Committee for the Abolition of Illegitimate Debt

Coinciding with the signing on December 9, in Buenos Aires, of the South Bank’s Founding Act, hundreds of social movements, networks, organizations and personalities from throughout Latin America and the world are presenting to the Presidents of Argentina, Bolivia, Brazil, Ecuador, Paraguay, Uruguay, and Venezuela, an Open Letter [1] expressing their expectation with regard to the creation of the new financial institution together with proposals intended to insure that the Bank can indeed contribute to the integration of the region’s peoples and the full enjoyment of human and environmental rights and the right to development.

The text manifests the movements’ conviction that this South-South entity must break with the experience of existing multilateral organisms such as 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.

, the IMF 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 , the IDB, and the Andean Development Corporation (CAF), “which are widely recognized today for their non-democratic, non-transparent, regressive, and disaccredited operations”. The South Bank must also contribute to overcoming "the negative experience of economic liberalization suffered by the region, with its consequences of ever more indebtedness and the constant draining of capital, deregulation, and the privatization of public patrimony and basic services.

Among other key points, which build on the proposals presented in June of this year, this Second Open Letter highlights the importance of the South Bank forming an integral part of a new regional financial architecture, which would also include the creation of a South Fund - with the functions of a regional 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 , and a common monetary instrument. It also underscores the need for transparency and participation of the social movements in both the negotiating phase as well as the eventual operation of the institution and calls on the Presidents to inform and consult with society and incorporate clear mechanisms of citizen control in the Bank´s establishment.

This Second Open Letter on the South Bank is signed, among others, by representative networks, movements, and personalities in Latin America such as the Hemispheric Social Alliance, the Andean Coordination of Indigenous Orgnizations, Jubilee South/Americas, Committee for the Abolition of Third World Debt (CADTM), Latindadd, the Network of Women Transforming the Economy Remte, Oid-LA, the Latin American Association of Political Economists Sepla, the Lutheran World Federation’s Advocacy Program on Illegitimate Debt, the Peace and Justice Service in Latin America, Nobel Peace Laureate Adolfo Pérez Esquivel, and Nora Cortiñas and Mirta Baravalle of the Mothers of May Square-Founder’s Line. Together with numerous other national, regional, and global organizations, they manifest in this statement the importance they attribute to the South Bank being a public entity; whose direction is exercised on an equal basis among the participating countries; that it be capitalized in a way that is proportionate to the capacity of each economy; that its operations be transparent and austere; and that in essence, it promote the integration in solidarity of the peoples and countries of the region on the basis of concrete objectives such as full employment, food security and sovereignty, the guarantee of healthcare and housing, the universalization of free and public basic education, the redistribution of wealth, environmental protection, and the overcoming of inequities such as those of gender and ethnicity. As in their First Open Letter, endorsing movements and organizations specifically reject the possibility that the South Bank reproduce the model and priorities of the existing international financial institutions by providing financial backing for megaprojects that are destructive of local communities, the environment, and biodiversity or infrastructure schemes such as IIRSA, which responds to a logic of “integration” designed by global capital interests and the huge TNCs.

Titled “For a South Bank Oriented to a Sovereign and Sustainable Development Matrix for the Integration of the Continent in Solidarity”, the Open Letter further affirms the need for the new Bank to be an instrument “to safeguard and channel savings within the region, interrupting the recurrent cycles of exaction of national and regional efforts through manœuvres and deals on the basis of public indebtedness and securities, the subsidization of privileged and/or corrupt local and international private economic and financial groups, and constant backing for speculative transborder capital flows.”