Committee for the Abolition of Illegitimate Debt

Between August 15 and September 7, 2008, the Caribbean was severely hit by four successive hurricanes (Fay, Gustav, Hanna, and Ike) that devastated several regions with disastrous consequences in particular for the peoples of Cuba, the Dominican Republic, and Haiti. We express our fraternal solidarity with these peoples, and we call on the entire world community to respond with concrete support in accordance with the level of need.

In Haiti, even before the balance Balance End of year statement of a company’s assets (what the company possesses) and liabilities (what it owes). In other words, the assets provide information about how the funds collected by the company have been used; and the liabilities, about the origins of those funds. is completed, it is known that some 500 people lost their lives. The number of victims reaches 800,000. Every region of the country was severely affected with the destruction of much strategic infrastructure (bridges, roadways, industrial installations, etc) and the loss of a high percentage of food production. Communication with entire departments has been cut off. The two most affected cities are Gonaïves and Cabaret. Gonaïves, the country’s third largest city with a population of some 300,000 inhabitants and which in 2004 suffered terrible floodings that caused the death of more than 3,000 people, is now still 85% submerged below water. In Cabaret more than 80 persons have died, most of them sleeping children and babies. More than 80,000 persons have sought refuge in provisional centers and over the past 10 days, 10 refugees died of hunger at those centers.

The application of neoliberal policies since the end of the ‘80s has dramatically reduced the capacity of the State to administer a territory that faces a generalized environmental, social, and economic crisis, including the rapid disappearance of forest cover, the installation of free-zones in fertile agricultural lands, the destruction of food security with an increase in dependency on the importation of agricultural goods from the United States (Haiti is now the world’s third largest importer of rice from the United States.). These circumstances, the result of policies imposed by the International Financial Institutions (IFIs), have increased the vulnerability of the country, including in particular its most empoverished sectors, as well as the accumulation of illegitimate debt.

The presence in Haiti of a UN peace and stabilization mission (MINUSTAH) since June, 2004, has contributed to a worsening of the situation through the weakening of national institutions. When the catastrophic floods hit the city of Gonaïves in September, 2004, less than 40% of the emergency assistance requested ever arrived; today the tragedy is repeated without any preventive works having been undertaken to protect the population of Gonaïves. The MINUSTAH costs nearly US$ 600 million annually. That is an enormous amount of resources for a country where the per capita annual income is US$ 450 and whose total annual exports are around US$ 500 million; resources that are not being invested for the reconstruction of the country and its institutions. In addition, the Haitian people, the true creditors, face the risk of being charged for the expenses of the MINUSTAH, an amount that would be added to the already illegitimate debt claimed of the country.

The IFIs and lender countries continue to collect from Haiti payments on debt claims that are estimated at more than US$ 1.6 billion; a debt that has increased scandalously some 40 times through the complacency of the governments which have held power over the past 34 years. It is important to underscore that the external public debt of Haiti grew from US$ 40 million in 1970 to US$ 844 million in 1986, to US$ 1.3 billion in 2005, and today it is over US$1.6 billion, even though the majority of Haitian governments never stopped paying faithfully.

It is paradoxical to observe that the debt stock Debt stock The total amount of debt continues to increase rapidly despite the so-called debt relief initiatives launched since 2006 and the restructuring decided by the Paris Club Paris Club This group of lender States was founded in 1956 and specializes in dealing with non-payment by developing countries.

in December 2006. In March, 2006, 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 and 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.

integrated Haiti into the Highly Indebted Poor Country Initiative (HIPC Heavily Indebted Poor Countries
HIPC In 1996 the IMF and the World Bank launched an initiative aimed at reducing the debt burden for some 41 heavily indebted poor countries (HIPC), whose total debts amount to about 10% of the Third World Debt. The list includes 33 countries in Sub-Saharan Africa.

The idea at the back of the initiative is as follows: a country on the HIPC list can start an SAP programme of twice three years. At the end of the first stage (first three years) IMF experts assess the ’sustainability’ of the country’s debt (from medium term projections of the country’s balance of payments and of the net present value (NPV) of debt to exports ratio.
If the country’s debt is considered “unsustainable”, it is eligible for a second stage of reforms at the end of which its debt is made ’sustainable’ (that it it is given the financial means necessary to pay back the amounts due). Three years after the beginning of the initiative, only four countries had been deemed eligible for a very slight debt relief (Uganda, Bolivia, Burkina Faso, and Mozambique). Confronted with such poor results and with the Jubilee 2000 campaign (which brought in a petition with over 17 million signatures to the G7 meeting in Cologne in June 1999), the G7 (group of 7 most industrialised countries) and international financial institutions launched an enhanced initiative: “sustainability” criteria have been revised (for instance the value of the debt must only amount to 150% of export revenues instead of 200-250% as was the case before), the second stage in the reforms is not fixed any more: an assiduous pupil can anticipate and be granted debt relief earlier, and thirdly some interim relief can be granted after the first three years of reform.

Simultaneously the IMF and the World Bank change their vocabulary : their loans, which so far had been called, “enhanced structural adjustment facilities” (ESAF), are now called “Growth and Poverty Reduction Facilities” (GPRF) while “Structural Adjustment Policies” are now called “Poverty Reduction Strategy Paper”. This paper is drafted by the country requesting assistance with the help of the IMF and the World Bank and the participation of representatives from the civil society.
This enhanced initiative has been largely publicised: the international media announced a 90%, even a 100% cancellation after the Euro-African summit in Cairo (April 2000). Yet on closer examination the HIPC initiative turns out to be yet another delusive manoeuvre which suggests but in no way implements a cancellation of the debt.

List of the 42 Heavily Indebted Poor Countries: Angola, Benin, Bolivia, Burkina Faso, Burundi, Cameroon, Central African Republic, Chad, Comoro Islands, Congo, Ivory Coast, Democratic Republic of Congo, Ethiopia, Gambia, Ghana, Guinea, Guinea-Bissau, Guyana, Honduras, Kenya, Laos, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Myanmar, Nicaragua, Niger, Rwanda, Sao Tome and Principe, Senegal, Sierra Leone, Somalia, Sudan, Tanzania, Togo, Uganda, Vietnam, Zambia. ); the same year the Interamerican Development Bank (IDB), at its annual Assembly of the Board of Governors, promised to cancel all outstanding claims against the five most impoverished countries of the continent (Haiti, Nicaragua, Guyana, Bolivia, Honduras). It should be noted that this cancellation was subject to the fulfillment of the conditionalities defined by the World Bank and the IMF. In practice, it is increasingly evident that these initiatives do not lead to a resolution of the problem of the country’s indebtedness and that nothing substantial has changed. In order to illustrate the cynicism of these policies in the case of Haiti, it must be remembered that 4 months after the flooding and destruction of Gonaïves in September, 2004, Haiti was compelled to pay the World Bank US$ 52.6 million in arrears, a payment which impeded urgent investments and led to a further deterioration in the population’s precarious quality of life.

In the face of the present catastrophe, the government of Haiti made an initial announcement offering US$ 900,000 to assist the victims; at the same time it continues to effectively pay debt service Debt service The sum of the interests and the amortization of the capital borrowed. amounting to approximately US$ 6,000,000 monthly. This situation should not and cannot continue.

For all of the above, we, the undersigned participants in the I South-North Study and Strategy Meeting of the International Campaign on Illegitimate Debt, representing 50 global and regional networks and organizations from 36 countries around the world, gathered in Quito, Ecuador between September 9 –15, 2008, reiterate our solidarity with the people of Haiti and call on all the respective lenders and credit agencies to immediately and unconditionally cancel the external debt unjustly claimed of Haiti. We also stand with and support the social forces of Haiti in their demand that the Haitian government repudiate and immediately cease payment of debt service claims until a comprehensive and participatory audit is made of the country’s public debt, and we demand that restitution and reparations be made for all that has been unjustly paid so as to guarantee social, economic, and ecological justice. It is time to settle the enormous debt owed to the people of Haiti.

Quito, Ecuador, September 15, 2008

Signed

Jubilee South, Africa Jubilee South, Jubilee South/Americas, Jubilee South Asia-Pacific Movement on Debt and Development, European Network on Debt and Development EURODAD, Jubilee USA Network, CADTM Belgium, CADTM Ecuador, African Network on Debt and Development AFRODAD, Lutheran World Federation Program on Illegitimate Debt, LATINDADD, Southern Peoples’ Ecological Debt Creditors Alliance, Norwegian Church Aid, SLUG- Norway, Debt and Development Coalition of Ireland, Observatory on Debt in Globalization of the Spanish State, French Plataform on Debt and Development, Aktion Finantzplatz -Switzerland, Jubilee Debt Campaign-Great Britain, Jubilee Scotland, Jubilee Australia, ATTAC Japan, Freedom from Debt Coalition Philippines, Equity Equity The capital put into an enterprise by the shareholders. Not to be confused with ’hard capital’ or ’unsecured debt’. Justice Working Group Bangladesh, Indian Social Action Forum, INFID Indonesia, KAU Indonesia, National Debt Group-Ecuador, Jubilee Peru Network, Jubilee South Brazil, PAPDA Haiti, Dialogue 2000 Argentina, Jubilee South Colombia, “In Debt with Rights” Campaign-Colombia, CADTM Colombia, Red Sinti Techan-El Salvador, Economic, Social, Cultural and Environmental Rights Platform–Uruguay, ANEEJ Nigeria, Jubilee Zambia, Economic Justice Network Malawi, Campaign Against Debt-Mali, National Forum on Debt and Development-Ivory Coast, CADTM Morrocco, Southern Africa Economic Justice Network