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‘Toxic debts’, generated by Western governments and institutions, have held back the fight against poverty across the Muslim world for three decades. Sovereign debt cancellation is a critical part of repairing this damage, says a report by Jubilee Debt Campaign and Islamic Relief UK.

Link to full report: Fuelling Injustice - Debt and Muslim Countries

27th July 2010

Debt 'Fuels Instability and Injustice' in Muslim World

19th July 2010 - Jubilee Debt Campaign

A report released today claims that debt generated by Western governments and institutions has created more than three decades of injustice, impoverishment, instability and poor governance across the Muslim world.

The report, published by Jubilee Debt Campaign and Islamic Relief UK, says these ‘toxic debts’ have held back the fight against poverty while fuelling arms sales, dictatorships and environmental destruction.

The report looks in particular at Bangladesh, Indonesia, Lebanon and Pakistan – all countries with high levels of poverty and instability and subject to large-scale, reckless lending from the West.

Amongst its findings, the report claims:

• Indonesia spends more than $2.5million an hour servicing debts largely given to the brutal General Suharto. In particular, the government is repaying millions of pounds to Britain, for weapons sold to Suharto that were used in internal repression;

• Bangladesh spends over $1billion a year servicing debts – more than they spend on healthcare. Some of these loans are based on World Bank projects which helped undermine Bangladesh’s resilience to natural disasters;

• Lebanon spends 50% of its budget on debt service, more than twice what it spends on education and health combined;

• Pakistan, a country where 38% of small children are underweight, spent nearly $3billion servicing debts last year – almost 3 times what the government spends on health care.

Nick Dearden of Jubilee Debt Campaign, said:

"This report clearly shows the hypocrisy at the heart of international development policy. On the one hand Western governments talk about the need to tackle poverty, poor governance and conflict, while on the other they create unpayable debts, prop up dictators and fuel repression. How can the West lecture Muslim countries about democracy and conflict, when their own lending has fuelled violence and anti-democratic regimes?"

"It is essential that our governments are made to face up to their own role in creating poverty and conflict in the world. Debt cancellation is a critical part of repairing this damage – allowing developing countries to choose their own destiny without being controlled by the shackles of debt."

Samia Ahmed of Islamic Relief said:

"Most people assume that our government is aiding poorer countries in the world through international development funding. But what this report shows is that, all too often, poorer countries are funding us through these massive debt repayments, based on loans that should never have been given in the first place."

"It is a great irony that Islam warns against imposing interest rates and encourages the forgiveness of unpayable debts, yet it is Muslim countries who are suffering under unbearable debt burdens. There are solutions to unpayable and unjust debts – it is time a much fairer lending system was put into place."

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