Committee for the Abolition of Illegitimate Debt

As Nathan Legrand writes in his article, “Around forty delegates, most of them being representatives of social movements (peasants’ movements, feminism, trade unionism, etc.), came together for this three-day long programme. This workshop was not just a CADTM workshop: it would not have been made possible without the active participation and financial support of the Sri Lankan Law & Society Trust (LST) and Movement for Land and Agricultural Reform (MONLAR). As participants came mostly from Sri Lanka and the two main national groups – Sinhalese and Tamil – were represented, the whole meeting could be held in three languages (Sinhala, Tamil, English) thanks to a hard-working team of simultaneous interpreters.”

To learn more about the social and political situation in Sri Lanka, read Nathan’s excellent article: “South Asia: New creditors and new forms of debtpeonage”.

We had fruitful discussions with a number of Sri Lankan activists and I gave an interview to one of the country’s main daily papers.

On top of the workshop, Nathan, Sushovan Dhar and I had several discussions about the CADTM’s activities in South Asia as well as in East Asia. We also planned Sushovan’s trip to South Africa on the occasion of the summit of BRIC heads of states, who will meet in Johannesburg from 25 to 27 July 2018. Sushovan’s trip was planned with the help of Patrick Bond Bond A bond is a stake in a debt issued by a company or governmental body. The holder of the bond, the creditor, is entitled to interest and reimbursement of the principal. If the company is listed, the holder can also sell the bond on a stock-exchange. , who is active in South Africa and is one of the organizers of the counter-summit. On the way Sushovan could stop over in Nairobi, Kenya, and meet CADTM contacts there. Indeed, for the past thirteen years, i.e. since the 7^th World Social Forum which was held in Nairobi in 2007, the CADTM has developed contacts with Kenyan organizations. Jawad went to Kenya in 2016 on behalf of the CADTM’s shared International Secretariat and the CADTM African coordination has planned an event there in the course of 2018.

In Negombo, a city some 40 km north of Colombo, Nathan and I had an important meeting with women and men who had been victims of microcredit loans and we reported on it in this article. The women belong to three communities: Muslim, Tamil and Sinhalese.

In Sri Lanka resistance to microcredit agencies is getting organized.

Nathan and I then went to Calcutta, a megalopolis of 14 million inhabitants in India, where Sushovan, is based . Sushovan set up a full programme of events. We were welcomed by the main trade union for 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 of India employees .

In collaboration with a cultural association, this trade union had invited me to give a lecture, on 16 April, on the topic of central banks, socialisation of the banking sector and illegitimate debts including those of large private corporations. There were about 120 participants, mainly central bank and public banks’ trade unionists (the TU for central banks’ employees is part of a larger federation of bank employees). My lecture was chaired by a former finance minister of the West Bengal government (West Bengal has 90 million inhabitants). We have to keep in mind that West Bengal was run by a coalition called Left Front for 34 years from 1977 to 2011. The coalition brought together the Communist Party of India (Marxist), All India Forward Bloc, the Revolutionary Socialist Party, the Marxist Forward Bloc, the Revolutionary Communist Party of India, the Biplabi Bangla Congress and the Communist Party of India.

Asim Kumar Dasgupta, the former Finance Minister who chaired my lecture, is a member of CPI (M), a party that has had a pro-China Maoist leaning since its inception in 1964 when it broke away from the Indian Communist Party, which was at the time dependent on Moscow. The Communist Party of India (Marxist) has more than a million members. Asim Kumar Dasgupta was Finance Minister for 24 years (1987-2011). He completed his studies in the US, where he wrote his PhD. He studied alongside Joseph Stiglitz. We can only be critical of the Left Front’s governmental management that eventually disappointed people through continually yielding to big capital and not sufficiently using its period in power to extend a series of positive but insufficient social reforms.

My lecture focused on the need to socialize the banking sector including a number of emergency measures to counter government offensives against public banks (see below), the need to foster all sorts of self-organized actions by social and grassroots movements, the need to take radical measures to break away from the capitalist system. Several questions were raised on how to assess experiments in Venezuela, Ecuador and Bolivia, particularly Venezuela, and I explained the limitations of such experiments. Members of the audience also asked me about China and I explained that it is a capitalist country with an imperialist policy that does not in any way provide an alternative to the US, though at the moment the US is more aggressive and dangerous. I added that debts contracted with China and Chinese investments should be audited. My answer came as a shock to some participants but most were in agreement.

After the lecture several activist and TU leaders came to tell us they had been convinced that both a citizen audit of the debt and emergency measures to socialize banks were urgently needed. On the following day we had a meeting with Sushovan in the TU building. Proposals for forthcoming collaboration were considered. They will be followed up by Sushovan.

On 17 April one of the two major Indian daily papers, The Hindu, which sells over one million copies, published a long interview with me talking about the international crisis and possible ways out 

It should soon be available in French on our website www.cadtm.org.

Here is the transcript of a section of the lecture I gave in Calcutta:
Public banks account for over two third of the Indian banking sector. They are deliberately slandered by the government, major media and the international financial press such as The Financial Times, with a view to accelerating the momentum towards privatization that started in the 1990s. Detractors of public services use this campaign to claim that if banks were completely run by the private sector, they would be far more efficient and would serve the general 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. much better. A number of bank fund embezzlement scandals by major Indian capitalists is grist to the mill of this campaign. One such instance involves capitalist Nirav Modi and the Punjab National Bank (PNB): the public bank granted him fraudulent loans and issued warrants that made it possible for him to borrow in Antwerp, Frankfurt, Hong-Kong, Mauritius and Bahrein without these transactions being recorded in the Indian PNB accounts. The Central Bank of India was thus not informed, neither of the amounts involved nor of the SWIFT codes associated with these foreign transactions. The tax swindle accounts for over 1.4 billion euros.

Such scams are a clear sign that the CEOs of those ‘public’ banks run them as cash cows for major Indian capitalist groups. A significant proportion of the loans granted by those banks go to big private corporations that borrow at a cheap rate then default even though they are still garnering profits. In the Indian press jargon they are called ‘wilful defaulters’.
Those responsible for recent scams, namely Nirav Modi and Vijay Mallya, escaped Indian law by leaving the country before any lawsuit was filed. The Finance Minister published a list of ‘wilful defaulters’, and while the private sector seems largely unwilling to call upon the law, the government seems prepared to recapitalize public banks to top up the losses. The recapitalization Recapitalization Reconstituting or increasing a company’s share capital to reinforce its equity after losses. When the banks were bailed out by the European States, they were most often recapitalized with no conditions attached and without the States having the decision-making power their participation in the banks’ capital should have given them. scheme amounts to $32 billion. The exorbitant amounts involved in the scams and wilful defaults, feed the demand for public banks to be privatized. A massive argument in this campaign is the high number of non-performing loans (NPLs), i.e. loans that have not been repaid for at least three months, in public banks – a stunning majority of those NPLs result from indebted private corporations’ defaults, whereas there is very little defaulting among the lower classes.

This should be perceived in an international context. NPLs account for 10% of loans in the Indian banking sector as a whole and 12.5 % in public banks. In June 2017, NPLs accounted for 46% of loans in Greece, 44% in Cyprus, 17% in Portugal, 13% in Slovenia, 12% in Bulgaria, Italy and Ireland, 11% in Hungary, 10% in Romania [1]. This indicates that the rate in India is not abnormal, This should be better known by Indian public opinion who would then be less alarmed, all the more so as in Europe a majority of NPLs pertain to private banks. In Italy NPLs account for twice India’s NPLs while the Indian population is fifteen times that of Italy.

However, even if the Indian situation is not as dramatic as made out by dominant discourse, it still demands radical solutions. The measures to be taken involve:

• retrieving damages capitalists inflicted on public banks from the assets of those corporations’ main shareholders;
• refusing to have taxpayers and/or savers with less than 100,000 rupees deposits (1,240 € [2]), i.e. 92% of them, pay for those bank consolidations;
• file lawsuits against senior executives of the banks involved and against beneficiaries;
• forbid public banks to carry out speculative transactions, trade in derivatives Derivatives A family of financial products that includes mainly options, futures, swaps and their combinations, all related to other assets (shares, bonds, raw materials and commodities, interest rates, indices, etc.) from which they are by nature inseparable—options on shares, futures contracts on an index, etc. Their value depends on and is derived from (thus the name) that of these other assets. There are derivatives involving a firm commitment (currency futures, interest-rate or exchange swaps) and derivatives involving a conditional commitment (options, warrants, etc.). , grant loans over a definite amount to private corporations, and force them to grant loans to households, the public sector, small and medium-sized enterprises, farmers, craftsmen and other independent workers;
• force large private corporations to find funds with the private sector at their own risks without any state guarantee;
• force all banking bodies, whether public or private, to increase the transparency of their accounts and, as a consequence, to do away with banking secrecy;
• force the Central Bank of India to carry out exhaustive in situ monitoring to put an end to the trend that has consisted of calling upon private auditing firms over the last years and to confine monitoring to remote appreciation based on elusive reports provided by the banks.

These are emergency measures that must lead the way towards a complete socialization of the Indian banking sector.

The slander campaign against the public banking sector in India ignores a significant lesson to be learned from the banking crisis that started in the US and in Europe in 2007-2008. At the time the Indian banking sector was hardly affected because deregulation was not as thorough as in other countries. It was forbidden to public banks, and to some extent to private banks too, to massively speculate on foreign markets, especially in the US and in Europe. Such relative financial protectionism in the Indian banking sector protected it from contamination.