This article was downloaded by: [University of Birmingham] On: 7 January 2009 Access details: Access Details: [subscription number 789758540] Publisher Routledge Informa Ltd Registered in England and Wales Registered Number: 1072954 Registered office: Mortimer House, 37-41 Mortimer Street, London W1T 3JH, UK Global Society Publication details, including instructions for authors and subscription information: http://www.informaworld.com/smpp/title~content=t713423373 When do NGOs Matter? Activist Organisations as a Source of Change in the International Debt Regime André Broome Online Publication Date: 01 January 2009 To cite this Article Broome, André(2009)'When do NGOs Matter? Activist Organisations as a Source of Change in the International Debt Regime',Global Society,23:1,59 — 78 To link to this Article: DOI: 10.1080/13600820802556769 URL: http://dx.doi.org/10.1080/13600820802556769 PLEASE SCROLL DOWN FOR ARTICLE Full terms and conditions of use: http://www.informaworld.com/terms-and-conditions-of-access.pdf This article may be used for research, teaching and private study purposes. Any substantial or systematic reproduction, re-distribution, re-selling, loan or sub-licensing, systematic supply or distribution in any form to anyone is expressly forbidden. The publisher does not give any warranty express or implied or make any representation that the contents will be complete or accurate or up to date. The accuracy of any instructions, formulae and drug doses should be independently verified with primary sources. The publisher shall not be liable for any loss, actions, claims, proceedings, demand or costs or damages whatsoever or howsoever caused arising directly or indirectly in connection with or arising out of the use of this material. Global Society, Vol. 23, No. 1, January, 2009 When do NGOs Matter? Activist Organisations as a Source of Change in the International Debt Regime Downloaded By: [University of Birmingham] At: 22:36 7 January 2009 ANDRÉ BROOME Who drives change in international economic regimes? While mainstream International Political Economy scholarship has traditionally focused on the major players within states and markets as the key sources of political and economic change, recent studies have sought to highlight the important role that is also played by a wider range of social actors. A common point of reference here is the activities undertaken by nongovernmental organisations (NGOs), with the campaign to put debt relief for heavily indebted poor countries on the global agenda being often cited as the exemplar of a civil society success story. This article explores the mechanisms through which the international sovereign debt regime for the world’s poorest and most indebted economies has changed over the last 15 years, with increasing acceptance that large-scale debt relief was appropriate for a select group of countries leading to the establishment of the heavily indebted poor countries (HIPC) Initiative in 1996 and the Enhanced HIPC Initiative in 1999. Through tracing how international NGOs were able to shape the reform agenda with respect to the international sovereign debt regime for low-income countries, the article seeks to enhance our understanding of when, why, and how NGOs can potentially act as an important source of change in international economic regimes. Introduction Understanding the sources of change and continuity in international economic regimes has been a central concern of International Political Economy (IPE) scholarship since the sub-discipline of International Relations (IR) first emerged in the early 1970s.1 Yet despite this central focus on exploring how and why change occurs in international regimes, as well as investigating the sources of continuity, the majority of mainstream IPE scholarship has tended to focus on a narrow range of elite actors as the principal groups or individuals capable of effecting regime change. For much of its history, the analysis of political and economic change in the field of IPE has rather narrowly concentrated on the activities of major states, as well as changes occurring in the “big end of town” in financial  I am grateful to Chris May, Leonard Seabrooke, and two anonymous reviewers for their helpful suggestions on earlier drafts of this article. I also wish to thank the participants at the 2008 BISA International Political Economy Group Workshop for their useful comments and suggestions. 1. Benjamin J. Cohen, International Political Economy: An Intellectual History (Princeton: Princeton University Press, 2008). ISSN 1360-0826 print/ISSN 1469-798X online/09/010059– 20 # 2009 University of Kent DOI: 10.1080/13600820802556769 Downloaded By: [University of Birmingham] At: 22:36 7 January 2009 60 André Broome markets, trade, and production.2 Broader social mechanisms—such as the pressures generated by non-elite actors, small states, gender relations, indigenous politics, and grassroots public campaigns—have tended to play a marginal role in accounts of change in international economic regimes. Scholars have instead concentrated on adding to what we know about how a very narrow range of actors work—and the reasons why their actions achieve or fail to achieve change. As a result, while there has been an exponential increase in the stock of IPE “knowledge” as the field has developed, many otherwise worthy contributions have failed to move beyond conventional understandings of who is able to act in the global political economy and, more importantly, whose actions matter and how. In order to move beyond the focus on exploring political and economic change simply as a result of the interaction of major states on the one hand and important market actors on the other, this article focuses on the role that non-governmental organisations (NGOs) may be able to play in shaping the process of change within states and markets.3 To do so, the article draws on the incremental process of change in the international sovereign debt regime for heavily-indebted poor countries (HIPCs) to highlight how, when, and why NGOs may be able to exert influence on changes in international economic regimes, as well as the potential limits to this influence. As one of the best-known “success stories” of a coordinated public advocacy campaign among NGOs to effect political change, the customisation of the international sovereign debt regime for HIPCs may not be generalisable to other areas of IPE where NGOs have sought to exert an influence. This is nonetheless a useful case to revisit because it provides a window on how the actions of NGOs may influence change in states and markets by revealing the mechanisms through which such change occurs, as well as how pressures for change may be blocked or channelled in ways that result in unintended outcomes. The article proceeds as follows. First, how the sources of change in the global political economy are conventionally understood, and how NGOs have gained increased scholarly attention in recent years as a potential remedy to the perceived democratic deficit of the major international economic organisations is discussed. Second, the gradual emergence of international debt norms that formed the terms on which debtor states could renegotiate their sovereign loans when faced with difficult economic circumstances is examined. Third, the role of NGOs in effecting change in the international sovereign debt regime for HIPCs is investigated. Here, in particular, the focus is on how international NGOs’ public pressure for change was translated into substantive change in practice through reframing how the sovereign debt problems of HIPCs were understood by policy makers, thereby altering the basis on which new policy proposals were evaluated. Finally, the article concludes by arguing that IPE as a field needs to develop broader and more inclusive accounts of the range of actors that shape the evolution of international regimes. At the same time, the article calls for greater attention to be focused on specifying the mechanisms through which NGOs are able successfully 2. Leonard Seabrooke, The Social Sources of Financial Power (Ithaca, NY: Cornell University Press, 2006), p. 3. 3. On the problems associated with the concept of “non-governmental organisation”, see Norbert Götz, “Reframing NGOs: The Identity of an International Relations Non-starter”, European Journal of International Relations, Vol. 14, No. 2 (2008), pp. 231 –258. On the rapid growth of NGOs in the postwar period, see Kim D. Reimann, “A View from the Top: International Politics, Norms and the Worldwide Growth of NGOs”, International Studies Quarterly, Vol. 50, No. 1 (2006), pp. 45–67. When do NGOs Matter? 61 to exert pressure for political change, to complement the existing work in IPE— and IR more broadly—that has concentrated on the normative role of NGOs in international affairs. Downloaded By: [University of Birmingham] At: 22:36 7 January 2009 NGOs and the Sources of Change in the Global Political Economy Despite the broadening of the subject matter of the field over the last two decades, many IPE scholars would continue to agree with Robert Keohane’s statement in his seminal work After Hegemony that “Wealth and power are linked in international relations through the activities of independent actors, the most important of which are states.”4 The state remains the key institutional fulcrum in most explanations of how change is effected in the world economy, notwithstanding the increased focus in recent years on how competing sources of authority may also generate pressure for international political change (such as actors who can exercise “moral authority” or “private authority”).5 Indeed, even as the research agenda on the evolution and impact of international norms on state behaviour has expanded, with numerous empirical studies demonstrating the catalytic role that non-state actors can play in the global transmission of norms and the sanctioning of norm transgressions,6 the fundamental role of the state continues to be affirmed. Although there remains a continued emphasis on the centrality of the state as the primary actor in IR, and state–market interactions as the primary focal point in mainstream IPE, scholars have begun to focus their attention more directly on exploring the role of domestic actors in generating pressures for local, national, and international political change. Yet despite the pioneering research of scholars such as Peter Katzenstein,7 who made a strong case for the importance of analysing how countries’ domestic politics matter for international relations, progress towards routinely incorporating “low politics” into the study of IR as a matter of course has been uneven and gradual. Nevertheless, the need to take into account a state’s domestic politics as an essential methodological step for understanding its external strategic objectives now receives wide support. In a recent IPE textbook, for instance, Michael Hiscox argues that “Understanding why governments make the particular choices they do requires careful attention to the political pressures they face from different domestic groups”, as well as studying how these various pressures are mediated by a state’s domestic institutions.8 While this represents significant progress in a discipline that has tended to eschew the parochial politics of states’ domestic affairs in order to concentrate on the “high politics” of inter-state relations, thereby drawing an analytic line in the sand to demarcate two distinct 4. Robert O. Keohane, After Hegemony: Cooperation and Discord in the World Political Economy (Princeton: Princeton University Press, 2005/1984), p. 18. 5. Rodney Bruce Hall and Thomas J. Biersteker (eds.), The Emergence of Private Authority in Global Governance (Cambridge: Cambridge University Press, 1999); Rodney Bruce Hall, “Moral Authority as a Power Resource”, International Organization, Vol. 51, No. 4 (1997), pp. 591–622. 6. See Thomas Risse, Stephen C. Ropp and Kathryn Sikkink (eds.), The Power of Human Rights: International Norms and Domestic Change (Cambridge: Cambridge University Press, 1999); Martha Finnemore and Kathryn Sikkink, “International Norm Dynamics and Political Change”, International Studies Quarterly, Vol. 52, No. 4 (1998), pp. 887 –917; Ann Florini, “The Evolution of International Norms”, International Studies Quarterly, Vol. 40, No. 3 (1996), pp. 363– 389. 7. Peter J. Katzenstein, Small States in World Markets (Ithaca, NY: Cornell University Press, 1985). 8. Michael Hiscox, “The Domestic Sources of Foreign Economic Policies”, in John Ravenhill (ed.), Global Political Economy (Oxford: Oxford University Press, 2005), p. 51. Downloaded By: [University of Birmingham] At: 22:36 7 January 2009 62 André Broome spheres of politics that many politicians would find spurious, the range of non-state (and non-market) actors that have received sustained attention among mainstream IPE scholars has, until recently, remained fairly limited. The most obvious exception to the continued focus on states and markets in IPE is the increased attention many scholars have given to examining the changing roles that NGOs now play in some important dimensions of international affairs.9 In particular, many scholars have begun to focus more closely on the interactions between NGOs and international economic organisations such as the International Monetary Fund (IMF),10 the World Bank,11 and the World Trade Organization.12 This has been driven in part by the changing practices of the institutions themselves. In an effort to improve their public image, and thereby ameliorate perceived “legitimacy crises”,13 several of the major international economic organisations have turned to increased civil society participation as a catch-all solution in response to the trenchant criticisms they have recently faced.14 In addition, some scholars have sought to build an explicitly normative case for expanding the international role of NGOs and “global civil society” more broadly. From a cosmopolitan perspective, for example, progressive goals can be achieved through incorporating NGOs within the formal decision-making structures of international economic organisations, as a means to achieve greater democratisation. In contrast, critical perspectives envisage NGOs remaining outside formal structures of public authority, as independent actors that might help to increase critical reflection and public deliberation about global governance.15 9. Michele M. Betsill and Elisabeth Corell, “NGO Influence in Environmental Negotiations: A Framework for Analysis”, Global Environmental Politics, Vol. 1, No. 4 (2001), pp. 65–85. 10. Andrew Sumner, “In Search of the Post-Washington (Dis)consensus: The ‘Missing’ Content of PRSPs”, Third World Quarterly, Vol. 27, No. 8 (2006), pp. 1401–1412; Ben Thirkell-White, “The IMF and Civil Society”, New Political Economy, Vol. 9, No. 2 (2004), pp. 251 –270. 11. Paul J. Nelson, “Internationalising Economic and Environmental Policy: Transnational NGO Networks and the World Bank’s Expanding Influence”, Millennium, Vol. 25, No. 3 (2001), pp. 605 – 633; Susan Park, “Norm Diffusion within International Organizations: A Case Study of the World Bank”, Journal of International Relations and Development, Vol. 8, No. 2 (2005), pp. 111–142; Susan Park, “How Transnational Environmental Advocacy Networks Socialize International Financial Institutions: A Case Study of the International Finance Corporation”, Global Environmental Politics, Vol. 5, No. 4 (2005), pp. 95–119. 12. Luis Cabrera, “The Inconveniences of Transnational Democracy”, Ethics and International Affairs, Vol. 21, No. 2 (2007), pp. 219–238; Baogang He and Hannah Murphy, “Global Social Justice at the WTO? The Role of NGOs in Constructing Global Social Contracts”, International Affairs, Vol. 83, No. 4 (2007), pp. 707–727; Jan Aart Scholte, Robert O’Brien and Marc Williams, “The WTO and Civil Society”, Journal of World Trade, Vol. 33, No. 1 (1999), pp. 107 –124. 13. See Jacqueline Best, “Legitimacy Dilemmas: The IMF’s Pursuit of Country Ownership”, Third World Quarterly, Vol. 28, No. 3 (2007), pp. 469–488; Daniel C. Esty, “The World Trade Organization’s Legitimacy Crisis”, World Trade Review, Vol. 1, No. 1 (2002), pp. 7–22. 14. Thirkell-White, op. cit., pp. 255–257; Dieter Plehwe, “A Global Knowledge Bank? The World Bank and Bottom-up Efforts to Reinforce Neoliberal Development Perspectives in the Post-Washington Consensus Era”, Globalizations, Vol. 4, No. 4 (2007), pp. 518 –520; Pamela Blackmon, “Rethinking Poverty through the Eyes of the International Monetary Fund and the World Bank”, International Studies Review, Vol. 10 (2008), pp. 179–202. 15. See William Smith and James Brassett, “Deliberation and Global Governance: Liberal, Cosmopolitan, and Critical Perspectives”, Ethics and International Affairs, Vol. 22, No. 1 (2008), pp. 69 –92; cf. Kerstin Martens, “Institutionalizing Societal Activism within Global Governance Structures: Amnesty International and the United Nations System”, Journal of International Relations and Development, Vol. 9, No. 4 (2006), pp. 371 –395. Downloaded By: [University of Birmingham] At: 22:36 7 January 2009 When do NGOs Matter? 63 How the concept of civil society is understood by different actors is, of course, neither universal nor natural.16 For instance, the tendency among many scholars explicitly to define civil society actors as “non-violent” does not always match with the shared understandings of non-elite social actors in different parts of the world, who may see groups that engage in violence as legitimate.17 In addition to the substantial differences in how the concept may be understood by academics in comparison with the everyday experiences of non-elites,18 there is also a significant difference between the broad academic understanding of civil society as “a rule-governed society based on the consent of individuals”19 and the way the concept is operationalised by institutions such as the IMF, which has sought to improve country ownership of its economic reform programmes through increased dialogue with a select group of civil society actors.20 The key point to draw from this is that the concept of civil society in general, as well as the specific roles played by individual NGOs, should not be understood as intrinsically good or necessarily progressive.21 The aim here is therefore not to reproduce the classical liberal assumption that civil society is inherently good while government, if not kept in check by a strong civil society, is inherently bad.22 Rather than assume that the actions of NGOs necessarily represent a legitimate political agenda in opposition to the illegitimate agenda of international economic organisations and their dominant member states,23 this article seeks more narrowly to explore the mechanisms through which NGOs, as a particular class of political actors, were able to shape the global political agenda in a specific issue area—the evolution of the international sovereign debt regime for lowincome countries. The Emergence of International Sovereign Debt Norms The co-ordinated campaign among NGOs to push for substantive changes to the international sovereign debt regime provides a useful case study of the role of civil society actors in the global political economy for two principal reasons. First, the debt campaign appears to represent an NGO “success story”, where the public 16. See Louise Amoore and Paul Langley, “Ambiguities of Global Civil Society”, Review of International Studies, Vol. 30, No. 1 (2004), pp. 89 –110. 17. Nick Henry, “A Civil War? Violence and Non-violence in a Democracy Movement”, Paper presented at the Pan-European Conference on International Relations, Torino, 12–15 September 2007, available: ,http://archive.sgir.eu/uploads/Henry-A%20Civil%20War%20-%20Nick%20Henry%20%20PECIR%20paper.pdf . (accessed 20 January 2008). 18. Rene Lemarchand, “Uncivil States and Civil Societies: How Illusion Became Reality”, Journal of Modern African Studies, Vol. 30, No. 2 (1992), p. 179. 19. Mary Kaldor, “The Idea of Global Civil Society”, International Affairs, Vol. 79, No. 3 (2003), pp. 583 –593. 20. Thomas C. Dawson and Ghita Bhatt, The IMF and Civil Society Organizations: Striking a Balance (Washington, DC: IMF, 2001), available: http://www.imf.org/external/pubs/ft/pdp/2001/pdp02.pdf (accessed 20 April 2008); Best, op. cit.; Thirkell-White, op. cit., p. 256. 21. See Julie Hearn, “African NGOs: The New Compradors?”, Development and Change, Vol. 38, No. 6 (2007), pp. 1095–1110. 22. Steven Scalet and David Schmidtz, “State, Civil Society, and Classical Liberalism”, Nancy L. Rosenblum and Robert C. Post (eds.), Civil Society and Government (Princeton: Princeton University Press, 2002), pp. 30–32. 23. Ian Clark, “Legitimacy in a Global Order”, Review of International Studies, Vol. 29, No. 1 (2003), p. 77. Downloaded By: [University of Birmingham] At: 22:36 7 January 2009 64 André Broome campaign waged by international NGO networks such as the European Network on Debt and Development (Eurodad), Oxfam International, and Jubilee 2000 is commonly perceived to have played a role in reconstructing how the governments of major states conceived their interests in relation to the outstanding debts owed by low-income developing countries. While the apparent success of this campaign, compared with other NGO efforts, makes generalisations difficult, it does provide a concrete example of international political change with identifiable outcomes which allows us to look more closely at the social mechanisms by which this was achieved. Second, when placed in a broader historical context the debt campaign would also seem to provide an example of a highly unlikely success story, where a handful of (relatively) poorly resourced social groups, with no means to exercise coercive forms of power, were pitted against influential elite actors and the established norms and rules of the international financial system. In this respect, although the fruits of the campaign were a long time coming and the resulting policy initiatives continue to be subject to a range of criticisms,24 the shift in the principles governing the treatment of sovereign debt owed to official creditors that these initiatives embody represents a significant change in the international debt regime. The key change in the principles underlying the treatment of sovereign debt by bilateral official creditors and multilateral institutions that has occurred during the last two decades is the weakening of pacta sunt servanda—the principle that “pacts must be respected”.25 An exception to the principle of pacta sunt servanda in international law is provided by the principle of rebus sic stantibus, which potentially allows international agreements to be broken in the case of fundamental changes in the circumstances pertaining to an agreement, and when upholding the agreement would be inequitable.26 The weakening of the principle of pacta sunt servanda with respect to the international debt regime occurred first with bilateral sovereign debt owed to other governments, and later in the case of debt owed to multilateral lenders such as the IMF and the World Bank, which had previously sought to protect their preferred creditor status by ensuring that multilateral debts were repaid.27 Securing the protection of external creditors’ property rights in their dealings with sovereign governments, and in particular ensuring that states honour promises to fulfil debt contracts by maintaining interest payments, has been a central concern of international economic rule-making throughout the last two centuries. Although sovereign debts have often been subject to renegotiation (or in some cases outright default), these changes therefore represent a major shift away from the previous treatment of sovereign debt contracts for a restricted group of low-income countries. 24. Jonathan E. Sanford, “IDA Grants and HIPC Debt Cancellation: Their Effectiveness and Impact on IDA Resources”, World Development, Vol. 32, No. 9 (2004), pp. 1585–1588; Christian Barry and Lydia Tomitova, “Fairness in Sovereign Debt”, Ethics and International Affairs, Vol. 21, No. s1 (2007), pp. 41–79; Jubilee Debt Campaign, Unfinished Business: Ten Years of Dropping the Debt (London: Jubilee Debt Campaign, 2008), available: ,http://www.jubileedebtcampaign.org.uk/download.php?id ¼ 729. (accessed 1 June 2008). 25. Barry and Tomitova, op. cit., p. 53. 26. Martti Kostkenniemi, From Apology to Utopia: The Structure of International Legal Argument (Helsinki: Finnish Lawyers’ Publishing Company, 1989), pp. 280, 299. 27. M. Bowe and J.W. Dean, “Has the Market Solved the Sovereign-debt Crisis?”, Princeton Studies in International Finance, 83 (Princeton: Princeton University Press, 1997), p. 13. Downloaded By: [University of Birmingham] At: 22:36 7 January 2009 When do NGOs Matter? 65 While the process of developing international rules to protect the property rights of foreign capital owners developed initially among industrialised countries, these rules were later extended to less-developed countries in Africa, Asia, Latin America, and elsewhere through a combination of diplomatic intervention, bargaining, and coercion.28 In the post-Second World War era, the global diffusion and reinforcement of the basic principle that interest payments due on sovereign debts must be maintained, even if the timetables for loan repayments are rescheduled or maturing debt is refinanced, has been undertaken by international economic organisations such as the IMF and the World Bank.29 For example, in an attempt to establish the new international organisation’s credibility with the international financial community, when it opened for business the World Bank refused to lend to any state that had defaulted on loans during the Great Depression of the 1930s until those outstanding claims were settled.30 Both the IMF and the World Bank have played a central role in co-ordinating the response to sovereign debt crises during the last 25 years. In developing multilateral responses to major sovereign debt crises, what is at stake in the terms of debt renegotiations is not simply the impact of a heavy repayment burden on the economic recovery of the country in question or the distribution of the financial losses that will be sustained by official or private creditors, but also the integrity of the international financial system itself.31 Moreover, when faced with major debt renegotiations and the risk of sovereign default, the IMF’s own institutional reputation is on the line as a credible commitment mechanism that can help to provide confidence to external creditors that a government will meet its obligations.32 The onset of the 1980s debt crisis has been described as “the greatest challenge to international economic stability that the world had faced since the Great Depression”.33 Private lending to oil-importing developing countries expanded rapidly during the course of the 1970s, with bank loans through the euromarkets rising to $4.5 billion by 1973 from only $300 million in 1970.34 By the late 1970s many developing countries had accumulated heavy external debt burdens, both in terms of the total stock of public and publicly guaranteed debt denominated in US dollars as well as rapidly increasing debt-service ratios. In Brazil and Argentina, for instance, the ratio of debt-service payments to export earnings doubled between 1973 and 1978, while Mexico’s debt-service ratio increased from 30.3% to 74.1%. The rapid increase in foreign borrowing was due in part to encouragement from Organisation for Economic Cooperation and Development (OECD) countries for banks to lend to developing countries to alleviate their worsening balance of payments positions during the 1970s, which resulted from higher import prices generated by the oil shocks. To protect their 28. Charles Lipson, Standing Guard: Protecting Foreign Capital in the Nineteenth and Twentieth Centuries (Berkeley and Los Angeles: University of California Press, 1985), pp. 9, 12. 29. Susanne Soederberg, “The Transnational Debt Architecture and Emerging Markets: The Politics of Discipline and Punishment”, Third World Quarterly, Vol. 26, No. 6 (2005), pp. 929 –930. 30. Lipson, op. cit., pp. 169–170. 31. Ibid., p. 172. 32. See André Broome, “The Importance of Being Earnest: The IMF as a Reputational Intermediary”, New Political Economy, Vol. 13, No. 2 (2008), pp. 125–151. 33. Ethan B. Kapstein, Governing the Global Economy: International Finance and the State (Cambridge, MA: Harvard University Press, 1996), p. 81. 34. José Antonio Ocampo, Jan Kregel and Stephany Griffith-Jones (eds.), International Finance and Development (London: Zed Books/United Nations, 2007), p. 109. Downloaded By: [University of Birmingham] At: 22:36 7 January 2009 66 André Broome own export earnings, major OECD countries encouraged developing countries to accommodate the new international economic environment through external borrowing rather than to take the painful route of radical adjustment of their policy settings, in the belief that deficit countries could trade their way out of trouble through increasing exports. At the same time, relatively high inflation rates meant that interest rates on sovereign debt remained low in real terms during the 1970s, thereby making borrowing to fund balance-of-payments shortfalls and development projects an attractive short-term option for many governments.35 Following the second oil shock in 1979, a world recession, and higher interest rates around the world stemming from monetary policy changes in the United States, the growing debt burden in developing countries came to a head in August 1982 with the announcement by Mexico’s finance minister that the government was suspending its forthcoming interest payments on foreign bank loans. In the immediate aftermath of Mexico’s announcement, the US government took the lead, together with the central banks of other major OECD economies, in organising a large bailout package to extend new loans to the country in an attempt to contain the short-term effects of Mexico’s debt moratorium for the international financial system, with the United States later continuing to play a key role in negotiating debt rescheduling and refinancing agreements between the Mexican government and commercial banks. Following Mexico’s debt moratorium, 20 other developing countries sought debt rescheduling agreements during 1983, with the IMF gaining increased responsibility for co-ordinating debt renegotiations between borrowing countries and commercial lenders.36 A key source of the IMF’s potential influence in the world economy stems from its capacity to act as a reputational intermediary for its member states, by lending credibility to policy-makers’ efforts to achieve macroeconomic stability in adverse economic circumstances.37 During the 1980s debt crisis, the IMF’s importance to private creditors lay in the organisation’s ability to design and oversee macroeconomic stabilisation programmes for each country, which allowed lenders to avoid entanglement in a debtor country’s domestic politics, while the IMF’s involvement also helped to facilitate agreement on debt rescheduling terms among the numerous private creditors that were involved.38 Less than a decade after Mexico’s announcement of a debt moratorium, increasing foreign investment and economic growth in many Latin American countries led observers to conclude that, notwithstanding the significant social and economic costs that had been borne by developing countries, the debt crisis had been adequately resolved—at least as far as middle-income developing countries were concerned. For a large group of low-income developing countries, however, the debt crisis of the 1980s had left them with a reputation for being inherently “uncreditworthy”, with the result that many low-income countries continued to remain locked out from private sources of external finance.39 35. Kapstein, op. cit., pp. 70–71, 85 –86. 36. Ibid., pp. 88–89. 37. Broome, op. cit.; cf. Mark Beeson and André Broome, “Watching from the Sidelines? The Decline of the IMF’s Crisis Management Role”, Contemporary Politics, Vol. 14, No. 4 (2008), pp. 393 –409. 38. Lipson, op. cit., pp. 92–93. 39. Lex Rieffel, Restructuring Sovereign Debt: The Case for Ad Hoc Machinery (Washington, DC: Brookings Institution Press, 2003), pp. 3–4. Downloaded By: [University of Birmingham] At: 22:36 7 January 2009 When do NGOs Matter? 67 In the post-Second World War era, renegotiations of sovereign debt owed to other governments have usually been dealt with on a case-by-case basis through the Paris Club, an ad hoc grouping of official lenders first convened in 1956 as a forum for Argentina to renegotiate its outstanding debts with creditor governments. States seeking to reschedule the timetable for repaying official loans must have an IMF programme in place in order to assure creditors that the new terms for repaying loans will be observed. In order for a country to gain a debt rescheduling agreement through the Paris Club, three principles in particular have to be upheld—imminent default, policy conditionality and burden sharing. First, countries must be able to demonstrate—through substantial arrears on external debt payments—that in the absence of a rescheduling agreement sovereign default is imminent, a diagnosis which often relies on the IMF’s short-term balance-of-payments projections for a country. Second, creditor governments insist that a debtor country agree to a programme of reforms to national policy settings in order to resolve the causes of payment difficulties, usually through an IMF loan agreement. Third, the costs of rescheduling debt must be shared among creditors according to the level of their exposure, with debtor countries unable to grant a particular creditor more favourable terms than others.40 Because of the importance that creditors have attached to upholding these principles and the ad hoc nature of the Paris Club (similar to the London Club, where countries negotiate with private creditors to refinance debt owed to commercial banks), the process has served to isolate debtors while helping to ensure solidarity among creditors.41 Throughout the debt crisis of the 1980s it was widely assumed that the solution for countries struggling with external debt was to balance the rescheduling of repayment obligations through the Paris Club with refinancing to safeguard the integrity of the international financial system and, in particular, to uphold the principle of pacta sunt servanda. In this respect, “the conventional wisdom was that the debtors were illiquid but solvent if given enough time to pay”.42 OECD governments and the international economic organisations long sought to avoid changing the international sovereign debt regime in any way that risked violating the principle of the sanctity of contracts.43 Debtor governments had argued strongly for sovereign debt relief, special treatment for low-income debtors, and a move away from case-by-case debt rescheduling in order to shelter debt renegotiations from bilateral strategic politics as key demands in the New International Economic Order negotiations during the 1970s and early 1980s.44 In response, a “moral hazard” counterargument was often put forward against proposals to reduce sovereign debt stocks, which maintained that debtor governments must honour previous loan agreements, even if these were paid off over an extended period of time, to avoid creating perverse incentives 40. Alexis Rieffel, “The Role of the Paris Club in Managing Debt Problems”, Essays in International Finance, 161 (Princeton: Princeton University Press, 1985). 41. Charles Lipson, “The International Organization of Third World Debt”, International Organization, Vol. 35, No. 4 (1981), p. 622. 42. Huw Evans, “Debt Relief for the Poorest Countries: Why Did it Take So Long?”, Development Policy Review, Vol. 17, No. 3 (1999), p. 268. 43. Ibid., p. 270. 44. Thomas M. Callaghy, Innovations in the Sovereign Debt Regime: From the Paris Club to Enhanced HIPC and Beyond (Washington, DC: World Bank Operations Evaluation Department, 2004), p. 5. 68 André Broome Downloaded By: [University of Birmingham] At: 22:36 7 January 2009 in the future for countries to increase their borrowing in order to secure a debt write-off.45 In contrast to middle-income developing countries that had borrowed heavily from private creditors, the bulk of the debt owed by many low-income developing countries stemmed from trade credits or credit guarantees that had been extended by OECD countries’ export credit agencies in order to support their overseas exports.46 As a result, unlike middle-income debtors, low-income debtors were more likely to face a prolonged period shut out from private sources of external finance, as most had restricted access to private financing even during the bank lending boom of the mid-1970s. With their economic growth rates and terms of trade continuing to deteriorate during the 1980s, in many cases the non-concessional cashflow relief available to low-income countries through the Paris Club process only served to increase the overall stock of their outstanding debts over the course of the decade.47 NGOs, Moral Authority, and Political Change The process of customising the international sovereign debt regime for HIPCs was a long-drawn-out process that evolved haphazardly from the late 1980s. Beginning in 1988 with agreement on the Toronto Terms (which allowed for a maximum 33% reduction in official debt), Paris Club creditors began to accept that substantively to address the chronic debt problems of low-income countries rather than simply applying a short-term bandage to disguise their difficulties required debt rescheduling on concessional terms, and at least a partial reduction in the stock of debt. When these changes to debt-servicing agreements failed to make a significant improvement in the debt stocks and debt-service ratios of many low-income countries, this process continued to evolve through the 1990s. The terms of debt renegotiations gradually became more generous as Paris Club creditors subsequently agreed on the Houston Terms in 1990 (enabling more favourable rescheduling terms for middle-income debtors), the London Terms in 1991 (allowing for up to 50% debt reduction for low-income countries) and the Naples Terms in 1994 (which increased debt reduction to a maximum of 67% for the poorest countries that were eligible to borrow on concessional terms from the World Bank’s International Development Association). This led to further changes with the establishment of the HIPC Initiative under the auspices of the World Bank and the IMF in 1996 on the Paris Club’s Lyon Terms, which increased the level of debt reduction to 80% for a specific group of the world’s poorest countries with high ratios of external debt to export earnings. The stated goal of the HIPC Initiative was that heavily indebted countries should finally make an exit from the continual process of debt rescheduling through achieving “debt sustainability”.48 45. William Easterly, “Reviewing Two Decades of Debt Relief”, World Development, Vol. 30, No. 10 (2002), pp. 1679, 1681. 46. Christina Daseking and Robert Powell, From Toronto Terms to the HIPC Initiative: A Brief History of Debt Relief for Low-income Countries, IMF Working Paper, WP/99/142 (Washington, DC: IMF, 1999), p. 4. 47. Anthony R. Boote and Kamau Thugge, “Debt Relief for Low-income Countries: The HIPC Initiative”, IMF Pamphlet Series, 51 (Washington, DC: IMF, 1999), p. 4. 48. Ibid., pp. 4–5; Callaghy, op. cit., pp. 16–17, 34–36. Downloaded By: [University of Birmingham] At: 22:36 7 January 2009 When do NGOs Matter? 69 With the debt debate quickly progressing to proposals for 100% cancellation of external debts owed to the OECD governments and the international economic organisations by HIPCs in the late 1990s, the Enhanced HIPC Initiative was created in 1999 following a wide-ranging review by the international economic organisations of the initial outcomes of the HIPC Initiative.49 This included the Cologne Terms, which would extend up to 90% debt reduction for HIPCs that successfully graduated from the intensive policy surveillance and structural reform process that the IMF- and World Bank-supervised Enhanced HIPC Initiative entails through the design of Poverty Reduction Strategy Papers for eligible countries.50 The international sovereign debt regime for heavily indebted poor countries was further fine-tuned with the decision by the Group of 8 (G8) countries at the Gleneagles Summit in July 2005 finally to accept 100% cancellation (with some conditions) of HIPC debts owed to the IMF and the World Bank.51 The advocacy role of NGOs has played an important part in shaping the evolution of the sovereign debt agenda during the last decade and a half. Although the international sovereign debt regime had previously revolved around state interests and inter-state bargaining, during the 1990s networks of NGOs led a concerted push for OECD governments and the IMF and the World Bank to accept the principle of debt reduction for the world’s poorest and most indebted countries. This involved altering the terms that were used to describe and to interpret the issue of low-income developing country debt, in order to build public support for a narrative that rich countries had an obligation to assist poorer countries through debt forgiveness. With the combined debt levels of the 41 countries that were given the “heavily indebted poor country” label by the IMF and the World Bank during the 1990s rising from US$55 billion in 1980 to US$183 billion in 1990 and US$215 billion in 1995, NGO networks focusing on debt issues, such as Jubilee 2000, Oxfam International and Eurodad, sought to persuade richer countries to act to alleviate extreme poverty in HIPCs. While the transformative potential of civil society actors in the contemporary world economy has sometimes been overstated in recent years,52 in this case NGOs played an important role in helping to shift the terms through which the international debt debate was framed, thereby altering the criteria on which appropriate policy solutions were evaluated.53 Central to the co-ordinated NGO campaign to generate pressure for reform of the international sovereign debt regime was the construction and transmission of “a moral discourse that portrays developing country debt as an immoral burden on the backs of the poor”.54 This encouraged the presentation of policy proposals for debt relief as a moral imperative, based either on religious principles or 49. IMF and World Bank Staffs, “100 Percent Debt Cancellation? A Response from the IMF and the World Bank”, IMF Issues Brief, 01/07 (Washington, DC: IMF, 2001), available: ,http://www.imf.org/ external/np/exr/ib/2001/071001.htm. (accessed 15 April 2008). 50. David Craig and Doug Porter, “Poverty Reduction Strategy Papers: A New Convergence”, World Development, Vol. 31, No. 1 (2003), p. 60. 51. Eric Helleiner and Geoffrey Cameron, “Another World Order? The Bush Administration and HIPC Debt Cancellation”, New Political Economy, Vol. 11, No. 1 (2006), pp. 125–140. 52. Amoore and Langley, op. cit. 53. Callaghy, op. cit., pp. 6, 44; Evans, op. cit., p. 274. 54. Thomas M. Callaghy, “Networks and Governance in Africa: Innovation in the Debt Regime”, in Thomas Callaghy, Ronald Kassimir and Robert Latham (eds.), Intervention and Transnationalism in Africa: Global–Local Networks of Power (Cambridge: Cambridge University Press, 2002), p. 125. Downloaded By: [University of Birmingham] At: 22:36 7 January 2009 70 André Broome secular ethics.55 In this respect, the NGO campaign to transform the principles underpinning the treatment of sovereign debt by official creditors relied on the exercise of moral authority to alter the frames that policy makers used to understand the debt problem and the policy choice set of possible solutions.56 Following Thomas Biersteker and Rodney Bruce Hall,57 the foundation of NGOs’ moral authority can be located in their capacity to provide an alternative source of expertise in a given issue area, combined with their status as “other-regarding”, non-self-interested actors in contrast with the self-interested agendas pursued by national governments. In public discourse, frames can operate as a cognitive constraint on how a group of actors think about a particular political issue because they help to “call attention to some aspect of reality while obscuring other elements”.58 In short, an actor or group of actors that can shape how an issue is framed may be able to tilt the political playing field in their favour, because the strategic use of frames can influence what counts as a political problem, how the causes are diagnosed and what possible solutions may be prescribed.59 By publicly articulating a common understanding of low-income countries’ debt problems that was framed in moral terms, NGOs attempted to embarrass—or to “shame”—both IMF and World Bank officials as well as national policy makers into viewing the insistence on full debt repayment for the poorest countries as an illegitimate position.60 NGOs specifically employed the strategic use of frames to encourage policy makers to conceptualise the high sovereign debt levels of low-income countries in moral terms.61 This was achieved through the mass mobilisation of public support in favour of the goal of debt relief for the poorest and most heavily indebted countries, a campaign which was strengthened by the involvement of highprofile celebrities such as Bono and Bob Geldof. In this respect, the debt relief goals of activist organisations were boosted by the “celebrity diplomacy” of individuals such as Bono, who was able to gain one-on-one audiences at G8 summits with leading politicians such as George W. Bush, Tony Blair, and Gerhard Schröder, among others.62 Through a combination of the development of analytical expertise on debt issues, which strengthened the case for debt relief that NGOs put to officials within the World Bank and the IMF, and public campaigns 55. Dot Keet, “The International Anti-debt Campaign: A Southern Activist View for Activists in ‘the North’ . . . and ‘the South’”, Development in Practice, Vol. 10, Nos. 3 and 4 (2000), p. 461. 56. See Joshua William Busby, “Bono Made Jesse Helms Cry: Jubilee 2000, Debt Relief, and Moral Action in International Politics”, International Studies Quarterly, Vol. 51, No. 2 (2007), pp. 247–275. On “moral authority” and international affairs, see Hall, op. cit.; Miroslav Nincic and Donna Nincic, “Humanitarian Intervention and Paradoxes of Moral Authority: Lessons from the Balkans”, International Journal of Human Rights, Vol. 8, No. 1 (2004), pp. 45–64; Chaim D. Kaufmann and Robert A. Pape, “Explaining Costly International Moral Action: Britain’s Sixty-year Campaign against the Atlantic Slave Trade”, International Organization, Vol. 53, No. 4 (1999), pp. 631–668. 57. Thomas J. Biersteker and Rodney Bruce Hall, “Private Authority as Global Governance”, in Hall and Biersteker (eds.), The Emergence of Private Authority in Global Governance, op. cit., p. 218. 58. Robert M. Entmann, “Framing: Toward Clarification of a Fractured Paradigm”, Journal of Communication, Vol. 43, No. 4 (1993), p. 55. 59. Ibid., p. 52. 60. Keet, op. cit., pp. 461, 472. 61. See Barry and Tomitova, op. cit.; Elizabeth A. Donelly, “Making the Case for Jubilee: The Catholic Church and the Poor-country Debt Movement”, Ethics and International Affairs, Vol. 21, No. 1 (2007), pp. 107–133. 62. See Andrew F. Cooper, Celebrity Diplomacy (Boulder: Paradigm, 2008), p. 37. Downloaded By: [University of Birmingham] At: 22:36 7 January 2009 When do NGOs Matter? 71 with clear slogans such as “Drop the Debt” and “Make Poverty History” that were sponsored by celebrities who could gain access to key G8 politicians, international NGOs were able to generate strong support for reforming the international sovereign debt regime for HIPCs among the wider public as well as key policy-making officials. By drawing on celebrity support to gain a greater media profile and public recognition for their campaign, NGOs helped to dramatise the issue of debt relief by contesting the fairness of the international debt regime and arguing that in its current form it neglected a universal moral duty to assist the world’s poor. With the total stock of HIPC debt nearly quadrupling from 1980 to 1995, framing the debt problems of low-income countries in terms of fairness helped to tie the goal of debt relief to the broader issue of developed countries’ foreign aid responsibilities, which survey evidence suggests continues to enjoy relatively strong public backing in OECD countries.63 As a consequence, framing debt relief as a moral responsibility could resonate with the public in wealthy countries because it chimed with the expectation that governments could and should act to alleviate poverty in less fortunate countries. When this was coupled with analysis from NGOs, such as Eurodad, which demonstrated that HIPCs faced an increasing sovereign debt burden that they would be unable to service, as we shall see below, it helped to undermine the argument that debt relief would create a “moral hazard” problem in the international financial system. Yet while the development of rival expertise by NGOs was clearly important in building a case for debt relief, the moral component of the campaign waged by NGOs was crucial to the public legitimation of the principle of debt relief for heavily indebted low-income countries. Although barely noticeable until the late 1990s, even the IMF gradually began to articulate in public a more explicit “moral concern with ensuring that the poorest aren’t left behind”, at the same time as linking this goal to further international economic integration.64 The success of NGOs in helping to change the terms of reference for policy discussions of the sovereign debt problems of low-income countries represented a significant shift compared with the debt policy debates of the mid-1990s. During the establishment of the HIPC Initiative in 1996— which extended much less generous debt relief terms than those later agreed in 1999 for the Enhanced HIPC Initiative—state representatives on the Executive Board of the IMF continued to question the “moral hazard” problem that the initiative might produce.65 As late as 1998, IMF Managing Director Michel Camdessus warned an audience at a conference on the ethical dimensions of international debt about the moral hazard risk that debt relief posed, which might stimulate “less than optimal policy by debtor governments . . . or reckless behavior by investors—public or private”.66 During the process that led to the 63. Mark Otter, “Domestic Public Support for Foreign Aid: Does it Matter?”, Third World Quarterly, Vol. 24, No. 1 (2003), p. 117. 64. Jacqueline Best, “Co-opting Cosmopolitanism? The International Monetary Fund’s New Global Ethics”, Global Society, Vol. 20, No. 3 (2006), p. 314. 65. IMF Archives, Debt Problems of Heavily Indebted Poor Countries—Framework for Action— Draft Report to Interim and Development Committees, Executive Board Meeting Minutes, EBM/96/34 (Washington, DC: IMF, 1996), p. 10. 66. IMF Archives, Addressing Concerns for the Poor and Social Justice in Debt Relief and Adjustment Programs, Address by Michel Camdessus, Managing Director of the International Monetary Fund, at the Downloaded By: [University of Birmingham] At: 22:36 7 January 2009 72 André Broome establishment of the Enhanced HIPC Initiative in 1999, however, moral hazard concerns gradually became less prominent. Instead, the extension of debt relief came to be viewed within the IMF as very closely associated with the goal of improving poverty reduction within heavily indebted poor countries because it would help to free up resources to enable increased public expenditure in areas such as health and education.67 To facilitate change in the international sovereign debt regime, a key political goal pursued by NGOs was therefore to shift to a common understanding of sovereign debt in low-income countries as a problem of social justice and fairness rather than as a technocratic economic problem that required the maintenance of the principle of pacta sunt servanda to guard against moral hazard in the international financial system. In this respect, NGOs were effectively arguing that fundamental changes in the circumstances of heavily indebted poor countries had caused sovereign debt agreements to become inequitable, in line with the principle of rebus sic stantibus that would allow for existing agreements to be broken. Within this broad overall strategy, which involved hundreds of NGOs active in numerous countries around the world, different NGOs undertook specific (albeit overlapping) tactical roles. These campaign tactics included providing expert information to challenge the analysis of debt issues conducted by IMF and World Bank staff,68 raising the public profile of the debt problem through greater media coverage and “celebrity diplomacy”,69 arguing in favour of initiatives that would provide a comprehensive response common to all eligible debtors rather than an ad hoc approach, and monitoring official creditors’ compliance with previous agreements.70 The provision of an alternative source of expert analysis of debt issues to that conducted by the staff of the IMF and the World Bank was particularly important for two reasons. First, it helped to undermine the claim made in the early 1990s by both the World Bank and the IMF that external debt was not the principal economic problem faced by most low-income developing countries. Second, because both organisations base their claim to expert authority on undertaking top-quality analysis grounded in hard statistical data, challenging the IMF’s and the World Bank’s views by talking in their own language of facts and figures meant that the case for reform was likely to have greater resonance within the organisations themselves. In addition, the tactical use of expert information by NGOs such as Eurodad was important because the analysis conducted by IMF and World Bank staff has long been criticised for the tendency to base projections on overly Conference on the Ethical Dimensions of International Debt, Seton Hall University, South Orange, New Jersey, 22 October 1998 (Washington, DC: IMF, 1988), p. 4. 67. IMF Archives, Heavily-indebted Poor Country (HIPC) Initiative—Strengthening the Link Between Debt Relief and Poverty Reduction, EBS/99/168 (Washington, DC: IMF, 1999); IMF Archives, Modifications to the Heavily-indebted Poor Country (HIPC) Initiative, EBS/99/138 (Washington, DC: IMF, 1999). 68. Sasja Bökkerink and Ted van Hees, “Eurodad’s Campaign on Multilateral Debt: The 1996 HIPC Debt Initiative and Beyond”, Development in Practice, Vol. 8, No. 3 (1998), pp. 325– 326; Helen Yanacopulos, “The Public Face of Debt”, Journal of International Development, Vol. 16, No. 5 (2004), pp. 724 –725. 69. Cooper, op. cit., p. 37. 70. Gail Hurley, Multilateral Debt: One Step Forward, How Many Back? (Eurodad, 2007), available: ,http://www.eurodad.org/uploadedFiles/Whats_New/Reports/Microsoft_Word__Eurodad_MDRI_ Update_April07_FINAL.pdf. (accessed 17 April 2008); Jubilee Debt Campaign/Jubilee USA, Loose Ends: The G8 Debt Deal and the Annual Meetings (London: Jubilee Debt Campaign, 2005), available: ,http://www.jubileedebtcampaign.org.uk/download.php?id ¼ 137. (accessed 20 February 2008). When do NGOs Matter? 73 Downloaded By: [University of Birmingham] At: 22:36 7 January 2009 optimistic assumptions about debtors’ economic growth prospects and export performance, which underestimates the severity of a country’s debt problems.71 This use of hard evidence helped to underpin and add credibility to the broader moral critique of the international sovereign debt regime. The main targets of NGO publications on debt issues were the international economic organisations and their major shareholding governments in the G8. As Thomas Callaghy demonstrates, sympathetic “insiders” within G8 governments and the IMF and World Bank bureaucracies were sometimes able to draw from the NGO discourse on sovereign debt to support their own arguments in internal policy debates, which helped to validate the wider NGO debt reform agenda.72 A crucial initial step was to convince both bilateral and multilateral official creditors that a systemic debt problem did in fact exist for a large group of low-income countries, and to define the scope of the problem through credible analysis. Understanding the Influence of NGOs on the International Debt Regime Evaluating the extent of NGOs’ influence and the mechanisms through which this is exercised is often difficult owing to the range of potential causal factors involved in the process of change in international regimes, as well as the problems inherent in any attempt to establish an unambiguous link between the intentional actions of NGOs and policy outcomes.73 Notwithstanding these methodological difficulties, the overall impact of the NGO campaign from the early 1990s onwards to transform the principles underpinning the international sovereign debt regime depended to a large extent on the following three key conditions. First, the identification and use of formal and informal pressure points where NGOs might be able to exert a persuasive influence, which included lobbying individual governments at the national level and during G8 meetings, targeting the Executive Boards of the IMF and the World Bank and seeking to influence the management and staff of the organisations through both formal lobbying and, where possible, informal contacts. A second important factor was the ability to take advantage of a window of opportunity for change that was created by the chance confluence of a series of events. This included the appointment of a reform-oriented World Bank president, James Wolfensohn, in 1995,74 as well as the election of the Labour government in the United Kingdom in 1997 which made more generous debt relief terms through reform of the HIPC Initiative a cornerstone of its foreign economic policy.75 Political support for reforming the international sovereign debt regime was also driven by actors as a means to achieve other political goals. For instance, support from the United States for greater official debt relief was driven by the need to deal with the massive level of sovereign debt owed by Iraq after 2003, as well as the influence of religious actors and economic conservatives in the Republican Party. Economic conservatives in the United States were keen to rein in the 71. Bökkerink and van Hees, op. cit., p. 325; Ocampo, et al., op. cit., p. 116. 72. Callaghy, op. cit., pp. 21–22, 27. 73. See Betsill and Corell, op. cit.; Paul Nelson, “Heroism and Ambiguity: NGO Advocacy in International Policy”, Development in Practice, Vol. 10, Nos. 3 and 4 (2000), pp. 478 –490. 74. Callaghy, op. cit., p. 29. 75. Rob Dixon and Paul Williams, “Tough on Debt, Tough on the Causes of Debt? New Labour’s Third Way Foreign Policy”, British Journal of Politics and International Relations, Vol. 3, No. 2 (2001), pp. 150 –172. Downloaded By: [University of Birmingham] At: 22:36 7 January 2009 74 André Broome activities of the IMF and the World Bank by forcing the organisations to absorb the cost of debt relief themselves, while religious actors—mobilised by Jubilee USA—argued that debt forgiveness was morally right.76 This is not to suggest that the pre-existing policy preferences of the Labour government in the United Kingdom after 1997 and the Bush administration’s affinity with many of the goals of religious groups in the United States can simply account for how the United States and the United Kingdom came to accept and to support the principle of an extension of debt relief for HIPCs. Rather, NGOs were able to build on these foundations to dramatise and promote their political goals. As then British Chancellor Gordon Brown observed in 1999, agreement within the G8 on the principle of greater debt relief was “[i]nspired by the campaign led by churches and charities”.77 The point to note is that NGOs were able to build upon these contextual factors to mobilise support for changes to the international sovereign debt regime, by connecting the Labour government’s stated position on the debt problems of low-income countries and President Bush’s religious values to the principle of debt relief.78 In addition, the public relations damage suffered by the IMF as a result of its actions during the Asian financial crisis in 1997/98 motivated the organisation to attempt to restore its reputation among both borrower and creditor governments through addressing some of the concerns raised by its critics.79 While among the major international economic organisations the IMF, in particular, has continued to be subject to strong criticisms from many NGOs, some of their concerns have gradually achieved greater recognition—although not necessarily greater influence—within the organisation. For example, when discussions over reforms to the 1996 HIPC Initiative were in full swing in 1999, the IMF and World Bank staff submitted a joint report to their respective Boards that represent member states on alternative proposals for reforming the international sovereign debt regime that included a survey of the main positions of Jubilee 2000, Oxfam International, Eurodad, and many other groups such as the Vatican, Christian Aid, and the Anglican Church.80 This falls well short of providing clear evidence that the major NGOs involved with the debt campaign directly shaped policy debates within either the IMF or the World Bank. Nevertheless, the discussion of the various rationales for sovereign debt relief articulated by NGOs (such as those based on moral and social justice arguments), which were drawn from faceto-face consultations strongly encouraged by member state representatives at the IMF and the World Bank,81 does suggest a significant shift from past practice 76. Helleiner and Cameron, op. cit., p. 131; cf. Alexandra Homolar-Riechmann, “Loose Morals: The Foundations of Neoconservativism”, Paper presented at the BISA United States Foreign Policy Working Group Conference, Institute for the Study of the Americas and London School of Economics, 18–19 September 2008. 77. Gordon Brown, “Smash the Chains”, The Guardian (21 December 1999), available: ,www.guardian.co.uk/world/1999/dec/21/debtrelief.development. (accessed 10 September 2008). 78. Cf. Helleiner and Cameron, op. cit., p. 133; Dixon and Williams, op. cit., p. 161. 79. Beeson and Broome, op. cit. 80. IMF Archives, HIPC Initiative—Perspectives on the Current Framework and Options for Change, EBS/99/52 (Washington, DC: IMF, 1999). 81. IMF Archives, Chairman’s Summing Up—Meeting of the World Bank’s Committee of the Whole on Heavily Indebted Poor Countries (HIPC) Initiative—Perspectives on the Current Framework and Options for Change, EBS/99/58 (Washington, DC: IMF, 1999), p. 1. Downloaded By: [University of Birmingham] At: 22:36 7 January 2009 When do NGOs Matter? 75 where the debt policy agenda was negotiated behind closed doors between the IMF and World Bank staff and state representatives. The third condition that enabled the NGO debt campaign to have a significant impact upon the evolution of the international sovereign debt regime was the ability of different NGOs, despite pursuing a range of political agendas, to cooperate and increasingly to co-ordinate their activities to maximise their public impact. Like states, NGOs also face a collective-action problem when they hold varying preferences over political goals. However, when a broad degree of consensus over strategic goals can be achieved—even if the principled beliefs that motivate the advancement of these goals vary—NGOs can be expected to achieve a stronger degree of influence over international political and economic change.82 High-profile celebrity support combined with events such as the Birmingham G8 summit in 1998, where NGOs organised a human chain made up of over 50,000 people to encircle the summit, enabled the coalitions of NGOs focused on achieving more generous official debt relief to attract widespread public support all over the world, ensuring that the debt problem remained a live issue on the political agenda for G8 governments.83 While the changes to the international sovereign debt regime during the last 20 years are often cited as unambiguous evidence of the increased importance of civil society actors in international affairs, it is important to note that their impact in this case must be conceived in terms of their direct and indirect influence over the actions of states. As Daniel Drezner has argued, the process through which changes in international regimes are negotiated may sometimes be shaped by non-state actors such as NGOs, but concrete political changes that result in the design of new policy regimes at the global level are finalised through agreements struck among major states.84 For instance, the incremental customisation of the international sovereign debt regime for low-income countries also highlights the importance of informal fora of international economic governance involving major states—relative to formal international economic organisations such as the IMF and the World Bank—as crucial drivers of change in the global political economy. The key informal forum in the debt case was the G8, which pushed the IMF and the World Bank towards understanding debt issues as a common problem faced by a set of low-income countries during the mid-1990s.85 The G8 also endorsed the final shape of the HIPC and Enhanced HIPC Initiatives,86 and pushed the international economic organisations to adopt 100% cancellation of multilateral debts (at least in principle) despite their strong opposition.87 In the case of the IMF, which has continued to remain reluctant to support proposals for the extension of debt relief,88 it is clear that winning support among G8 members was crucial for the calls from NGOs for multilateral debt relief to gain traction within the 82. Daniel W. Drezner, All Politics is Global: Explaining International Regulatory Regimes (Princeton: Princeton University Press, 2007), pp. 70–71. 83. Busby, op. cit., p. 257. 84. Drezner, op. cit., pp. 88, 204. 85. Bökkerink and van Hees, op. cit., p. 325. 86. Sieglinde Gstöhl, “Governance through Governance Networks: The G8 and International Organizations”, Review of International Organizations, Vol. 2, No. 1 (2007), p. 15. 87. Helleiner and Cameron, op. cit.; IMF and World Bank Staffs, op. cit. 88. Callaghy, op. cit., p. 34. Downloaded By: [University of Birmingham] At: 22:36 7 January 2009 76 André Broome organisation.89 G8 governments, together with other Paris Club members, have also stumped up most of the financing for debt relief that has been made available, with non-Paris Club creditors less willing to support debt relief through the HIPC Initiative and Enhanced HIPC Initiative.90 The campaign by NGOs to influence change in the international sovereign debt regime suggests that NGOs matter in the study of IPE for three principal reasons. First, through the exercise of moral authority NGOs can potentially shape how political issues are defined, both through their public campaigning and through their efforts to lobby national policy makers and officials in international economic organisations. Second, NGOs can potentially influence how policy responses to particular issues are crafted, which may involve influencing both the scope of policy change and the process through which change is implemented (such as whether an issue will be dealt with on an ad hoc basis or through new multilateral rules). Finally, the process of changing the international sovereign debt regime for HIPCs suggests that large professional NGOs are engaged in a symbiotic relationship with IOs and states that could potentially transform the political environment within which international economic regimes are constructed as well as influencing how they evolve.91 While the incremental moves towards greater inclusion of NGOs within the formal regulatory processes of international economic organisations might not necessarily enhance the legitimacy of institutions such as the IMF, the World Bank, or the World Trade Organization, this might nonetheless suggest that co-ordinated and sustained opposition from NGOs risks doing severe damage to their reputations and undermining their sources of legitimacy. Conclusion From the emergence of the debt crisis in the 1980s the debate over alternative policy solutions has often been framed in moral language, but the terms of the debate have shifted significantly during the past two decades. The symbolic success of the debt campaign waged by NGOs during the last 15 years can be seen in the gradual shift in terminology from the discussion of alternative policy solutions to low-income countries’ high debt levels in terms of the moral hazard problem that debt relief might pose to the stability of the international financial system, to a greater focus on the problem of moral fairness in the global political economy. Yet while the co-ordinated efforts of NGOs contributed to the adoption of major changes in the principles underpinning the international sovereign debt regime for HIPCs, significant gaps remain between the headlinegrabbing initiatives that have been announced by official bilateral and multilateral creditors and the full implementation of the benefits of debt relief initiatives for eligible countries. Moral victories, while important in their own right as potential impulses for future social action, may often prove difficult to translate into substantive political and economic change in practice. The broader lessons of this article for understanding the sources of change in international economic regimes are threefold. 89. Yanacopulos, op. cit., pp. 722– 724. 90. IMF Archives, Enhanced Initiative for Heavily-indebted Poor Countries—Review of Implementation, EBS/00/166 (Washington, DC: IMF, 2000), pp. 15– 16. 91. Cf. Reimann, op. cit.; Martens, op. cit. Downloaded By: [University of Birmingham] At: 22:36 7 January 2009 When do NGOs Matter? 77 First, the case of the debt campaign suggests there is a need for IPE scholars to pay further attention to exploring the strategic use of frames by actors who do not have recourse to more coercive forms of influence. A key part of the NGO campaign to effect a change in the principles of the international sovereign debt regime was the credible use of evidence-based arguments against the claims in the early 1990s of the World Bank and the IMF that a debt crisis in a large group of low-income countries did not exist. But the key to assembling the broad transnational coalition that rallied behind the debt relief cause was the success of NGOs such as Jubilee 2000 and Oxfam International in reframing sovereign debt problems in terms of a moral imperative for wealthy OECD governments to assist the poorest societies in the world, with the articulation of “debt relief” as an important part of the solution. This played an important role in the effort to discredit the traditional economic argument that non-concessional debt rescheduling was a more appropriate response for distressed economies than debt relief, which, it was argued, would create a moral hazard problem and contribute to international financial instability. While other scholars have suggested that we should expect to find transnational advocacy networks achieving a stronger influence on policy elites when they campaign on “global issues with a visible moral dimension”,92 the importance of the role of NGOs in advocating changes to the international sovereign debt regime is that NGOs were partly responsible for transforming the political context in which debt problems were understood. That is, while the sovereign debt problems of low-income countries gradually evolved into a political debate that incorporated a strong moral dimension, this had previously been a set of issues that tended to be discussed only in economic and strategic terms among national and international policy elites. By translating a set of technical concepts and public policy problems into moral language and achieving a significant degree of success in persuading other actors to buy into this reinterpretation, NGOs were able to introduce—or at least more strongly emphasise—a moral dimension to the issue of low-income countries’ high levels of sovereign debt. The second lesson that this article suggests for the study of political and economic change is the importance of exploring how a specific set of contingent circumstances may allow non-state actors successfully to exert influence on public decision-making processes. The impact of the NGO debt campaign during the 1990s and early 2000s was partly enabled by a window of opportunity for changing the international sovereign debt regime created by a leadership change at the World Bank, as well as changes in government in the United Kingdom and the United States where, for very different reasons, political leaders made greater debt relief for heavily indebted poor countries a foreign policy priority. This provided an important opening for NGOs to push for changes to the international sovereign debt regime. In addition, the damage done to the IMF’s reputation during the Asian financial crisis may have made it more difficult for the IMF to resist the expansion of debt relief beyond the terms agreed for the 1996 HIPC Initiative. The confluence of a number of favourable conditions in this case suggests that public campaigns run by NGO coalitions on different issues in the future may fare less well. It is also doubtful whether it would be possible to 92. Cenap Cakmak, “Transnational Activism in World Politics and Effectiveness of a Loosely Organised Principled Global Network: The Case of the NGO Coalition for an International Criminal Court”, International Journal of Human Rights, Vol. 12, No. 3 (2008), p. 388. Downloaded By: [University of Birmingham] At: 22:36 7 January 2009 78 André Broome mobilise such a wide range of supporters—who often pursued different political agendas—to co-operate to push for change on other issues. In this respect, the public campaign for debt relief enabled numerous groups to co-operate to support a common goal for very different reasons (such as the different underlying rationale of economic conservatives compared with religious actors in the United States). The third and final broader lesson this article suggests for the study of the sources of change in international economic regimes is that while NGOs have become more prominent players in international affairs in recent years, specifically as critics of the policies of the international economic organisations, their impact on formal policy change is likely to continue to depend on the extent to which they are able to influence the political agendas of major states. This is hardly surprising, as international organisations such as the IMF and the World Bank remain at heart state-driven agencies, despite exhibiting a significant degree of autonomy. However, because for the most part their influence is channelled through states, this does suggest that recent claims that NGOs are at the vanguard of an emergent global civil society that can help to generate transnational democracy without accessing formal decision-making structures should be treated with scepticism.