Bankers saved, human rights sacrificed

16 April 2008 by Eric Toussaint , Damien Millet

The randomness of numbers sometimes throws up some striking coincidences. Behind the shadow plays conjured up by the zealous servants of neoliberal globalisation, the brutal backstage reality revealed itself this week, through the publication of two international statistics.

On the one hand, the amount of Official Development Assistance ODA
Official Development Assistance
Official Development Assistance is the name given to loans granted in financially favourable conditions by the public bodies of the industrialized countries. A loan has only to be agreed at a lower rate of interest than going market rates (a concessionary loan) to be considered as aid, even if it is then repaid to the last cent by the borrowing country. Tied bilateral loans (which oblige the borrowing country to buy products or services from the lending country) and debt cancellation are also counted as part of ODA. Apart from food aid, there are three main ways of using these funds: rural development, infrastructures and non-project aid (financing budget deficits or the balance of payments). The latter increases continually. This aid is made “conditional” upon reduction of the public deficit, privatization, environmental “good behaviour”, care of the very poor, democratization, etc. These conditions are laid down by the main governments of the North, the World Bank and the IMF. The aid goes through three channels: multilateral aid, bilateral aid and the NGOs.
(ODA) distributed by the rich countries in 2007 is approximately 100 billion dollars. According to the Organisation for Economic Co-operation and Development OECD
Organisation for Economic Co-operation and Development
OECD: the Organisation for Economic Co-operation and Development, created in 1960. It includes the major industrialized countries and has 34 members as of January 2016.
(OECD), this aid has decreased by 8.4% to exactly 103.7 billion dollars. This downward trend is important, since it reveals the fiasco of international commitments.

Not one summit of the eight most industrialized countries, the G8 G8 Group composed of the most powerful countries of the planet: Canada, France, Germany, Italy, Japan, the UK and the USA, with Russia a full member since June 2002. Their heads of state meet annually, usually in June or July. , ends without a promise to increase ODA, particularly towards Africa, the continent which is most affected by poverty. Since 1970, the rich countries have promised to increase it to 0.7% of their Gross National Income (GNI). This figure is respected by only five countries: Norway, Sweden, Luxembourg, Denmark and the Netherlands. Last place is occupied by the US, with a figure of 0.16%...

From a global perspective, the ODA does not rise above 0.28% of the GNI, despite a series of statistical manipulations designed to camouflage the low value of the aid money given by rich countries: in fact, they include in the ODA dubious figures such as debt relief, the expenses of the US to rebuild Iraqi and Afghan infrastructures that it destroyed, the tuition fees of students from the South who study in the North, the salaries of expatriated staff and the multitude of consultants who defend the interests of donor countries or who produce costly and useless reports |1| ... Furthermore, this aid is largely directed towards countries of geostrategic 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. to the donor country, with flagrant disregard for the real needs of the countries of the South: apart from Iraq and Afghanistan, the major beneficiaries of US aid are the Sudan, Colombia, and obviously Israel.

During the 2005 G8 summit in Gleneagles (Scotland), the commitments were clear: a significant increase in ODA, and more importantly, a doubling of the ODA to Africa by 2010. According to the OECD, this implied “lifting aid from USD 80 billion in 2004 to USD 130 billion in 2010 (at constant 2004 prices).” The verdict is clear: “Overall, most donors are not on track to meet their stated commitments to scale up aid and will need to make unprecedented increases to meet the targets they have set for 2010 |2|.” This amounts to saying that these targets will remain unmet. Indeed, for nearly forty years, the words of a G8 leader have been cheap…

On the other hand, according to the International Monetary Fund 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.
(IMF), the potential cost of the current international crisis is approximately 1,000 billion dollars, a result of the so-called ‘subprime’ crisis that emerged in the summer of 2007 and continues to wreak havoc. In a report published on the 8th of April, the IMF has estimated this cost at precisely 945 billion dollars for the international financial system, of which 565 billion is directly linked to the system of risk-laden mortgage Mortgage A loan made against property collateral. There are two sorts of mortgages:
1) the most common form where the property that the loan is used to purchase is used as the collateral;
2) a broader use of property to guarantee any loan: it is sufficient that the borrower possesses and engages the property as collateral.
loans. Here is what happened: to obtain astronomical profits on their liquidities Liquidities The capital an economy or company has available at a given point in time. A lack of liquidities can force a company into liquidation and an economy into recession. , credit institutions loaned out to an already heavily indebted sector of the population, within the poor or middle classes, at a fixed and medium rate for the first two years to entice clients, before the rate increases sharply during the third year. The lenders asserted to the borrowers that the property that they were buying, which also acted as guarantee against the loan, would rapidly rise in value due to ascending prices in the real estate market. In 2007 the real estate bubble burst. The crisis then spread to multiple financial actors which had devised extraordinary debt structures and had carried out enormous operations off the books.

The ministers for Finance of Western countries have strongly reacted to the publication of the IMF figure, as if it was dangerous to show the extent of the crisis |3|. Everywhere across the countries of the North, whether they are conservatives or social-democrats, governments apply neoliberal policies that are particularly devastating to the majority of their citizens. The level of social services is voluntarily and severely curtailed, the profits of big capital are ignored, while the rate of VAT, which affects the poor to a greater degree than the rich, is increased.

These same governments, which are unable to help their needy populations, quickly came to the rescue of private interests. On the menu: nationalization of troubled banks, exchange of devalued and distressed debt securities for fresh cash, cash injection, rescue plans, decreased interest rates Interest rates When A lends money to B, B repays the amount lent by A (the capital) as well as a supplementary sum known as interest, so that A has an interest in agreeing to this financial operation. The interest is determined by the interest rate, which may be high or low. To take a very simple example: if A borrows 100 million dollars for 10 years at a fixed interest rate of 5%, the first year he will repay a tenth of the capital initially borrowed (10 million dollars) plus 5% of the capital owed, i.e. 5 million dollars, that is a total of 15 million dollars. In the second year, he will again repay 10% of the capital borrowed, but the 5% now only applies to the remaining 90 million dollars still due, i.e. 4.5 million dollars, or a total of 14.5 million dollars. And so on, until the tenth year when he will repay the last 10 million dollars, plus 5% of that remaining 10 million dollars, i.e. 0.5 million dollars, giving a total of 10.5 million dollars. Over 10 years, the total amount repaid will come to 127.5 million dollars. The repayment of the capital is not usually made in equal instalments. In the initial years, the repayment concerns mainly the interest, and the proportion of capital repaid increases over the years. In this case, if repayments are stopped, the capital still due is higher…

The nominal interest rate is the rate at which the loan is contracted. The real interest rate is the nominal rate reduced by the rate of inflation.

In 2000, the United Nations Development Programme UNDP
United Nations Development Programme
The UNDP, founded in 1965 and based in New York, is the UN’s main agency of technical assistance. It helps the DC, without any political restrictions, to set up basic administrative and technical services, trains managerial staff, tries to respond to some of the essential needs of populations, takes the initiative in regional co-operation programmes and co-ordinates, theoretically at least, the local activities of all the UN operations. The UNDP generally relies on Western expertise and techniques, but a third of its contingent of experts come from the Third World. The UNDP publishes an annual Human Development Report which, among other things, classifies countries by their Human Development Rating (HDR).
(UNDP) advanced the figure of 80 billion dollars over ten years as the amount required to guarantee universal access to drinking water – yes, universal –, a decent diet for children, primary education for all, basic health care, including gynecological care. Thus, the challenge was to find 800 billion dollars in total. They were not found, and the living conditions of billions of individuals have continued to decline. The abrupt rise in the price of foodstuffs, due to the development of the production of biofuels, has now thrown tens of millions of inhabitants of Africa, Latin America and Asia into absolute poverty. Food riots have erupted in Haiti, Egypt, the Ivory Coast, Senegal, Cameroon, Burkina Faso and this is only the beginning. Instead of approaching the Millennium Development Goals, however tentative these may be, we are getting further away at great speed. The current banking crisis will cost 1,000 billion dollars, and will prove, that in the case of the 800 billion proposed by the UN to guarantee some basic human rights, it was the political will that was lacking. It is a flagrant violation of the Universal Declaration of Human Rights and other international treaties. It is unacceptable and unforgivable. And it is the very logic of the economic model that should be questioned.

Eric Toussaint is president of CADTM Belgium (Committee for the Abolition of Third World Debt, ), author of : The World Bank : A Critical Primer, Pluto Press, London, Between The Lines, Toronto, David Philip, Cape Town, 2008

Damien Millet is spokesperson for CADTM France, coauthor with Eric Toussaint of Who owes Who?, Zedbooks, London, 2004

Translated by Diren Valayden with the collaboration of Christine Pagnoulle


|1| See ‘Les faux-semblants de l’aide au développement ‘, Le Monde diplomatique, July 2005

|2| OECD, Press release, 4 April 2008

|3| Dépêche AFP, «Les pays riches reprochent au FMI son chiffrage trop sévère de la crise», 10 avril 2008.


Eric Toussaint

is a historian and political scientist who completed his Ph.D. at the universities of Paris VIII and Liège, is the spokesperson of the CADTM International, and sits on the Scientific Council of ATTAC France. He is the author of Bankocracy (2015); The Life and Crimes of an Exemplary Man (2014); Glance in the Rear View Mirror. Neoliberal Ideology From its Origins to the Present, Haymarket books, Chicago, 2012 (see here), etc. See his bibliography: He co-authored World debt figures 2015 with Pierre Gottiniaux, Daniel Munevar and Antonio Sanabria (2015); and with Damien Millet Debt, the IMF, and the World Bank: Sixty Questions, Sixty Answers, Monthly Review Books, New York, 2010. Since the 4th April 2015 he is the scientific coordinator of the Greek Truth Commission on Public Debt.

Other articles in English by Eric Toussaint (389)

0 | 10 | 20 | 30 | 40 | 50 | 60 | 70 | 80 | ...


Damien Millet

professeur de mathématiques en classes préparatoires scientifiques à Orléans, porte-parole du CADTM France (Comité pour l’Annulation de la Dette du Tiers Monde), auteur de L’Afrique sans dette (CADTM-Syllepse, 2005), co-auteur avec Frédéric Chauvreau des bandes dessinées Dette odieuse (CADTM-Syllepse, 2006) et Le système Dette (CADTM-Syllepse, 2009), co-auteur avec Eric Toussaint du livre Les tsunamis de la dette (CADTM-Syllepse, 2005), co-auteur avec François Mauger de La Jamaïque dans l’étau du FMI (L’esprit frappeur, 2004).

Other articles in English by Damien Millet (45)

0 | 10 | 20 | 30 | 40



35 rue Fabry
4000 - Liège- Belgique

00324 226 62 85