Committee for the Abolition of Illegitimate Debt

Eric Toussaint: After a year and a half of Collor’s presidency, what is the situation now in Brazil?

Lula: It has become quite clear for Brazilians that president Collor’s neo-liberal policy is a failure. Despite all the promises, nothing has been solved; inflation Inflation The cumulated rise of prices as a whole (e.g. a rise in the price of petroleum, eventually leading to a rise in salaries, then to the rise of other prices, etc.). Inflation implies a fall in the value of money since, as time goes by, larger sums are required to purchase particular items. This is the reason why corporate-driven policies seek to keep inflation down. has decreased, but the social cost in terms of unemployment, agrarian policy, wages, health and education has been extremely high. This means that it is now urgent to make counter-proposals geared towards the economic growth of Brazil, the redistribution of wealth to compensate the workers for their losses as a result of the plan.

But all this must be done in conjunction with a major re-organisation of the social movement, otherwise, if it remains confined to the struggle over institutional issues, the P.T. is going to become highly vulnerable. And, if we are to succeed in standing up to the government, the question of alliances with other progressive forces is also crucial.

E.T.: Not long ago, the headlines of the weekly magazine, “The Economist”, were; “Latin America is for sale”. What is the situation as regards the sale of national companies? And what is the position of the P.T.?

Lula: The IMF IMF
International Monetary Fund Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.

http://imf.org wants the indebted countries to sell their state enterprises to help pay off the foreign debt. Our position is clear on this. We defend the state control of all companies in strategic sectors. On the other hand, there is no objection to the privatisation of the companies nationalised under the military regime and the companies of lesser importance, such as textiles. Those companies belonging to the strategic sectors, such as oil, iron and steel, water, the ports, electric power … must be under state control. Our struggle to prevent these companies being privatised favours their democratisation. It is important that these companies should be opened up so that they can be administered by civil society. It is important that there should also be union leaders running them, groups from civil society must be involved in the administration so that, as a whole, they are transformed into assets belonging to the community. In no way can we consent to national assets being privatised in order to pay the external debt. In fact, up until know the government hasn’t got very far with its privatisation policy because there have been no buyers. But, if it was only up to the government, everything would already be privatised. Another thing to remember, is that this urge to privatise is devoid of any popular support - the Argentine example is there for all to see – and there privatisation has brought nothing but calamity.

There is a total incompatibility between Third World development policy and refunding the debt

E.T.: And where does the P.T stand with regards to the external debt?

Lula: It is our opinion that no Third World country is in a position to pay the debt. We believe that any Third World government which takes the decision to carry on refunding the external debt is opting for the road to ruin. There is a total incompatibility between Third World development policy and refunding the debt. We maintain that there should be an immediate moratorium on the debt and we demand an audit be carried out on its history to find out just where the money came from, to find out if the loan was contracted by the state or some other public administration or whether it was a private initiative, to find out what the money was spent on, and so on. All this must be done so that we can get a reliable picture of just what was going on.

And then, with the economies deriving from the non-payment of the debt, we will be able to set up a development fund to finance research and technological innovation, teaching, health, land reform: a development policy corresponding to the needs of the whole Third World. This development fund would be managed by the country itself. It would be controlled by an authority, as yet to be created, comprising the National Congress (Parliament), the trade union movements, the political parties; they would form a commission which would deal with the administration of the fund. An international political initiative is also required. A united front must be set up by the debtor countries to confront the creditors. And it is also necessary for the third world countries to unite so that each government understands that its problems are no different from those of the other Third World countries. By itself, no country can possibly resolve the problem of the debt.

It is also important to bear in mind that the discussion of the external debt should not be between governments and bankers but on an inter-governmental level. Another thing that must be done is to transform the question of the debt into a political issue. Merely discussing the problem of the debt is not enough; what has got to be done is to think about the necessity of a new international economic order. We cannot go on selling raw materials for next to nothing while we pay a fortune for manufactured products. This series of measures cannot be carried through without political action. Political action is the pressure exerted by social movements. This means that the question of the debt must be transformed into something that the population takes into its own hands.

A united front must be set up by the debtor countries to confront the creditors. And it is also necessary for the third world countries to unite so that each government understands that its problems are no different from those of the other Third World countries. By itself, no country can possibly resolve the problem of the debt

E.T.: Six years ago, Fidel Castro launched an international campaign based on the theme “the debt cannot be paid”. After a good start, this campaign seems to have got bogged down through lack of interest Interest An amount paid in remuneration of an investment or received by a lender. Interest is calculated on the amount of the capital invested or borrowed, the duration of the operation and the rate that has been set. . Now, one has the impression that Bush [1] is riding high with his”initiative for the Americas". [2] How do you explain that?

Lula: It is a fact that it was the Cuban government which launched this debate and there were a number of highly constructive international meetings on the subject. But what is happening in Latin America is that the economic situation is so bad that the majority of the workers just do not have the time to think of medium-term objectives. Often our struggle is focused on immediate goals. It is a fight for survival. And under this pressure, left wing organisations do not devote enough time and energy to medium and long-term objectives. We are attempting to find solutions for unemployment and problems of hunger without making a sufficient link-up with the foreign debt. As a party, we think that it is important to put this issue on the agenda; and the same applies at the level of the trade unions, because, unless we solve the debt problem, we won’t solve the problem of income distribution, inflation, or development either. But just to come back for a moment to the causes of the weakness in the debt campaign, it has to be said that there is a lack of international co-ordination among the Latin-American trade union organisations and this is above all due to the fact that, in each of the countries concerned, the movement is insufficiently developed.

E.T.: And for the continent as a whole? What can be said about the organisation at that level?

Lula: During the Latin-American left-wing forum in Sao Paulo, in June 1991, the question of the foreign debt was tabled. This is an issue which is sufficiently important to unite the left.

The question will be put on the agenda of the second meeting which takes place in Mexico City, in June 1992.

Another thing that must be done is to transform the question of the debt into a political issue

E.T.: And what about socialism? Is this still a possible option?

Lula: I continue to believe in it. I still believe that the only hope for mankind is a fairer world in which wealth is distributed in a more equitable way. We have a great contribution to make. There are millions of us on the surface of the Earth who want to build socialism. But socialism must not be the reflection of what went on in Eastern Europe. The Workers’ Party has always condemned the single party system, the lack of freedom or the right to strike for the trade union movement. We think that democracy, a multiparty system, the freedom and autonomy of the trade unions, the right to strike, freedom of speech, are all prerequisites of socialism. If these don’t exist, then it is not socialism. The failure of socialism in Eastern Europe is not to be blamed on socialists but on the bureaucracy. It also should be added that today, everyone is eager to speak about the collapse of Eastern European “socialism”, but few are prepared to discuss the necessary solidarity with Cuba, the people of Panama or those of Africa. One of our prime acts of solidarity must be the defence of Cuba.

*This interview was first published in the review of the CADTM n°4-5, October-November 1991