the policies that we're trying to win."

He added that the pope has "an astute sense of the issues of debt and taxes, corruption and trade and how it all comes together."

Jubilee USA accomplishes all this with only three full-time employees and one part-time employee. But their offices are a beehive of activity with as many as a dozen people from other organizations coming to the office to consult, be briefed on developments, and strategize.

"We believe we're working on the most important issues of our time," LeCompte says. "We need to build an economy that promotes and protects the participation of the most vulnerable."

Listening to LeCompte's enthusiasm, which is matched by his mastery of the issues, with the vocal support of Francis, no one should bet against Jubilee USA, not even a vulture fund manager.

[Michael Sean Winters blogs about religion and politics for NCR on Distinctly Catholic.]

This story appeared in the June 20-July 3, 2014 print issue under the headline: Jubilee aims to ease Grenada's debt crisis .

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