Who wants to pay thousands of billions?

13 November 2006 by Damien Millet


For a few days now, we have seen a large change in the scale of published economic figures. Whereas the unit of a ‘billion’ was the maximum not long ago, the end of October was a clear turning point and the beginning of ‘thousands of billions’.

To blame, is the report published by Nicolas Stern, former head economist at 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.

, on what economic impact global warming will have between now and 2100. Obviously, the process is open to criticism because any assumptions used for such a calculation are based on very random estimates that are not necessarily widely agreed upon in the scientific world. Economic forecasts for a century are clearly questionable, even forecasts made by the International Monetary Fund 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
on growth and export for a few years often differ greatly from the what actually happens. However, it is true that the IMF has a tendency to publish statistics that are along the same lines as neo-liberal reforms that it wishes to introduce in a forceful way, even if real events then contradict the position they defend...

Having said this, the Stern report has estimated that before the end of this century, global warming could cost the small sum of 7 000 billion dollars, or more if the rise in temperature is larger than estimated or if nothing is done to prevent this serious trend towards global warming. The British Prime Minister, Tony Blair, who requested this report, snatched it up to show that it is a priority for him. Let us note that he is acting this way in his last year in office, one which remains branded as neo-liberal, with no concessions and unshakeable support of stupefying policies of his united states opposite number on environmental issues... In such a way that he could appear to be one of the first to alert public opinion to this subject, keeping quiet about the fact that his policies have contributed to the worsening of the phenomenon in the world. In short, the transition to thousands of billions of dollars is underlined by this report so full of opportunism.

Most citizens have simply retained that there really are a lot of zeros without realising how much the exact amount represents. To fully understand it, shouldn’t it be compared with some other figures of the same sort ?

The fortune belonging to the richest people in the world is perfect for this. Cap Gemini, consulting firm, and the Merrill Lynch bank publish a report every year on wealth in the world, which is particularly interesting for those who enjoy mind-boggling figures. And so there are 8.7 million people on this planet whose property represents more than a million dollars and the millionaires’ riches together come to 33 300 billion dollars. Could this not be a lead to look into closely and start genuinely fighting for environmental conservation and for wiping out poverty ? A special tax on these millionaires’ fortunes would pay out a jolly sum of 10 000 billion dollars.....

Far from taking a part of these riches amassed by few to improve conditions for so many, the neo-liberal economic model promoted by the IMF, the World Bank and the biggest multinationals - and actively supported by Tony Blair, Jacques Chirac and other leaders in the North - does the exact opposite. The debt mechanism, which is its nervous system, has enabled a brutal domination of developing countries’ economies. It has organised the harnessing of natural resources and a transfer of enormous financial riches from populations in the South to their rich lenders who are no doubt in the list of 8.7 million people mentioned here above. Since the debt crisis in the early 1980’s, reimbursements from countries in the South to their foreign lenders came to about 6 000 billion dollars, or the equivalent of 11 times their external debt in 1980. During this time, this debt has quadrupled reaching today 2 800 billion dollars which is the absolute maximum despite incessant declarations - and untrue ones - on the reduction of the debt by the IMF and the World Bank.

And this is why, although the assets belonging to the first twenty financial multinationals reach 18 000 billion dollars, half of mankind has to survive with less than two dollars a day. So it’s not surprising to hear the Food and Agriculture Organization of the United Nations (FAO) announce at the end of October that 854 million people are starving, of which 820 are in developing countries, and that the number is increasing by 4 million every year on average. The modest objectives for development during this millennium, one of which is to half the number of people who are starving before 2015, will not be reached. But according to the United Nations Development Programme UNDP
United Nations Development Programme
The UNDP, founded in 1965 and based in New York, is the UN’s main agency of technical assistance. It helps the DC, without any political restrictions, to set up basic administrative and technical services, trains managerial staff, tries to respond to some of the essential needs of populations, takes the initiative in regional co-operation programmes and co-ordinates, theoretically at least, the local activities of all the UN operations. The UNDP generally relies on Western expertise and techniques, but a third of its contingent of experts come from the Third World. The UNDP publishes an annual Human Development Report which, among other things, classifies countries by their Human Development Rating (HDR).

(UNDP) 80 billion dollars per year for 10 years would be enough to guarantee universal access to drinking water, a decent diet, primary education and basic health treatment. That makes a total of 800 billion dollars that the expert neo-liberals cannot find, deaf to the demands of social movements for the total and unconditional cancellation of the public external debt of developing countries, for the withdrawal of neo-liberal policies dictated by the IMF and for a fair distribution of the world’s wealth. Just 800 billion dollars to wipe out poverty... but I’m going off the point. Sorry, we’re not talking about thousands of billions of dollars here.



Translation: Deborah Worsdale

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 articles in English by Damien Millet (46)

0 | 10 | 20 | 30 | 40

CADTM

COMMITTEE FOR THE ABOLITION OF ILLEGITIMATE DEBT

35 rue Fabry
4000 - Liège- Belgique

00324 226 62 85
info@cadtm.org

cadtm.org