Eric Toussaint
This
contribution puts forward suggestions and alternative avenues for debate. They
do not make up an all-inclusive programme, nor should they be seen as proposals
to accept or reject en bloc. At best, they are a collection of
necessary-but-insufficient conditions for charting the path forward. The
starting-point for this debate has to be the fulfilment of basic human rights.
The question we have tried to address may be summarised thus: how does one move
from an economy of indebtedness towards financing sustainable[2]
and socially just development?
The Universal Declaration of Human Rights states
that "Everyone has the right to a standard of living adequate for the
health and well-being of himself and of his family, including food, clothing,
housing and medical care and necessary social services. (…) Everyone has the
right to education, to work and to social security " (see Articles
22-26).
The
International Pact for Economic, Social and Cultural Rights, ratified by the
majority of UN member states, stipulates that " States have a right and
a duty to draw up appropriate national development policies to constantly
improve the welfare of the population as a whole and of every individual, on
the basis of their free, active and meaningful participation in development and
the fair distribution of the profits thereof." (Art. 2, cited by C.
Jochnick, 2001, p. 100).
The
UN Committee for Economic, Social and Cultural Rights interprets the
obligations of the Pact as follows: "A member State in which a large
number of individuals are deprived of basic foods, primary healthcare, decent
clothing and housing or elementary education, is not fulfilling its obligations
as laid down by this Pact."
Despite
this, and the fact that total world wealth has increased eight-fold since 1960,
at the present time one in two human beings lives on less than two dollars a
day, one in three has no access to electricity, one in four lives on less than
a dollar a day, one in five has no access to clean drinking water, one in six
is illiterate and one in seven adults and one in three children suffer from
malnutrition.
Several
specialised United Nations institutions[3]
co-wrote a document estimating that 80 billion dollars (80.000.000.000 USD) a
year for ten years would be enough to guarantee to every human being living on
this planet access to basic education, basic health care, adequate food,
drinking water and sanitation, and for women, gynaecological and obstetric care[4].
Present
day misery could be transformed with such wealth...
The
laws of the market and profit cannot be expected to satisfy essential needs.
The 1.3 billion people deprived of clean drinking water and the 2 billion
without access to medicines or healthcare[7]
have too little purchasing power to interest the markets. There is not enough
profit to be made[8].
Only resolute public policies can ever
guarantee the fulfilment of basic human needs for all[9].
This is why the public authorities must have at their disposal the political
and financial means of honouring their obligations towards their citizens.
The latter must also be able to exercise
fully their right to play a central role in the political life of the State. To
bring that about, efficient judiciary mechanisms and economic policies must be
implemented in a dynamic of participative democracy. The example of a
participative budget as practised in Porto Alegre since the early 90s should be
adopted on a world-wide scale and inspire original policies of radical
democracy.
The
application of the Universal Declaration of Human Rights and the International
Pact for Economic, Social and Cultural Rights has to be backed up by a powerful
social and citizens' movement. This can only be an authentic revolutionary
project, no more, no less.
Firstly,
the haemorrhage of wealth represented by debt repayments has to be stemmed.
Next, different sources of funding must be found for socially just and
ecologically sustainable development. Finally, we must break away from the old
logic that leads to the cycle of indebtedness, to embezzlement and large-scale
pillage of local wealth, and to dependence on the financial markets and
condition-laden loans of the international financial institutions.
1.
Breaking the infernal cycle of debt
The
champions of neo-liberal globalisation tell us that the Developing Countries
(in which they include Eastern Europe) must repay their external debt if they
wish to benefit from constant flows of funding.
In
fact, ever since the debt crisis in 1982, the flows have been going from the
Periphery to the Centre, and not the other way as the leaders of the
international financial institutions would have us believe. In order to
estimate real flows, as it transpired in chapter 9, the following factors have
to be taken into account: repayment of the external debt; capital outflow due
to residents of Periphery countries; the repatriation of profits by
multinational firms (including invisible transfers, especially via such
procedures as "over-" or "under-" billing on invoices); the
acquisition of privatised businesses in the Periphery at knock-down prices, by
capitalists of the highly industrialised countries; the purchase at low prices
of raw materials produced by the populations of the Periphery (degradation of
the terms of exchange); the "brain drain"; genetic pillage; pillage
of natural resources and destruction of the eco-system… The donors are not the
ones we are led to believe. It is a gross error of language to consider the
OECD countries, members of the Committee for Development Aid and the Bretton
Woods institutions as "donors".
In
the last two decades, there has been a massive net transfer of wealth from the
Periphery to the Centre. The added mechanism of debt repayment has become a
powerful support to those previously in operation (unfair trading, exploitation
of natural and human resources, the brain drain, repatriation of profits to the
parent company, etc.) Since 1982, the populations of the Periphery countries
have sent their creditors the equivalent of several times the Marshall Plan
-see chapter 9, box 9.1.- (with the local capitalist elite skimming off their
commission on the way).
It
has become urgent to adopt the opposite view from that of official discourse:
the Third World's external public debt must be cancelled. Close scrutiny
reveals that the Third World debt is slight compared
to the historic social and ecological debt owed it by the rich Northern
countries. In 2002, the Third World debt (former Eastern bloc countries
included) came to about 2400 billion dollars (of which about 1600 billion is
public debt), merely a small percentage of the world debt which comes to more
than 60,000 billion dollars. (The total sum of public and private debt for the
USA alone comes to 30,000 billion dollars).
If
the Global South's external public debt were
to be entirely cancelled without indemnifying the creditors, it would be a
paltry loss of barely 5% in their portfolios. On the other hand, to the
populations liberated at last from the burden of debt, those sums, which could
be used to improve health and education, create jobs, etc., would mean a lot.
Indeed, the repayment of the Global South's external
public debt represents, on average, expenditure of about 190-220 billion
dollars a year, that is about 2-3 times the amount required to satisfy basic
human needs as defined by the United Nations.
Some
claim that debt cancellation leads to permanent exclusion from access to
international capital. No serious study of the history of debt crises underlies
this claim.
Between
the end of the 18th Century - when the United States of America cancelled their
debt towards the British Crown - and the end of the 20th Century - with the
cancellation of part of Poland's debt in 1991 (one of the rare examples where
the creditors made a spontaneous effort, obviously strategic interests were at
stake) - numerous measures of debt-cancellation have been taken. For example,
Mexico stopped repaying its debt between 1914 and 1946 (Marichal, 1989,
pp.224-228); the Bolshevik government declared unilateral cancellation of the
debts of the Tsarist empire. In no case did disaster ensue, as predicted by the
creditors. On the other hand, there is no shortage of examples of countries
that have become weakened and impoverished through debt-repayment. Argentina is
a case in hand.
Since
the end of the 1990s, flows related to international loans have become
negative. Indebted countries taken as a whole repay more each year than they
receive in the form of loans (whether bank loans, bonds, bilateral loans or
World Bank loans). Every year since 1999, the loans granted by commercial banks
have been less than the repayments they have received. The same has been true
of bilateral loans since 1996. The flows have been negative for the issue of
debt paper since 2000. For World Bank loans, ODA included, flows have been
negative since 2000[10].
Furthermore,
the threat of exclusion from access to private external capital means little to
most Third World countries, which have had hardly any access to that capital
for years. The UNDP states that "only 25 Developing Countries have
access to private markets for bonds, commercial bank vestments" (UNDP,
1999, p31). Note that the UNDP includes the East European states in the 25
countries mentioned and that the total number of Developing Countries, as they
define them, is 180.
According
to the United Nations, in 1999 the 48 Least Developed Countries (LDCs), with
their nearly 600 million inhabitants, received only 0.5% of Direct Foreign
Investments (DFI) destined for Developing Countries (DCs). Indeed, the DCs'
share of DFI has been in constant decline over the last three years - while the
rich countries get 80% of these flows.
For the handful of Third World countries
with access to international capital (4 countries - China, Brazil, Mexico and
Thailand - received more than 50% of DFI flow in 1998), 80% of Foreign
Investment input is accounted for by the acquisition of pre-existing businesses
taken over by multinationals of the most industrialised countries. This does
not result in job-creation, quite the opposite.
Furthermore, these acquisitions imply a
loss of national control over the productive infrastructure. Not to mention the
highly volatile and speculative nature of the other capital flows (which is one
of the lessons of the financial crises of the 90s).
Restricting this type of flow would do no
harm to the economies of these countries. We propose replacing these
unproductive, even damaging, flows by alternative sources of funding (see the
second part of this text), so as to significantly reduce dependence on
financial markets and the Bretton Woods institutions.
The Judicial Basis for Debt Cancellation
Debt-cancellation
is all the more legitimate that it can be justified by several legal arguments,
including the notions of "odious debt", "force majeure" and
"state of need".
Odious
Debt
State
debts contracted against the interests of local populations are judged
unlawful. According to Alexander Sack, who theorised this doctrine, "If
a despotic power contracts a debt not in accordance with the needs and
interests of the State, but to strengthen the despotic regime, to repress the
population who are combating it, this debt is odious for the population of the
State as a whole. This debt is not an obligation for the nation: it is debt of
a regime, the personal debt of the authorities which contracted it;
consequently, when the regime falls, the debt becomes null and void."
(Sack, 1927).
Thus, debts contracted against the
interests of the population of the indebted territory are "odious"
and, in the case of a change of regime, the new authorities are not held to
repay them.
The notion dates back to the end of the
19th Century.[11] One of its
applications was in 1898, when the United States gained control of Cuba after a
war with Spain[12]. The latter
demanded that the victor take on the Cuban debt towards the Spanish Crown, in
accordance with international law. The United States' Negotiating Commission
refused to do so on the grounds that the debt was "a burden imposed
upon the Cuban people without their consent".
The
Commission argued that "the debt was incurred by the Government of Spain
for its own interests and by its own agents. Cuba had no say in the
matter." The Commission added that "the creditors accepted the risk
of their investments". The dispute was resolved by an international treaty
between the USA and Spain signed in Paris in 1898. The debt was completely
cancelled.
Later,
in 1923, an international Court of Arbitration in which Judge Taft, President
of the United States Supreme Court, took part, declared that loans made to
President Tinoco of Costa Rica by a British bank established in Canada were
null and void since they had not served the country's interests but the
personal interest of a non-democratic government. On this occasion, Judge Taft
declared that "The case of the Royal Bank rests not simply upon the
form of the transaction, but upon the bank's good faith at the time of the loan
for the effective use of the Costa Rican government under Tinoco's regime. The
Bank must prove that the money was lent to the government for legitimate
purposes. It has not done so." (Judge Taft, quoted in Adams, 1991,
p.168).
The legal regimes (recognised lawful
governments) which followed the dictatorships of South America in the 80s
(Argentina, Uruguay, Brazil, etc.) should have drawn upon international law to
have their odious debts cancelled. They did not. For the very good reason that
the dictatorships had benefited from the active support of the USA (when it was
not the USA that had helped get them into power) and the main lenders were none
other than US banks.
Other
countries, too, had a perfect right to demand the cancellation of their debts.
To give just a few more flagrant examples: the same happened in the Philippines
after the overthrow of the dictator, Marcos, in 1986; in Rwanda in 1994 after
the genocide perpetrated by its dictatorial regime[13];
in the Republic of South Africa as it emerged from Apartheid (1994); in the
Democratic Republic of Congo in 1997 when Mobutu was overthrown; in Indonesia
in 1998 when Suharto left power, etc.
Instead
of turning to national and international law, those newly in power prefer to
negotiate with the creditors to spread out the repayments or make cosmetic
reductions. Once they are sucked into the interminable cycle of external debt,
it is their populations who bear the cost.
This
system of creating dependency has to be brought to an end. Full support must be
given to the social and citizens' movements in Developing Countries that call
on their governments to repudiate the external public debt and stop repayments.
Citizens'
movements in favour of debt cancellation have regularly invoked the doctrine of
"odious debt", but post-dictatorship regimes and of course, the
lenders, have turned a deaf ear. The
issue was taken up by the US government in April 2003. In circumstances not
unlike the precedent of the war between Spain and the USA in 1898, the USA has
asked Russia, France and Germany to cancel the odious debts owed by Iraq.
Taking word for word the definition of odious debt as quoted above, the debts
contracted by the dictator Saddam Hussein were declared null and void. The USA,
along with their British, Australian, Dutch and Danish allies, attacked Iraq in
violation of the UN Charter of March 2003. They then occupied it with over
100,000 soldiers, and were preparing to establish a protectorate, de facto
or legally, over the country. They
would have liked to persuade some of the main creditors, especially the three
powers that opposed the war (France, Russia and Germany), to renounce what was
owing to them.
The
objective of the USA was, and still is, to get its hands on Iraq's oil revenues
generally, and particularly to use it to pay the costs of the military
intervention and ensuing destruction, of reconstruction and of the current
occupation. They want to prevent the oil revenues from being used to repay
debts to the powers that did not support military intervention. The USA used
the argument of odious debt purely as an opportunistic ploy. Their idea was for
Iraq to be relieved of old debts in order to guarantee the repayment of the
newly incurred ones, to the new main creditors especially the USA, down to the
last cent. This has been analysed in Chapter 16. Nevertheless, the USA has
shown the world that the doctrine of odious debt is not a thing of the
past. The Iraqi people are entitled to
completely recover their freedom (which means the departure of the foreign
occupying forces) and to see the debts contracted by Saddam Hussein wiped out.
Furthermore, they are entitled to reparations on the part of their aggressors. Other populations bearing the burden of
odious debts have every right to demand their cancellation.
Citizens'
surveys (audits) to investigate the legitimacy of debts their country is
expected to repay are a fundamental tool. Parliaments and governments of
indebted countries could carry out debt audits. Some countries have clauses in
their constitutions that expressly provide for this. (Brazil's 1988
constitution; the 1999 constitution of the Bolivarian republic of Venezuela).
Powerful mobilisations of citizens in various countries have clamoured for auditing procedures to be started. A case in hand was Brazil in September 2000,
when the Jubilee South Campaign, the National Conference of Bishops, the
Landless Movement and the CUT (the Portuguese acronym for Brazil's United Confederation
of Workers) organised a referendum on the debt. Six million citizens took part
and more than 95 % of those voted in favour of organising an audit.
Numerous Brazilian social movements asked the new president Lula, who came into
power in January 2003, to organise the audit as provided for in the Brazilian
constitution of 1988.
The powerful Confederation of Indigenous Nationalities of Ecuador
(CONAIE) put pressure on the new Ecuadorian president Lucio
Guttierez to do an audit. President Chavez of Venezuela announced a similar
initiative.
A
great deal hangs on doing audits to determine whether or not all or part of a
country's debt is odious. The table below gives a provisional and
non-exhaustive list of the debts of a few countries. The amounts involved in
odious debts are considerable. The table is provisional as only a precise and
rigorous audit (carried out with the citizen's participation) can properly
determine the size of the odious debt to be declared null and void. The table nevertheless gives food for
thought and action.
Table
19.1.
|
Country |
Dictatorial
Regime |
Period
of Dictatorship |
Odious
Debt (in bns
of dollars) |
Debt Stock In
2001 |
|
Indonesia |
Suharto |
1965-1998 |
150 |
135 |
|
Iraq |
Saddam
Hussein |
1979-2003 |
122 |
122 |
|
Brazil |
Military
junta |
1965-1985 |
100 |
226 |
|
Argentina |
Military
junta |
1976-1983 |
45 |
137 |
|
South
Korea |
Military
regime |
1961-1981 |
30 |
110 |
|
Nigeria |
Buhari/Abacha |
1984-1998 |
30 |
31 |
|
Turkey |
Military
regime |
1980-1989 |
30 |
115 |
|
Philippines |
Marcos |
1965-1986 |
27 |
52 |
|
South
Africa |
Apartheid |
1948-1991 |
22 |
24 |
|
Syria |
Assad |
1971- |
21 |
21 |
|
Thailand |
Military
|
1966-1988 |
21 |
67 |
|
Morocco |
Hassan
II |
1961-1999 |
19 |
17 |
|
Zaire/DRC |
Mobutu |
1965-1997 |
13 |
11 |
|
Chile |
Pinochet |
1973-1990 |
12 |
38 |
|
Tunisia |
Ben
Ali |
1987- |
11 |
11 |
|
Pakistan |
Military |
1978-1988 |
10 |
32 |
|
Peru |
Fujimori |
1990-2000 |
9 |
27 |
|
Sudan |
Nimeiry |
1969-1985 |
9 |
15 |
|
Ethiopia |
Mengistu |
1977-1991 |
8 |
5.7 |
|
Kenya |
Moi |
1978-2003 |
5.8 |
5.8 |
|
Congo |
Sassou |
1979- |
4.5 |
4.5 |
|
Iran |
Shah |
1941-1979 |
4.5 |
7.5 |
|
Bolivia |
Military
junta |
1964-1982 |
3 |
4.7 |
|
Guatemala |
Military
regime |
1954-1985 |
2.7 |
4.5 |
|
Mali |
Traore |
1968-1991 |
2.5 |
2.9 |
|
Somalia |
Siad
Barre |
1969-1991 |
2.3 |
2.5 |
|
Malawi |
Banda |
1966-1994 |
2.2 |
2.6 |
|
Paraguay |
Stroessner |
1954-1989 |
2.1 |
2.8 |
|
Nicaragua |
Somoza |
1974-1979 |
2 |
6.4 |
|
Kampuchea |
Khmers
Rouges |
1976-1989 |
1.8 |
2.7 |
|
Togo |
Eyadema |
1967- |
1.4 |
1.4 |
|
Liberia |
Doe |
1980-1990 |
1.2 |
2 |
|
Myanmar
|
Military
regime |
1988- |
1.2 |
5.7 |
|
Rwanda |
Habyarimana |
1973-1994 |
1 |
1.3 |
|
Salvador |
Military
junta |
1962-1980 |
1 |
4.7 |
|
Haiti |
Duvalier |
1957-1986 |
0.8 |
1.2 |
|
Uganda |
Idi
Amin Dada |
1971-1979 |
0.6 |
3.7 |
|
Central
Africa |
Bokassa |
1966-1979 |
0.2 |
0.8 |
Table
by Damien Millet and the author on the basis of preliminary work by Joseph
Hanlon (2002).
The
amounts given as odious debt (column 4) are in most cases lower than the real
figures, as they only concern the period of the dictatorships stricto sensu..
They do not include debts contracted to repay the odious debts. The point of an
audit would be to determine the precise amount of debt that can be rightly
considered odious. The list of eligible countries also needs to be completed.
Several additions are required to the doctrine of
odious debt as formulated by Alexander Sack last century. The Center for
International Sustainable Development Law (CISDL) at McGill University (Canada) has propose a general definition which seems
quite appropriate: “ Odious debts are those contracted against the
interests of the population of a State, without its consent and with the full
knowledge of the lenders" (Khalfan et al., “ Advancing the
Odious Debt Doctrine ”, 2002, cited in Global Economic Justice
Report, Toronto, July 2003).
So
the issue of odious debt should on no account be abandoned, even if creditors
of every kind like to consider it closed. Indebted States have not finished
repaying odious debts. They can still make a decision grounded in law to
repudiate these debts. New debts contracted in the 1990s and early 2000s by
legitimate regimes to repay odious debts contracted by the despotic regimes
that went before, should also fall into the category of odious debt. This is
the opinion of various experts such as those at the CISDL mentioned above as
well as Joseph Hanlon (Great Britain), Hugo Ruiz Diaz (Paraguay – Belgium) and
Patricio Pazmino (Ecuador)[14]
The
definition proposed by the CISDL implies that private creditors who have lent
(or lend) money to regimes (legitimate or not) or to companies guaranteed by
the State for projects that have not been decided through democratic
consultation or are detrimental to the society, risk seeing their loans
cancelled. All the more so in cases where the creditor has also actively or
passively colluded with embezzlement. A great number of projects, old and new,
come under this category. The great Three Gorges Dam project in China is a case
in hand. Once the notion of odious debt is well-established, creditors will be
forced to make clear their responsibilities and commitments and to respect
democratic, social and environmental rules. If they do not, they may find
themselves having to give up all hope of recovering the money they lent.
The
doctrine of odious debt also needs to be extended to cover debts contracted
with the Bretton Woods Institutions (the IMF, the World Bank and the regional
development banks).
Why?
The IMF and the World Bank (multilateral lenders) hold about 450 billion
dollars of credits on indebted countries[15]
and a large part of those debts fall into the 'odious' category.
There follow several examples of cases where the
doctrine of odious debt should be applied, in line with the CISDL's definition.
1)
Multilateral debts contracted by despotic regimes
(all the dictatorships mentioned earlier were supported by the IMF and the
World Bank) must be considered odious. The IMF and the World Bank have no right
to demand their repayment from the democratic regimes that replace
dictatorships (*).
2)
Multilateral debts contracted by legal and
legitimate regimes to repay debts contracted by the despotic regimes are
themselves odious. They must not be repaid. This is the case for about thirty
countries mentioned in the (non-exhaustive) table above (*).
3)
Multilateral debts contracted by legal and
legitimate regimes within the framework of structural adjustment policies
detrimental to populations are also odious. (The detrimental nature of these
policies has been amply demonstrated by numerous writers and international
organisations – especially branches of the UN, see below). For twenty years the
IMF and the World Bank have continued to define and impose, come hell or high
water, conditionalities that turned out to have catastrophic consequences for
basic human rights. This amounts to dolus malus[16],
defrauding the borrowers and their populations. The loan contract concerned is
null and void. The letters of intent that the governments of indebted countries
are obliged to send to the IMF and the World Bank (who dictate their contents)
are an artifice invented by these institutions to cover themselves in the
eventuality of legal proceedings against them. The procedure is nothing but an
artifice and therefore has no legal value[17].
Just as an individual does not have the RIGHT to agree to be reduced to slavery
(the contract whereby he or she renounces their liberty has strictly no legal
value), a government has no right to renounce the exercise of its country's
sovereignty. In so far as it cancels a
State's exercise of its sovereignty, such a letter is null and void. The Bretton Woods institutions cannot use
this letter of intent to escape responsibility. They remain fully responsible
for the wrongs done to populations through the application
of the conditionalities they impose (structural adjustment, which has now been renamed
Poverty Reduction Strategy - PRS - for the HIPC or Poverty Reduction and Growth
Facility - PRGF - for the rest).
4)
The antidemocratic, despotic nature of the
Bretton Woods institutions themselves also needs to be recognised. The required
majority is 85%, giving the USA a veto as they hold about 17% of the votes.
There is a clear imbalance in the distribution of voting rights.
5)
At the same time as actions are brought to
cancel multilateral loans, the Bretton Woods institutions must also be forced
to make reparations to the populations who have suffered the human and
environmental damage caused by their policies(*).
6)
Lastly, civil and criminal actions must be
brought against the officials of those institutions, who should be held
responsible for the violations of basic human rights they have perpetrated and
still perpetrate by imposing structural adjustment and/or by lending support to
despotic regimes (*).
All
points marked with an asterisk (*) apply equally to bilateral debts and
bilateral creditors. To illustrate point no. 6, in the future a democratic Togo
freed of the dictator Eyadema could bring a court action against France in The
Hague (or even the International Criminal Court) for its active support of the
dictatorship. Furthermore, in strict application of the doctrine of odious
debt, a democratic, post-Eyadema Togo would no longer owe the debts contracted
under the dictatorship.
"Force majeure"
Another means provided by the law of supporting debt cancellation and
stopping repayments is to use the argument of "force majeure[18]
and that of a fundamental change of circumstances. The UN International Law
Commission defines “ force majeure ” as follows: "The
impossibility to act legally (…) is the
situation that arises when unforeseen circumstances beyond the control of the
person or persons concerned absolutely prevent them from respecting their
international obligation, by virtue of the principle that one cannot do the
impossible" [19].
This
principle of international law acknowledges that a change in the
conditions of a contract may render it invalid[20].
This means that contracts requiring the fulfilment of a succession of future
commitments are subject to the condition that the circumstances should remain
unchanged. (In Common Law, there are several doctrines based on a similar
principle, including "force majeure" (circumstances beyond one's
control), "frustration", impossibility" and
"non-feasibility".)
"Force
majeure" and a fundamental change of
circumstances quite clearly apply to the
debt crisis of the 80s. Indeed, the fundamental causes of the debt crisis from
1982 on were two exogenous factors: the dramatic rise in interest rates imposed
world-wide by the United States government from the end of 1979, and the drop
in export prices for the Periphery countries from 1980 on. Both these factors
were instigated by the creditor countries. They are cases of "force
majeure" which fundamentally modify the situation and prevent the debtors
from fulfilling their obligations[21].
To justify a refusal to pay in law, as well as the
arguments mentioned above, the argument of a state of necessity can also be
used. A state of necessity can be invoked when it would cause unreasonable
sacrifice and hardship to the populations concerned, to continue making repayments, thus directly affecting the State's
fundamental obligations towards its citizens. Regarding this point, the UN
International Law Commission (ILC) declares,
“A State cannot be expected to close its
schools, universities and law courts and to do away with public services,
plunging the community into chaos and anarchy simply to be able to use the
money to repay its national or foreign creditors.
There are limits to what can reasonably be
expected from a State as there are for an individual… ” (ILC, 1980, p. 164-167,
cited by Hugo Ruiz Diaz, op. cit.)
It
is time to break away from old habits of dependency and subjugation. It is time
to support the social and citizens' movements in the countries of the Periphery
who are calling upon their governments to repudiate the external public debt
and stop paying it.
2.
Extra resources to finance development
For debt cancellation to serve the purpose of
human development, obviously the money previously ear-marked for debt repayment
needs to be used to fulfil basic human rights. This means that a democratically
determined portion should be paid into a development fund, under the direct and
active control of the local population. The emphasis must be on citizens taking
part in deciding on priorities and working out projects to meet these
priorities; and in overseeing how financial and human resources are spent…
However
once this first step of debt cancellation has been taken, the present economy
based on international indebtedness must be replaced by a model which is both
socially just and ecologically sustainable, and independent of the fluctuations
of the money markets and of the loan conditionalities imposed by the World Bank
and the IMF.
This
development fund, already supplied with money saved through debt cancellation[22],
must also be financed by the following measures:
2.1.1.
Restitution of stolen property to the citizens of the Global South:
the considerable wealth illicitly accumulated by the ruling authorities and
local capitalists has been deposited securely in the most industrialised
countries with the active collusion of private financial institutions and the
tacit agreement of the Northern governments (the practice continues to this
day).
Take,
for example, Argentina under the military junta (1976-1983): this country's
debt was increased six-fold. A large part of the money borrowed was deposited
by members of the regime in banks in the USA, Great Britain and other
industrialised countries (see chapter 16). Financial and industrial firms in
the industrialised countries as well as members of successive Argentine
governments thus became rich through illegal means. The Argentine judiciary
established the facts in the course of a trial that took place in July 2000[23].
The collusion of the IMF and the New York Federal Reserve was proven. On the
basis of the judgement passed, which should set a legal precedent, the populations
thus robbed should be able to get compensation.
Imagine,
for example, what it would mean to the population of Argentina to recover the
money deposited by the military junta (1976-1983) in the most industrialised
countries, imagine what the return of a large part of the late President
Mobutu's fortune (equivalent to ten times the Democratic Republic of Congo's
annual national budget) would mean to the Congolese people, or to the
population of Nigeria if they could recover the fortune of the dictator Abacha,
safely invested in Switzerland and in Great Britain with the collusion of the major
banks. Remember, too, the colossal
fortune deposited mainly in the same two financial centres by Russian oligarchs
in the 1990s and early 2000s.
To
operate such restitution implies the completion of legal proceedings in the
Third World countries and the most industrialised countries. The example of the retrocession to the
Philippine government, in 2003, of part of the fortune of the dictator Marcos
(658 million dollars) by the Swiss authorities proves that it can very well be
done[24].
Such investigations would require full international co-operation and the
ratification of the Convention of Rome of March 1991 that deems the
misappropriation of public property to be a human rights violation.
Among other things, they would serve to
ensure that people guilty of corruption do not get off scot-free. This is the
only hope, if democracy and transparency are one day to triumph over
corruption.
2.1.2.
Further action would be to support the resolutions made at the international
meeting held in Dakar in December 2000[25]
(From Resistance to Alternatives) demanding compensation for the pillage
which the peoples of the Periphery have been subject to over the last five
centuries. This includes the restitution of economic and cultural property
stolen from the Asian, African and South American continents and from the
Amerindian, Caribbean and Oceanic peoples.
Ever
more numerous and more active movements are stating the case for reparations.
Under pressure from African social movements and associations of both North and
South America, the subject was officially placed on the agenda of the United
Nations conference against racism in Durban in August 2001. The US government
withdrew from the conference and the European Union manoeuvred to limit the
effect of the final resolution. Its
delegate was not prepared to go further than recognising the Slave Trade as a
crime against humanity. He wanted to avoid anything that might open the way to
demands for reparation. Although it already has a long history, the battle over
this issue is only now beginning. It is a battle that must be won, for moral as
well as economic reasons.
The
environmental debt, contracted mainly by the multinational corporations of the
highly industrialised countries, the governments of the North and the World
Bank[26],
is also an integral part of the demand for reparations. Remember the damage
caused, and the pillage, by oil, mining and agro-business multinationals.
2.2
Nationalisation/socialisation of the domestic assets of dictatorial regimes
Debt cancellation sets the clock back to
zero. The expropriation of ill-gotten gains - dictators' (and their
entourage's) holdings abroad - would provide the ideal basis for a development
fund. To this fund should be added the wealth accumulated by these predatory
regimes within their own borders. A proper register of these holdings must be
established. The regime's physical wealth (not just financial) should also be
placed at the disposal of the development fund. This fund is essential for
undertaking constructive projects aimed at satisfying the real needs of the
population, and for setting up a host of social and environmental programmes.
2.3
Making fraudulent capitalists pay their fair share
Holders
of capital from the South have large sums of money in foreign accounts. They
have enriched themselves on the backs of their people, through out-and-out
theft and/or through organised capital flight. A proper register of domestic
and foreign-held wealth must be established. This means that officials in each
country, under the pressure of the social movements, must take legal steps to
demand that banking secrecy be lifted at both national and international
levels.
These same officials must determine how
much wealth is involved and who controls it. One way of doing this would be to
send commissions of enquiry to private foreign banks. With this information in
hand, governments can establish what tax penalty should be imposed to ensure
that state coffers receive all taxes due.
Since those with assets abroad also hold
domestic assets, their domestic wealth can be frozen as long as the tax penalty
is not paid. If the penalty is never paid, a part of the person's domestic
assets can be confiscated and transferred into the public domain.
2.4
Monetary reform by redistribution
A
redistribution of wealth can also be achieved by means of appropriate monetary
reforms. Without going into too much detail, one model is the kind of monetary
reform carried out after the Second World War by the Belgian government or, on
the other side of the planet and in more recent times, by the Nicaraguan
government in 1985. The idea is to tap into the wealth of those who got rich at
the expense of others. The principle is straightforward: at the time of a
change of legal tender, automatic parity between the old money and the new is
only guaranteed up to a certain limit. Beyond this ceiling, any remaining
monies must be placed in a blocked account, and its origin justified and
authenticated. As a general rule, the remainder above the fixed limit will be
exchanged at a less favourable rate (e.g. two old francs for one new). In cases
where it is clear that the money has criminal origins, it can be seized[27].
Such monetary reform enables part of the wealth to be distributed in a socially
fairer manner. Another objective of the
reform is to reduce the total amount of money in circulation, diminishing
inflationary tendencies. For the reform to succeed, capital movements and
exchanges need to have been subjected to strict controls.
2.5.
On the international level, set up global taxation
2.5.1.
Tax financial transactions
Initially
proposed by the 1972 Nobel prize-winner for Economics, James Tobin, this idea
was taken up by other economists, then by the international network, ATTAC (Association
for the Taxation of Financial Transactions for Aid to Citizens). Such a tax
would liberate considerable sums of money for development.
UNCTAD
(United Nations Conference for Trade and Development) calculates that 1000
billion dollars a day taxed at 1% would produce 720 billion dollars a year. As
a working hypothesis, they propose splitting it in two: $360 billion for a
social and ecological fund in the countries where the transactions took place,
and $360 billion for a redistribution fund for the countries of the South (for
health, education, etc.). The two funds would be managed by mixed boards of
directors representing civil society and governments. As for ATTAC's
international platform, it suggests a tax of 0.1% bringing in some 100 billion
dollars annually, which could be used to combat inequality, and to provide
public health and education services, food security and sustainable
development. Obviously, it is impossible to calculate exactly how much such a
tax would raise, since it depends on the rate of the tax and the volume of
financial flows[28]. ATTAC,
with the support of other movements (including the CADTM), considers that the
EU (or the Euro Zone within it) is large enough to apply a Tobin-type tax
without waiting for an international consensus.
Furthermore, in view of the globalisation of
markets which has been taking place since Tobin's initial proposal (and
especially the development of derivative products bridging all the gaps between
markets), it would seem necessary to tax all financial transactions (shares,
bonds, hard currency and derivatives), so that operators cannot dodge this
solidarity tax by turning to other markets. Centralised computerisation of
clearing operations, through clearing houses such as the SWIFT for the exchange
market and Clearstream and Euroclear for international transferable securities
transactions, makes the application of such a tax perfectly feasible, since all
international financial transactions are traceable and carried out only in
these places.
2.5.2.
Taxes on DFI, on the profits of multinational corporations (MNCs) and other
global taxes…
The
movement ATTAC also proposes to tax Direct Foreign Investments (DFI). ATTAC
France sees this as fluctuating between a rate of 20% and 10%, according to a
classification worked out by the International Labour Organisation (ILO), based
on the degree to which workers' basic rights are respected, with a specific
scale for different categories of countries. ATTAC also proposes a tax on MNC
profits. The idea is that the Tobin-type tax, the DFI taxes and those on MNC
profits should all be pooled in a global fund for the guarantee of human rights
and the protection of the environment (which is in line with the proposal made
in this chapter).
On
the matter of global taxes, apart from the wealth tax suggested in 2.7, certain
movements are also discussing the idea of a tax on the kerosene used by airline
companies. Aviation kerosene is the
only fossil fuel that is not taxed. Its combustion damages the environment and
contributes to exhausting non-renewable sources of energy. Considering that the
ill effects are global, it is logical to think in terms of a global tax, that
airline companies would have to pay into a global fund for the guarantee human
rights and the protection of the environment. The idea of taxing CO2 emissions
(with ill effects as global as those of kerosene) is also under discussion.
2.6.
Raise Official Development Aid to at
least 0.7% of the GDP and completely change the thinking behind it. Instead of
ODA, let's talk about Reparation Funds
The
present level of Official Development Aid (ODA) does
not balance out the negative effect of debt repayment (see details in Chapter
9).
First, it should be pointed
out that a significant part of ODA is made up of loans to be repaid. Next, in
2002, the grand total of ODA did not exceed 57 billion dollars, i.e. about six
times less than the amount repaid by the Third World in external debt
servicing.
In 2002, ODA represented a mere 0.23% of the Gross Domestic Product of
the most industrialised countries, despite their commitment, frequently
reiterated within the framework of the UN, to reach the objective of 0.7%. In
fact, ODA fell by over 30% between 1992 and 2002, in scandalous contradiction
of promises made in Rio (1992) by the Heads of State of the industrialised
countries.
Taking
the present average of 0.23%, ODA must be multiplied threefold to fulfil the
commitments made. Considering that ODA represents a little under 50 billion
dollars, if it is multiplied by three, it should reach 150 billion dollars a
year which should be entirely paid out as donations (as compensation, and no
longer, as is too often the case, in the form of loans).
Finally, rather than speak of aid, henceforth it would be more
appropriate to use the term reparation, the idea being to make
reparation for all the damage caused by centuries of pillage and unfair trade.
Part of the sum of 150 billion dollars of donations should be paid into a
global fund guaranteeing human rights and the protection of the environment
managed by the DCs (within the framework of the UN) and part into National
Development Funds run by the populations concerned and their representatives.
2.7. Levy
an exceptional tax on the estate of the very wealthy
In
its 1995 report, UNCTAD suggests levying a single, exceptional tax on the
estate of the very wealthy. Such a tax levied throughout the world would
mobilise considerable funds. This exceptional tax (different from recurrent
property taxes such as exist in several countries round the planet) could also
be levied at national level without having to wait for a global decision.
UNCTAD does not suggest a particular rate nor a particular target among the
large fortunes.
It
is time to take the plunge. For an exceptional solidarity tax like this, once
in a lifetime, of say 10% of the fortune of the wealthiest tenth of the
population in each country, could generate very considerable internal
resources.
In
most countries, tax-payers pay tax at both national and federal levels, and
also local taxes, at municipal or regional level. All it means is that extra
rich tax-payers will be subject to the same type of rules, extended to the
entire planet. On top of their national taxes, they will have to pay once an
exceptional world tax on their fortune, levied where their fortune is, and paid
into a global fund for the guarantee human rights and the protection of the
environment.
The
concentration of wealth in the hands of a tiny minority has reached a point
never previously known in the history of humankind. This is the case in all the
countries on the planet, with just a few exceptions that can be counted on the
fingers of one hand. The accumulated wealth comes to such absurd amounts as to
be an insult to the human conscience and to the peoples of the world. As mentioned in the introduction to this
chapter, the 2003 edition of the World Wealth
Report, produced by the wealth management consultants Cap Gemini Ernst and
Young and the investment bank, Merrill Lynch, in 2002 there were about 7.3
million millionaires in dollars (i.e. about one thousandth of the world's
population) with about 27,300 billion dollars between them (not including their
principal place of residence).
An
exceptional global tax of 20 % on the fortunes of the richest thousandth of the
planet would bring in roughly 5,5 00 billion dollars (27,300 divided by 5 =
5,475 billion dollars) which would go into the global fund for the guarantee
human rights and the protection of the environment, already permanently
financed by a Tobin-type tax and other global taxes. Part would be spent in the
form of donations, another part would be lent at low interest rates or none at
all, so that the fund would be permanently re-supplied.
Many
questions remain. What rate to apply? A single rate? Of how much? Or a
progressive rate? What percentage of the Fund's resources would be distributed
as donations? What percentage as loans? At what rate of interest? On what
terms? What percentage of the Fund would go towards global projects? … towards
continental projects? A reforestation fund? A fund for complete
denuclearisation? What priorities, what projects? Who decides? The UN General
Assembly preceded by national referenda? Continental referenda? What percentage
would go to local projects?
More
generally, the idea is to work towards a truly redistributive system of
taxation, giving governments the means to fulfil their obligations towards
their citizens with regard to their economic, social and cultural rights.
3.
A new development strategy
Instead
of the present development strategy, which consists of the creditors forcing
Southern countries to adopt neo-liberal type adjustment programmes, an
endogenous and integrated development strategy should be embraced. The change
would be implemented in the following stages:
3.1
End Structural Adjustment Policies
Structural
Adjustment Programmes (SAP) result in the weakening of States by making them
more dependent on external fluctuations (world market movements, speculative
attacks, etc.) and by subjecting them to conditionalities imposed by the
IMF/World Bank duo backed up by the governments of the creditor countries
grouped within the Club de Paris.
SAPs deliver up the economies of the
Third World to the appetites of the great multinational firms. Far from solving
the problem of indebtedness (the Third World debt has quadrupled since the
first SAPs were set up, even though it has been repaid six times over during
the same period), they entail massive redundancies and drastic cuts in social
budgets. They prevent any real human development.
The UN Human Rights Commission[29]
has repeatedly adopted resolutions concerning the debt problem and structural
adjustment. In a resolution adopted in 1999, the Commission states that "For
the population of an indebted country, the exercise of their basic rights to
food, housing, clothing, work, education, medical care and a healthy
environment may not be subordinated to the application of Structural Adjustment
Programmes and economic reforms generated by the debt." (1999, Art.5).
The
UN Secretary General, for his part, writes that "The UN Special
Investigator on Structural Adjustment clearly shows that Structural Adjustment
Programmes, recommended by the international financial institutions, have a
patently negative influence (directly and indirectly) on the fulfilment of
economic, social and cultural rights and are incompatible with the fulfilment
of those rights." (UN, Secretary General, 1995, p.66, quoted by Chris
Jochnick, 2000, p.136).
Furthermore, according to the UN, certain
conditions fixed by the creditors and the funding agencies constitute a
violation of the right to self-determination of the populations concerned:
"Every country has a sovereign right to dispose freely of its natural
resources for its economic development and the welfare of its people; any
measures or external economic or political pressures which are brought to bear
against the exercise of this right is a patent violation of the principles of
self-determination of peoples and of non-intervention as stated in the UN
Charter (...) Those measures include economic pressure aimed at influencing
another country's policies or at controlling the main sectors of its national
economy. Economic and technical assistance, loans and the increase of foreign
investments must be provided without the imposition of conditions which go
against the interests of the receiving country." (Secretary General
1995: 165, 171, 173).
Fantu
Cheru, the UN's special reporter on the effects of
SAPs and the external debt on the effective enjoyment of all human rights,
especially economic, social and cultural rights (sic !), declares
“ Aggravated malnutrition, the fall in school attendance rates
and the rise of unemployment have been imputed to structural adjustment
policies. Yet the same institutions (Author's note: the International
Financial Institutions) continue to prescribe the same therapy and make it a
condition to qualify for debt reduction, in denial of the evidence – that is,
that structural adjustment programmes have without the shadow of a doubt
increased poverty ” (in UN Human Rights , E/CN.4/2001/56, 18 January 2001,
p. 14).
The
human consequences of Structural Adjustment Programmes are incontestably
negative. The latter must therefore be cancelled and replaced with policies
aimed at satisfying basic human needs, giving priority to domestic markets,
food security and complementary exchanges on a regional or continental basis.
3.2
Ensure the return of privatised strategic sectors to the public domain
Water reserves and distribution,
electricity production and distribution, telecommunications, postal services,
railways, companies which extract and transform raw materials, the credit
system, certain education and health sectors, etc. have been systematically
privatised or are in the process of being so. These companies must be returned
to the public domain.
3.3
Adopt a partly self-based development model
Such
models entail constructing sufficiently solid internal economic foundations to
allow the country to open up to international trading.
This type of development involves
creating politically and economically integrated zones, bringing to bear
endogenous development models, strengthening internal markets, creating local
savings funds for local financing, developing education and health, setting up
progressive taxation and other mechanisms to ensure the redistribution of
wealth, diversifying exports, introducing agrarian reform to guarantee
universal access to land for small farmers and urban reform to guarantee
universal access to housing, etc.
Today's global architecture, structured
on the idea of a "Periphery" which is forced to provide raw materials
and cheap labour to a "Centre" that has all the technology and
capital, must be replaced by regional economic groupings. Only such self-based
development would allow South-South relations to emerge, which is the condition
sine qua non for the economic development of the Third World (and
therefore, by extension, the world). These integrated zones could establish
regional authorities with powers of economic and social regulation.
3.4
Act upon trading practice
The
existence of unfair exchange between the most industrialised countries and
those of the Periphery is one of the fundamental causes of the latter's
indebtedness. In fact unequal exchange creates a structural deficit in the
balance of payments: imports grow faster than exports, leading to indebtedness.
The historical tendency to downgrade the
terms of exchange must be brought to an end. To do this, mechanisms
guaranteeing a better price for the basket of products exported on the world
market by Developing Countries must be introduced. (These might include
stabilising the prices of raw materials, building up regulatory stocks - which
means doing away with zero stocks, etc.)
To set up such concerted mechanisms, the
Developing Countries' efforts to establish cartels of producer countries must
be actively encouraged. The Organisation of Petroleum Exporting Countries
(OPEC) is too often decried, while in several respects it plays a positive role[30]. The creation of such cartels could simultaneously
result in a reduction of the quantities exported (which, on the one hand, would
limit the exhaustion of natural resources, and on the other, would free up
areas for cultivation of food crops) and an increase in export revenues that
the beneficiary countries can reinvest in development. Why not a cartel of
copper producers (not long ago, Chile alone accounted for 30% of global
exports)? A coffee cartel? A tea cartel? Etc.
The
countries of the Periphery must be able to have recourse to protection measures
for their local production.
As for agriculture, as demanded by Via
Campesina, there has to be recognition of each country's, or group of
countries', right to nutritional sovereignty, and especially to
self-sufficiency in staple foodstuffs. Import protection is the logical
corollary, in total opposition to the minimum agricultural import quota of 5%
now imposed on all member countries by WTO rules.
In
the words of Via Campesina: “To guarantee the independence and food sovereignty
of all the peoples of the world, food has to be produced within small-holder
based systems of diversified production. Food sovereignty means a population's
unalienable right to define its own agricultural policies and, concerning
food, to protect and regulate national agricultural production and the domestic
market so that sustainable objectives can be met. It means deciding on ways of
reaching self-sufficiency without getting rid of their overproduction by
dumping it on other countries. (…) International trade must not be given
priority over social, cultural, environmental or development criteria. ”
(Via Campesina, in Rafael Diaz- Salazar 2002, p.87 & 90). Furthermore, Via
Campesina is in favour of "the abolition of all backing or subsidies,
direct or indirect, of exports ", of "the prohibition of the
production and marketing of seed and genetically modified organisms" and
of "the prohibition of patents on life and the private appropriation of
knowledge related to agriculture and food " (op. cit.).
The rules of global trading must be
subordinate to strict environmental, social and cultural criteria. Health,
education, water and culture can have no place in the field of world commerce.
Public services in the general interest are the guarantee of basic rights and
must therefore be excluded from the General Agreement on Trade and Services
(GATS).
Furthermore,
the Trade-Related Intellectual Property Rights (TRIPs) agreement needs to be
abolished, aspects of which allow the North to appropriate the rich natural
resources of the South and prevent the Southern countries from freely producing
goods (such as medicines) to satisfy the needs of their populations.
3.5.
Guarantee people's right to circulate and to settle
Quite
apart from the fact that the freedom to circulate and to settle constitutes a
basic human right, it should be remembered that migrant workers' remittances to
their families living in the DCs represent a very important resource for tens
of millions of families. In 2002 alone, migrants' remittances represented 80
billion dollars (see details in Chapter 9), i.e. twice as much as the
"donation" part of all Official Development Assistance. It is the
free circulation of capital and merchandise that need to be combated; and, in
the struggle against selfish, neo-liberal policies, people's right to circulate
freely and settle that needs to be firmly upheld. Obviously, on the basis of
the real improvement in living conditions that will result from the application
of the measures outlined above, the reasons for migrating will disappear. That
is the way to deal with the problem, not by closing borders to human
beings.
4.
New rules of good financial practice
The repeated financial crises of the 90s
proved by their absurdity that there can be no sustainable development without
strict controls of capital movements and tax evasion. Several strategies are
therefore required to subordinate the money markets to the fulfilment of basic
human needs.
4.1
Re-regulate the financial markets
The
deregulation of the money markets has led to the inordinate development of
financial speculation. It is time to regulate the money markets once again,
beginning by establishing a means of tracing all financial operations (to
determine who does what and for what purpose).
4.2
Control capital movements
to avoid the devastating effects of the remorseless ebb and flow of
international capital.
Article
VI of the IMF Statutes explicitly recognises the merits of a government
adopting measures to control capital movements. The article permits a member
country of the IMF "Exercise such controls as are necessary to regulate
international capital movements".
An
appropriate measure would be to establish a temporary obligatory deposit,
whereby every capital entry would be conditional upon an accompanying deposit
for one year of 30% of the sum invested. After a year, the deposit would be
returned to the investor (encouraged to invest only in the long term). The
deposit would not earn any interest.
Numerous
other control measures exist, for example the obligation to hold shares and
bonds for a minimum of one year before selling them on, the limitation of
currency exchange to commercial transactions (excluding financial operations),
heavy taxation in the case of excessive fluctuation (as proposed by the
economist Bernd Spahn), etc.
4.3
Eliminate tax havens which contribute to inflating the
financial bubble and weakening the legitimate economies (between 500 and 1500
billion dollars are laundered each year). To do this, each State must identify
through the clearing-houses which transactions come from tax havens, and tax
them heavily, to cancel out the benefit of unfair fiscal policy. At the same
time, they must remove the bankers' rule of secrecy to combat more
efficiently tax evasion, embezzlement of public funds and corruption.
4.3
Adopt rules to ensure the protection
of countries which have recourse to external indebtedness
External
indebtedness may be justified if decided democratically by the countries
concerned. However the use the borrowed money will be put to must be organised
according to principles radically different from those that have hitherto
prevailed.
Two new principles must be adhered to.
First, a "reverse" conditionality: the obligation to repay and pay
interest on these loans, made at low rates of interest and below market
conditions, will only be valid if the debt is proven to have enabled sufficient
creation of wealth in the countries concerned.
Second, the lender countries should
organise strong and efficient protection for the Developing Countries on an
international scale, to enable the latter to defend themselves against all
forms of abuse and despoilment by banks, private international investors or the
international financial institutions.
Furthermore,
as Carlos Marichal suggests (Carlos Marichal, 2002 in Fattorelli, p. 21),
private companies that contract debts must be made to take the risks on
themselves. Any company that borrows from outside will have to take out
insurance with a big international insurance company. This should prevent the
Sate - and thus the tax-payers - from having to bail out the company in case of
bankruptcy, as happens regularly at the moment. For example, in the crises of
the 1990s, the governments of the indebted countries of East Asia and Latin
America took over the private debts.
Lastly,
every loan contract should stipulate that the courts of the borrowing countries
will deal with any litigation that might arise between borrower and lender.
This would reverse the present situation where it is systematically the courts
of the creditor countries that deal with cases of litigation. It is clear from perusal of the sentences
handed down that the courts of the creditor countries tend to find in favour of
the lender. It would be far preferable for the courts of the borrowing
countries to deal with such cases, so that borrowers will be better protected
and lenders made to assume their responsibilities.
4.5 Democratic
control of political indebtedness
The
decision by a State to contract debts and the terms under which they are taken
out must be submitted to popular approval (by debate and vote in
parliament, and citizens' control).
5.
Further indispensable measures
Cancelling
the external public debts of the Periphery, abandoning structural adjustment
policies and other measures proposed above are necessary conditions, but
insufficient as such to guarantee the authentic human development of the
peoples of the world. Further measures are indispensable, beginning with
equality between women and men and the right to self-determination for
indigenous peoples.
On
a global level, the following must be guaranteed for all: freedom to circulate
and freedom to settle; the universal right to employment by a radical reduction
of working hours, contrary to the present line of reasoning which results in
the unemployed coexisting alongside overworked and stressed salary-earners[31];
the universal right to a citizen's income (Passet, 2000, pp.266-278; ATTAC,
2001a, Coutrot and Husson, Avenue du plein emploi, (Full Employment
Avenue), p.66); the discontinuance by the North of the public debt mechanism
which engenders austerity policies and the massive transfer of citizens' income
to capital holders[32];
the defence of the pension system by distribution as opposed to the system by
capitalisation (and the introduction of the distribution pension system where
it does not exist) (Kalfa in ATTAC, 2001b, Une economie au service de
l'homme, pp.141-159); free education and health; prohibition of GMOs in
agriculture as demanded by Via Campesina; vast socially useful and
environmentally friendly public works programmes (for example, building
accommodation and urban facilities, renovation of existing accommodation,
railway infrastructure for public transport…); literacy campaigns; vaccination
campaigns; primary healthcare of the sort seen in Nicaragua between 1980 and
1983 and in Cuba in the first phase of the revolution, with spectacular
results…
Arms
expenditure: Particular attention must be brought to the
drastic reduction of arms expenditure. These represent about 800 billion
dollars a year. The vast majority of arms are produced by G8 countries (see
chapter 8). These countries, using export credits, push the Periphery countries
to buy arms, despite hypocritical speeches to the contrary. The most highly
industrialised countries, starting with the United States (about 400 billion
dollars), spend outrageous sums on producing tools of destruction and death. A
drastic reduction in arms spending and a move towards total disarmament would
free up the enormous dividends of peace, to be shared to the benefit of all.
Multinational
corporations (MNCs): They have to be made to take legal
responsibility with regard to both national and international jurisdiction.
This includes in countries where they have subsidiaries. What about the
families of the more than 100,000 Bhopal inhabitants who
died in atrocious circumstances due to the negligence of the MNC Union Carbide
in India in December 1984? The directors of Union
Carbide got off scot-free. However, the
wind of change is blowing. In 2002, a group of victims of Apartheid brought an
action against 21 MNCs in a New York court. The MNCs are accused of aiding and
abetting a regime responsible for crimes against
humanity. Governments must use
their power to hold MNCs to respecting international and national treaties and
conventions on human rights and protection of the environment. The Bilateral
Agreements on Investment (BAI) should also be done away with; they are simply
the MAI (Multilateral Agreement on Investment) in sheep's clothing. They confer
exorbitant powers on the MNCs and lead governments to give up their national
sovereignty. States should implement their right to nationalise MNC
subsidiaries so that their own citizens can dispose of their own natural
resources.
The
question of political democracy is obviously central. Without the active
intervention of citizens at all levels of political decision-making, none of
the proposals made here would make much sense.
Global
public goods: One of the issues dear to the heart of
alter-globalisation is global public goods. There are a variety of terms used -
common goods, human heritage, the common inheritance of humankind - and the
field they cover is broadening all the time. Indeed, “ The
fundamental rights and needs of the human person and ecological necessity are
the decisive factors in identifying something as a global public good ” (Lille
and Verschave, 2003). To draw up a complete list of public goods, there would
have to be a vast democratic consultation, reflecting different histories and
cultures.
The
notion of "public good" intersects the notion of "right" at
many points. The protection of public goods means guaranteeing the universal
right and access to water, clean air, energy, food, transport, basic education,
and also to knowledge in the wider sense, to development, to equality, freedom,
pleasure… in other words, the right to life. All these rights have been
magnificently expressed in the pacts and charters of the UN.
Compared
to these historical antecedents, it has to be admitted that the Millennium
objectives are minimalist. By fighting for public goods, the
alter-globalisation movement is a spur urging a return to the founding texts to
bring them up to date. Access to public
goods for all, now and in the future, and their conservation,
for things like water, air and energy for example, means that we need
proper global ecological legislation, which at the moment barely exists. The right to development would also require
economic legislation that would make it possible to argue in court for the
criminal nature of usurious indebtedness.
From
this it follows that, still in the context of rights and law, justice itself
must be considered as a public good - criminal justice, economic and social
justice. For justice intersects with all other global public goods. It is both
a condition and a component of the most fundamental public goods: equality,
liberty and solidarity.
6.
What future for the IMF, the World
Bank and the WTO?
Can
the IMF and the World Bank be reformed? There is every reason to doubt it. In
my opinion, these institutions should be abolished and replaced by other global
institutions[33]. They
should be abolished because their property-based constitutions, their
allegiance to a very limited number of countries (of which only one, the United
States, has the veto on any decision it may wish to block, even if all 183
other members wanted it to go forward) and the distribution of power within
their ranks are incompatible with any truly democratic reform (see Chapters 10
and 11). Other multilateral institutions should be set up in their stead (with
the same names or different ones does not matter) based on the democratic
principle contained in the UN Charter (one State, one vote) and with the
mission of ensuring monetary stability internationally, controlling capital
movements, offering low-interest loans not tied to neo-liberal monetarist
conditionalities, and returning what was stolen from them to the countries of
the Periphery. Mankind should be endowed with international institutions where
every people of the world can really find its place. Institutions where the
national delegates could debate questions central to humanity in public
(broadcast on television and radio). Institutions where the GDP or the military
force of certain countries - or of one country - would have no weight in the
decision-making process.
For years now, the possibility
of reforming a whole series of international institutions, in particular the
WTO, the IMF, the World Bank and the related regional development banks, has
been a subject of open debate. Certain points are not even worth debating: do
we need global public institutions in such crucial areas as trade, money and
credit? The answer is affirmative; we
will never be able to resolve international problems without permanent,
internationally recognised institutions having democratic legitimacy.
The second point of debate could be the object of a consensus: do we
only need institutions of global scope, or would it be a good idea to delegate
certain tasks to regional bodies, to avoid too much centralisation, with
institutions too far removed from the day-to-day reality of peoples around the
world? It might be agreed that within the global organisations, regional
structures should be given considerable autonomy.
As an example, during the Asian crisis of 1997-98, the US government and
the directors of the IMF opposed the creation of an Asian monetary fund, which
had it existed, would have permitted a concerted and far more efficacious
response to the speculative attacks than a global organisation could provide.
It is perfectly conceivable that the IMF co-exist with regional monetary
funds.
Another example: a Latin American and Caribbean monetary fund could give
rise to a single currency for the nations of Latin America and the Caribbean.
One would hardly expect a global organisation to encourage the creation of a
regional currency. Of course, if it were possible to get to the point where the
whole planet adopted a single currency, that would be real progress, but there
are obviously several stages ahead before reaching that point. One is that the Periphery countries should
band together to equip themselves with a common currency so that they can do
without the dollar, the euro and the yen as much as possible, connect up among
themselves and become less dependent on the fluctuations of those three hard
currencies.
The most burning question of the debate is, can we concentrate on
reforming the institutions (in particular the above-mentioned trio) or should
we be taking action to replace them with new ones?
Whether the
IMF, the World Bank and the WTO should be reformed or replaced is the object of
ongoing debate within the different social movements and networks belonging to
the movement for a different type of globalisation. There is general agreement
both on the need for global institutions for exchange, credit and trade [34]
and on the rejection of the policies upheld by the IMF, the WB and the WTO.
This was what Gus Massiah, president of the CRID (the French Centre for
Research and Information on Development) and vice-president of ATTAC France,
explained in his closing speech at the seminar on the future of the
International Financial Institutions held at the National Assembly in Paris on
22nd and 23rd June 2001: "High on today's agenda is the discussion
between those who feel that the time has come to demand that [the IFIs] should
be dismantled or set aside while new institutions are put in their place, and
those who think that their present crisis provides an opportunity to make them
advance by imposing structural reforms. It is not a dogmatic or theological
issue, but an analysis of the situation and inherent political opportunities.
The debate is open, each movement must decide what steps to take regarding
common objectives" (Guy Massiah, June 2001).
Let us continue the debate, while at the same time reinforcing the unity
between partisans of radical reform of the institutions and partisans of their
replacement.
It would first be helpful to define the kind of institutions that might
replace the present ones.
We should opt for proposals that radically redefine the basis of the
international architecture (missions, modes of operation…). Let us reconsider the case
of those specialised global institutions, the WTO, the IMF and the World
Bank.
Concerning the World Trade Organisation, we share
the abolitionist point of view of Walden Bello and Nicola Bullard of the Focus
on the Global South network (Bello, 2000a), and that of François Houtart and
Samir Amin of the World Forum for Alternatives (Amin, 2000). Michel Husson
summarises the arguments as follows: "The treaty which instituted the
WTO is a contract with advantages for only a few, in the imperial style. It
cannot serve as a basis for a world economic order favouring development. This
is why we are fighting to have the WTO dismantled, and its functions devolved
upon other institutions. UNCTAD could provide the framework within which
agreements could be made with the aim of true co-development. The function of
such an institution would be to guarantee and organise the right of the
countries of the South to take the protection measures necessary for their
integration into the world market, whereas the entire logic of the WTO is
founded on the negation of that right. It would also ensure the transfer of
technology, unlike the WTO mainly preoccupied by the protection of property
rights and the patenting of anything that can be patented. Finally, instead of
giving the WTO the role of judge in questions of labour legislation, the powers
and competence of the International Labour Organisation should be broadened, by
giving it possibilities of recourse. It is within this context that the debate
over "social clauses" should be held, and that the NGOs and trade
unions should constitute a common front for universal advances in social
rights" (Michel Husson, 2001).
In the domain
of trade, the new WTO or the organisation that replaces it should aim to
guarantee the fulfilment of a series of international pacts and treaties,
starting with the Universal Declaration of Human Rights and all the fundamental
treaties on human rights (individual and collective) and the environment. Its main function will be to supervise and
regulate trade so that it conforms strictly to social (the conventions of the
International Labour Organisation - ILO) and environmental norms. This
definition is in direct opposition to the WTO's present objectives, which are
to impose free trade, to commercialise every aspect of human activity and all natural
resources, to generalise new rules uniquely and systematically in the interests
of the MNCs (and usually of their making).
Of course this necessitates a strict separation of
powers. There is no question of allowing the WTO, or any other organisation for
that matter, to have its own court. So the Dispute Settlement Body will have to
go.
The World Bank, or whatever stands in for it, would
regain its legitimacy if it was largely regionalised and had as its function to
make loans at low or zero interest rates and donations, conditional upon
express guarantees that they are used only in strict observance of social and
environmental norms and, more generally, basic human rights.
Unlike today's World Bank, the new one, the one the
world needs, would not seek to defend the interests of the creditors and force
the borrowers into submission to the market-king. This new bank would have as
its principal mission to defend the interests of the populations who receive
loans and donations.
As for the IMF in its new form, which in some respects
would resemble its original mandate, it should guarantee the stability of
currencies, fight speculation, control capital movements, take measures to
prohibit tax havens and fiscal fraud. To attain this last objective, it could
contribute, along with governments and regional monetary funds, to the pool of
different taxes (de Tobin-type taxes, Spahn-type taxes, taxes on Direct Foreign
Investment…).
All these avenues require a new, coherent, global
architecture, with its own hierarchy and division of powers. The cornerstone
should be the United Nations, provided that its General Assembly become the
true decision-making hub. This implies eradicating the status of permanent
member of the Security Council, and the veto that goes with it. The General
Assembly could delegate specific missions to ad hoc committees.
The UN could also be reformed, as Gilbert
Achcar (2002) proposes, by giving it a double-chamber system along the lines of
the US constitution or that of the USSR in 1923. There would be the Chamber of States, rather like the present
General Assembly, and the Chamber of Peoples, elected by direct suffrage with
proportional representation of the populations (G. Achcar, 2002, note 17, p.
122).
As a permanent body, alongside the Security Council,
which could only act on a General Assembly mandate, there could be an Economic
and Social Council like the present ECOSOC but with real powers issuing from a
clear General Assembly mandate. As a useful comparison, the Security Council
and the Economic and Social Council should not be given sweeping and
undemocratic powers comparable to those of the European Commission. The
Security Council and the Economic and Social Council should be subordinate to
the UN General Assembly.
Another thing: today, the UN usually plays the role of
an international fire-brigade or ambulance . In some cases, it simply serves as
an alibi or cover for military aggression waged by the world's most powerful
countries, as was the case in the intervention of the USA and its allies in the
first Gulf War in 1991 and in Somalia in 1992. Increasingly, it promotes the
interests of the most powerful MNCs - as in the case of the Global Compact initiative
taken by the Secretary General, Koffi Annan, in 2000.
The UN must turn its back on these practices, unworthy
of its initial mandate, and become (once more) the champion of a new global
economic and social order based on the Universal Declaration of Human Rights
and other international pacts and treaties on human rights (individual and
collective) and the environment.
We believe that it is necessary and possible to reform
the UN for three fundamental reasons: its charter is globally progressive and
democratic; the principle underlying its composition is democratic (one State =
one Vote) - even if it needs to be completed by a system of direct proportional
representation, as suggested above; during part of its past, in the 1960s and
1970s, the General Assembly adopted resolutions and made declarations that were
distinctly progressive (and which remain applicable, in principle) and set up
several useful institutions (the ILO, UNCTAD, the WHO…).
The situation of the World Bank and the IMF is quite
different. Their constitutions are antidemocratic, indeed frankly despotic, and
the US government's veto makes any significant change impossible in the
foreseeable future. The World Bank has never hesitated to violate UN
resolutions (particularly those of 1964 condemning South Africa and Apartheid,
and Portugal for maintaining its colonial empire). As for the WTO, even if, in
principle, its mode of representation is democratic (one State = one Vote), the
fairy godmothers that presided over its cradle sent it shooting off into an orbit
diametrically opposed to that of the interests of humankind. It has to be
prevented from doing any (further) harm as soon as possible.
One other question that has not yet been taken far
enough is that of an international legal system, an international judiciary,
independent of the other international instances of power, which would complete
the present system, mainly composed of the International Court at The Hague and
the young International Criminal Court. With the neo-liberal offensive of the
last twenty years, the laws of commerce have progressively taken over public
law. Undemocratic international institutions like the WTO and the World Bank
function with their own legal structures: the Dispute Settlement Body, part of
the WTO, and the ICSID (International Centre for Settlement of Investment
Disputes) which has taken on a disproportionate importance since the
multiplication of Bilateral Agreements on Investment (BAI). The UN Charter is
(regularly) violated by permanent members of its Security Council, the USA and
the UK in particular. New places where the rule of law does not apply have been
created. Prisoners deprived of all rights are held in Guantanamo by the USA.
After having impugned the International Court of the Hague where it was
condemned in 1985 for having attacked Nicaragua, the USA now refuses to
recognise the International Criminal Court.
All that is extremely worrying and requires urgent
initiatives to be taken to complete the international legal system. This means
elaborating or adopting international law on matters where there is an absence
of, or inadequate, legal definition. One example would be the
International Arbitration Tribunal for the debt, proposed by certain movements.
The idea is attractive, but the question is, what law would apply there? International Trade Law? That is, the trade
laws of the creditor States (almost 80% of loan contracts stipulate that the
competent legal authority is that of the USA or the UK)? If that were the case,
the borrowers are pretty sure to lose. Should there not first (or at least, at
the same time) be a redefinition of the law regulating relations between
borrowers and lenders? The question contains its own answer.
At the
beginning of this chapter, the limits of the proposals were emphasised. The
question which we have tried to answer was summarised as follows: how does one
move from an economy of indebtedness towards financing sustainable and socially
just development? To answer it, we have scanned a broad range of ideas, yet
without claiming to lay down a complete coherent set of proposals. Some
fundamental issues were not able to be addressed in the chapter even though
they constitute a necessary part of any alternative on both a national and a
global scale. Some of these issues will require specific elaboration: how to
weave the gender dimension into the proposals, so that they promote real
advances towards equality between men and women? Is the proposal to include
social clauses central to the quest to improve workers' rights internationally?
What about environmental clauses? What strategy should be adopted with regard
to multinationals?
Complementary
measures are dealt with in other documents prepared by different international
networks and movements such as ATTAC, CADTM, Via Campesina, Focus on the Global
South, the World Forum for Alternatives, the World Women's March, Jubilee
South… or adopted at large international meetings such as those of Saint Denis,
Paris (June 1999), Bangkok (February 2000), Geneva (June 2000), Dakar (December
2000) and Porto Alegre (the social movements' declaration at the World Social
Forum in Porto Alegre 2001, 2002, 2003 and in Mumbai 2004). For a broader
alternative view, these documents are well worth consulting.
[1]
This contribution is an entirely reworked and augmented version of a text
written in collaboration with Arnaud Zacharie, “ Guarantee the
satisfaction of basic human needs for all ”. It was the CADTM's
contribution to the second World Social Forum held in Porto Alegre in January
2002. The original text can be consulted on the CADTM's web-site www.cadtm.org The new additions are entirely the
responsiblity of the author. This contribution has been presented in Quito in
July 2004 during the first Social Forum of the Americas.
[2]
Sustainable development is defined as a development which "enables
fulfilment of present needs without compromising the ability of future
generations to fulfil theirs," cited by Passet, 2000, p.14. The concept of
sustainable development is criticised as it is usually associated with the idea
of continued growth. The issues raised by sustainable development are beyond
the scope of this work.
[3]
World Bank, WHO, UNDP, UNESCO, UNFPA, UNICEF, Implementing the 20/20
Initiative. Achieving universal access to basic social services, 1998,
www.unicef.org/2020/2020.pdf
[4]
The above-mentioned organisations estimate that it would cost an extra 80
billion dollars a year (at the dollar's 1995 value) to reach the amount
required for basic social services, on top of the 136 billion dollars now
spent.
[5] According to Forbes magazine 2001, in 2000 the joint assets of Bill
Gates, Larry Ellison, Paul Allen and Warren Buffett came to 160.6 billion
dollars.
[6] According to the 2003 edition of theWorld Wealth Report 2003,
produced by the wealth management consultants, Cap Gemini Ernst and Young
and the investment bank Merrill Lynch, in 2002 there were about 7.3 million
millionaires in dollars (i.e. about one thousandth of the world's population)
with about 27,300 billion dollars between them (not including their main place
of residence).
[7]
See Medecins sans Frontieres (2002), “ Acces aux medicaments et sante
publique universelle ” (Access to medicines and universal public
health) on the site of the World Social Forum.
[8]
See MSF cited above: “On internet, of the 1,223 new medicines to have
been marketed between 1975 and 1997, only 13 were designed to treat tropical
infectious diseases and half of those derived from veterinary research. Only
0.2% of the global budget for pharmaceutical research, which fluctuates between
50 and 60 billion dollars, is devoted to acute respiratory diseases,
tuberculosis and diarrhoea-type diseases, which together account for 18% of
global mortality”. In the same document, MSF explains that the
pharmaceutical company Aventis abandoned production of the only efficient drug
to treat sleeping sickness in 1994. The reason given was insufficient profits.
[9]
It is not enough for governments to guarantee basic needs, with the rest
depending on private initiative. For example, governments must ensure universal
access not only to primary, but also to secondary and higher education.
[10]
Source: World Bank, GDF, 2003. What is mentioned above is up to and including
2003 (at time of writing). It is unlikely that the
flows will become positive in 2004-2005.
[11]
See Hugo Ruiz Diaz's concise introduction in
“ La dette odieuse ou la nullite de la dette” (Odious or Invalid Debt),
his contribution at the 2nd Seminar on International Law and the
Debt organised by the CADTM in Amsterdam in December 2002.
Text available on the CADTM web-site www.cadtm.org
[12]
Cuba 1895-1898: In 1895, the poet Jose Marti, a Jacobite with ideas close to
those of socialism, started off an independence war. The whole country was at
war. Jose Marti organised the Liberation Army (more than 50,000 fighters) and
founded the Republic in Arms. Over 150,000 people came to live in the
rebel-held areas. Spain waged total war in 1896-97, with concentration camps;
some 400,000 people died there. But Spain lost, despite her 250,000 soldiers,
and had to grant autonomy in January 1898. The revolutionaries did not accept
and continued fighting. The USA declared war on Spain. After a brief campaign
when it got the support of the Cuban revolutionaries, the US Army took over the
island. Without recognising the Cuban republic, the USA signed a pact with
Spain whereby Spain renounced all claim to Cuba (Treaty of Paris, of 10
December 1898). 1898-1902: The USA occupied
the island for almost four years and obliged the members of the Constitutive
Assembly of 1901 to adopt the Platt amendment(1902). Cuba had to grant the USA
the right to intervene in the island to "preserve Cuban independence"
and to have a government t that would "protect life, property and
intellectual liberty ". Washington obtained the Guantanamo base, for an
indefinite period. The Republic of Cuba was founded on 20 May 1902. From that
moment until the revolutionary victory of 1 January 1959, Cuba was
under the neo-colonial domination of the USA (source: Yannick Bovy and Eric
Toussaint, 2001, Cuba : Le pas suspendu de la revolution, (The
suspended step of the revolution) Cuesmes – Belgium, 2001, p. 36-37).
[13]
In the case of Rwanda, the International Development Committee of the British
parliament explicitly evoked the notion of "odious debt" in pleading
for its cancellation: "A large part of Rwanda's external debt was
contracted by a genocidal regime… There are claims that these loans were used
to buy arms and that the present government, and in the last instance, the
population of Rwanda, should not have to repay these "odious" debts.
We recommend that the government should urge all bilateral creditors,
especially France, to cancel the debt contracted by the previous regime"
(in Report of the British International Development Committee, May 1998, cited
by Chris Jochnich, 2000)
[14]
See Pazmino's contribution at the 2nd Seminar on International Law
and the Debt organised by the CADTM in Amsterdam in December 2002. www.cadtm.org/pages/espanol/especuadorfreire.htm
[15]
In general, the poorer a country of the South, the higher the share of its debt
due to the IMF and the World Bank. In the case of many African countries
without strategic natural resources, more than 70% of their debts are due to
the Bretton Woods Institutions.
[16]
Dolus malus: a legal term meaning 'wilful misrepresentation'.
[17]
In“ Globalisation and its Discontents ”, Joseph
Stiglitz describes a situation that goes back to the time when he was
vice-president of the World Bank: “ A picture can be worth a thousand
words, and a single picture snapped in 1998, shown throughout the world, has
engraved itself in the minds of millions, particularly those in the former
colonies. The IMF's Managing Director, Michel Camdessus (…), a short, neatly
dressed former French Treasury bureaucrat (…), is standing with a stern face
and crossed arms over the seated and humiliated president of Indonesia. The
hapless president was being forced, in effect, to turn over the economic
sovereignty of his country to the IMF in return for the aid his country needed.
In the end, ironically, much of the money went not to help Indonesia but to
bail out the "colonial power's" private sector creditors. Officially,
the "ceremony" was the signing of a letter of agreement, an agreement
effectively dictated by the IMF though it still tries to keep up the pretence
that the letter of intent comes from the country's government!" in
Stiglitz, 2002, p. 40-41)
[18] For an analysis of the force majeure argument
in the case of debt cancellation, see Hugo Ruiz Diaz's
paper : “ La dette extérieure : mécanismes juridiques de
non paiement, moratoire ou suspension de paiement ” (External debt: the
legal mechanisms of non payment, moratorium or suspension of payment),
presented at the 1st International Seminar on International Law and the Debt,
organised by the CADTM in Brussels in December 2001.
[19] ILC, Draft article 31, A/CN, 4/315, ACDI 1978, II, vol. 1,
p. 58
[20]
Originally formulated thus: Contractus qui habent tractum successivum et
dependetiam de futurum, rebus sic stan, tibus intelligentur.
[21]
Charles Fenwick, International Law (3rd edition 1948): similarly, in
one of the definitive texts on common law, explains that "a tacit
condition, binding all contracts, is that they cease to be obligatory when
substantial changes arise in the state of affairs or conditions upon which they
were drawn up", in Black's Law Dictionary 1267 (6th
edition 1990). See also, in international jurisprudence, the sentence
pronounced by arbitration on 11th November 1912 in the affair of the
State loan between Turkey and Russia where we read, "… the exception of
force majeure … may be contested in international law" (Sentence by
arbitration, Recueil des Arbitrages internationaux, T.II, 1928, pp.545
ff.). Furthermore, the Argentine Civil Code stipulates that the debtor's
obligation ceases "when the benefit which constitutes the object of the
debt becomes physically or legally impossible, through no fault of the
debtor's" (Art. 724 and 888).
[22]
In 2000, the countries of the Periphery repaid approximately 343 billion
dollars (240 billion dollars in repayment of the principal and 103 billion
dollars of interest) while at the same time receiving fresh loans to the value
of about 248 billions. If they had refused to service the debt and had taken
out no fresh loans, they would have economised: 343 - 248 = 95 billion dollars
(Source: World Bank, GDF, 2001), i.e. more than the 80 billion needed to begin fulfilling
basic human needs. .
[23] The complete Spanish text of the sentence is
available on the CADTM's web site: www.cadtm.org/pages/espanol/olmos.pdf
[24] According to the Financial Times, the amount
recovered by the Philippine government was 658 million dollars, while Marcos is
estimated to have accumulated at least 5, even 10 billion dollars. The
procedure was complicated by the fact that the Swiss Supreme Court demanded
that a Philippine court pronounce judgement on the sum transferred by
Switzerland to a Philippine bank account. The late Marcos' entourage were
trying to claim the money. In July 2003, the Philippine Supreme Court finally
decided, by 12 votes to 0 and one abstention, that Marcos had acquired the
money at issue by illegal means, and that therefore it should be handed over to
the Philippine government. (Financial Times, 16/07/2003)
[25]
From Resistance to Alternatives, complete text available on the CADTM's web
site : www.cadtm.org
[26] On this subject, see the Alliance of Peoples of the
South creditors of the environmental debt www.ecuanex.apc.org/accion/,
work by Joan Martinez - University of Barcelona - and Aurora Donosio - Accion
Ecologica, Ecuador.
[27]
Such a proposal is bound to raise howls of protest from neo-liberals, in the
name of freedom and justice. However, they had no scruples about the
high-handed devaluation of the CFA franc (of the Franc Zone) in January 1994
and many other devaluations that enable the rich to get richer. The rich only
have to have part of their holdings in hard currency for that part of their
wealth to increase to a value inversely proportional to the devaluation. The
Franc Zone capitalists, knowing that devaluation was in the offing, bought hard
currency with "their" CFA francs. Once the CFA franc had been
devalued by 50% in January 1994, they had only to buy them back with their hard
currency to double their initial outlay. This occurred on a large scale and
none of the leading figures of the IMF or the World Bank were heard to
complain.
[28] In 2002, the French economist, Bruno
Jetin, published a very useful and readable book on the feasibility and
finalities of the Tobin tax. On the question of how much might be raised using
a Tobin-type tax (TTT), “100 billion dollars would seem a reasonable
estimate of the minimum revenue that might be levied by the TTT, without
excluding the possibility that it might be three times higher". As to how to use the revenues thus procured, B. Jetin says,
“ In our opinion, all the TTT revenues should be used for international
programmes of general interest in areas such as health or the environment, on
the one hand, and for national development programmes in the countries of the
South, on the other ”.. (Bruno Jetin, La taxe Tobin et la Solidarite
entre les Nations, (The Tobin Tax and Solidarity between Nations), Edition
Descartes et Cie, Paris, 2002).
[29] With reference to the investigations
of special reporters, of experts' working groups and of the UN Secretary
General.
[30] For example, Venezuela, an OPEC member, has signed
agreements with about a dozen Caribbean and Latin American countries -
including Cuba - whereby it sells them oil at "friendly" prices, much
lower than the price it charges the USA for which it is one of the main
suppliers.
[31]
"An explicit objective must be that of abolishing unemployment, which is
the main mechanism for social discrimination of the worst sort. All the debates
about the end of waged labour, and the wonders of free time and a well-rounded
lifestyle, are no obstacle to
this objective. Indeed, these matters cannot be properly addressed as long as
so many are excluded from the terms of the debate. This is why a generalised
reduction of working time is pivotal for finding an egalitarian solution to the
social crisis" (Husson, 1996). Such a project implies workers' control to
guarantee the full application of these measures, the rhythm and organisation
of work (no overtime allowed, no night-shifts where not socially necessary, no
piece-work
[32] As François Chesnais observed, "In
simple terms, this is precisely the most solid mechanism set up by financial
liberalisation for the transfer of the wealth of certain social groups and
certain countries to others. Any attack on the foundations of finance means
dismantling these mechanisms and therefore cancelling public debts, not only
those of the poorest countries, but also those of any country where the living,
breathing social forces refuse to see their government subject its citizens to
austerity budgets on the pretext of repaying the public debt." (Chesnais,
1998, Tobin or not Tobin?, p.11).
[33] Michel Husson, in a text destined
for the editorial committee of ATTAC France, advances a similar point of view:
"The IMF and the World Bank have lost all credibility, they are
universally denounced, criticised and opposed. They have been widely
discredited, which is why they must be abandoned or dismantled. Walden Bello,
of Focus on the Global South, talks of decommissioning them, the term used for
nuclear power stations. In other words, the Bretton Woods institutions must be
left behind and replaced by new ones, better suited to a new conception of
globalisation. No-one denies the need to dispose of institutions, and there is
no question of rallying to the ultra-liberal logic of the Meltzer report which
seeks, from a narrow viewpoint, to uphold the logic of the present way of
running the IFIs. Neither does this position imply a lack of concern about the
institutional terrain. The growing success of our demonstrations makes it all
the more relevant and necessary to build there. If indeed there is to be a
debate between the "abolitionists" - who want to replace the existing
financial institutions with new ones - and the "reformists" who
propose to transform the present institutions into new ones, then let it go
ahead without delaying the process. All are agreed upon the objective which is
to set up more democratic institutions, centred on the interests of the
citizens of the world." (Michel Husson, June 2001).
[34]"We
therefore consider that international financial institutions are necessary for
long-term action, but we do not trust the orientations and functioning of those
in place. What we expect from these institutions is, very specifically,
stability of the monetary system, the prevention of financial crises AND a
finance system which promotes development respectful of human rights, which we
will call, to keep it simple, sustainable development. Moreover, we expect
these institutions to function democratically" (Gus Massiah, June 2001).