Since the mid-2000s, Oxfam and our allies have been urging the International Monetary Fund to sell off some of its enormous hoard of 90.5 million ounces of gold bullion and use the profits to cancel the debts of low-income countries.
As Gandhi's dictum has it: First they ignored us, then they mocked us, and then we won!
For years, our calls fell on deaf ears. When I first lobbied officials at Canada's ministry of finance on the issue, they just nodded their heads. A year later, they called our proposal reckless; such a sale would so upset the gold market, it should never be considered.
In 2007, however, IMF staff began to toy with the idea, not as a source of debt relief, but a way to address a shortfall in the Fund's operating budget. The institution was facing hard times; there was little uptake for its lending except from the poorest countries that could barely afford to repay.
An action they had derided as financial tomfoolery suddenly made economic sense. The cash could help cover staff salaries, and would come in handy for the major renovations planned for the Fund's downtown Washington offices.
In early 2008, when the price of gold was $850 an ounce, the IMF proposed selling 12.8 million ounces of its holdings over a two-year period. The proceeds would create a $7 billion endowment to generate income for its activities.
In the wake of the financial crisis later that year, of course, the IMF received a new lease on life, with all sorts of countries demanding loans and a huge influx of new capital.
The crisis also created a gaping fiscal hole in the budgets of the poorest countries, pushing them farther into the red even as they slashed public services. Sierra Leone's debt to the rest of the world, for example, doubled between 2008 and 2011. Last year the country's government spent more on debt repayment than on healthcare.
There was a third, unexpected consequence of the crisis: Gold prices went through the roof. The IMF sold over 7 million ounces of gold during 2009, and earned a windfall of almost $1.44 billion over and above the $7 billion they expected for the endowment.
At that point, Canadian officials told me they thought the money should be used to help poor countries. The rest of the IMF Board agreed, earmarking most of the windfall profit (almost $900 million) for lending to low-income countries -- not to lower their debts, but at least not for the institution's overhead.
By the time the IMF finished selling off the bullion at the end of 2010, the price of gold had risen to over $1,000 an ounce and the total windfall had ballooned to $3.6 billion.
We insisted that the entire windfall be used for debt relief. With our allies in the Jubilee Campaign, the ONE Campaign, the International Trade Union Confederation and others, we delivered tens of thousands of petitions from 60 partners around the globe.
In late February, the IMF Board came much of the way around, agreeing to use $1.1 billion of the remaining windfall to cover the interest payments on existing IMF loans for the poorest countries through 2014.
More than a billion dollars, which governments would have paid in interest, can now be invested in small-scale farming, education and health care. This will change people's lives.
Nearly $1.2 billion in gold windfall is still up for grabs, so we cannot rest easy. But here is a victory to be celebrated.