Concerted efforts in South Asia against debt and microcredit

5 April 2017 by Renaud Vivien , Sushovan Dhar , Nathan Legrand

Sushovan Dhar (India), Monower Mustafa (Bangladesh) and Éric Toussaint (Belgium) in Dhaka, March the 3rd 2017

CADTM South Asia held a Workshop in Dhaka, Bangladesh from 3-4 March 2017. This international event brought together activists, journalists and members of various organizations from the host country, India and Nepal [1], actively resisting public and private debts, such as micro-credit, and IFI-funded projects that destroy the environment and the livelihood of the population.

It should be noted that Bangladesh is the worst victim of global warming. Floods, cyclones and storms are common incidents here and they are devastating, especially for the peasants. In urban areas too, working conditions are ruthless. Let us not forget the collapse of the Rana Plaza industrial building on 24 April, 2013, leaving 1138 textile workers (mostly women) dead and 2500 people seriously injured. Since the disaster, the social situation has hardly improved while the state continues to pay back every cent of the ​​debt and implement policies based on the IMF 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.
’s degrading recommendations. It is in this country that Muhammad Yunus created Grameen Bank, the infamous microfinance institution. The microcredit model has spread extensively within the country and its real 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. rate is around 35% or more. This has led to extreme indebtedness and dire consequences.

Delegates from the CADTM Belgium also attended this working meeting as CADTM international co-secretariat’s representatives. This platform provided us an opportunity to discuss micro-credit, review the conditionalities of creditors who use, as elsewhere, debt to impose anti-social reforms and finance harmful projects such as coal-fired power plants. The workshop let us discuss the political, economic and social situation in the countries represented, the problems associated with debt (public and private), the harmful projects financed by debt, and how the CADTM network and its allies could take tangible actions in the coming months. The workshop’s major themes were as follows.
Before addressing country-specific situations, Sushovan Dhar (member of CADTM India, active in the South Asia network) and Éric Toussaint (founder and one of the CADTM International’s spokespersons) started with the origin of the CADTM, created in 1990 in Belgium, and its global extension. The network is now present in some thirty countries, four of which are located in Asia: India, Pakistan, Japan and Bangladesh [2]. They pointed out the network’s guiding principles, such as horizontality (member organizations are indeed sovereign, in accordance with the network’s Technical Charter while respecting the Political Charter’s limits). They went into detail about the issues involving the “debt system” and explained how the fight against illegitimate debts converges with other struggles and counters the capitalist and patriarchal systems. They concluded their remarks by explaining why the network’s last Global Assembly (in 2016) decided to change the CADTM’s name. The CADTM is now called the “Committee for the Abolition of Illegitimate Debts”, thus encompassing both public and private debts in the South and the North.

Global and regional political situations

After this general presentation, Éric Toussaint described how debts have evolved globally since the outbreak of the last capitalist crisis in 2007. He showed how the debts of the private banks became public debts when the Northern public authorities bailed out the banks. He stressed that Europe is the epicenter of the global crisis today, a continent where the capital’s offensive on labor is more significant than elsewhere. He also pointed out the danger of a new debt crisis in the South, which has already affected several countries like Algeria, Venezuela, Mozambique, and Nigeria, and implicates not only the Western lenders but also China, the new imperialist creditor power. Éric Toussaint insisted that unilateral acts of payment suspension are essential for confronting the diktats of debt. Examples are Ecuador in 2007-2009, Iceland in 2008-2010, Argentina in 2001- 2005 and Norway in 2006. Such sovereign decisions legitimized by international law have made it possible to reverse the balance Balance End of year statement of a company’s assets (what the company possesses) and liabilities (what it owes). In other words, the assets provide information about how the funds collected by the company have been used; and the liabilities, about the origins of those funds. of power in favor of the populations. That is why the creditors and the mainstream media do not talk about it at all.

Thereafter, Nathan Legrand (CADTM Belgium / the network’s International Shared Secretariat) explained how the Syriza government’s capitulation in Greece shows that the European Union (EU) is beyond reform, hence the States must challenge illegitimate debts through unilateral acts and in order to break with austerity. To illustrate these illegitimate debts, Nathan went on to explain how the bank bailouts have increased public debts and therefore impacted the European populations since they are now being asked to bear the brunt. According to the European Commission, these rescue packages cost more than € 745 billion and came with guarantees worth more than € 1 trillion! Countries on the EU’s periphery lacking the financial means to save the banks were forced to sign memoranda with the Troika Troika Troika: IMF, European Commission and European Central Bank, which together impose austerity measures through the conditions tied to loans to countries in difficulty.

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.
, European Commission and IMF) and were directly subjugated to the creditors. Nathan concluded his speech by reminding us that our fights for economic and social justice are also struggles against reactionary, security and migration policies.

The participants then debated on the strategy to be adopted towards the EU before the Workshop went on to look at the situation in Nepal with a presentation by Ratan Bhandari (member of the organization Jal Sarokar Manch). Ratan first pointed out that the so-called external “aid” has in fact impoverished Nepal, a country of 26.6 million people who are among the poorest in the world. Going back to his country’s history, Ratan reminded that in 1934 Nepal had refused international loans after a major earthquake. Foreign “aid” poured in both from the USSR and the US only during the Cold War. Gradually debts replaced donations and Nepal’s first loan dates back to 1964. Ratan then elaborated on 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.

loan of 1994 foiled by the population. Intended to finance the Arun III hydroelectric project in the country’s eastern parts, this loan came with 44 conditions imposed by the World Bank! Faced with a powerful popular movement against this project, the World Bank finally gave up. Then he elucidated the current composition of Nepal’s debt. The country owes 63% of its public debts to external creditors, mainly the international financial institutions. The main creditor is the World Bank, followed by the Asian Development Bank (ADB). What these two organizations grant to Nepal is not free aid. For example, Nepal was granted loans following the devastating earthquakes of April and May 2015. As for bilateral creditors, the most important is Japan through its investment bank, the Japan Bank for International Cooperation.

Tsutomu Teramoto, member of ATTAC-CADTM Japan, presented the situation in his country. Since 2012, Shinzo Abe’s right-wing government has been ruling Japan. Recently Abe became remarkably close to Donald Trump, the new US President, despite the fact that he has withdrawn from the free trade agreement known as the Trans-Pacific Partnership (TPP). A remarkable feature of Shinzo Abe’s mandate was his economic policy called “Abenomics” (a portmanteau of two words: “Abe” and “Economics”), which was implemented to sustain Japan’s economic prowess threatened by China’s growing power. This policy permits attacks on labor laws and curbs on social expenditure. The profits of large firms are on the rise. So are unemployment and inequality. Currently, the prospects are gloomy: an economic crisis looms in the near future. Tsutomu went on to discuss Japan’s trade policy: since the US has withdrawn from the TPP, Abe is now trying to expedite the Regional Comprehensive Economic Partnership (RCEP) with countries in South Asia, Southeast Asia and Oceania. Japan wants India’s participation for restraining China’s importance in the Indian economy and in the region. At the same time, Shinzo Abe implements disturbing nationalist and military policies and encourages xenophobia. In 2015, the government authorized external interventions by the armed forces. Since July 2016 this has allowed Japan to intensify its army’s role in South Sudan. A new US military base is under construction on Okinawa Island, despite local opposition.

Japan is one of the largest Southern states’ creditors and invests heavily in infrastructure projects and megaprojects, such as nuclear power plants. For the government, investment in infrastructure projects yields visible short term results, unlike those in the areas of health and education which are thus neglected.

With a public debt of more than 200% of GDP GDP
Gross Domestic Product
Gross Domestic Product is an aggregate measure of total production within a given territory equal to the sum of the gross values added. The measure is notoriously incomplete; for example it does not take into account any activity that does not enter into a commercial exchange. The GDP takes into account both the production of goods and the production of services. Economic growth is defined as the variation of the GDP from one period to another.
(a debt of about $ 10 trillion), Japan has beaten all debt records. The Central Bank Central Bank The establishment which in a given State is in charge of issuing bank notes and controlling the volume of currency and credit. In France, it is the Banque de France which assumes this role under the auspices of the European Central Bank (see ECB) while in the UK it is the Bank of England.

has repurchased most of the securities held by foreign banks, so that the domestic creditors hold almost all of the public debt.

Students’ private debts are a major problem, bearing witness to the poor economic situation. Half of the students have a debt that averages $ 30,000 per student, payable Payable A sum of money that one person (debtor) or group of people owes to another (creditor). over 20 or 30 years. This phenomenon is all the more serious because employment prospects are scarce. The students are penalized for any default in debt repayment. For example, banks block their accounts or deny them mortgage Mortgage A loan made against property collateral. There are two sorts of mortgages:
1) the most common form where the property that the loan is used to purchase is used as the collateral;
2) a broader use of property to guarantee any loan: it is sufficient that the borrower possesses and engages the property as collateral.
credit. There is a risk of a “debt trap”.

Anti-nuclear movements have significantly resurfaced in Japan, with a strong youth participation. While the government is trying to pursue nuclear energy, as the sector is profitable for companies, popular resistance has been unprecedented since the 1970s. In 2015, Japan also witnessed a strong mobilization against the law authorizing external interventions by the army. At the same time, there is an important mobilization against the construction of the new US military base in Okinawa. Still, it cannot be denied that struggles in general are gradually losing steam, while the activists are getting older. These are challenges that progressive organizations must address.

Sushovan Dhar, a CADTM member from India, described the plight of an overwhelming majority of the Indian population. The country’s growth is on the decline and the economy is in dire straits. In fact, the concept of growth in the country only means that the purchasing power of barely 15-25% of the population has to be boosted. Inequalities are rising while new employment mainly involves insecure jobs. The formal sector is also increasingly leaning towards contractual labor. 93.5% of the Indian labor force (400 to 500 million) is in the informal sector. Of the remaining 6.5%, 70% of the workforce has contractual jobs: in reality, only 2% of the workers have access to social security coverage.

Neoliberalism, a ruling class project, has led to massive inequality. Only a few people emerge as winners while a huge majority remains losers. Apart from a few tokens such as huge shopping malls, some luxury cars and new highways, precarity and unemployment prevail (unemployment’s official figures do not exist, though they would be underreported anyway, since many unemployed are classified as self-employed). The development of social security depends on private insurance companies. The new right-wing government of the Bharatiya Janata Party (BJP) is wrecking the only few labor laws left.

The miserable life of the peasantry leads to an exodus of rural people looking for insecure work in urban areas. Wretched life forces a massive number of peasants to commit suicide. More than 300,000 suicides have been reported since 1995. Actually the numbers are more, as suicides are reported only when landowners commit them (thus suicides of landless peasants and women go unreported). This suffering of the peasants is directly connected to their over-indebtedness, which is caused by factors such as the agricultural models introduced by the international financial institutions or the bad climatic conditions resulting from the industrial model. The indebted peasants are gradually becoming overindebted due to the practices of microfinance institutions.

For spending in Social Security, India has earmarked less than 1.5% of its budget. This is even less than Sri Lanka, known for its low social spending. The number of private medical clinics is increasing: access to healthcare is limited to those who can afford it.

Swaraj Das, an Indian trade unionist, explained how land dispossession and extractivism are connected. India has numerous open-pit mines that destroy the entire ecosystem and aggravate global warming. The pollution emitted by this industry is so intense that recently public transport and coal-fired power plants had to be shut down for a week in Delhi. Despite this damage, the Indian government continues its extractivist policy, supported by major backers, in particular the World Bank. It is promoting a thermal power plant at Rampal in the Sunderbans area of Bangladesh. This is a joint initiative of the governments of Bangladesh and India. It is also the Indian government’s shot at exporting its inferior quality coal to Bangladesh as a way to support its mining sector, increasingly dominated by the private sector. The CADTM supports the common struggle against this project in Bangladesh and India, since it entails a struggle against extractivism and the region’s international financial institutions.

The next speaker was Monower Mostafa, a researcher at the Development Synergy Institute in Dhaka and a member of the CADTM. In Bangladesh, while policy-makers welcome the achievement of structural changes in the economy, growth is stable at about 6% per year, the number of poor people is statistically decreasing, and a change in the living conditions of the underprivileged is expected. But a change in which direction?

Quantifying poverty is a flawed exercise. It does not reflect the living conditions of the Southern populations (because it is simply based on scanty figures for expenditure and does not take into account the access to basic needs such as food, health care and education). In reality, inequalities are increasing in Bangladesh: positive economic indicators show that only a minority section is getting richer, while basic human needs are denied to the majority. While 2.2 million people join the labor market every year, only 1.3 million work within the country. The remaining 900,000 are migrant workers. Moreover, insecure jobs and the lack of jobs in productive sectors of the economy are major problems. The poorest have very limited access to essential services, the quality of which is also below par. Only one “poor” person out of three has access to social services, that too inadequate. Moreover, the impacts of climate change deal hard blows to people’s living conditions.

Bangladesh’s public debt stands at just over 13% of GDP, with 1/3rd external debt and 2/3rd domestic debt. Though there is no perceptible risk of default, debt repayment definitely curtails the expenditure in health, education and social security. Moreover, neither Bangladesh’s parliament nor the society at large ever discusses the country’s bilateral and multilateral loans that have no respite from crucial conditionalities. This is why the IMF could persuade Bangladesh to impose a value added tax (VAT), a severely unjust tax that can only accelerate the misery of the poorest populations. Loans from international financial institutions, including the World Bank and the ADB, are often designed to impose useless infrastructure projects and extractive industrial models that destroy the environment, intensify climate change and harm the populations. Moreover, Bangladesh has seen two military dictatorships- part of its public debt is obviously odious.

In Bangladesh, particularly alarming is the case of private debt in the form of microcredits. Considering the magnitude of the problem, the activists of the CADTM Bangladesh established that a citizen audit of both public and private debt could effectively be an important tool to counter the dependence on international financial institutions, creditor states and microfinance institutions. Subsequent discussions in the workshop highlighted the experiences of movements in the other countries represented and elsewhere. These helped the Bangladeshi activists to chalk out policies and action-plans in keeping with national realities.

What will be the nature of a citizen debt audit in Bangladesh?

Renaud Vivien, a member of Greece’s Truth Commission on Public Debt, outlined the principles of citizen debt audits. These are meant to reveal the real factors behind internal and external (even individual) indebtedness. Why were the loans contracted? Under what circumstances? Under what conditions? Who are the lenders? Have national and international laws been respected? What were the consequences of indebtedness? An audit can answer more such questions.

Debt is not neutral, it is a mechanism of domination. An audit provides the necessary arguments for the repudiation of illegitimate, illegal, odious and unsustainable debts. It’s also a tool for questioning the state’s budget (and thus national political decisions) and for proposing alternatives for the fulfillment of basic human rights. Auditing is a civic and political right (hence a human right). Citizen audits must demand that the policy makers recognize the illegitimacy of debts.

Then the objectives and modalities of a citizen debt audit in Bangladesh were discussed. It is important to analyze the conditions imposed on loans. These conditions are clearly mentioned in documents (e.g. letters of intent sent to the international financial institutions). If the public is unable to access these documents, these must be declassified within the purview of the right to information. The audit also challenges the definitions of sustainability and unsustainability of international financial institutions, which are mere technicalities: if Bangladesh’s public debt is technically “sustainable”, it means that the population is bled dry to reimburse it and cuts are imposed on health care or education. In this sense, the debt is unsustainable, since it cannot be repaid without impairing fundamental human rights. The workshop highlighted the negative environmental impacts caused by certain useless infrastructure projects and extractivist megaprojects. The audit must also scrutinize these impacts and denounce them.

The swift implementation of a citizen debt audit in Bangladesh was proposed. Initially it will focus on a few specific cases of illegitimate debt, such as the Ganges dam project threatening the local people (a project conceived in the 1960s by Pakistan’s central government, which treated East Pakistan - now Bangladesh - as a quasi-colony), or the coal-fired power plant in the Rampal region threatening the Sundarbans, the largest mangrove forest in the world. Other loans have been contracted for specific projects that are yet to see the light of the day. The audit will also challenge the loans contracted under military dictatorships.

Since microcredit is a significant issue in Bangladesh, an audit will have to tackle private debts. The process can start with interviewing victims of microcredit for collecting their testimonies and exposing the practices of microfinance institutions. These institutions 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. hugely from the impoverishment of millions of people. To start with, such an audit could focus on one or two of the most important institutions, such as Grameen Bank or BRAC Bank.

Several well-known researchers and activists from Bangladesh, as well as Éric Toussaint -the CADTM international network’s spokesperson- supported the citizen audit initiative. This audit should lay bare the actual fallouts of public debt and microcredit. Furthermore, they stressed the importance of abolishing the debt model so that Bangladesh can freely choose its policies. This anti-debt struggle will need to widely mobilize people from the bottom. This implies seeking alliances with other organizations, such as those fighting corruption. Help from researchers would be required for a widespread participation in the audit. It is useful to compare the methods adopted by the other countries in the region, hence forge ties with activists in the neighboring countries. This regional workshop has been successful in this respect. Finally, it was argued that the bottom-up initiative should rigorously pressurize the policy-makers to examine illegitimate debt, as was the case in Ecuador following Rafael Correa’s election. Without such pressure, the authorities will never survey the debt and will continue to implement the existing policies.

The CADTM’s agenda for the region

To conclude the Workshop, a calendar of actions for the CADTM in Bangladesh and the region was prepared collectively. The participants want to set into motion the conditions conducive for the launch of a citizen’s audit of Bangladesh’s microcredit and public debt. This is in keeping with the modalities proposed in the previous discussions (i.e. prioritizing the analysis of some typical projects of the international financial institutions, particularly in the sectors of health and extractivism). This audit is part of the movement against the international financial institutions, which is one of the CADTM’s top priorities for its activists in India and Bangladesh. The Workshop was also a new benchmark in the collaboration and integration between the CADTM and activists from Nepal involved in similar struggles. This collaboration should be bolstered in the coming months. The CADTM’s South Asia network is jointly planning to participate in the movement against the ADB’s activities at its 50th annual summit, scheduled to be held from 4-7 May in Yokohama, Japan.

Translated by Suchandra De Sarkar


[1Unfortunately, no delegate from Sri Lanka was able to come while the delegate from Pakistan had to give up his travel plans at the last minute. Diplomatic relations between Bangladesh and Pakistan have deteriorated sharply following the trial and sentencing of war criminals backed by the Government of Pakistan. These persons have been convicted of crimes committed during the Bangladesh National Liberation War in 1971.

[2The CADTM membership of the Bangladeshi association is currently under process. In accordance with the CADTM Technical Charter, the network’s Global Assembly validates an organization’s membership.
The next one will be held in 2019.

Renaud Vivien

member of CADTM Belgium, member of the Truth Commission on Public Debt.

Other articles in English by Renaud Vivien (21)

0 | 10 | 20

Other articles in English by Sushovan Dhar (61)

0 | 10 | 20 | 30 | 40 | 50 | 60

Other articles in English by Nathan Legrand (15)

0 | 10




8 rue Jonfosse
4000 - Liège- Belgique

00324 60 97 96 80