On the 16th of October 2015 representatives from PERC attended the European Citizen’s Assembly on Debt in Brussels. The event, organised by CADTM and Attac, brought together activists, politicians and organisations from across Europe to challenge dominant discourses around debt (we spent too much, now we must pay) and to discuss democratic ways forward.
The event came at a very important moment. Europe faces an impasse. Greek voters were asked in June this year whether they accepted the bailout terms offered their nation, to which 61 per cent of the populous rejected the offer. Despite this decisive blow to the troika
Troika: IMF, European Commission and European Central Bank, which together impose austerity measures through the conditions tied to loans to countries in difficulty.
IMF : https://www.ecb.europa.eu/home/html/index.en.html , the conditions set, including drastic cuts and privatisation, will be carried out by the Syriza government led by Alexis Tspiras.
That same month saw the publication of the preliminary report by the Truth Committee on Public Debt, which provided evidence for odious and illegitimate debts being sought by the International Monetary Fund
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 and the European Central Bank Central Bank The establishment which in a given State is in charge of issuing bank notes and controlling the volume of currency and credit. In France, it is the Banque de France which assumes this role under the auspices of the European Central Bank (see ECB) while in the UK it is the Bank of England.
ECB : http://www.bankofengland.co.uk/Pages/home.aspx .
The report makes clear that the IMF knew they were making loans to Greece with measures that were undemocratic, ineffective, and would lead to serious violations of socio-economic and human rights. Similarly, debts owed to the ECB
European Central Bank The European Central Bank is a European institution based in Frankfurt, founded in 1998, to which the countries of the Eurozone have transferred their monetary powers. Its official role is to ensure price stability by combating inflation within that Zone. Its three decision-making organs (the Executive Board, the Governing Council and the General Council) are composed of governors of the central banks of the member states and/or recognized specialists. According to its statutes, it is politically ‘independent’ but it is directly influenced by the world of finance.
https://www.ecb.europa.eu/ecb/html/index.en.html were accrued only to serve the interests of the financial institutions, allowing the major European and Greek private banks to dispose of their Greek bonds. Big Finance was saved while the Greek people are made to suffer and told that they are the lazy ones.
Information on the protest
The event sought to look at odious debt and the importance of public scrutiny of debt across all of Europe, framed around the important work conducted by the Truth Committee in Greece.
Key themes of the day included: calling for democratic values and processes; the illegitimacy of institutional responses; and, false narratives around debt.
The presentations and conversation during the event showed the need for continued and extended citizen led debt audits as a means of education, awareness-raising and a tool for assessing what debts should be repaid and which ones should not.
More broadly, organisers of the event advocated the need for a public space to think, debate and debunk austerity and audit public debt. The secondary aim was to mobilise and coordinate the fight against the “debt system”.
The day was followed by a protest against austerity and TTIP that assembled in front of the European Parliament.
In the morning panel we first heard from Thanos Contargyris from Attac Greece on the illegitimacy of Greece’s public debt and the unsustainability of subsequent austerity measures, in which cutbacks in public services is used to pay for debts accumulated and sustained also through high levels of military spending and 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. payments. See his slides here.
Marco Bersani, ATTAC Italy, continued the discussion of illegitimate and odious public debt. Public debt in Italy is now at approximately 135 % of GDP – an increase from 119 % before the last three democratically questionable elections. Showing the odious nature of debt servicing, spending on 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. is at 5 % of Italy’s GDP GDP
Gross Domestic Product Gross Domestic Product is an aggregate measure of total production within a given territory equal to the sum of the gross values added. The measure is notoriously incomplete; for example it does not take into account any activity that does not enter into a commercial exchange. The GDP takes into account both the production of goods and the production of services. Economic growth is defined as the variation of the GDP from one period to another. whilst public investment has decreased by 20 % over the last seven years, making it 5% lower than the EU average.
The next set of panellists turned to concrete strategies for collaboration and public education on debt and austerity. Aïcha Magha from ACiDe / FGTB Wallonne showed the potential of using visual tools and animation, with their video from the campaign ‘Who profits from debt?’ being viewed over 350,000 times in just two weeks. Michel Husson from CAC France presented the results from their citizen’s audit on public debt, suggesting that 59% of public debt is illegitimate as it has been accrued through excessive interest rates in the 1990s and fiscal gifts during the 2000s.
The case for auditing local authorities was made by Yago Alvarez Barba, PACD (Spanish Citizen Debt Audit Platform), and Ludovica Rogers, Debt Resistance UK. Barba discussed the work of PACD to date, explaining how working at the local level makes debt activism more accessible for the wider public as well as pointing toward their work on sectoral audits – focussing for example on cutbacks in the health sector.
Rogers outlined the crucial work by Debt Resistance on local government borrowing from private banks, the use of brokers, and the cost and conditions of LOBO loans. See her presentation here.
The afternoon session continued on the theme of how debt audits and activism can, and need to, bridge across the European, national and local levels. Marie-Dominique Vernhes from Attac Germany presented Conrald Schuhlers’ text on the cancellation of German debt after World War II.
Economist Bruno Théret called for a shift in monetary regime to end the cycle of indebtedness and austerity, arguing for the use of local, alternative and complementary currencies.
The afternoon panel also heard from prolific leaders in national and European party-political campaigns against odious and unjust debt.
Zoe Konstantopoulou, former President of the Greek Parliament, provided a passionate account of her experience in leading the truth commission on debt. See her talk in full here (in English).
Philippe Lamberts, MEP Groups of the Greens, spoke of how Greece had been purposely humiliated by European institutions as to act as a warning sign for other countries to not follow the route embarked upon by Tsipras.
Miguel Urban, Podemos, continued the critique of the role of the European institutions in using debt to blackmail national governments and called for grassroots movements and new forms of politics.
The day was concluded by Eric Toussaint, CADTM International, arguing that debt is a central issue for democratic movements today and one which needs to be addressed in order for progressive governments to have a future. Click here for a video of Eric’s speech (in French).