 ICONS Sample Simulation Messages: Fall 1997Following is a collection of messages on debt and development
issues taken from the Fall 1997 university-level International System Simulation. This
simulation involved 16 country-teams located at universities in Canada, Costa Rica,
Colombia, Finland, Norway, Russia, and the United States. |
| Message: #729 | From: India | Oct 29, 1997 14:08 |
| To: All | ||
| Issues: Debt/Development | ||
| Subject: India's Proposals | ||
INTRODUCTION The debt and development council of India has put together the principles concerning the debt issue gathered from themessages we have received. We have tried to put together all the ideas of different governments dealing with the issue. We have come to the conclusion that all the participants are aiming not only at a common goal but also wish to use common means. Therefore we find it relevant to put them all together and start thinking of how to get them to work in practise. We are aiming at creating a general treaty, which every country would sign. With this we would like to create a basis for the plans to be made and action steps to be taken. If we could reach a common agreement on these principles , these could be utilised in the work of development organisation that might be founded as a result of this discussion or in the plans that are already proposed by some of the participating countries. PROPOSALS OF THE PRINCIPLES TO BE AGREED ON ¤DEBT PAYMENTS The method of debt payment will be restructured: Lower interest rates and longer maturities. The process of paying back will be handled case by case taking both parties into account ¤DEBT FORGIVENESS Industrialised countries are willing to practise some form of debt- forgiveness and this issue will be handled case by case ¤CURRENCY Part of the debt burden could be considered to be paid in local currencies or products ¤FUTURE DEBT New loans will be given with long-term ma aturities and fixed interest rates. Loans will not be given for military purposes or repaying debt. The loans will not be given without a good plan of the use of the money. The future credits should be granted in local currencies of the debtor countries. ¤ANNUAL MEETING There will be a meeting in the beginning of every fiscal year between the creditor and the debtor countries . In this meeting the current debt situation is assessed and the repaying schedule for that year is established when needed. Also long term plans in area of debt and development will be discussed in that meeting. This is a PROPOSAL based upon our interpretation of what participiants have been saying. Any modifications to this proposal would be welcome so that we can then have an agreement. |
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| Message: #1076 | From: Japan | Nov 04, 1997 12:40 |
| To: Canada, France, India, Netherlands, United Kingdom | ||
| Issues: Debt/Development | ||
| Subject: Agreement on Debt Relief | ||
| Highly respected conference members, Japan is delighted that so many of us are willing to sign an agreement on the debt issue. We have noticed that we, France, Canada, India, Netherlands and UK, share almost the same opinion on this issue. We suggest that we would work out an agreement and sign it as soon as possible, hoping the others will join us as well. We have reread the proposal of India, as they hoped. It is near to our message about HIPC, but with certain differencies. We see that a common agreement on debt relief is necessary for protecting the developing countries. Otherwise there could be countries that are left out totally because of their low-appreciated currency or restrictions on trade. It might also happen that if the debt relief would be organized on bilateral basis some countries would try to exploit the developing countries as much as possible, for example by demanding totally free access to the markets, share of local companies, access to politics etc. On the other hand, trade agreements are not always out of question. Furthermore, HIPC includes dealing with bilateral debt through Paris Club. Of course the countries have to be seen case by case as well, in order to define their ability to pay back/get debt forgiveness. But, as we already said, we do not trust on only the good will of the developed countries. So, the HIPC (where most of you are anyway in) seems to be quite near to our interests. We hope you are willing to cooperate with u us and we could find a solution in this important issue. |
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| Message: #1090 | From: Japan | Nov 04, 1997 13:28 |
| To: All | ||
| Issues: Debt/Development | ||
| Subject: RE: Proposed Principles | ||
| Highly respected participants, Japan has received Indias proposal, reflecting the ideas of all of us. However, we have some amendments to do: *DEBT PAYMENTS: We still refer to HIPC, where these conditions are already detailed. We agree on the general principles, but are not sure about the benefit of handling debt payments case by case. It would give too free hands to some of the developed countries, who could then tell debtor countries what to do, for example letting the investments in without restrictions. (See media about OECD:s MAI, Multilateral Agreement on Investment, which is under work right now.) * DEBT FORGIVENESS should be organized together, for the same reasons as above. Otherwise the countries would be in unequal position, some of them dropping out totally. *CURRENCY: Japan sees local currencies are far too unsecure. At least most of the debt should be paid in hard currencies, which would improve the economy as well. The currency can be discussed later. *FUTURE DEBT Japan agrees that certain conditions (please remember Well-being plan) to the further loans are essential. *ANNUAL MEETING is certainly needed. This could happen either inside World Bank, IMF or IDO (International Development Organisation). |
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| Message: #1129 | From: France | Nov 04, 1997 17:07 |
| To: Argentina, Brazil, China, Colombia, Costa Rica, Venezuela | ||
| Issues: Debt/Development | ||
| Subject: debt restructuring | ||
| Although we intend to be strong participants in anny discussions, we want to hear plans and/or ideas from the developing countries. We have reviewed Japan's and India's plans concerning this issue and agree with most of their points, but with a few reservations. We would like to know which points you agree or disagree with and how it will benefit your coutry. Our goal is to formulate a plan that will benefit the developing countries by putting more weight on their needs and positions. | ||
| Message: #1222 | From: Canada | Nov 05, 1997 14:06 |
| To: Japan | ||
| Issues: Debt/Development | ||
| Subject: RE: India's Proposed Principles | ||
| As you might have expected, Canada applauds your comments on India's Proposed Principles for debt and development. Like Japan, Canada has concerns about the repayment of debt in local currencies as opposed to hard currency. While Canada is, perhaps, more willing than Japan to consider debt rescheduling on a case-by-case basis, we understand and support the need for a common framework. Canada is confident that the proposals of France, India, Netherlands, UK and other participating countries can be brought into line with the shared Japanese and Canadian goals for an agreement on debt and development. | ||
| Message: #1227 | From: United Kingdom | Nov 05, 1997 14:28 |
| To: All | ||
| Issues: Debt/Development | ||
| Subject: Proposed Principles | ||
| ISSUE: Debt/Development SUBJECT: Proposed Principles TO: All The UK considers the principles proposed by India and Japan to very close to us. The UK agrees with Japan that we need a common guideline concerning the principles of debt restructuring, case-by-case negotiations should be within general standards. Japan has referred to HIPC Debt Initiative agreed by the World Bank and IMF last year as an issue to develop. The UK supports Japan on this. Britain proposes the following specifications for HIPC: 1) We make a commitment that every eligible poor country should be launched on the process of debt relief by the year 2000. 2) The ratio of debt to exports of poor countries should not be over 150 per cent. We have to ensure that countries do not fall back into an unsustainable debt position after they have been given relief. 3) The burden of reducing countries' debt to these levels should be shared among creditors countries in proportion to the amount of money poor countries owe them. IMF, which is a multilateral creditor, has had financing problems in meeting its part of the debt initiative. The UK is convinced that in the long run sales of IMF gold stock will be necessary. These are Britain's final suggestions. We hope for comments, so that we reach sign an agreement as soon as possible on debt issue and move on International Development problem. |
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| Message: #1250 | From: India | Nov 05, 1997 16:25 |
| To: All | ||
| Issues: Debt/Development | ||
| Subject: Renewed principles | ||
| Highly respected participants. We received Japan´s suggestions for adjustments to be made in the proposal of the principles to be agreed on. We consider the points that Japan brought up valuable. Therefore we present a renewed version of the principles. ¤ DEBT PAYMENTS: The method of debt payments will be restructured: lower interest rates and longer maturities. The process of paying back will be handled case by case under common rules: § All the 41 heavily indebted countries should be able to take part in HIPC (Heavily Indebted Poorest Countries) and the criteria of unmanagable debt burden should be lowered. § The sustainable level of debt should be lowered. The debt-to-export ratio should be at highest 100% and the debt-servicing-export ratio should be around 10 %. ¤DEBT FORGIVENESS: Industrialized countries are willing to practice some form of debt forgiveness. Debt forgiveness is organized together and debt is handled country specifically. ¤ CURRENCY: Part of the debt burden (up to 50%) can be paid in local currencies. Part of the debt could be considered to be paid in local products. ¤ FUTURE DEBT: New loans will be given in long-term maturities and fixed interest rates. Loans will not be given for military purposes or repaying debt. The loans will not be admitted without a good plan of the use of the money. The possible future credits should be granted in local currencies of the debtor countries. ¤ANNUAL MEETING: There will be a meeting in th he beginning of every fiscal year between the creditor and the debtor countries. In this meeting the current debt situation is assessed and the repaying schedule for that year is established when needed. As you see, we have put together the suggested principles and Japan´s ideas and suggestions. We feel strongly that an agreement needs to be achieved fast. These principles are valid till the time when the global debt situation is improved and the need of a new agreement is stated in the annual meeting. Comments and suggestions are welcome. The annual meeting could be held at The World Bank or IMF, altough such a venue perhaps lacks neutrality. However, India would like to point out the importance of equality in the annual meeting. |
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| Message: #1298 | From: Netherlands | Nov 06, 1997 09:51 |
| To: Canada, France, Japan, United Kingdom | ||
| Issues: Debt/Development | ||
| Subject: Agreement on debt relief | ||
| Hello our partners! We have carefully considered Japan's suggestion in message #1090 and are willing to sign that Agreement On Debt Relief. It would be great if you accepted it, too. This would practically be a solution to the problem, if we -Five Mighty States- arrived at mutual consent. The leading countries having agreed, there is no way out for others but to submit. Still, we'd like to clarify some points of the Plan. We stand for greater role of the IDO: to hold annual meetings, to prepare raw data and draft treaties. With its Private Capital Department (PCD) it can also serve as a link between private capital and developing countries and this would make for larger investments in LDCs' economies and thus increase the effect of development aid. Furthermore, we think that developed countries should be especially concerned with the aid towards "the most HIPC of the HIPC", i.e. countries with debt-to-export ratio more than 200% and debt service-to-export ratio more than 20%. In our opinion we should provide them with much more humanitarian aid, observe carefully the course of events there to provide help in case of natural disaster, a danger of civil war or uprising, etc. Their economic, political and social situation being unstable, we are to patronize them somehow, not simply forgive or reschedule their debts. We are deeply interested in your qualified opinion on this matter. Would you please contact us? Hoping you'll join us, The Dutch government. |
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| Message: #1505 | From: Canada | Nov 07, 1997 21:17 |
| To: France, India, Japan, Netherlands, United Kingdom | ||
| Issues: Debt/Development | ||
| Subject: comments on proposals | ||
| Canada wishes to offer its comments on Japan's proposal, as outlined in message #1090, and India's proposal, as amended in message #1250. 1. DEBT PAYMENTS: Canada supports India's proposal for lower interest rates and longer maturities. We also support the rescheduling of debt payments on a case-by-case basis, within a framework of common rules and conditions. Lastly, Canada supports lowering the debt-to-export and debt servicing-to-export ratios. 2. DEBT FORGIVENESS: Canada supports the HIPC initiative (1996), under which the Paris Club will provide relief of 67% for debt services during the first three-year period and debt administration relief of up to 80% during the second three-year period. Upon the completion of these two periods, forgiveness of 80% of the remaining debt principal will be provided. Canada supports the extension of this initiative to all 41 HIPC countries. 3. CURRENCY: Canada has concerns about debt repayment in local currencies. We propose that creditor nations retain the right to determine whether or not this option will be extended. 4. FUTURE DEBT: Canada supports the granting of new loans with longer maturities and lower interest rates. We support India's suggestion that new loans must not be used for military purposes or for debt repayment. 5. ANNUAL MEETING: We support the proposals for an annual meeting to be held between debtor and creditor countries at the start of each fiscal year to asses the current debt situation and establish repayment t schedules, if necessary. We welcome any comments or suggestions that you might have and look forward to our continued cooperation | ||
| Message: #1718 | From: Venezuela | Nov 11, 1997 15:15 |
| To: All | ||
| Issues: Debt/Development | ||
| Subject: DEBT AGREEMENT | ||
We agree with most of the principals that you put on the table. But we still have some comments. We agree with the DEBT PAYMENTS, but it's necessary to include that the reschedule of the debt will be considered at below market interest rates over long term periods. Besides, for countries that don't need debt forgiveness (like us!) it is necessary to have grace period of at least 5 years at the beginning of the new schedule. It must be included the capitalisation of moratorium interest. DEBT FORGIVENESS. It will be put as an option of a country an not as an obligation. Venezuela wants to show its commitment with lenders. This is the reason to enter in bilateral negotiations of debt without a reduction in the stock obligations. CURRENCY: We agree. FUTURE DEBT. We consider that floating interest rate will be acceptable if lenders give us the possibility to access some hedging tools (swaps). This option is in place in some organisations like OPIC (USA). ANNUAL MEETING: OK. The benchmark currently being used to indicate a sustainable debt level and the assessment of a debtor's situations must involve a reasonable judgement on what a debtor country can afford to pay without jeopardising its long term prospects. The past ten or so years clearly have proven that half-hearted approaches merely complicate the situation and that creditors themselves were subsequently required to pay more due to such unrealistic and simplistic assumptions and assessments. . If the IMF will monitor and to support adjustment programmes, this institution should undertakes these assessments in a standarised way. In particular, there is great confusion when an IMF team enters a debtor country, since the government officials often do not know what data and information the IMF wants to see and every IMF tean has its own ideas about what represents important data and what not. While multilateral creditors like World Bank, the IMF and regional development banks should maintain their status as preferred, but not exempt, creditor, they should apply a similar program to deal with debt as other creditors. The possibility of debt swaps must be present in the agreement. This option is very useful for countries that have a lot of natural resources like Venezuela and Brazil, or with great need in terms of development that could be exchanged for debt. Debt conversion programmes may be offered by individual creditors countries on a voluntary basis, without a ceiling. The proposed swaps could be debt-environment, debt-education and health, debt-child survival, etc. Any compensation with some type of resource will be forgotten, because it will decrease the revenues of the countries in the future, and consequently, will not improve the position of any lender (FRANCE). If we use a scheme like HIPC, several nations, included Venzuela will not qualify. Please refer the Web Page of IMF. Venezuela prefers to restructure current loans instead to reduce the stock debt. It doesn't means that Venezuela will not support initiatives on debt forgiveness, but the agreement should consider countries with this option (FRANCE) The agreement should have a comprehensive approach, which must not only deal with bilateral debt, but also with the commercial and multilateral debt problem. It is in everybody's interest to create a basis from which a human and sustainable development can take off and from which full and punctual repayments will result. Bilateral and multilateral creditors have both expressed the desire for more effective collaboration on these issues, but the greater responsability lies certainly with the former. Best regard |
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