In the interest of the people

Long before the Make Poverty History campaign caught the public imagination—its huge momentum so famously derailed by four bombs on the London transport system last July—another global movement was calling for the cancellation of the unpayable debts of the world’s poorest countries. At the turn of the millennium Africa was said to be paying $200 million every week just to service its debts. ‘The debts are unjust, unpayable and are killing too many people,’ lamented Jubilee 2000, ‘The cards are stacked against the poor. We’ve got to change the system, to put an end to this injustice.’ Thus, in over 120 countries, trade unions, charities, religious groups and community organisations came together with a unified retort; a call that the debt be dropped.

There is no doubt that this is a noble cause. It is claimed that Benin used over 50% of the money saved through debt relief to fund health care, while Tanzania was able to abolish primary school fees which led to an increase in attendance of over 60%. Our noble Prophet, peace be upon him, said: ‘Your smile for your brother is charity. Your removal of stones, thorns or bones from the paths of people is charity. Your guidance of a person who is lost is charity.’ Thus the work of Jubilee 2000 was indeed commendable. But for those of us familiar with religious law it does seem that we are missing something. While calling for the cancellation of existing debts, there is a much larger injustice about which we have fallen silent.

Low income countries pay around $2.30 to service their debts for every $1 they receive in grant aid. In her well known book, A Fate Worse Than Debt, Susan George called interest rates the ‘bane of Third World debtors’ existence.’ Interest lies at the heart of the matter. The first loans to Africa, Asia and South America came from the World Bank and foreign governments, targeted at development projects and the expansion of capital goods imports. Such loans were tied to relatively low interest rates. It is ironic that the newly oil-rich Muslim countries of the Middle East should be responsible, even if indirectly, for much of today’s crisis.

In the 1970s, commercial banks inexperienced in dealing with poor countries found themselves holding excess capital from OPEC’s oil price partnership and thus provided variable-rate loans based on market rates. Interest rates followed market fluctuations and, largely as a result of the U.S. Federal Reserve tightening monetary policy against inflation in the 1980s, they quickly rose from negative to positive levels. Consequently, as debt repayments suffered, the commercial banks withdrew from further lending to protect their own interests. The result of continued high interest rates, combined with a decline in commercial bank lending, was the paradox that the recipient countries were paying out more finance servicing payments than they received as borrowing.

The Jubilee Debt Campaign as it is now known is demanding an end to the injustice of what has been termed the Third World Debt Crisis. Admirable, indeed, but is it not time that we addressed the issue at the heart of this crisis? The movement’s name derives from the Hebrew Bible, for the jubilee was a time when debts would be forgiven. In The Times in 1998, the late Roman Catholic Archbishop, Cardinal Hume, wrote, ‘the prospect of reducing the burden of debt has profound theological resonance.’ A step further could have equally heartfelt significance, for in this crisis there is an inkling of an issue that was always treated with due concern through the ages by Church theologians.

Judaism, Christianity and Islam have much in common. One example is a prohibition on the consumption or charge of interest. Traditionally in all three faiths to make a transaction involving interest was considered a major sin. The law in the Pentateuch states that an Israelite may not exact interest from his poor brother on a loan given to him (Exodus 22:25; Leviticus 25:36). In the Psalms it is written that one who does not put his money out to usury will remain unshaken (15:5). In Ezekiel, a righteous man is one who ‘never lends either at discount or at interest, but shuns injustice and deals fairly between one person and another’ (18:8); a loan in interest, meanwhile, is considered amongst a list of abominations (18:13).

Similarly, Christians made reference to the Gospel of Luke which advises believers to lend without expecting a return (6:35). The Encyclical of Pope Benedict XIV of 1745 states, ‘The nature of the sin called usury has its proper place and origin in a loan contract.’ He goes on, ‘One cannot condone the sin of usury by arguing that the gain is not great or excessive, but rather moderate or small; neither can it be condoned by arguing that the borrower is rich; nor even by arguing that the money borrowed is not left idle, but is spent usefully…’

As for us Muslims, the Qur’an states, ‘Those who devour usury will not stand except as stand one whom the devil by his touch has driven to madness. That is because they say: Trade is like usury, but God has permitted trade and forbidden usury …’ (2:275). Our blessed Prophet, peace be upon him, confirmed this when he said, ‘A dirham which a man knowingly receives in usury is more serious a sin than thirty-six acts of adultery.’

It should not then be difficult to appreciate how a disassociation from interest would have the greatest theological resonance. Yet in reality we find quite the contrary, for most people are ignorant of this tradition. Although a distinction between usury and interest was rejected by both Luther and Melancthon, Calvin’s separation of the two gradually gained acceptance amongst both Protestants and Catholics. Thus today, in a global economy based on interest, few would even give the matter a second thought. Indeed this is surely the time that our beloved Prophet Muhammad spoke of when he said, ‘A time is certainly coming to mankind when only the receiver of usury will remain and if he does not receive it, some of its smoke will reach him.’

It is time that we stopped skirting around the issue. It is not just the debts which are unjust, unpayable and which are killing too many people, as the Drop the Debt campaign argued. All of us would do well to support this admirable and worthwhile campaign, but we should recognise that it is only part of the solution. If we—believers of the Abrahamic faiths—really want to change the system we may have to concede that it is time to stick Calvin’s separation back together again and that maybe, just maybe, the ancients had it right after all.