November 4, 2010
Now the EU is awake at last, it should deal with debt workouts for EU and developing countries.
With the Greek financial crisis rocking the foundations of European Monetary Union, the EU has finally realised it needs to agree on debt mechanisms. With regard to the Council’s conclusions on a ‘permanent crisis mechanism’, EU leaders need to remember that debt workout mechanisms are not only about economic stability but also about people.
Civil society has long pointed out that action to improve debt workout mechanisms for countries in financial difficulty is urgently needed. It took a debt crisis on its doorstep for the EU to wake up and take the issue seriously.
The Greek crisis has demonstrated once again that in the end it is vulnerable groups – in which women are overrepresented – who suffer from the impacts of anti-crisis measures the most. This has been a reality for developing countries for decades.
The EU needs to implement existing proposals which reduce the negative impacts of debt crises on the most vulnerable people and it must apply them to both member states and third countries. EU solidarity with countries in financial trouble cannot end at the Union’s borders.
Relevant agencies with expertise (UNCTAD, the international financial institutions and within civil society, etc.) need to develop a binding, independent and predictable framework for arbitrating on sovereign debt claims alongside standards for responsible lending and borrowing, which should be speedily adopted.
Such a framework would help to reverse the adverse impacts of a sovereign debt crisis on vulnerable groups and would fill the current vacuum in global sovereign debt governance.
Policy and Advocacy Officer
CIDSE (an international alliance of Catholic development agencies)Author : Andreas