Can the Italian debt be repudiated?

24 June 2019 by Cristina Quintavalla , Antonio De Lellis

Debt is not a natural disaster, nor is it the effect of excessive social expenditure: its odious nature derives from its negative consequences on the population. The Italian case.

“If Salvini really wanted to fight Brussels, as he says, he would have to push for the government to stop repaying the 360 ​​billion euros of Italian securities held by the ECB ECB
European Central Bank
The European Central Bank is a European institution based in Frankfurt, founded in 1998, to which the countries of the Eurozone have transferred their monetary powers. Its official role is to ensure price stability by combating inflation within that Zone. Its three decision-making organs (the Executive Board, the Governing Council and the General Council) are composed of governors of the central banks of the member states and/or recognized specialists. According to its statutes, it is politically ‘independent’ but it is directly influenced by the world of finance.
. He may deny this, but I believe he will not, otherwise he would thwart the interests of the Italian bankers and the financial institutions that support him”. Thus the historian and political scientist Eric Toussaint, from Cadtm, answering a question on the Italian situation, at a meeting on the debt at the news agency.

During the event in Rome the Italian translation of his book, Il Sistema, Storia del debito sovrano e del suo ripudio (The System, History of Sovereign Debt Sovereign debt Government debts or debts guaranteed by the government. and its Repudiation, preface by Marco Bersani, Bordeaux editions) was presented, as well as in Taranto, Parma and Milan.

It has been emphasized that the debt system as an instrument of domination is the corner stone of capitalism. The operational arm consists of institutions such as 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.
, the World Bank World Bank
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.

, the World Trade Organization, which destabilize markets and states, by using debt as blackmailing tool, imposing ’rescue’ policies on the conditions they set. This happens at the expense of the people in the poorest countries, who, faced with the obligation of repaying their previous debts, give up resources, lands and products. With the support of Western governments, big multinational corporations, monopolize mining activities, impose their products, destroy the small peasant economy, devastate the territories.

Even the European institutions, such as the ECB and the European Commission, have set up devices that force the euro-zone states themselves to use the speculative market to finance themselves.

Debt is not a natural disaster, nor is it the effect of excessive social expenditure: its odious nature derives from its negative consequences on the population.

Toussaint argued that odious debts should and can be repudiated, as many peoples and governments have tried to do over the past two centuries, in most cases with success. “In order for a debt contracted by a regular government in an equally regular manner to be considered odious, it must be demonstrated that the objectives for which the debts were contracted were clearly contrary to the interests of all or part of the territory and that the creditors were aware of the odious purpose when the loan was issued”.

The causes of Italian public debt are: bank bailouts (13.5 bn), lack of tax revenue due to the reductions that benefited the highest incomes (295 bn), financial speculation (467 bn in the years 1992 / 2007/2011 only), the interest Interest An amount paid in remuneration of an investment or received by a lender. Interest is calculated on the amount of the capital invested or borrowed, the duration of the operation and the rate that has been set. on the debt (from 1992 to 2017 2,094 billion, of which 1,299 in debt), tax avoidance and evasion (on average 120 billion a year). In light of these data and other expenses, such as those for armaments and large useless and harmful works, can the Italian public debt be repudiated?

We think so, provided we know how to build a vast front of opposition and interconnections, intertwining analyzes and concentrating on the deterioration of living and working conditions. To accept this challenge we must consider that, while today there are many languages, but a single-minded approach, we should have ways of thinking but a single language, common to all and rooted in struggle, which expresses itself through the construction of a shared ethics, with the goal of a dignified life for all the people who live on the territory, within another model of society.

Published in Italian by “Il Manifesto” on 22 June 2019

Cristina Quintavalla

membre du CADTM Italie

Other articles in English by Cristina Quintavalla (2)

Antonio De Lellis

est membre du CADTM Italie




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