Committee for the Abolition of Illegitimate Debt

This logic continued until the middle of the first decade of this century. Then in 2004-2005, improvements in the commodity markets permitted exporting countries to accumulate exchange reserves, which some have used to lessen their burdensome domination by 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 : Argentina, Brazil, Indonesia, the Philippines, and Uruguay have all made anticipated reimbursements.

Yet no countries have taken alternative paths to capitalism, which is heading us all straight into a brick wall both socially and ecologically, even if Argentina and Ecuador have been giving their creditors a hard time. Between December 2001 and March 2005, Argentina suspended repayment of 90 billion dollars, and held out against its private creditors, who were forced to accept a 65% decrease in the value of the bonds in their possession. In 2008, after an audit at the request of Ecuadorian President Rafael Correa, Ecuador refused the reimbursement of 70% of its debt to private creditors. This debt had been found to be illegitimate, and was finally bought back at 35% of its nominal value: the government thus saved 7 billion dollars, which were reallocated to social expenditures.

The crisis that started in 2007-2008 has touched the developed countries, and Europe has been hit the hardest. Europeans must learn from the suffering endured by the populations in the South over the last three decades. In the North, as in the South, the mainstream media has been making the people feel guilty, because they are supposedly living above their means. From this point of view, there is only one terrible solution to propose: austerity, sacrifice and severe deprivation, in the sole aim of ensuring the repayments to the creditors.

In daily life, payments are made against invoices, which attest that goods have been purchased or that services have been provided. In the case of public debt, where is the invoice? If debt there is, it has three causes: the increase in interest rates 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. at the beginning of the 1980s, tax advantages to businesses and the wealthy, and the current crisis provoked by the banks and other private financial institutions. The people are in no way responsible, they do not live above their means, since basic human rights are often far from being guaranteed, and the invoice served does not mention goods and/or services to their advantage. It is the creditors who are living above their means. Must we the people repay their debt?

The only way to answer this question is to undertake a critical analysis of the history of this debt. A ‘citizens’ audit’ is the most appropriate tool for performing this analysis: it is up to all of us to understand the origin of the debt, and to point out who is responsible for it. An audit will highlight the portion of the debt that is illegitimate, which we should refuse to pay and so be abolished. In France, during the summer of 2011, NGOs, trade unions and political parties created a collective for the auditing of public debt (CAC, see www.audit-citoyen.org). The appeal the collective issued calling for a citizens’ audit received 58,000 signatures in six months.

Issued nationally, this demand was quickly retransmitted throughout France. Dozens of local grass roots committees sprung up over night. The will to start this audit reflects the anxiety and desire to act, which French citizens are experiencing as the European Union encounters waves of austerity “justified” by the debt. If we are going to pay, we want to know why. We want to decide what it is acceptable to pay for and what is not. To achieve this, an audit is absolutely necessary.

In December 2011, the two programmes of Là-bas si j’y suis on France Inter, hosted by Daniel Mermet, presenting the action of the CADTM, met with great success. In the weeks that followed, there were numerous requests for information and contacts. Public opinion is overwhelmingly convinced that French public debt is illegitimate and is in favor of having it audited.

On 14 January, 2012, the CAC organized its first day of activities bringing together committee members seeking information and coherent forms of action in Paris. About fifty people were expected, but one hundred and twenty showed up. Something is really happening. The number of requests to the speakers to help launch local committees has increased exponentially. The following day, at the invitation of ATTAC and Mediapart, more than 1100 people turned up at the Espace Reuilly also in Paris, for an information exchange session on the theme ’Their debt, our democracy’. An extra conference was improvised on the pavement in front of the building for the people who could not enter the hall in which there were only 700 seats. Another great step forward had been taken.

By the beginning of March 2012, more than 110 local groups had been formed. Frequently, working subgroups find data for the overall analysis or start working on an audit of the local debt owed by municipalities, public hospitals, and public housing organizations. Others prepare street actions or analyze the local impact of austerity measures. People are coming forward, organizations are being set up, and the offensive has started. These undertakings are essential for democratically taking back decision-making power, which has been confiscated by creditors and the financial markets, if we are to finally break the taboo surrounding the question of whether or not the public debt must be reimbursed.

Translated by Mike Krolikowski and Charles La Via