Committee for the Abolition of Illegitimate Debt

From the perspective of both Pretoria and the Bank, the highlight of the first week was $8.5 billion in Just Energy Transition Partnership (JET-P) financing that Western powers are directing – 97% as loans, just 3% in grants – towards Eskom’s supposed decarbonisation, as well as electric vehicle export subsidies (benefiting mainly German auto makers) and a probably-fictional green hydrogen industry (led by ultra-polluter Sasol).

The JET-P deal was stale, having been announced a year earlier in Glasgow. In the meantime it was repeatedly derailed when other distractions intervened: Russia’s invasion of Ukraine, energy crises pushing up the cost of solar and wind power (to the point local Independent Power Producer contracts are now unaffordable for privatised renewable-energy generation), other inflationary pressures leading to rapid 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. rate hikes, and the crash of most currencies against the US dollar.

In a context of broken multilateralism – witnessed by Ramaphosa’s repeated failures to acquire Intellectual Property waivers on Covid vaccines and treatment at the World Trade Organisation WTO
World Trade Organisation The WTO, founded on 1^st January 1995, replaced the General Agreement on Trade and Tariffs (GATT). The main innovation is that the WTO enjoys the status of an international organization. Its role is to ensure that no member States adopt any kind of protectionism whatsoever, in order to accelerate the liberalization global trading and to facilitate the strategies of the multinationals. It has an international court (the Dispute Settlement Body) which judges any alleged violations of its founding text drawn up in Marrakesh.

– just the revival of the small Western JET-P gesture stole the COP27 show.

And at the same time, the 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.

provided another $500 million loan for what it considers to be Eskom’s Komati coal-fired generator’s decarb. Malpass, who was Donald Trump’s rogue appointee in 2019, even personally visited the site last weekend.

As he reported back at the COP27 on Wednesday, “Developing complex projects like this takes a long time as will implementation. That helps explain the key role played by the World Bank Group working with Eskom, the South African federal and local governments, and the JET-P partners as part of the country platform.” (Affected workers and communities were not worth mentioning, or talking to.) Malpass bragged of Komati, “The World Bank is proud to lead this successful approach to reducing emissions.”

But leaving leadership of Eskom’s decarbonisation pilot to Malpass is asking for trouble. Last month, an Extinction Rebellion and DebtForClimate.org protest at the Bank’s Johannesburg office drew scores of community and environmental activists insisting not only on existing Eskom debt cancellation, since a 2010 Medupi coal-fired power plant credit of $3.75 billion was the World Bank’s largest-ever project loan, and it occurred when Malpass’ predecessor Robert Zoellick knew full well that Hitachi had bribed the African National Congress with a free 25% local co-investor share Share A unit of ownership interest in a corporation or financial asset, representing one part of the total capital stock. Its owner (a shareholder) is entitled to receive an equal distribution of any profits distributed (a dividend) and to attend shareholder meetings. .

In 2017, when he was deputy U.S. finance minister testifying to Congress, Malpass (correctly) accused the Bank of malfeasance, remarking of its staff, “They’re often corrupt in their lending practices, and they don’t get the benefit to the actual people in the countries. They get the benefit to the people who fly in on a first-class airplane ticket to give advice to the government officials in the country.”

Asked by congressional finance committee leader Maxine Waters, “Do you have an example of that?,” Malpass didn’t hesitate: “Well, for example, we have countries such as South Africa that are deteriorating rapidly as their government is unable to provide efficiency and effectiveness... South Africa is heavily indebted and not making progress and is not being well served by its relationships with international financial institutions.”

The revelation was logical, in the wake of Hitachi’s 2015 prosecution under the U.S. Foreign Corrupt Practices Act, in part because the then Eskom chair, Valli Moosa, was also a key member of the ANC Finance Committee. (Ramaphosa later named Moosa the leader of the Presidential Climate Change Commission.)

But there were plenty of other fingerprints, including on Eskom’s whites-only electricity infrastructure dating to the first World Bank loan to South Africa, in 1951, and several more through 1967. Even eight years after apartheid ended, the Bank made a venture capital investment in what became a massive white-owned coal mine – Tendele – bordering Hluhluwe-iMfolozi nature reserve (Africa’s oldest), displacing hundreds of residents but without having obtained legally-required environmental permission.

On October 20, 2020, leading anti-coal activist Fikile Ntshangase was assassinated there, at a crucial point in the struggle against Tendele’s expansion, resulting in her lawyer Tembeka Ngcukaitobi demanding reparations: the return of mine profits worth millions of dollars to the victimised community, which includes World Bank payoffs as an original investor.

The anti-Bank protesters also demanded an end to the $2 million initial financing of a Richards Bay Liquefied Natural Gas (LNG) terminal that began in 2019. At both Richards Bay and Komati, Eskom CEO Andre de Ruyter repeatedly told the Bank and other JET-P partners he would ideally find R85 billion for two new methane gas generators with 4000MW capacity. Tragically, the JET-P inflow now frees up De Ruyter’s revenues to pursue those plans, even though methane is more than 80 times more potent than CO2 over the next twenty years.

Moving Eskom from decarbonisation to methanisation will, in turn, make those South African export products reliant upon gas-fired electricity much more prone to international climate sanctions, a threat Ramaphosa openly fears.

And the methane is also likely to be sourced from Cabo Delgado, Mozambique, which is the site of a war zone with nearly one million people displaced and several thousand corpses, and a $100 million World Bank investment.

The Bank’s website claims it is concerned about the Islamic insurgency “threatening the economic potential of lucrative LNG investments in the area. The arrival of regional troops has helped stabilise the situation to a degree.” Not true: in spite of Ramaphosa’s authorisation of more than 1000 South African troops to defend Paris-based TotalEnergies’ $20 billion Cabo Delgado gas processing plant and the surrounding area, in the wake of French president Emmanuel Macron’s mid-2021 visit to Pretoria, the war against slippery insurgent forces is at best stalemated.

And as Mozambique’s gas is eventually extracted and sent to Europe for combustion, the worsening climate crisis will cause more cyclones in the fast-heating Mozambique Channel, like Kenneth which in 2019 was the African coastline’s most intense ever, with 225 kph winds.

In September, former U.S. Vice President Al Gore called for Malpass to be fired, due to his “ridiculous” climate denialism, but the problem is evident when other Bank staff push methane gas projects or demand Medupi debt repayment.

In all this, South African officials play a pernicious official role, one that was called out by Basani Baloyi of the Institute for Economic Justice on Thursday in a COP27 briefing: “The World Bank’s Vice President of Integrity, Leonard McCarthy, a former Director of the Directorate of Special Operations (Scorpions) with close relations to the ruling party, refused a request to investigate the corruption associated with the [Medupi] loan.”

Hence, she went on, “The call for the cancellation of Eskom’s odious debt Odious Debt According to the doctrine, for a debt to be odious it must meet two conditions:
1) It must have been contracted against the interests of the Nation, or against the interests of the People, or against the interests of the State.
2) Creditors cannot prove they they were unaware of how the borrowed money would be used.

We must underline that according to the doctrine of odious debt, the nature of the borrowing regime or government does not signify, since what matters is what the debt is used for. If a democratic government gets into debt against the interests of its population, the contracted debt can be called odious if it also meets the second condition. Consequently, contrary to a misleading version of the doctrine, odious debt is not only about dictatorial regimes.

(See Éric Toussaint, The Doctrine of Odious Debt : from Alexander Sack to the CADTM).

The father of the odious debt doctrine, Alexander Nahum Sack, clearly says that odious debts can be contracted by any regular government. Sack considers that a debt that is regularly incurred by a regular government can be branded as odious if the two above-mentioned conditions are met.
He adds, “once these two points are established, the burden of proof that the funds were used for the general or special needs of the State and were not of an odious character, would be upon the creditors.”

Sack defines a regular government as follows: “By a regular government is to be understood the supreme power that effectively exists within the limits of a given territory. Whether that government be monarchical (absolute or limited) or republican; whether it functions by “the grace of God” or “the will of the people”; whether it express “the will of the people” or not, of all the people or only of some; whether it be legally established or not, etc., none of that is relevant to the problem we are concerned with.”

So clearly for Sack, all regular governments, whether despotic or democratic, in one guise or another, can incur odious debts. has been made.” But the COP27 also gives Baloyi and climate justice activists a chance to demand further-reaching climate reparations, in part to cover Loss&Damage expenses, which she defined as a “moral obligation.”

Again, former Shanduka Coal tycoon Ramaphosa’s interests are the opposite, to reject any liability for climate damage, even though South Africa’s historic emissions rank 16^th highest at 30 billion tonnes, adding 500 million more each year.

But mimicking the dogmatic, unethical U.S. position against acknowledging any liability, one of Ramaphosa’s COP27 delegates claimed on Tuesday, “there are a set of rules vis-à-vis funding arrangements and no attempt must be made to reopen them.”

For the self-interested Pretoria delegation – strongly allied with local corporate fossil-fuel abusers in the National Business Initiative and Business Unity South Africa – this logically refers to the Paris Climate Agreement’s provision that the 2015 deal “does not involve or provide a basis for any liability or compensation.”

Breaking free of this insidious influence – combining Western imperial financing sources, supine politicians, high-polluting local corporates promoting a sub-imperial climate policy stance, and the climate-debt-denialist World Bank – has never been more urgent. But with leaders like Ramaphosa and Malpass, it’s never seemed more unlikely.