Committee for the Abolition of Illegitimate Debt

The CADTM is pleased at the prospect of collaboration between Tunisia and Ecuador to audit Tunisia’s debt.

At the request of the President of Tunisia, Ecuador’s President, Rafael Correa, has just announced that he will be sending a team of economists to Tunisia to provide advice and share Share A unit of ownership interest in a corporation or financial asset, representing one part of the total capital stock. Its owner (a shareholder) is entitled to receive an equal distribution of any profits distributed (a dividend) and to attend shareholder meetings. his country’s experience with debt auditing. The assistance comes after a member of Tunisia’s National Constituent Assembly introduced a bill to set up a debt audit commission.

The CADTM, which participated in the audit of Ecuador’s debt and actively supports the campaign against 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. being conducted in Tunisia by RAID (a member of the CADTM and ATTAC networks), is pleased at the prospect of collaboration between Tunisia and Ecuador. As in Ecuador, the audit could lead to concrete results and liberate the Tunisian people from a debt that is largely odious and illegitimate. The country today is still in the stranglehold of debt largely inherited from the Ben Ali era. The amounts devoted to reimbursing this debt represent eight times the country’s budget for social affairs, three times the health budget, and nearly six times that of employment. An audit of Tunisia’s debt, like the one conducted in Ecuador, to identify the odious and illegitimate share – which must be written off unconditionally – is clearly of vital importance for the Tunisian people.

We should recall that Ecuador, between 2007 and 2009, was engaged in a struggle with its creditors over its decision to audit the entirety of its public debt unilaterally. The audit was conducted by an international commission appointed by Rafael Correa and made up of representatives of the State, social movements, and international networks working on debt – including the CADTM. On the basis of the audit’s conclusions, Ecuador suspended payment of a large share of its illegitimate debt and forced its creditors to buy back their bonds at a quarter of their value. The operation resulted in the country’s saving 7 billion dollars, freeing up financial resources that instead of debt payments, can be used for social expenditure on health, education and the development of communications infrastructures.

Tunisia could be the next country to follow Ecuador’s example; but we should remain vigilant. The Tunisian bill, which has not yet been debated by the National Constituent Assembly, has several limitations. As provided for in the bill, the audit concerns only debt contracted under the dictatorship of Ben Ali, whereas large loans were contracted with 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.

and 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 after the popular uprisings of 2011. The new debts include conditions that violate sovereignty and the social rights of the people. Also, suspension of debt payments is not provided for in the bill, despite the fact that the social and economic situation is extremely critical. Tunisia could invoke such principles of international law as the state of necessity or fundamental change of circumstances to immediately declare a moratorium on its debt. Finally, although the bill calls for participation by representatives of “civil society,” as was the case in Ecuador, vigilance is called for regarding the makeup of the commission given the task of auditing the debt.

The CADTM therefore expresses its critical support for the Tunisian legislative bill on debt audit and calls on creditors to refrain from taking any measures aimed at influencing the choices of Tunisia’s elected officials. For example, debt-swap programs like the one announced by French President François Hollande in July must be suspended immediately. This is because the debts involved in these swaps may be odious and illegitimate.

What took place in Ecuador can also happen in Tunisia and elsewhere, provided that peoples mobilize together against odious and illegitimate debt in their countries and create a united front against the creditors, as called for by the late president of Burkina Faso, Thomas Sankara. The CADTM joins in the call for worldwide mobilization against illegitimate debt during the Global Week of Action Against Debt, 8 to 15 October.

Contacts:

Renaud Vivien, CADTM legal specialist, +32 (0)497.04 79.99
Fathi CHAMKHI, spokesperson for RAID (member of Attac and Cadtm), + 216 79.325.158 / + 216 55.52.23.78 (GSM)

Translation: “Snake” Arbusto & Vicki Briault