5. Change the Structure of International Financial Relations

The pattern of international financial relations must be reformulated fundamentally to establish a fair process between debtors and creditors. Current debt management practices are characterized by the creditors' double role as judge and plaintiff. They do not reflect the fact that the responsibility for today's unbearable burden of debt in many Southern countries rests not only with debtors but with debtors and creditors alike. Therefore, the current practice should be replaced by a fair and transparent procedure that provides a framework for fair and equal relationships between debtors and creditors.

The introduction of an international insolvency/bankruptcy procedure⁸ has been proposed as one possibility to achieve these fundamental changes. It could be modeled after experiences of local governments in the US which are entitled to legal protections from their creditors if they become insolvent/bankrupt. (A similar procedure was introduced in Hungary in 1996.) One major element of an international procedure would be to establish neutral courts of arbitration that allow those affected to voice their views and concerns regarding the impact of the proposed solution.