4 December 2015 by Eric Toussaint
Eric Toussaint described how the debt bondage leads different countries to underdevelopment. He cited examples of the opposite policies as well: success stories of states that defied recommendations imposed by the 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, 180 members in 1997), 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.
http://worldbank.org . After a long-lasting audit of the odious debt, the leftist government of Ecuador defaulted, thus freeing direct funds for economic development, education, and poverty reduction. Éric Toussaint urged the Ukrainians to “disobey the creditors” and to demand debt relief. If the “plan A” (reaching a consensus through negotiations) does not work, we should implement a “plan B” – revolutionary break with the international financial institutions.
However, it is clear for the citizens of Ukraine that their government is hardly capable even for the first scenario. Discussing the case of Greece, where the government was forced to capitulate without having used the report of the anti-debt committee, established by former President of the Hellenic Parliament Zoe Konstantopoulou, Éric Toussaint noted that even this defeat should be a lesson for the European Left: during this period, they have to figure out how a “plan B” could look like.
Eric Toussaint’s lecture took place in Kiev (Ukraine) on the day of October Revolution, November 7. Left-wing academics and activists proved their ability to carry out socially critical activities of international level. The renowned Kiev Polytechnic Institute (KPI) has hosted researchers from Ukraine, France, Great Britain, Russia, Belgium, Germany, and Greece. The “Economic Crisis or Crisis of Neoliberalism? Alternative Development Policy for Ukraine” conference ascertained a high level of debate against the dominant ideological discourse.
Economists, sociologists and trade union activists manifested lots of issues to be voiced. However, the representatives of the Ukrainian government, who would need to hear the raised proposals in order to save the country from the collapse, did not show up at the conference.
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 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 (see here), 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. Since the 4th April 2015 he is the scientific coordinator of the Greek Truth Commission on Public Debt.
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