Hugo Chavez, Nestor Kirchner et Inacio Lula: Not the same kettle of fish

Make the public understand the connection between the lack of resources for health and education and the payment of foreign debt is no easy task for the social movements. And it is made even more difficult by the fact that the governments make it difficult to get information on the extent of their countries’ indebtedness and on adjustment measures enforced by the International Monetary Fund (IMF). Eric Toussaint, president of the Committee for Cancellation of the Thirld World Debt (CADTM) explains that the alliance between governments and the ruling class is one of the reasons why the idea of an audit that would expose how the debt was contracted still is taboo. “Governments and ruling classes don’t like to question this fact because they have interests in maintaining a high level of indebtedness” he told us. For Toussaint, a sovereign decision of the governments to investigate on the payment of the debt and to demand its cancellation is necessary. “What kind of sanction could this yield ? Will the United States invade Brazil ?" He asked ironically. Toussaint underlined the advantages of control on capital flows implemented by the Venezuelan government and showed that contrary to what is claimed by the business world such measure does not deter investors. "The country risk rating is the same for Venezuela as for Brazil. What investors are attracted by is purchasing power."

Brasil de Fato - How do you explain such resistance to tackling the debt problem?

Eric Toussaint - There are two reasons. Governments do no want to deal with this issue. The Brazilian government, for instance, wants a social pact between the big capital and the people. President Luiz Inácio Lula da Silva represents this pact. He doesn’t want to deal with the debt issue because the Brazilian bourgeoisie - whose income is largely based on loan revenues - has obvious economic assets in the debt payment. This upper class “invests” in the international financial markets or “invests” in its own country by lending money to the State, which generates a huge internal debt. Of course, they don’t want the president to question the debt payment. This would affect them as a social class. And Lula doesn’t want to stand up against them, or against the IMF, or against the World Bank. He insists that the orthodox monetary policy which demands a budgetary surplus of more than 4.5% mustn’t be questioned. The second reason is that as a rule social movements in Latin America do not enough relate the lack of resources for social needs to the consequences of debt payment. It is a mistake. If there is no money for land reform or for education, this is related to debt payment.

BF - Is this related to the cousin concept of the "unpayability" of the debt?

Eric Toussaint - The debt has been paid, it is payable. The problem is that the debt payment is unacceptable. It is scandalous that the people should have to pay for a debt that they never contracted. The finance ministry uses the revenue of taxes paid by the population for it. Tax revenues in Brazil are among the highest in the world. Poorer people pay very heavy duties when they buy fuel or food. This tax, which generates revenues, should be invested in social expenditures such as new job opportunities, health, and education. It is currently used to pay the external and internal public debt. This is scandalous, unfair, and inacceptable. A debt that has been paid many times, that was contracted by a military dictatorship, or indeed by democratic regimes that contracted new debts in order to pay the old one hasn’t any legitimacy.

BF - Could the audit of the debt be a useful tool ?

Eric Toussaint - The conclusion of an audit of the external debt would be that it is illegitimate. On this basis, it is possible to think that a social movement could organize to demand the suspension of payment. The repudiation of debt can be founded on legal basis, on the argument of a sovereign government that would claim it does not acknowledge it. It is possible to say: “I will not pay”. The Argentinian government suspended the payment of the public debt due to private creditors at the end of December 2001. This amounts to a hundred billion dollars that Argentina simply doesn’t pay back. There haven’t been any sanctions, there hasn’t been any intervention, nothing has happened. The consequence of this has been economic growth. If Argentina can do it, why not Brazil, which has a more powerful economy ?

BF - But is it not an isolated decision?

Eric Toussaint - It shouldn’t be isolated. Chávez proposed Kirchner and Lula to invest resources into health and education with the creation of an international humanitarian fund to replace the IMF instead of paying their creditors. This is Chávez’ proposal. In the mean time Venezuela still paying its external debt. The difference is that part of the country’s oil revenues is devoted to social programmes. Chávez’ is the only government in the capitalist world that takes advantage of popular mobilisations and actually uses a large part of its tax revenues to improve the people’s living conditions. This is extraordinary. Because Venezuela is in a different situation from Argentina or Brazil (where payment is more difficult because they cannot rely on high oil revenues), Venezuela will not decide on the non payment of the debt on its own. The decision can’t be taken alone. Reprisals are often mentioned, but what reprisals ? The US will not invade Brazil because its government no longer pays its external debt, will they ?

BF - The Brazilian government implements a budgetary surplus at a higher rate (4.5%) than the 3.75% demanded by the IMF. How can this be accounted for ?

Eric Toussaint - I think that Lula’s strategy is an electoral one. In running for the presidential elections of 2006, he claims to be the candidate of the bourgeoisie and at the same time the people’s candidate (PT). But this will not work. The bourgeoisie will say: “Thank you Sr Lula, you have been very useful for us but now we have our own candidate”. Lula’s government does the opposite of what had been promised by the PT: a break away from the pattern applied by Fernando Henrique Cardoso. If the IMF and the World bank support Brazil, it is because Lula actually conforms to the same pattern.

BF - Another issue that shows the vulnerability of this economic policy is the control on the flows of capital. What do you think of the strategy of Venezuelan government to maintain the control on currency exchange rates?

Eric Toussaint - I enthusiastically support Chávez’ policy on that matter. The control over exchange rates is essential because it prevents speculation against the national currency and because it prevents a massive outflow of capital. In Brazil and Argentina there is no such control; which makes the evasion of capital quite easy. In Venezuela capitalists must get the state’s permission to convert bolivars into euros or into dollars.

BF - Is the thesis that control on capital deters investors valid?

Eric Toussaint - Not at all. It is wrong. Control prevents capital from flowing out, not from flowing in. There is an inflow of capital to Venezuela because people have purchasing power. When the Venezuelan government decides giving out about 500,000 scholarships of 100 dollars each for people to get educated, what is the consequence? How will the Venezuelans use this money? They buy food, clothes, this money is injected into the economy as purchasing power. It stimulates the economy through the internal market. This is basic. This is not socialism, this is not marxism, this is different, but it makes good sense.

BF - Why are governments so reluctant to control the flows of capital if it is as simple as that ?

Eric Toussaint - Because the Brazilian bourgeoisie for instance will not accept any control on its money or what it does with it. The bourgeoisie told Lula that if the government wants to serve its interest, it cannot use this kind of control. This is the only explanation. In this respect the policy carried out by the Minister of Economics and Finance, Antonio Palocci is actually Lula’s. The Brazilian president knows very well what he is doing. To say the contrary would be to underestimate him. What Chávez is doing shows that it is possible to apply other economic measures without provoking financial and economic sanctions against Venezuela. Despite the control on exchange rate, the risk rating is the same for Venezuela as for Brazil. If sanctions against Venezuela were considered, its risk rating would be twice or three times higher. Such measures can be taken, to improve the country’s economic situation and to control the capitalists.

BF - What do you think of the political process that takes place in Venezuela beyond the economic sphere ?

Eric Toussaint - The secret of the process, which is one of Chávez’ big assets, is the capacity of the Venezuelan people to mobilize in order to defend what it have gained. If Chávez recovered the presidency on April 13, 2002 when the bourgeoisie, the catholic hierarchy and part of the army had made an alliance to push him out, it is because the people invaded the streets to defend him. The issue of popular mobilisation is prominent. Labels can prove dangerous. Venezuela still is a capitalist society in which the public sector, such as the oil company PDVSA, has a place it has lost in other capitalist countries. Venezuela is a capitalist country with a left government that relies on popular mobilisations and carries out social reforms. In the international context this is not so bad. Unfortunately, in the current conjuncture, socialist revolutions are not on the agenda. We can’t compare the Bolivarian revolution with the guerrilla of the 26 July Movement in Cuba that destroyed Batista’s state apparatus. In Venezuela, the state apparatus has not disintegrated. Moreover, with his ’Missions’, Chávez can circumvent ministers in order to plough ahead in his social reforms.

BF - What are the limits of the process?

Eric Toussaint - As Chávez puts it himself, the limits are related to the debate between Stalin and Trotsky, when Trotsky claimed that socialism in one country alone couldn’t work. An international strategy is necessary. And Chávez claims there is no solution on a national level. The future of the Bolivarian process highly depends on what’s going on in the country and with the capacity of Venezuelan people to defend what it has gained and its president. We have to be attentive to what is going on in neighbouring countries. I consider support and solidarity with Venezuela as important as the social mobilisations in Europe, in Asia and in Africa. For all the riches of the process, if Venezuela remains isolated, we cannot be optimistic about its future. We saw how the United States intervened to support the coup on April 11, 2002, along with Aznar. If there is no international development, the forces against Chávez could act again.