The Debt Scam

16 February 2004 by Eric Toussaint , Damien Millet

For the last 20 years, despite their innumerable natural and human resources, the Third World countries have been milked dry. The debt is also a subtle mechanism of domination and a new method of colonisation, hindering any sustainable human development in the South. The policies adopted by the indebted governments are more often decided by the creditors than by the parliaments of the countries concerned. The limits of the so-called debt-reduction initiative launched with great pomp by the G7, 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.

, were shown up by the greatest petition ever known (24 million signatures collected between 1998 and 2000, co-ordinated by the Jubilee 2000 campaigns).

A radically different approach needs to be adopted - cancel the debt, pure and simple. It is immoral and often odious anyway.

The authors provide answers to various objections to this proposal. The authors argue tant debt-cancellation is necessary but not sufficient, and must be accompanied by other measures such as the recovery of “ill-gotten gains” and their restitution to the despoiled people. They suggest alternative sources of finance, both local and international. They also ask who owes what to whom? They support the demands for reparation put forward by social movements in the South.

In the answers to fifty pertinent questions, this book explains in clear, simple terms how and why the debt impasse has come about. Graphs and charts are used to illustrate the responsability of those who uphold neo-liberalism and corporate-driven globalisation - the international financial institutions, the industrialised countries and also the leaders of the South.

The authors:

Damien Millet teaches mathematics. He’s the General secretary of CADTM France, a member of Attac and collaborates on the magazine ’Alternative’ (Niger).

Eric Toussaint is a historian and political scientist, President of the CADTM, member of the International Council of the World Social Forum and of the Scientific Advisory Board of Attac France, author of “Your Money or Your Life! The Tyranny of Global Finance” (1999), co-author of “Le bateau ivre de la mondialisation. Escales au sein du village planétaire” (2000), of “Afrique : abolir la dette pour libérer le développement” (2001).

Translated from french by Vicky Briault Manus, Professor at the University of Grenoble.

This edition was published by Vikas Adhyayan Kendra (VAK), Mumbai, India, 2003.

Author

Eric Toussaint

is a historian and political scientist who completed his Ph.D. at the universities of Paris VIII and Liège, is the spokesperson of the CADTM International, and sits on the Scientific Council of ATTAC France.
He is the author of Greece 2015: there was an alternative. London: Resistance Books / IIRE / CADTM, 2020 , Debt System (Haymarket books, Chicago, 2019), Bankocracy (2015); The Life and Crimes of an Exemplary Man (2014); Glance in the Rear View Mirror. Neoliberal Ideology From its Origins to the Present, Haymarket books, Chicago, 2012, etc.
See his bibliography: https://en.wikipedia.org/wiki/%C3%89ric_Toussaint
He co-authored World debt figures 2015 with Pierre Gottiniaux, Daniel Munevar and Antonio Sanabria (2015); and with Damien Millet Debt, the IMF, and the World Bank: Sixty Questions, Sixty Answers, Monthly Review Books, New York, 2010. He was the scientific coordinator of the Greek Truth Commission on Public Debt from April 2015 to November 2015.

Author

Damien Millet

professeur de mathématiques en classes préparatoires scientifiques à Orléans, porte-parole du CADTM France (Comité pour l’Annulation de la Dette du Tiers Monde), auteur de L’Afrique sans dette (CADTM-Syllepse, 2005), co-auteur avec Frédéric Chauvreau des bandes dessinées Dette odieuse (CADTM-Syllepse, 2006) et Le système Dette (CADTM-Syllepse, 2009), co-auteur avec Eric Toussaint du livre Les tsunamis de la dette (CADTM-Syllepse, 2005), co-auteur avec François Mauger de La Jamaïque dans l’étau du FMI (L’esprit frappeur, 2004).

Other publications in English :

China’s Overseas Investment in the Belt and Road Era
4 May - Globalization Monitor
Africa : the debt trap and how to get out of it
27 March - CADTM
A century of debt crises in Latin America : from independence to the Great Depression, 1820-1930
24 January 2022 - Carlos Marichal
Greece 2015: There was an alternative
6 October 2020 - Eric Toussaint
Impact of European policies on the Global South and possible alternatives
8 September 2020 - ReCommons Europe

Committee for the Abolition of Illegitimate Debt

The Debt Scam

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Other articles in english by Damien Millet (46)

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