Alternative solutions to the debt crisis

International conference Brussels, 6-8 March

19 May 2014 by Bodo Ellmers

In March 2014, Eurodad and the Brussels office of the Rosa-Luxemburg-Stiftung brought together politicians, academics and civil society activists from Europe and other regions to discuss alternative solutions to the debt crisis. The conference was scheduled to take place in Brussels in the run up to May’s European Parliament elections – the first European elections since the global financial crisis turned into the European debt crisis, and a key opportunity to change the path of European debt policies.

In an age of austerity, in which public spending cuts and structural adjustment Structural Adjustment Economic policies imposed by the IMF in exchange of new loans or the rescheduling of old loans.

Structural Adjustments policies were enforced in the early 1980 to qualify countries for new loans or for debt rescheduling by the IMF and the World Bank. The requested kind of adjustment aims at ensuring that the country can again service its external debt. Structural adjustment usually combines the following elements : devaluation of the national currency (in order to bring down the prices of exported goods and attract strong currencies), rise in interest rates (in order to attract international capital), reduction of public expenditure (’streamlining’ of public services staff, reduction of budgets devoted to education and the health sector, etc.), massive privatisations, reduction of public subsidies to some companies or products, freezing of salaries (to avoid inflation as a consequence of deflation). These SAPs have not only substantially contributed to higher and higher levels of indebtedness in the affected countries ; they have simultaneously led to higher prices (because of a high VAT rate and of the free market prices) and to a dramatic fall in the income of local populations (as a consequence of rising unemployment and of the dismantling of public services, among other factors).

programmes are the default answer for governments and international institutions to surging sovereign debt Sovereign debt Government debts or debts guaranteed by the government. levels, this conference aimed to find more effective and just ways out of the crisis.
It aimed to promote the debate about alternative solutions to the austerity policies, bank bail-outs and creditor domination that crisishit
countries in Europe and beyond have had to endure over the past few years. The ultimate goal was to develop a compendium of alternative solutions and to mobilise the political pressure for their implementation.

Experts and affected citizens from different crisis countries in Europe and the Middle East and Northern African (MENA) region made presentations about how the debt crisis had affected their countries.
They described which policy options they expect their parliaments and governments to take, but also the many ways in which citizens are resisting attempts to solve their crisis through adjustments on their costs. The idea was to learn from each other and to connect social movements and activists.

Debt crises are not new, although (Western) Europe has largely managed to avoid them since the Great Depression of the 1930s. Many developing countries have more recently experienced how debt crises are used to impose neoliberal transformation processes on them. Some countries have managed to escape. Experienced activists from countries such as Argentina and Ecuador presented case studies where alternative solutions were applied. The idea was to see if these solutions can be introduced in the currently affected countries too.

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