Committee for the Abolition of Illegitimate Debt

26^th December: horror

On Sunday 26^th December 2004 at 0:59 a.m. GMT and 7:59 a.m. in the Eastern part of the Indian Ocean, a massive earthquake - 9.0 on the Richter scale [1] - occurred on the ocean floor some 150 kilometres off the coast of the Indonesian island, Sumatra. The tsunami it created travelled very fast, resulting in “tidal waves,” which devastated the coastal areas of countries surrounding the Indian Ocean. It hit Indonesia first, most especially the province of Aceh at the Northern point of Sumatra. The fatal wave rushed on at the speed of an airliner and after two hours hit Thailand (especially the tourist zone of Phuket). Then Sri Lanka, South West India. Malaysia, Burma and Bangladesh were next, followed by the Maldives then the Seychelles and finally, between eight and twelve hours later, the tsunami reached the East African countries of Somalia, Kenya and Tanzania, more than 6000 kilometres from the epicentre.

Waves up to 17 metres high crashed onto the tourist coasts and fishermen’s villages. The damage was considerable owing to the absence of any official warning system in this region. Ships, cars, residential buildings, hotel complexes, various infrastructures and human beings were swallowed up by the waves, leaving a panorama of desolation. Christmas festivities were in full swing, the digital video cameras of numerous foreign holidaymakers in the area instantly provided terrible images that were broadcast over and over again on televisions throughout the world, making it easy to identify with the victims. All of this gave rise to a wave of sincere emotion. The catastrophe took on a planetary dimension.

The real extent of the disaster only became apparent little by little: reality far exceeded what could be imagined at first. Eight hours after the earthquake, press agencies were announcing hundreds of victims: 500 in Sri Lanka, 400 in India, 100 in Indonesia, etc. Then the figures started to rise exponentially. Fifteen hours after the earthquake, the global estimate was 6,600 dead, and already the E.U. was promising an aid of 3 million euros. Three hours later, total figures stood at 11,300 dead: 4,400 in Indonesia (of which about 3000 for Banda Aceh alone), 3,500 in Sri Lanka, 2000 in India, 300 in Thailand... but it was only the beginning.

27^th December: staggering figures

Next morning on the 27^th, the press were reporting 17,000 dead. In the evening of the same day, the figure was corrected to 23,000. People started to try to organise rescue operations in the midst of devastated infrastructures. Thousands of people were reported missing and hundreds of thousands were without shelter. In Sri Lanka, 1.5 million people - that is to say 7.5% of the population - lost their homes and had to take refuge in Buddhist temples or schools. Health risks were high. Individuals and NGOs were quickly mobilized; there was an unprecedented burst of generosity from the general public. But governments reacted much more feebly, so much so that Jan Egeland, UN’s Under Secretary-General for Humanitarian Affairs and Emergency Relief strongly berated them: “We were more generous when we were less rich, many of the rich countries. And it is beyond me why are we so stingy, really. Christmas time should remind many Western countries at least how rich we have become.” First to be targeted as stingy is the U.S that had just announced a donation of 15 million dollars while at the same time, Japan was pledging 30 million and the E.U. 40 million. Egeland’s remarks seem to have hit home because mobilisation increased and the promises went up... During the Bam earthquake in Iran, exactly one year earlier, aid amounting to 115 million dollars was pledged at the time, but the U.N. noted that it has in fact only received 17.7 million and the town is still covered with rubble...

On the morning of 28^th December, an estimation of at least 55,000 dead was announced. The countries that were the worst hit were Sri Lanka, Indonesia, India and Thailand. But tens of people died in Malaysia, Burma, the Maldives and Somalia and people died in Tanzania, Bangladesh and Kenya too. The coastal areas were devastated and archipelagos like the Maldives or the Seychelles were very seriously affected. The U.N. announced that about one hundred airplanes, loaded with emergency relief from about twenty countries, should be arriving in the region within two days. Jan Egeland insisted: “ The cost of the devastation will amount to billions of dollars. (...) However, we cannot fathom the cost to these poor societies and the nameless fishermen and fishing villages and so on that have just been wiped out. Hundreds of thousands of livelihoods have gone ”

28^th December: call for cancellation

Already possible responses were being put forward. The Jubilee South network and CADTM were the first to point out that the burden of debt was a major obstacle to coping with the coming difficulties. Jubilee South launched a petition that was signed by social organizations throughout the world [2]

Still on 28^th December, the CADTM France published a press release calling for total cancellation of the external debts of devastated Asian countries. Relayed by AFP (Agence France Presse) (French Press Agency), it was taken up by the press [3].

It is well known that the countries struck by the tsunami are very different from each other. The worst hit are in Asia but East African countries like Somalia, Tanzania and Kenya also underwent serious damage and had to mourn their dead. Among the twelve countries concerned, some are emergent economies and borrow mainly from financial markets (India, Thailand, Malaysia); others depend strongly on tourism (Maldives, Seychelles), while others are countries of low revenue (Bangladesh, Kenya, Tanzania). Some are isolated from the international community (Burma due to military dictatorship, Somalia due to its almost nonexistent State structure). Finally others are intermediary countries faced with major difficulties (Indonesia, Sri Lanka). With such varied profiles and such heavy consequences, only total debt cancellation is the beginning of a proper and adapted response. This is because attempting to slightly reduce this or that part of debt is just setting up a lottery with the enormous risk of temporarily relieving a few countries while not helping others at all. However, this sort of inappropriate solution will be favoured in official quarters. We believe that the prerequisite of total debt cancellation is obvious.

On the other hand, other economic actors give less glorious accounts, fearing to lose the confidence of the financial markets [4]...At this point Insurance companies start making declarations, with the British group Lloyd’s proudly announcing that “We expect our exposure to be limited to holiday resorts, personal accident, travel insurance and marine risks. ” The Insurance Information Institute based in New York estimates the economic losses at “double digit billion figures ”, but that the insurance losses “should be modest ”. Effectively, almost all the victims are poor and uninsured. This analysis is confirmed by Georges Boduroglou, a director at French broker Gras Savoye, representing 85 % of the members of the French SNAV union of travel agents, who declared, “It is an enormous human catastrophe but a very small one for insurers, and the re-insurers will not be needed.”

Aid promised by the donor countries was increased as they became more aware of the great immediate needs. Germany for example, doubled the aid pledged from 1 to 2 million euros. The UN however was already estimating the needs in billions of dollars.

29-30 December, calm markets

As early as 29 December, the financial markets’ fears were calmed. They thought the economy had been spared (if one dare say that!) and the market then started rising again in all indecency. This is a very clear symbol of the immoral economic model that it has become necessary to fight.

The coastal populations were devastated, but investors were not worried. On the 29^th, in the morning, the World Bank announced: “Tsunami Areas May Not Need New World Bank and IMF Loans “. In this flood of emotion, social movements managed to focus attention on cancelling the debt. Creditors then reacted by recommending another solution, advantageous for them - a moratorium, that is to say, freezing payments. The reasoning of financial institutions and the governments of rich countries is to wait, play for time, but whatever happens, never give up on what is rightfully theirs, regardless of the living conditions of those who have to pay. After Germany, who on the 29^th December named Indonesia and Somalia as potential beneficiaries, on the 30^th, France proposed that “the Paris Club Paris Club This group of lender States was founded in 1956 and specializes in dealing with non-payment by developing countries.

creditors should agree on a moratorium on debt servicing for governments of affected countries that so asked.” The United States did not object but did not actually promise anything. As is their wont, they tried to take the lead of an international coalition with Australia, Japan and India to coordinate relief operations without going through the UN.

December 31^st: moratorium or cancellation?

Worried about the idea of this moratorium, the CADTM, as from December 31^st, sought to put pressure in the direction of cancellation.

At the beginning of the year 2005 the death toll had reached 127,000 - still a provisional figure - and more than half of the dead were in Indonesia alone. At this point, the damage was estimated at 14 billion dollars. The amount of aid pledged continued to rise, reaching an estimated 2 billion dollars by January 1^st after having doubled within 24 hours. This is more than the total amount received by the UN for the whole of the year 2004 for its operations in Darfour and in the Democratic Republic of Congo. Promises of aid continued flooding in.

By January 4^th, Great Britain, Germany, Italy, France and Canada were all clearly convinced of the need for a moratorium and the idea had been touched upon by the United States. Among the G8 G8 Group composed of the most powerful countries of the planet: Canada, France, Germany, Italy, Japan, the UK and the USA, with Russia a full member since June 2002. Their heads of state meet annually, usually in June or July. countries, only Japan, one of the largest creditors of Indonesia (29 billion dollars), together with Russia had not yet made any public declarations on the issue. Australia was the only country to express official reservations about this idea.
But there were also hesitations, which might at first seem surprising, on the part of the affected countries themselves. Effectively, this kind of moratorium is usually decided under certain conditions, which bind the indebted country with draconian constraints such as having to impose measures dictated by the IMF. For the Paris Club to reschedule the debt - which seemed to be the direction things were taking - theoretically required an IMF assistance programme. Now, for example, the IMF programme for Indonesia expired at the end of 2003 and Indonesia, which had gone through the severe crisis of 1997-1998 and had had to submit to the terrible regulations of the IMF, which only worsened the evil, rejected the idea of this kind of intervention. Indonesia therefore demanded that aid be granted without conditions.

Furthermore, Indonesia (like so many others...) is very much aware of the index that is assigned to it by the international credit rating agencies Rating agency
Rating agencies Rating agencies, or credit-rating agencies, evaluate creditworthiness. This includes the creditworthiness of corporations, nonprofit organizations and governments, as well as ‘securitized assets’ – which are assets that are bundled together and sold, to investors, as security. Rating agencies assign a letter grade to each bond, which represents an opinion as to the likelihood that the organization will be able to repay both the principal and interest as they become due. Ratings are made on a descending scale: AAA is the highest, then AA, A, BBB, BB, B, etc. A rating of BB or below is considered a ‘junk bond’ because it is likely to default. Many factors go into the assignment of ratings, including the profitability of the organization and its total indebtedness. The three largest credit rating agencies are Moody’s, Standard & Poor’s and Fitch Ratings (FT).

Moody’s : https://www.fitchratings.com/ such as Standard and Poor’s (S&P) or Moody’s. As it is, any delay in the debt servicing could cause Indonesia’s credit index to fall. On January 5^th, S&P announced that it would not change the credit rating if the restructuring of debt that was going to be decided on in the Paris Club were limited to public debts. The problem is that the Paris Club usually insists on “comparability of treatment”- namely that other creditors (mainly private) commit themselves to accepting the same conditions as those negotiated with the Paris Club creditors. Three times in the past, S&P lowered Indonesia’s credit index because of restructurings of bank loans tied to Paris Club negotiations.
India too continues affirming that they do not need foreign aid. This is both in order to maintain its status as a great regional power [5] (they even sent aid and assistance to The Maldives, Sri Lanka and Indonesia) and also to reassure the financial markets from which it borrows [6].

Thailand and Malaysia consider themselves sufficiently strong to decline in advance any proposals of a moratorium. These two countries see themselves practically as developed countries and certainly do not want to depend on Western countries, even under these painful circumstances.

The limits of a moratorium appear at the end of the press release that the AFP (French Press Agency) devotes to the topic that day: “But the NGOs are demanding more: for the five most affected countries, the external debt amounts to more than 300 billion dollars”, which means repayments of “more than 32 million USD a year”, protests Damien Millet, president of CADTM France, calling for the debt to be written off. “The debt continues to do its damage. The international community is trying to decide how best to help the devastated countries and during this time the rich countries, the World Bank, the International Monetary Fund (IMF), private banks and financial markets are waiting for their repayments,” he regrets.

As for the demands of supporters of the global social justice movement, the French daily, Libération, published an editorial [7] by the President of Attac-France, Jacques Nikonoff, who called for “an exceptional global tax levy as a forerunner to a real global taxation system”, adding: “As an immediate measure, an exceptional levy could be decided on by the international community, or, failing that, by the European Union. To give a concrete example, this levy could be the equivalent of 0.05% of world market capitalisation (the number of shares traded publicly on a worldwide scale, multiplied by the value of these shares), which, at the end of 2002, amounted to 20,000 billion euros. This exceptional tax would bring in 10 billion euros. No one could say this would ruin the shareholders or start a panic in the financial markets. Take, for instance, a Renault shareholder. On December 31, 2004, the 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. was quoted at 61.55 euros. With a tax of 0.05%, this shareholder’s contribution would be 3-euro centimes! And the financial markets would be punished (albeit lightly) in a way that makes sense, since they are in fact responsible for the financial crisis that took hold of Asia in July 1997. In just a few months unemployment increased by four in Korea, by three in Thailand, by ten in Indonesia: 12 million additional unemployed in the region. The reason for this crisis? Strong-arm liberalisation of the financial markets in these countries, under the driving force of the International Monetary Fund, which attracted floods of speculative capital.”

6^th January: international summit in Jakarta

In order to co-ordinate the aid effort (which had reached 4 billion dollars) Indonesia hosted a one day international summit in Jakarta attended by the ten countries of the Association of South East Asian Nations (ASEAN), China, Japan, South Korea, India, Sri Lanka, Australia, New Zealand and the United States, together with representatives of the UN, the World Bank, the World Health Organisation, the Asian Development Bank and the European Union. The major donors at that point were: Australia (765 million dollars over 5 years), Germany (680 million), Japan (500 million) and the United States (350 million). The European Union however, distinguished itself by announcing that day that its total government aid would be 1.5 billion euros (about 2 billion dollars) including a supplementary 450 million euros: 100 million for humanitarian aid and 350 million for reconstruction. Worldwide private donations had reached 630 million dollars. During the summit, as well as demanding the creation of a tsunami warning system, the UN said that 977 million dollars were needed immediately within six months [8] to help five million survivors. The US-led four-nation aid coalition was disbanded to allow the UN take over coordination of the aid. To this end, a conference of international donors was called.

The United States also announced the deployment of 14,000 soldiers, 19 US Navy ships, 40 airplanes and 50 helicopters. The presence of the military of the great powers (especially America and Australia) left an unpleasant feeling of reinforcing imperialism.

Furthermore, a press release of the G7 stated that it was now unanimous for a debt moratorium: “we would not expect debt payments from affected countries that request it until the World Bank and IMF have completed a full needs assessment of their reconstruction and financing requirements, recognizing that some countries may be unable to make debt payments. ”. It can be seen that the World Bank and the IMF are subtly emerging from the procedure of a unilateral moratorium in order to dictate the conditions required by the creditors. Canada is the only country to have decided on a unilateral moratorium without waiting for the Paris Club meeting.

The same day, Le Monde and L’Humanité published the opinion of the CADTM [9] :

Before the meeting of the Paris Club, several international officials travelled to Asia and made public declarations. On January 8, the president of the World Bank, James Wolfensohn, proposed loans to the stricken countries, “When we get to the question of reconstruction, what I have told the governments is that we are going to be there for them. We could ourselves go up to a billion dollars, I think, without any difficulty in terms of both new and converted funds for this purpose. On this occasion, I’m not wildly concerned about the money side, (...). If it became a billion and a half, I think we could probably do it.” It should be mentioned that the reserves kept by the World Bank amount to 31 billion dollars which makes it patently obvious that lending money to Southern countries is a very lucrative activity.

The following day, the prime minister of Luxemburg, Jean-Claude Junker, who was the president of the European Union at the time, declared on the public radio station, France Inter: “Personally I am for a total write-off of the debt of these countries”. After which he never again made such a resounding statement. It is difficult not to suppose he was brought to order. The European Commissioner for Development, Louis Michel, gets a glimpse of a solution before quickly closing the door on it: “I don’t quite see the reason to say that the debt for example of Indonesia, Thailand or Sri Lanka should be cancelled, or it should be done for everybody then”. You’re on! For the first time, this 10^th January, the provisional death toll rose above the 150,000 mark, with 104,000 in Indonesia, 31,000 in Sri Lanka, 10,000 in India and 5000 in Thailand.

11^th January, Geneva donors’ conference

International aid pledged thus far was estimated at 10 billion dollars: 6 billion from governments and 4 from the private sector. On January 11, a meeting of all the donors (about 70 countries) was held in Geneva. Coordination of the relief effort had been handed over to the UN. One of the aims of the meeting was to make sure the pledges were turned into “concrete agreements, with deadlines attached ”. The donation pledges received directly by the UN amounted to 2.69 billion dollars, that is to say three times the sum demanded (977 million dollars over the next 6 months), but nothing was agreed about where and when these amounts would be delivered. During this meeting, Jan Egeland insisted that the “20 to 30 million people who desperately need aid” in the world especially in Africa should not be forgotten. Of the 14 humanitarian crises affecting 26 million people and for which the UN was making appeals in 2005 (for a total 1.7 billion dollars) most were termed “forgotten crises”. In 2004, the UN received “only one thirds of the sum they had asked for to save lives»: the appeal funds were not completely subscribed. Egeland said that for example in terms of victims “ the Democratic Republic of Congo (...) suffered the equivalent of a tsunami every five months», and that could be avoided. He drove the nail home by reminding delegates that: “ It is as terrible to die in Congo as in Kosovo, it is as terrible to be displaced to the north of Uganda as to the north of Iraq and it is not less horrible to die in Darfour than on the coasts of the countries struck by the tsunami.” But this call to order was not enough and the donor countries only actually committed 717 million dollars to the United Nations for emergency aid, that is to say 73% of the whole amount asked for. The greatest contributor by far was Japan (250 million dollars), followed by the United Kingdom (74 million), Germany (68 million), Norway and the European Union (61 million).

France, which had first announced 50 million euros as its relief contribution, later decided to make 300 million euros “available” for the reconstruction of the affected countries. The Minister of the Economy said that: “in conjunction with the World Bank and the Asian Development Bank this will make a number of reconstruction operations possible.” Here the Minister is speaking about possible loans, which would increase the debt of the stricken countries. The answer from the countries concerned was not long in coming. The Indonesian Foreign Affairs minister, Hassan Wirajuda, on a visit to Paris, pointed out that Indonesia preferred receiving donations to being given loans.

Aid and a moratorium are taking shape, but the question of cancellation totally is being eluded. The CADTM seeks to put it in the centre of discussion in an article published on 11^th January in France in Libération [10] and in Belgium by Le Soir and L’Echo, then on the 18^th January in the Bangkok Post and on 1^st February by L’Humanité in France again.

12^th January, sad Bercy

The peak of the discussions concerning the affected countries’ debt took place in the French Ministry of Economy and Finance at Bercy, during a session of the Paris Club. This Club comprises 19 creditor countries “whose role is to find co-coordinated and sustainable solutions to the payment difficulties experienced by debtor nations” with regards to the bilateral part of their debt. The session of 12^th January was about the consequences of the tsunamis on debt servicing. The media and the public were highly mobilised. About 200 people answered the solidarity call of several organisations and gathered in front of Bercy to urge for cancellation of the debt of devastated countries. A delegation of representatives from non-governmental organisations; Attac, the Debtt and Development Coalition, The trade union group “G10-Solidaires” and CADTM were received at the Ministry and for the first time in the history of the Paris Club, the French Minister of Economy and Finance, Hervé Gaymard came in person to address the representatives.

As expected the Paris Club decided on a debt moratorium. The official press release published in its website [16] is very laconic: “During their meeting held on January 12, 2005, Paris Club creditors discussed the situation of the countries affected by the tsunami. Considering the exceptional scale and the devastating effects of this catastrophe, and in order to allow these countries to dedicate all available resources to address humanitarian and reconstruction needs, and in addition to the substantial commitments of their governments and citizens to provide assistance, they shared the view that, with immediate effect and consistent with the national laws of the creditor countries, they will not expect debt payments from affected countries that request such forbearance until the World Bank and the IMF have made a full assessment of their reconstruction and financing needs. In the light of that assessment, and in consultation with affected countries, Paris Club creditors will consider what further steps are necessary. The precise response to affected countries will be determined in the light of their individual requests taking into account the situation of each country ” Nearly as clear as oil slick...

During a press conference, the president of the Paris Club, Jean-Pierre Jouyet, clarified certain points, “Considering the disastrous consequences of this cataclysm, the member countries of the Paris Club have decided to suspend payments for the countries, which so wish”. Only Indonesia, Sri Lanka and the Seychelles showed interest in this emergency measure, which they would have to accept as it was. Emergent economies like Thailand or India preferred to preserve their credit index on the financial markets.

Furthermore, and quite exceptionally, this moratorium was not tied to any conditions. Indonesia had already stated clearly that it would refuse any offer with conditions attached. “This decision is an exceptional measure. It is justified by the scale of the catastrophe... In this exceptional situation, creditors wished that the suspension not be submitted to any conditions, neither an accord with the IMF (International Monetary Fund), nor to comparable treatment by private creditors as the Paris Club usually requires.” However, this moratorium, which is planned to last till the end of the year 2005 would be completed by other measures only after a thorough evaluation of the situation by the IMF and the World Bank. Those two always turn up in such circumstances.

According to figures released by the Paris Club, the affected countries as a whole should pay Paris Club members the total sum of 6.3 billion dollars, of which 3 billion for Indonesia, 328 million for Sri Lanka and 5 million for the Seychelles [17]. So in fact the Paris Club will recover half of the amount as scheduled... and the rest a little bit later.

What the Paris Club did not say was whether this temporary suspension of payments would give rise to any penalties for delayed payment or whether the interest would continue to accumulate thereby automatically increasing the amounts due [18].

Questioned about the call that had been made for a total cancellation of debt, Hervé Gaymard answered: “The question of writing off major debts is quite a political issue. (...) To treat the question of debt as a whole is not very appropriate because within this mass the debts are not all the same.” This does not however stop the populations from suffering untold hardships in order to repay all the creditors in the same way. Gaymard’s speech is a typical example of how the only way of conceptualising the debt is from the creditors’ point of view.

13^th January: bleak future

On 13^th January, Indonesia announced that it was not sure about accepting this moratorium. Indonesia’s government, with its neo-liberal tendencies, called for donations and loans but wishes to continue servicing its debt. India, Thailand and Malaysia all gave the same reason for not wanting to negotiate with the Paris Club.

At this point, the European Parliament came in on the field. It voted a resolution calling for the cancellation of debt and this was a totally new development, which is to be highlighted. The reaction of the CADTM to the events of these two days was unequivocal.

The Asian Development Bank (ADB) that day published an estimate of the extent of the economic fallout from the tsunami [19]. According to them, the number of poor people in the area will increase by nearly two million (one million in Indonesia, 650 000 in India and 250 000 in Sri Lanka). The Maldives is particularly affected since half of its population could be thrown into poverty. But the chief economist of the ADB, Ifzal Ali, reassures economists by stating that the impact on the economies will be limited: “As devastating as the disaster is to the people in affected areas, Asia’s resilience to external shocks will play a role in minimizing the impact the disaster will have on the region’s overall economic growth.”

First sigh of relief: the sacrosanct economic growth is safe since the industrial zones were not affected by the tsunamis, especially in Indonesia, India and Thailand. Aceh, the most devastated Indonesian province, only contributes 2 % of the gross domestic product (GDP), with economic activity depending mainly on petrol and natural gas whose installations were not damaged. In the same way, in Thailand the most affected region is the tourist zone of Phuket, but tourism counts for only 6 % of Thailand’s GDP [20]. Even so, care should be taken that foreign tourists do not associate the tsunamis with Thailand for too long so that Thailand does not gain a reputation as an unsafe destination. But thanks to a carefully orchestrated media campaign this does not seem to be happening.

The height of indecency was when those who hold the dominant economic model came close to rejoicing at the catastrophe, which will favour undoubtedly the economic activity of the region and therefore growth. According to the report of the ADB: “Reconstruction from natural disasters requires new investment that should have a positive impact”. Inevitably, what happened made it possible to note a “increased demand for a range of domestic goods and services, including food, water, medicines, building materials and clothing ”.
It is important to see through the lure of growth for growth’s sake. It is not possible for the planet to support unlimited growth, with all the environmental, human and social damage it brings with it. The unrestrained growth preached by the current system cannot go on forever. It is enough to take a quick look around to be convinced. This growth has to create never ending new desires to create consumption, it has to pollute to in order to de-pollute (water for example) and to destroy in order to rebuild (Iraq for example). That is why within this logic, tsunamis are positive for the growth of Asia since industrial zones were not affected and reconstruction is to be long and costly. Under these conditions, the blind quest for growth can only crush humans. Consequently, this growth cannot and must not be the ultimate indicator of the well being of the world.

After the damage on land comes the time for assessing the damage at sea: many fishing boats were destroyed and the quantity of fish available for the coastal populations who formerly drew most of their daily provision of protein from it is clearly decreasing. A report from the FAO (Food and Agricultural Organisation) alerts the world: “In Sri Lanka, (...) 80 % of coastal fishing vessels have been completely destroyed or very seriously damaged, including around 19 000 boats. Ten out of the 12 main fishing harbours in the country have been completely devastated including infrastructure such as ice plants, cold rooms, workshops and slipways. (...) In the Nanggroe Aceh Darussalam Province of Indonesia , where 42 000 fishermen and their families live, 70 % of the small-scale fishing fleet have been destroyed. In Nias Island, about 800 fishing canoes have been destroyed. Two thirds of local fishermen from the capital Banda Aceh were killed by the waves. (...) Inthe affected coastalareas of Thailand, 386 fishing villages with a total population of around 120000 people have lost about 4 500 fishing boats, or their fishing gear has been seriously damaged. In Thailand again, eight fishing harbours and their infrastructures have been seriously damaged. The aquaculture industry has suffered a serious setback. A total of around 15 800 fishing cages have been damaged; this has caused losses of about $33 million. In some areas, seafood supplies have dropped by 90 % since the tsunami. (...) In the Maldives, where a very large part of the population depends on fishing for their livelihood, more than one third of all inhabited islands were severely damaged and hundreds of boats and harbours were destroyed. (...) In the state of Andhra Pradesh in India, fishers along the 1 000 km coastline were the worst hit by the tsunamis. Around 2 000 fishing boats and about 48 000 fishing gears were lost, about 300 000 fishers have lost their jobs. In the state of Tamil Nadu, 591 fishing villages and 30 islands of the Andaman and Nicobar islands have been badly affected by the tsunamis. India’s seafood exports may decline by around 30 % as a result of the tsunami. In Myanmar, some 200 villages spread along the southern coast and heavily relying on fishing have been hit by tsunamis and lost fishing vessels, fishing gear and infrastructure. Some 17 seaside fishing villages have been reported as destroyed and at least 53 people as killed by the tsunamis. (...) In Malaysia, the livelihoods of about 6 000 fishermen have been affected by the disaster. In Somalia, around 2 600 fishing boats have been destroyed. (...) In the Seychelles, coastal fish farms and the artisan fisheries sector suffered extensively. A great number of fishing vessels were damaged or lost. The two fish processing plants and cold storage facilities located at the fishing port in Victoria were also affected by the tsunamis.” [21]

14^th January: corruption and separatist movements

Ever since the Suharto dictatorship between 1965 and 1998, which had the support of the western powers almost throughout, corruption has been the norm rather than an exception among the Indonesian elite, as can be seen from NGO Transparency International’s reports. In fact, the governor of Aceh, Abdullah Puteh is in prison at the time of writing suspected of corruption [22]. To send billions of dollars [23] in these conditions would seem very risky.

Susilo Bamba Yudhoyono, President of Indonesia since September 2004, decided to reassure foreign financial backers by appointing the international accounting agency Ernst & Young to track the funds [24]. However, there is already concern that private aid, which would pass through NGOs established in the country, would be reduced due to the on-going corruption. Again, many non-governmental organisations, which received donations of unprecedented amounts have neither the structure nor the expertise to ensure that these considerable sums are distributed exactly as planned. This was confirmed two weeks later [25] when an auditor revealed that the sum of 21 800 dollars was diverted to finance a summit on infrastructure in Jakarta, which had no connection with the earthquake. There were reports of the appropriation of various goods intended for people in distress (clothes, milk, sugar) by soldiers and policemen, connected with the claims of the separatists.

For almost 30 years, a separatist guerrilla movement has been active in Aceh province, which explains why it has been under martial law since 1976. The Aceh Liberation Movement wishes to break away from the central government of Jakarta and is engaged in armed struggle. Since 26^th December, the existence of this guerrilla movement has taken on a new dimension. The Indonesian government wanted to use the aftermath of the quake to regain control of this rebellious province, but the presence of soldiers, rescue teams and foreign journalists hindered this move. It then asked foreigners to keep it informed of all their movements, officially so that they could ensure their security vis-à-vis the rebels. Furthermore, the vice president, Yusuf Kalla, urged foreign troops (United States, Australia, Japan, Germany, Great Britain) to leave the country as quickly as possible. “Three months are enough. The sooner (they leave) the better” [26]. He was alluding especially to the United States, which maintains a fleet in the area and had sent about thirty ships, more than 50 helicopters and 15 000 soldiers to contribute to the relief work. Meanwhile, the rebel chiefs seek to deny the charges brought against them insisting that a ceasefire had been unilaterally declared on the day of the quake and accusing the Indonesian military of taking advantage of the situation to reinforce their presence and repression. In these circumstances, the various fraudulent actions by Indonesian soldiers should not be surprising. The official military has been occupying this hostile province for many years, and has thus seized part of its wealth. Aceh has been cut off from the rest of the country for many years and humanitarian organisations, which have been forbidden access for a long time, must now invest considerable sums there. This situation favours the key role played by some unscrupulous partners who have a tradition of dealings with the official army.

In the same way, in the northern region of Sri Lanka, the Liberation Tigers of Tamil Eelam (LTTE) was engaged in an armed battle with the government, and the army exploited the disaster to strengthen its position, while at the same time restricting international relief workers’ access to this region. During Kofi Annan’s visit to the country, the government exerted a lot of pressure to stop him from visiting the rebel zone so as to prevent the warring Tamil Tigers from gaining international recognition.

15 th January: no longer headline news

The reconstruction did not get as much attention from the press as the mourning. On this 15^th January, the press moved on to other things. Just the Paris Club meeting marked the end of two weeks’ undivided attention on Asia. International news turned towards Iraq, which was preparing to vote in an atmosphere of violence and fear, towards Davos, which was hosting the World Economic Forum once again. Never had the extremely rich WEF participants spoken so much about reducing poverty - to such a point they outshone the World Social Forum in Porto Alegre.

The death toll drawn up on the 18 th January stood at more than 162 000, with 110 000 in Indonesia, 31 000 in Sri Lanka, 10 000 in India and 5 000 in Thailand. But many were still missing who were not included in the statistics. Given that the ravaged area was teeming with tourists, it should be noted that nationals of almost 50 different countries died on that 26 th December. On every continent, families were mourning their loved ones.

This same day, Condoleezza Rice, who as U.S. Secretary of State designate was being questioned by a senatorial commission at her confirmation hearing [27], attracted attention to herself with an enormous blunder. The United States already has a problem with its image in the Moslem world especially after the assault on Iraq, yet Condoleezza Rice dared to applaud the role played by her country in giving aid to Indonesia, the most highly populated Moslem country, actually saying that “ the tsunami was a wonderful opportunity to show not just the US government, but the heart of the American people. And I think it has paid great dividends for us” [28]. No comment.

19^th January: towards an early warning device

The World Conference on Disaster Reduction had long been scheduled to take place in Kobe (Japan) from 18^th - 22^nd January under the auspices of the UN, and brought together 4 000 experts representing more than 150 countries [29]. Kobe had been the scene of a particularly fatal earthquake in 1995 and in this symbolic place, the experts decided to create an early warning system to reduce the toll of natural disasters [30] but technical difficulties remain especially in the choice of technology to use. Many countries proposed that their own early warning system should be used since they would like to see it extended to the Indian Ocean. Another difficulty was found to be in the absolute determination of the United States to remove any reference to climate change from the final project declaration. They uncompromisingly stuck to the line fixed by the Bush Administration, which refuses to ratify the Kyoto protocol on reducing emissions of greenhouse gases.

It must be said that the lack of a warning system was really brought to the fore by the 26 th December quake. Unlike the Indian Ocean, the Pacific Ocean has had one in use since 1965, an international anti-tsunami warning system connected to 26 countries: the Pacific Tsunami Warning Centre (PTWC). The poorest countries do not have the means to be a member of the PTWC and receive warnings but in fact, a few countries such as Thailand did receive the information transmitted by the group of technicians based in Hawaii. However since the tourist season was in full swing, they did not want to unnecessarily frighten the numerous foreigners who were there. And we know what happened then. The death toll published that day gave 220 000 dead, of whom 166 000 were in Indonesia.

In order to be able to deal with another disaster of this magnitude, the sum of 8 million dollars was pledged by Japan, the European Commission and Sweden for a tsunami early warning system in the Indian Ocean [31]. However, it is important not to focus on tsunamis and to forget cyclones, floods or drought. But even for tsunamis, it is not yet for the immediate future: UNESCO proposed for the year 2006 only, a system based on a network of lifebuoys in deep water with regional communication centres at the estimated cost of 30 million dollars (then a running cost of 15 million per annum), which has to be found first.

In short, other plagues and other continents should not be forgotten as the UN World Food Programme Executive Director James T. Morris pointed out, “ The chronic hunger and malnutrition that afflicts 300 million children worldwide does not create the dramatic media coverage of a tsunami, but it causes far greater suffering. We cannot afford to lose sight of that fact. This too is an emergency. ”.

Finally the United Nations Environment Programme (UNEP) laid emphasis on the extent of the damage inflicted on land suitable for cultivation and on the coral reefs and mangrove forests of the Indonesian coasts [32].

26^th January: one month later

Exactly one month later, the day was shared between meditation and prayers. But it was also the day school started again, especially in Aceh, an indication that the survivors were starting to get on with living, albeit differently. The number of victims continued to rise, with about 300 000 dead or missing, of whom more than 240 000 in Indonesia.

But the exact number will never be known: how is it possible to count all the Burmese living clandestinely in Thailand who worked in very precarious conditions in the tourist zones?

That day, the Indonesian minister of economy, Burial Bakrie, declared in an economic daily newspaper that Indonesia no longer needed a moratorium on its debt since it had been pledged donations and loans of approximately 1.7 billion dollars [33]. This moratorium will certainly not have had much success, in spite of the circumstances.

On the other hand, the influx of private donations during this long month had been exceptional. Very early in January, the French NGO Médecins Sans Frontières stopped collecting funds specifically for Asia as they had already received 40 million euros and declared that their Asia teams had as much as they could deal with. The Red Cross received 1.2 billion dollars and an official said he “now had enough funds to plan their relief program over 10 years [34].

Similarly, the UNICEF received pledges and donations of 300 million dollars, that is to say more than double the 144 million requested initially. These two big humanitarian organisations also specified that they had stopped the targeted collection of donations. But Jacques Hintzy, the UNICEF-France president, declared that “other populations desperately need our aid”, identifying “33 other emergency projects which would require 763 million dollars” [35] especially in Africa (Angola, Burundi, Eritrea, Somalia, Uganda, Sudan, Ivory Coast, Democratic Republic of Congo, etc.). But there, the money flow was not the same: UNICEF received only 10 million dollars and not the 290 million requested for Darfur (Sudan).

In 2004, only 60% of the funds requested by UNICEF for humanitarian relief work had been collected. It is to be hoped that the wave of generosity which sprung up with the tsunamis does not dry up.

31^st January: a different aspect of aid

One can only rejoice at this wave of generosity, but it should not be forgotten that all aid has its dark side. First of all, it often relieves the conscience of the giver more than the sufferings of the beneficiary. Thus tons of inappropriate drugs were sent to the affected countries and the French NGO Pharmaciens Sans Frontières (Pharmacists Without Borders) regretted in an official statement being faced with, “tons of drugs of every possible make, with user instructions written in languages the medical personnel cannot read and with too short expiry dates, which are randomly accumulating in warehouses and even in private residences” [36]. Many of them will even have to be destroyed. Moreover, this aid in kind has consequences on the local economy and could destabilise whole sections of it. Pharmacists Without Borders deplored the consignment of “tons of high quality drugs to South Asia when this part of the world produces the greater part of generic drugs used today in humanitarian programmes”. This strange game, which might not have been totally innocent, put the local pharmaceutical industry at risk. This industry has already been strongly undermined by the regulations imposed by the World Trade Organisation WTO
World Trade Organisation The WTO, founded on 1^st January 1995, replaced the General Agreement on Trade and Tariffs (GATT). The main innovation is that the WTO enjoys the status of an international organization. Its role is to ensure that no member States adopt any kind of protectionism whatsoever, in order to accelerate the liberalization global trading and to facilitate the strategies of the multinationals. It has an international court (the Dispute Settlement Body) which judges any alleged violations of its founding text drawn up in Marrakesh.

(WTO) whose Trade Related Intellectual Property Rights agreement, TRIPS, ensures above all, by means of patents, the protection of the interests of pharmaceutical multinationals but deprives poor countries of the right to copy medecines.

February: fears confirmed

The perspective provided by the passage of time confirmed the fears. The generosity the public manifested after the tsunami implied there should be a reorientation of aid, which the rich countries still refused to raise up to a morally decent level. On 14^th February, the WFP (World Food Programme) revealed that after the tsunami, the donations received in January 2005 for Africa dropped by 21% compared to that of January 2004: that is to say 24 million dollars as against 29 the preceding year. While the donations for Africa via WFP represented 20% of its expenses in January 2004, they represented only 8% in January 2005 [37]. The food situation in Africa will therefore suffer from the tsunami in South East Asia.

Subsequent days brought their own share of information on the omnipotence of the markets. First of all, Indonesia announced on 17^th February that it had accepted the moratorium proposed by the Paris Club [38], that is to say five weeks after the Club’s meeting. The hesitation had been long. The hesitation of the Indonesian authorities was not due to the rich countries’ proposal being insufficient but rather to considerations of the impact the proposal would have on access to financial markets. Emergent economies depend on the financial markets to such an extent that all their policies are made to please investors who will in turn increase their investments. That is why Indonesia carefully make it clear that, contrary to what had been said by the Paris Club president on 12^th January, they were not asking for anything, but were happy to accept the offer...the details of which were to be decided in March. It was still not certain whether a one-year moratorium would not be subject to interest arrears. This was a mug’s game since a refusal from Indonesia would make nonsense of the Paris Club approach. It was world turned upside down. The creditors had to persuade this country to accept their offer. Thus Indonesia was able to obtain one of its demands from countries like France i.e. converting part of the debt into direct foreign investments. It is always the same perverse logic which makes foreign investors central to a development process, which is in fact of very little interest to them.

The following day, the international credit rating agency, Moody’s, upgraded Indonesia’s index [39]. It can be seen that the path had carefully been cleared. The moratorium improved the short term financial prospects of Indonesia and the Paris Club undertook not to ask private creditors for comparability of treatment. At the market level, it was excellent news, all the more since the week before, the Indonesian government had announced 5.13% growth for 2004.

Thus the credit index went up but while making this decision was anyone thinking about the population and the victims of the tsunami? Their problems are far from being resolved.

For instance the FAO published a report, which revealed the consequences of the tsunami on the means of subsistence in the devastated zones [40]. In January, it had launched an appeal to collect at least 29 million dollars, which would be used to replace and repair the means of production for the millions of affected fishermen and villagers especially by providing fishing equipment, replacing boats, rehabilitating and renewing the stock of fish farming ponds, quickly rehabilitating ports, moorings, storing and processing equipment, supplying seeds, agricultural tools, repairing irrigation infrastructures, drainage and leaching arable lands affected by salty flood water . On 16^th February, the FAO revealed that firm commitment from donors amounted to only 20.5 million dollars whereas “For Indonesia alone, the estimation of the damage and losses suffered by agriculture, fishing, agro-food industries, irrigation, flood control system and environment stood at almost 1.32 billion dollars”. Moreover, for the fishing and aquaculture sector alone, the damage is estimated at 520 million dollars with more than 111 000 fishing boats destroyed or damaged and more than 36 000 engines lost or irreparably damaged. Nevertheless, it was not only a question of replacing everything “as it was”: it was a time for serious reflection in this domain. Thus, according to the fishing department of the FAO, which cannot really be considered a global social justice movement: “excessive capacity was a serious problem in some of the region’s coastal fisheries before the disaster, a problem that should be avoided with reconstruction. (...) There is a real risk that excess fishing capacity will be the result, and that more harm will be done than good. Over-fishing can hurt fish stocks, even causing fisheries to collapse. (...) At the same time, inappropriate boat and gear types could harm the environment, doing further damage to the underwater habitat”.

Similarly, in a report [41] published on 22^nd February 2005, the UNEP encouraged reconstructing differently, “to rebuild in a manner that preserves natural resources for the benefit of the local communities who were hardest hit by the disaster”. Thus, Sri Lanka, “has already decided to establish a “no build zone” up to 200 meters from the mean high tide line”. Among the major problems featured disposal of the refuse thrown up by the tsunami because of the enormity of its volume (between seven and ten million cubic metres in Banda Aceh, or again 35 000 tons on the Thai Koh Phi Phi island). Moreover, in many areas “ground waters, bore-holes and aquifers have been contaminated by salt water”. This is the case for 60 000 wells in Indonesia, 62 000 in Sri Lanka and aquifers of more than 30 islands in the Maldives. Very often the fertility of the soil is uncertain. Coral reefs and mangroves also underwent serious destruction. In the region of Aceh and the Western islands of Indonesia, 30% of the 100 000 hectares of coral reefs and about one third of the 50 000 hectares of coastal forest were damaged. In fact, Bangladesh “has also planted thousands of trees along the coastal strips as many people have been saved in previous disasters by clinging to the tops of coconut trees”.

In the midst of the recommendations of the report was the following point: “Apart from the consideration of ‘no build’ or restricted build zones in the coastal zones, government and local communities should also consider restoring mangrove forests and traditional forms of fish and shrimp farming. Simply re-instating intensive fish and shrimp aquaculture systems of the kind that have become economically popular in recent years may be a mistake (...) Meanwhile, the recovery and rebuilding process offers a ‘clear opportunity’ for sustainable energy generation based on wind, solar and tidal power. Community-based, emergency shelters, possibly like those in Bangladesh, should also be considered."

But is there room for any wisdom or common sense within today’s economic model? Can a model where the authorities do not have the means of looking after the well being of local communities offer a solution? Has it not already simply left the coast clear for all kinds of investors looking for easy profit Profit The positive gain yielded from a company’s activity. Net profit is profit after tax. Distributable profit is the part of the net profit which can be distributed to the shareholders. ? As an example, we can see a well-ordered attack by investors in Thailand. Aided by some officials, they exploited the complexities of the country’s land ownership laws to claim ownership to coastal zones where they wanted to build hotel complexes. But fishermen lived on this land with their families. Some of these families lived there without right of ownership and so when they fled during the tsunami to safe zones or rescue camps the powerful and self-proclaimed owners moved in. This was the case in Taptawan village, which housed a Morgan community and also in the Moslem village of Baan Nai Rai [42]. It was a massive attack and the communities are now totally destitute.

March: total cynicism

Almost two months after the Paris Club meeting, which decided on a moratorium on the debt of the affected countries which so wished, the Club held a second meeting on 9^th March to decide the practicalities of the moratorium. Apparently, only Indonesia and Sri Lanka showed an interest in this proposal. There was therefore no longer any mention of the Seychelles in the declarations made by the Club. Moreover, since it was just a question of a moratorium, which was to run till the end of 2005, the total amount due in 2005 would have to be paid. According to an official statement, the creditor countries which belong to the Paris Club “proposed that the suspended amounts be repaid within 5 years, one of which will be a year of grace”. Thus repayments will resume as of 2006 and the sum due in 2005 will be repaid from 2007 to 2010.

But the statement added: “Moratorium interest accrued in 2005 will be capitalized and paid as the deferred amounts. The moratorium interest rates Interest rates When A lends money to B, B repays the amount lent by A (the capital) as well as a supplementary sum known as interest, so that A has an interest in agreeing to this financial operation. The interest is determined by the interest rate, which may be high or low. To take a very simple example: if A borrows 100 million dollars for 10 years at a fixed interest rate of 5%, the first year he will repay a tenth of the capital initially borrowed (10 million dollars) plus 5% of the capital owed, i.e. 5 million dollars, that is a total of 15 million dollars. In the second year, he will again repay 10% of the capital borrowed, but the 5% now only applies to the remaining 90 million dollars still due, i.e. 4.5 million dollars, or a total of 14.5 million dollars. And so on, until the tenth year when he will repay the last 10 million dollars, plus 5% of that remaining 10 million dollars, i.e. 0.5 million dollars, giving a total of 10.5 million dollars. Over 10 years, the total amount repaid will come to 127.5 million dollars. The repayment of the capital is not usually made in equal instalments. In the initial years, the repayment concerns mainly the interest, and the proportion of capital repaid increases over the years. In this case, if repayments are stopped, the capital still due is higher…

The nominal interest rate is the rate at which the loan is contracted. The real interest rate is the nominal rate reduced by the rate of inflation. will be determined on a bilateral basis.” Now that is a real scandal! A country like Indonesia with more than 200 000 dead or missing after the 26^th December 2004 disaster will be penalised financially. It has to repay the entire amount of the sums due in 2005 - about 3 billion dollars - but it also has to pay extra interest for not paying in 2005 (called late interest). We should remember that in January, the Paris Club ostensibly made a show of generosity by talking about “the exceptional scale and the devastating effects of this catastrophe”. In fact it came to nothing, or rather worse than nothing since Indonesia and Sri Lanka who accepted the moratorium have been sanctioned. They will actually have to refund more than if the tsunami had not occurred, since not only has there been no debt relief but they will have to add on the sanction of late interest.

Taking advantage of the fact that the tsunami no longer made headline news, the Paris Club hurriedly took a scandalous decision, violating the memory of the deceased and missing. Once again it proved its cynicism, its inability to cater for the basic needs of the populations and its incompetence. In short, with the Paris Club, the worst is never certain but always likely - the tsunami is yet another proof of that. The press release of the CADTM became the subject of an AFP dispatch.

The neo-liberal economic model is directly to blame. Natural disasters have highlighted its perversity and just how much harm it can do.