Lidy Nacpil grew up in Metro Manila in the Philippines. A passionate environmentalist, she started out as a student protester in the early 1980s, part of the movement against the Ferdinand Marcos dictatorship and now heads up anti-debt campaign Jubilee South Asia.

Amy Hall spoke to Nacpil at the Friends of the Earth conference in London on Saturday 15 September where the 52-year-old veteran campaigner spoke on economics, building a global climate movement and appeared in the closing rally with fashion designer Vivienne Westwood and MP Caroline Lucas.

Do you think more needs to be done to link environmental and economic justice?

Yes, in the South especially because we already have a lot of people involved with some of the big economic justice questions, especially because it really impacts on the day-to-day survival, but somehow we haven’t established that quite as clearly as far as climate is concerned. It’s very important to talk about the atmosphere, greenhouse gases and so on because that’s the science, but if you start talking about those things to people on the street they’re really not going to understand and it’s very hard for them to be passionate and to care. We need to be able to translate what climate change is in terms of the economic and social problems that people are facing.

As a passionate climate campaigner, do you think we should be focusing on adaptation or prevention?

We have no choice, we have to do both. Globally the task is really about preventing it because we have very little time, the impacts are really profound and already we are feeling it. Whatever we are experiencing is going to be worse even if we reduce emissions to zero by tomorrow. Of course, especially for people who are impoverished and not just in the South, also here, the impacts are going to be greater and therefore there’s going to be a huge need for people to learn how to adapt and to deal with the loss and the damage that it will create. For many parts of the global population they have no choice.

How do you think campaigners can communicate this urgency to other people and to governments?

I think the answers are not new; it’s still the same painstaking kind of education work. Most people don’t know or don’t understand it and whatever information that they happen to get from mainstream media or from government may not be the right kind. I was surprised when I went to an island [in the Philippines] and spoke to the community. They knew about climate change because they said the local government did a seminar and the solution is to plant trees. It’s totally depoliticized.

We need to do that groundwork in order to galvanise people because unless there’s millions of people on the streets, or on radio, or clamouring for governments to do something about it they’re not going to move. If it was just a matter of really good studies, information, pictures in order to convince the policy makers, then we would have realised our objectives long time ago. It’s not enough because they have a lot of vested interests.

A flooded area in Manila, 2009.

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Sustainable sanitation, reproduced under a CC license.

You were in Manila recently during the flooding, is that a normal occurrence for the area?

No. Actually the first of such huge floods that we’d never witnessed before happened in September 2009. Metro Manila is one of the largest cities in the word. It has a population during day time of about 16 million people, so we have our share of huge roads – they just turned into these rivers of swirling waters and large areas like lakes with only tiny spots of roof tops. It’s something that we’ve never seen before – even our parents and grandparents have never seen it.

The following year it happened again in another part of the country, on the island of Mindanao [in the southeast of the Philippines]. The same images of devastation were there. Then a few weeks ago it happened again. Now I don’t think anyone can dare say that climate change doesn’t have anything to do with it. So if the image of climate change for Africa is Africa burning, the image for us is of drowning.

How did you first get involved in anti-poverty campaigning?

The dictatorship in the Philippines didn’t just mean violence and suppression of rights but also worsening poverty because of [Ferdinand Marcos] keeping the political power to himself. He was using that power to amass greater and greater wealth to control the economy. So for us the struggle against the dictatorship was not just about the human rights and freedoms; it was about the peoples’ survival in the face of robbery of the means to live.

I think we were wrong in thinking at that time that environmental issues could wait. I think we should have integrated it so we would already be in a far stronger place today to wage the fight on climate change.

How important do you think cross border coalitions like debt-cancellation campaign Jubilee South are?

We used to think that global solidarity is important because we need people to be in solidarity with us in our national struggles, which is still true. But now I think there is an understanding that it’s a global system that’s responsible.

In our earlier fights we were saying we just need to break free from the political stranglehold; we just need to build an independent and democratic government that is not controlled by big business or these northern countries and so on. But you can’t say this any more because you need to change the system here [in the North] too. Solidarity has to be understood like that now. It’s not just the North being in solidarity with the South any more, it’s a common fight.

What do you see as the biggest challenge to global equality?

The first problem us ourselves. I think the biggest challenge is this idea that ‘it’s too difficult so let’s settle for the achievable goals.’ I cringe every time people say we have to be realistic; to be realistic is to have good plans but it doesn’t need to mean you have to settle for less. We need to be able to move people to aim big because no less is required.

Lidy Nacpil is currently the coordinator of Jubilee South Asia and vice president of Freedom from Debt Coalition in the Philippines.

Lidy Nacpil will be back in Britain in October as part of the Christian Aid Tax Justice Tour.

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‘[P]eople, even the world’s poorest and most destitute, are required to pay their government’s debts as long as creditors pursue claims… In the worst cases, it’s the modern equivalent of debtor’s prison.’

These aren’t the words of a debt campaigner, but the head of the World Bank David Malpass, speaking last week. They come days after the head of the International Monetary Fund (IMF) called for reforming ‘the international debt architecture.’ Both statements suggest something big is happening. What’s behind it?

The coronavirus pandemic has propelled historically unprecedented levels of global debt into an all-out economic crisis for many countries. The health impacts have been serious enough, but this phase of the pandemic will be followed by the worst economic downturn in living memory.

None of this came out of a clear blue sky, but rather from the failure of world leaders to learn the lessons of the 2008 financial crash. Instead of reforming the economic model which landed us in that mess, the financial system was bailed out, the price paid by ordinary people in the US and Europe through austerity, while the banks and hedge funds went on a high-risk lending binge to the Global South.    

As a result, many countries were already facing a debt crisis before the pandemic. Then they were hit with a massive shock – trade collapsed, commodity prices plunged and their currencies fell. While powerful G20 governments offered more than 70 poorer countries a halt on their debt repayments this year, they didn’t actually cancel debts, treating the situation more as a cash flow problem which would blow over. Worse, the relief did not stretch to debts to the World Bank, IMF, or to the all-important debt owed to private corporations. As a result, masses of debt repayments are still being paid by countries that cannot afford it.

In a report we release with other campaigners today, we show that $13 billion will be paid by lower-income countries to the private financiers this year alone. Some of the biggest chunks of that debt are owed to some of the richest corporations on the planet – Goldman Sachs, UBS, HSBC, Legal & General and of course Blackrock. Blackrock is a multi-trillion-dollar investment fund whose assets are two and half times the GDP of the entire African continent. BlackRock alone holds close to US$1 billion of debt across Ghana, Kenya, Nigeria, Senegal and Zambia.

Perversely this means even the limited debt relief already given by rich countries, as well as emergency IMF loans, are being diverted into the pockets of some of the richest investors on the planet. The IMF says debt, already very high, is expected to rise by as much as 10 per cent next year for developing countries.

If we leave this situation to resolve itself, we risk catastrophic levels of suffering. The World Bank warns of up to 150 million more people living in extreme poverty next year. This translates into a potential increase of up to 45 per cent in child mortality. The IMF warns of a ‘lost decade’ for development, recalling the devastating 1980s debt crisis, over which the IMF itself presided.

For the IMF and World Bank, these levels of debt threaten the debt system as a whole. They also threaten the position of those institutions as the great arbiters of that system, given the limited influence they have with either the big new government lender, China, or the banks. That’s why, leaving aside the hypocrisy of World Bank chief David Malpass complaining of others not cancelling debts when it has not cancelled its own, his damning critique – reproduced below in full – in many ways reflects what campaigners have said for years:

‘[There is] an imbalance in the global debt system that puts sovereign debt in a unique category that favours creditors over the people in the borrowing country – there’s not a sovereign bankruptcy process that allows for partial payment and reduction of claims. As a result, people, even the world’s poorest and most destitute, are required to pay their government’s debts as long as creditors pursue claims – even so-called ‘vulture’ creditors who acquire the distressed claims on secondary markets, exploit litigation, penalty interest clauses and court judgments to ratchet up the value of the claims, and use attachment of assets and payments to enforce debt service. In the worst cases, it’s the modern equivalent of debtor’s prison.’

A vulture’s game

The IMF has joined the call for reform, admitting that the debt crisis is not about cash flow, but a fundamental solvency crisis for many countries.

What reforms do they propose? First, transparency, a not insignificant measure given the impossibility of most countries even identifying most of their private creditors at the current time.

Second, they urge the use of more tools to stop a minority of private creditors that disrupt efforts to write-down debt, including the so-called vulture funds, which specialize in buying up debt very cheaply, purely in order to sue countries for the full face-value of the debt. Vultures use courts in England or New York to sue. The World Bank calls on the UK and US to ‘do more’ to stop such activities.

These actions would certainly go a small way to tipping the balance in the direction of southern governments and away from the banks. That they are suggested at all is proof of just how serious a crisis the world faces. The IMF and World Bank are part and parcel of the current debt system, not champions of reform, and their proposals aim to preserve as much of the current system as possible, rather than see it swept away by the mass defaults which are coming.

But their proposals are nowhere near sufficient to build the economy we need. Deep transformation of the debt system, long overdue, must fundamentally shift the balance between creditors and debtors. It is rank hypocrisy that private creditors who make a killing on ‘risky’ high-interest loans to lower-income countries still expect to get paid out when their gamble fails. Just as obscene is the way the IMF still forces austerity and liberalization on countries, as they have done for 40 years, as a condition of recycling their debt. Any solution needs to cut the power of both sorts of lenders.

Proposals which could achieve this do exist. The idea of a new international debt mechanism, long argued about, could make debt cancellations relatively swift, comprehensive and fair, recognizing that a government’s first duty is to its citizens and their human rights, not the richest banks in the world.

Some critics counter that this would push up the cost of lending to developing countries. That’s far from certain, but, in any case, the dependence of developing countries on international markets, which issue debts in foreign currencies and under foreign laws, is going to cause huge problems whatever the interest rate.

Ultimately, lower and even middle-income countries must be less dependent on such debt, and move to funding themselves based on taxation and other domestic resources, if they are going to enjoy any economic sovereignty.

One international body which understands the enormity of the changes needed is UNCTAD, the UN Conference on Trade and Development, which has had a reputation for telling it like it is, since it was founded in 1964 to give a developing-country perspective on trade and development issues. Its own report, released a couple of weeks ago, is far more structural than anything produced by the IMF and World Bank.

UNCTAD chastises the leaders of rich countries for the economic model they have built over the last 40 years, and their failure to reforms that model after the 2008 crash.

Instead, UNCTAD argue, the responses to the crash exacerbated the problems of the high financialized global economy. ‘A combination of corporate rent-seeking and cheap credit, in the context of weak demand, reinforced a culture of quick financial returns, with private equity, outsourcing, share buy-backs and mergers and acquisitions the instruments of choice,’ it writes, offering this striking example: ‘between 2010–2019, S&P 500 companies channelled almost a trillion dollars a year into share buy-backs and dividend payments’.

For developing countries, this meant short-term cash, but massive long-term debt, volatility and dependence ‘with increased penetration of their financial markets by non-resident investors, foreign banks, and other more shadowy financial institutions.’

The UNCTAD report is clear: coronavirus proves that we are not facing an obstacle in an otherwise clear road. Austerity and liberalization will not resolve the problems we face, in fact they will be calamitous. It warns that ‘a complete wipeout of the Brazilian, Indian and Mexican economies’ is on the cards. To avoid it, ‘we need massive public financing’ and to suspend the international rules that increase the power of big business such as ‘global intellectual property rules and the toxic corporate court system which allows big business to sue government in special tribunals’.

Massive debt cancellation is necessary of course, but also a complete overhaul of the debt system to ‘prioritize the long-term collective interests of the many over the short-term financial rewards of the few’, through for instance a publicly-controlled credit rating agency.

A failed, free-market philosophy

These are frightening times, but clinging to the failed philosophy of the free market or the institutions that represent it, on the basis that perhaps they can restore a period which seemed more hopeful or stable, is counterproductive. After all, it is precisely this philosophy that brought about the catastrophe we now confront.

Nothing short of a thoroughgoing transformation of the global economy will do, allowing us to rebuild international co-operation based on trust, fairness and human rights. A back to ‘business as normal’ approach will not take us back to the 1990s high point of globalization, but rather intensify the rise of the populist right and erode what remains of our hollowed-out democracy.

As UNCTAD puts it: ‘The measure of our success cannot be whether we ward off another financial crisis and avoid increased public debt. Succeeding generations will not applaud higher share prices or fuller treasuries if we fail to meet the challenge – and sacrifice an untold number of lives and livelihoods in the process.’

While that may seem like a tall order, remember that we live in extraordinary times. If the head of the World Bank can call the global financial system a ‘debtors’ prison’ anything is possible.

The task ahead of us is to build an international economy which can give people a sense of security and control over their lives. To do this we must shift the balance back from creditors to debtors, from the market to the public sector, from capital to labour.

Nick Dearden is the director of Global Justice Now. He has been a campaigner against corporate globalization and for global economic justice for over 20 years. He was a leading voice in the UK and European movement against the now-abandoned EU US trade deal (TTIP) and a founder of the UK’s Stop Trump coalition.

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