Committee for the Abolition of Illegitimate Debt

In Indonesia, 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.

actively collaborated in the sinister transmigration project, [3] certain facets of which constitute crimes against humanity. This project concerned the displacement – in certain cases, forced – of millions of people from the islands of Java and Sumatra to other islands of the archipelago and dispossession of the indigenous people of these islands.

The World Bank, especially during the fifteen years of the programme’s heyday (1974-1989), was its principal source of external financing. The historians recognize this responsibility of the Bank: “During the middle and later 1970’s, the Bank, as well, supported and assisted the government’s controversial program of official and subsidized transmigration of families from Java to the outer islands”. [4] This contribution was not only restricted to financial and technical support. The Bank also supported the project politically.

Between 1950 and 1974, the government displaced 664,000 people within the framework of the transmigration programme. However, from 1974 on, with the World Bank’s support, 3.5 million people were displaced and assisted, and approximately 3.5 million people migrated on their own initiative. The World Bank directly contributed to displacements and relocations. Due to its loans it was possible, on the one hand, to almost totally cover the “official” migrations of 2.3 million people, and on the other hand to “catalyze” the relocation of some 2 million people transmigrating spontaneously.

Although the World Bank qualified this transmigration as “the biggest programme in the world for voluntary relocation”, it soon appeared that the programme was also used to rid Java of undesirable inhabitants. Thus, in the principal Javanese cities, “nonconformists”, elderly people, sick people (including those with leprosy), beggars and vagrants were forced either to disappear into the countryside (where their chances of survival were slim) or to transmigrate. In the latter case, they were herded into army trucks during the night and brought to “transit camps” where they were given training for their relocation. [5] Marriage was an obligatory criterion for selection: the authorities organized forced marriages of single people before their departure. One should note that the World Bank played a large role in recruitment operations for homeless people and political prisoners in order to send them to the remotest and least desirable transmigration sites.

The transmigration projects most heavily supported by the World Bank were those involving private domestic or foreign firms likely to promote foreign trade and attract more ambitious transnational investments (particularly projects for industrial plantations).

Unrestricted foreign exploitation of the resources of the outer islands was pursued for the benefit of the central government and firms operating in the country, but to the detriment of the local populations who saw a great portion of their habitat and their means of subsistence destroyed forever. The lands of the outer islands were regarded as “empty” because the natives who lived there for millennia did not have ownership certificates. These lands were then declared to be “at the State’s service” and were forcefully confiscated, most often without compensation. In fact the World Bank supported the government in its acts of expropriating land belonging to indigenous people, although it never acknowledged it officially.

The people of the transmigration programme inherited land that was not reserved for forest concessions and that was generally far from productive. For the government officials appointed to locate the sites to be cleared, it did not matter whether they were cultivable or not. Their job was to fill up a chart with information relating to site access, the number of hectares to be cleared and the number of families that could possibly be located there.

Mining companies destroyed complete mountainsides and daily poured tons of industrial waste into the rivers, polluting them beyond recovery

The forest – a vital resource for the native dwellers – gradually disappeared due to the operations of forestry companies and commercial plantations on the one hand, and government teams entrusted with clearing the areas intended for agriculture and the installation of migrants, on the other. In addition, mining companies (see the case of the American mining company Freeport McMoran) [6] destroyed complete mountainsides and daily poured tons of industrial waste into the rivers, polluting them beyond recovery. These rivers being the only source of water for native dwellers, major medical disasters occurred. Oil extraction along the coasts also caused great damage to the marine fauna and flora, another source of food for the indigenous populations.

The real culprits in this matter were those who devised, carried out and financed the project. Primarily they were the Indonesian authorities and the international institutions (the World Bank first and foremost), as well as certain Western governments (the US, the UK, Germany and Israel, for example) and the national and foreign companies involved in the project’s materialization. Among the devastating effects of the project: development and proliferation of intensive operations for the exploitation of natural resources; a rapid increase in the surface areas intended for commercial plantations as a result of programmes financed by international loans. These loans were always conditioned by the opening up of markets at all levels - removal of tariff barriers, attraction of foreign capital, priority on monocultures for export, liberalization and privatization of the goods and services distribution sectors, etc.

At the end of 1980, vociferous criticism increased, as much inside as outside the archipelago, accusing the World Bank of having taken part in a project of geopolitical domination typified by social and ecological blunders and infringing human rights in the course of its procedures. [7] The World Bank indeed played a major part in this project with harmful and irreversible consequences: control of the indigenous populations of the outer islands and violation of their right to land ownership; the exorbitant cost of displacements (7,000 dollars per family according to World Bank estimates) [8] in relation to the results achieved, because according to a 1986 World Bank study, 50% of the displaced families lived below the poverty level and 20% below subsistence level; persistent problems of density in Java; massive deforestation of the outer islands, etc.

The World Bank, accused on all sides, decided to cease financing the installation of new transmigration sites and the costs of transmigration travel. Nevertheless, it concentrated its loans on the reinforcement of already existing villages [9] and on maintenance of the commercial plantations, thus only partially renouncing its participation in the programme.

The World Bank obviously denied all the allegations brought by observers. In 1994, it decided to carry out an internal evaluation study [10] of the projects it financed, in order to determine its eventual responsibilities. In this report, the World Bank accepted a very small 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. of responsibility, stating that the project in Sumatra “had negative and probably irreversible effects” on the Kubu, a nomadic people whose survival relied on fallow cultivation, hunting and gathering in the forest. The audit admits that “although the existence of Kubu in the zones of the project was known since the project was planned, few initiatives were carried out to avoid problems”.

This debt is null and void: it must be cancelled

The loans of the World Bank for the transmigration programme correspond in all respects to the constitution of an 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. : they were contracted by a despotic regime, which used them for repression and not for the well-being of the population. Consequently, this debt is null and void: it must be cancelled. But it should not stop there. The transmigration project supported by the World Bank implied the forced displacement of certain populations. The World Bank cannot simply claim that it was not aware of this. It was also an accomplice to the violation of the rights of the indigenous people who lived in the zones colonized by the transmigration project. These very serious acts should not go unpunished.