Committee for the Abolition of Illegitimate Debt

‘We have lost all that money can buy and replace,’ said Roosevelt Skerrit, the prime minister of Dominica, where 98 per cent of the buildings are damaged.

Dominica is already heavily indebted, and 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.

http://imf.org ranked the island as at high risk of a debt crisis even before the devastation caused by Hurricane Maria. Now a petition to the World Bank and IMF calls for all lenders to suspend debt payments from countries drastically impacted by hurricanes in recent weeks.

Austerity programmes

Past hurricanes are one of the reasons why Dominica and other Caribbean countries are already heavily indebted. Just two years ago, Dominica was hit by Hurricane Erika, which is estimated to have caused losses of 90 per cent 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. , as well as killing 30 people and leaving over 500 homeless.

The prime minister of Antigua and Barbuda made an appeal for the country’s debt to be written off following Hurricane Irma. Speaking at the UN General Assembly, he said the cost of rebuilding from Hurricane Irma would be around $250 million – that’s 15 per cent of the country’s GDP or $2,500 per person.

But Caribbean countries are among many that have had their debt problems ignored for decades. Jamaica has effectively been in a debt crisis since the 1970s, with continued government cuts just leading to a stagnating economy. The current IMF mandated economic programme on the island includes austerity more than two times greater than that being pushed on Greece by the Eurozone.

In the Eastern Caribbean, many countries suffered an economic shock in the 1990s, when American companies used the World Trade Organisation WTO
World Trade Organisation The WTO, founded on 1^st January 1995, replaced the General Agreement on Trade and Tariffs (GATT). The main innovation is that the WTO enjoys the status of an international organization. Its role is to ensure that no member States adopt any kind of protectionism whatsoever, in order to accelerate the liberalization global trading and to facilitate the strategies of the multinationals. It has an international court (the Dispute Settlement Body) which judges any alleged violations of its founding text drawn up in Marrakesh.

to make the EU import bananas and sugar from Latin America on the same terms as from the Caribbean. The smaller Caribbean producers could not compete with the US companies in Latin America, and production was decimated. Debts were taken on in an attempt to cope.

Colonial debt

In contrast to the financial debts of Caribbean countries, there are much bigger debts owed the other way round. One is the economic impact of colonial history. As a taxi driver told me when I visited Grenada in 2013: ‘England bled us dry for many years of our cocoa and nutmeg, being made rich whilst we were made poor. It’s time for them to give something back. We really need your help in getting the debt written off.’

Another is the impact of climate change. Warmer seas mean there is more energy to drive the devastating power of hurricanes, and higher sea levels to begin with before hurricanes dump water onto the land. The devastating impact of storms across the Caribbean can only be expected to get worse.

In the long term, rebuilding the islands requires finally delivering debt cancellation to get debts down to a sustainable level. Reconstruction aid should be given as grants, not loans, and better trade terms would help the economies to be self-sufficient. Grants could support adaptation to the inevitable impacts of climate change, and the rest of the world needs to take on board a radical reduction in carbon dioxide emissions to stop climate change being even worse.

Right now, Dominica, Antigua and other countries need as much immediate help as possible, and the suspension of debt payments is the least they should receive.