Committee for the Abolition of Illegitimate Debt

CADTM is indignant that this particularly anti-democratic procedure is still in force at a time when good governance is at the heart of the recommendations of these institutions. A case of “Do as I say, not as I do”! Not to mention that the current president, James Wolfensohn, a New York banker but an Australian by birth, had to take out United States citizenship before being nominated in 1995.

CADTM is also indignant that World Bank World Bank
WB The World Bank was founded as part of the new international monetary system set up at Bretton Woods in 1944. Its capital is provided by member states’ contributions and loans on the international money markets. It financed public and private projects in Third World and East European countries.

It consists of several closely associated institutions, among which :

1. The International Bank for Reconstruction and Development (IBRD, 189 members in 2017), which provides loans in productive sectors such as farming or energy ;

2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;

3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.

As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.

leadership systematically goes to major names in banking or to former officers of the U.S. Defense Department, as was the case with the 1968 nomination of Robert McNamara, chief architect of the Vietnam war, and who used the World Bank as an effective geopolitical tool to serve the United States’ strategic allies.

It is clear that the World Bank and 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.

http://imf.org are still operating as if they were simply instruments in the service of the major Western powers (United States, Canada, Western Europe), the financial markets and trans-national corporations.

CADTM calls on the European administrators to block this unacceptable decision, as the United States dared to do in 2000 concerning an IMF nomination. Following the resignation of French Managing Director Michel Camdessus, the nomination of Caio Koch-Weser, then State Secretary at the German Ministry of Finance and European IMF candidate, was vetoed by the United States, after which the Europeans agreed on the choice of Horst Köhler.

It’s our belief, however, that they will not be blocking this nomination, being only too satisfied with the sharing of roles and the fact that they managed to nominate Spanish candidate Rodrigo Rato to lead the IMF in 2004! Yet how to explain that the presidency of the World Bank has never gone to a citizen of the Third World, in a front-line position when it comes to the challenges of human development?

One is justified in wondering if these institutions are capable of reform. Thereby posing the question of their legitimacy. For the CADTM, alternative international financial institutions are not only possible ... but urgently needed!