Press release

The CADTM calls on the members of the European Parliament to vote against the new EU loan to Tunisia and demands the immediate suspension of Tunisia’s debt repayments

26 February 2014 by CADTM International

On 13 February 2014, the European Parliamentary commission on international commerce gave its go-ahead for the European Union to accord a heavily-conditioned loan of €300 million to Tunisia. The draft project adopted by the commission would hold the Tunisian government to strictly applying the austerity measures imposed by the International Monetary Fund (IMF). This project will be discussed in a plenary session on 16 April.

In the opinion of the CADTM, this project is contrary to the interests of the population and to the promises made following the North African popular uprisings of 2011.

The effects of this would be to burden Tunisia with greater debt repayments, to the detriment of the vital needs of the people. This year alone, the Tunisian State has planned to make €2 million in foreign debt repayments, which is three times the health budget, and seven times the budget for employment and professional training! Far from being intended to aid Tunisian development, this loan is being granted to impose austerity measures on the people under the pretext of “supporting the effort for fiscal consolidation within the IMF1 framework.” In 2013, the transitory government concluded a structural adjustment Structural Adjustment Economic policies imposed by the IMF in exchange of new loans or the rescheduling of old loans.

Structural Adjustments policies were enforced in the early 1980 to qualify countries for new loans or for debt rescheduling by the IMF and the World Bank. The requested kind of adjustment aims at ensuring that the country can again service its external debt. Structural adjustment usually combines the following elements : devaluation of the national currency (in order to bring down the prices of exported goods and attract strong currencies), rise in interest rates (in order to attract international capital), reduction of public expenditure (’streamlining’ of public services staff, reduction of budgets devoted to education and the health sector, etc.), massive privatisations, reduction of public subsidies to some companies or products, freezing of salaries (to avoid inflation as a consequence of deflation). These SAPs have not only substantially contributed to higher and higher levels of indebtedness in the affected countries ; they have simultaneously led to higher prices (because of a high VAT rate and of the free market prices) and to a dramatic fall in the income of local populations (as a consequence of rising unemployment and of the dismantling of public services, among other factors).

program with 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.
that includes, among other measures, the recapitalisation of Tunisian banks, labour law reform, the freezing of wages and job creation in the public services, retirement and health care Care Le concept de « care work » (travail de soin) fait référence à un ensemble de pratiques matérielles et psychologiques destinées à apporter une réponse concrète aux besoins des autres et d’une communauté (dont des écosystèmes). On préfère le concept de care à celui de travail « domestique » ou de « reproduction » car il intègre les dimensions émotionnelles et psychologiques (charge mentale, affection, soutien), et il ne se limite pas aux aspects « privés » et gratuit en englobant également les activités rémunérées nécessaires à la reproduction de la vie humaine. reform, cuts corporation tax, and a 22% reduction in subventions for energy and basic foodstuffs.

It was precisely against these measures that a popular movement of protestation spread throughout the country at the beginning of January, obliging the provisional government, which had tried to impose new taxes on the transport sector, to step back.

The application of these austerity measures, by Tunisia, is an explicit condition for the European Union loan, “...the disbursement [...] to Tunisia should be strictly consistent with the provisions of the Financial Regulation, the provisions governing the guarantee fund mechanism, as well as conditional on successful programme reviews under the IMF’s financial arrangement and the implementation of the reform measures agreed in the Memorandum of Understanding between the Commission and Tunisia.” It will be up to the European Commission to verify that all the conditions in the loan agreement are fully respected. In other words, the Tunisian government will be forced to apply austerity policies that will more deeply impoverish the population.

The CADTM calls on the members of the European parliament to:

  • vote against this loan project;
  • give assistance to Tunisia that is made up of donations without conditions;
  • respect their own promises to suspend Tunisian repayments to foreign creditors for the amount of time needed to carry out an audit of Tunisian debt.

In 2011, more than 100 European parliamentary members signed an appeal launched by the CADTM and the Euro-deputies Marie-Christine Vergiat and Gabi Zimmer. This audit must lead to the unconditional abolition of the odious and illegitimate parts of the debt. On the 10 May 2012, the European Parliament passed a resolution that, “Considers the public external debt of the countries in North Africa and the Middle East to be odious debt Odious Debt According to the doctrine, for a debt to be odious it must meet two conditions:
1) It must have been contracted against the interests of the Nation, or against the interests of the People, or against the interests of the State.
2) Creditors cannot prove they they were unaware of how the borrowed money would be used.

We must underline that according to the doctrine of odious debt, the nature of the borrowing regime or government does not signify, since what matters is what the debt is used for. If a democratic government gets into debt against the interests of its population, the contracted debt can be called odious if it also meets the second condition. Consequently, contrary to a misleading version of the doctrine, odious debt is not only about dictatorial regimes.

(See Éric Toussaint, The Doctrine of Odious Debt : from Alexander Sack to the CADTM).

The father of the odious debt doctrine, Alexander Nahum Sack, clearly says that odious debts can be contracted by any regular government. Sack considers that a debt that is regularly incurred by a regular government can be branded as odious if the two above-mentioned conditions are met.
He adds, “once these two points are established, the burden of proof that the funds were used for the general or special needs of the State and were not of an odious character, would be upon the creditors.”

Sack defines a regular government as follows: “By a regular government is to be understood the supreme power that effectively exists within the limits of a given territory. Whether that government be monarchical (absolute or limited) or republican; whether it functions by “the grace of God” or “the will of the people”; whether it express “the will of the people” or not, of all the people or only of some; whether it be legally established or not, etc., none of that is relevant to the problem we are concerned with.”

So clearly for Sack, all regular governments, whether despotic or democratic, in one guise or another, can incur odious debts.
, considering that the debt was taken on by dictatorial regimes, mostly through the personal enrichment of the political and economic elite and the purchasing of arms, often used to oppress their own populations” (article 6).

Renaud Vivien
Co- general secretary of CADTM Belgium
Tel: +32 4 97 04 79 99
renaud at
CADTM – Committee for the Abolition of Third World Debt
345, Avenue de l’Observatorie - 4000 LIÈGE

Fathi Chamkhi
Spokesman for RAID (Member of the ATTAC and CADTM networks)
+216 55 52 23 78

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