Committee for the Abolition of Illegitimate Debt

The G20 G20 The Group of Twenty (G20 or G-20) is a group made up of nineteen countries and the European Union whose ministers, central-bank directors and heads of state meet regularly. It was created in 1999 after the series of financial crises in the 1990s. Its aim is to encourage international consultation on the principle of broadening dialogue in keeping with the growing economic importance of a certain number of countries. Its members are Argentina, Australia, Brazil, Canada, China, France, Germany, Italy, India, Indonesia, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, USA, UK and the European Union (represented by the presidents of the Council and of the European Central Bank). agenda, that had been very carefully prepared over several months, was completely turned upside down. In pathetic manner, all the state leaders and business captains suddenly became dependent on the Merkel - Sarkozy couple’s ability, before the end of the summit, to persuade the Greek authorities to abandon the proposed referendum. If the plan for a referendum had been confirmed, and had it involved asking the Greek people to accept the agreements made at the European summit of the 26^th and 27^th October 2011, this would have caused a banking and financial panic. Why? Because all the signs indicated that the plan would be rejected: according to polls carried out after the 27^th October, only 12% of the Greeks approved the plan. The danger of rejection would have provoked, during the month of November 2011, a plunge in the value of Greek bonds, obliging the big French banks, among others, to effect a write-down of their Greek assets to the tune of 80% to 90%. These banks’ shareholders would have sold their stock, thus causing a collapse in stock prices. Italian and Spanish bonds would have been subject to speculative attacks which the Eurozone would have been incapable of withstanding, the EFSF (the European Financial Stability Facility) not having sufficient means to do so. The French and German banks, along with other holders of Italian and Spanish debt, would have foundered.

It is clear that George Papandreou, faced with renewed popular unrest on 28^th October, the national holiday, and criticism within his own coalition, was doing what he could to gain time and to ensure a parliamentary vote of confidence. His U-turn was not motivated by a sudden will to hear the voice of the people, he who over the last eighteen months has cast aside the most elementary democratic rules and backed down on his electoral commitments. Once his 1^st November promise of a referendum was known, it was largely rejected by the Greek population, as well as by left wing political parties and social organizations. However, it was for totally different reasons that the European leaders were unanimously opposed to any public consultation whatsoever concerning the new austerity plan imposed on Greece in the framework of the October 2011 agreement.

That the EU is in crisis was blatantly obvious at the summit, and it was not the leaders of the European institutions who played the main roles. J.M. Barroso and H. Van Rompuy, respectively presidents of the European Commission and the European Council, were no more than mere onlookers, while the presidents of the two strongest countries of the Eurozone led the important negotiations from beginning to end.

George Papandreou has stepped down and it looks likely that a government of national unity would undertake to apply the austerity measures that the Greek majority refuses. Yet even if this provides temporary respite for the plan to save Athens (it would be more accurate to say, for the plan to save the euro and the big private banks), Greek discontent is such that nothing is certain.

Italy is already signaled as the next weak link in the Eurozone, with a sovereign debt Sovereign debt Government debts or debts guaranteed by the government. six times that of Greece. The G20 has failed the Italian Government abysmally. S. Berlusconi has had to accept that his country be put under the permanent scrutiny of 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 . Coming out of the meeting, Christine Lagarde, managing director of the IMF, said of the Italian head of government, “we will subject him to a reality test.” She went on to talk about Italy: “I am going to send them a team of probably five or six experts every three months.” [2]. That a founding member country of the G7 should be subjected to such humiliating treatment illustrates the extent of the damage to the Eurozone and the EU. Not to forget that Mario Draghi, the new president of the European 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.

ECB : http://www.bankofengland.co.uk/Pages/home.aspx , was until last month the director of the Italian Central Bank after having served S. Berlusconi as minister. The announcement by Mario Draghi, ex-director of Goldman Sachs, of a reduction of 0.25% of 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.

https://www.ecb.europa.eu/ecb/html/index.en.html prime rate is another concession to bankers having difficulty finding cheap funding.

Another failing of the EU and the Eurozone : the European Financial Stability Facility has not yet entered into its new judicial framework, nor had its means enlarged as agreed at the European summit of 21^st July 2011. The BRIC (Brazil, Russia, India and China) have clearly announced their refusal to fund this facility.

Nor is the IMF coming out as well as its managing director would have us believe: the 500 billion promised at the G20 summit in London in 2009 remains unconfirmed.

This is the consequence of the refusal by the G7 to accept one of the demands of the BRIC. They wanted, in return for their aide to the IMF, EU and to the USA, a greater weight in the decision-making of the IMF and 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.

, along with a new distribution of voting rights and more key positions in those institutions. It’s a lose - lose situation: the G7 cannot get the emerging countries to open their purse-strings; and the emerging countries cannot obtain a status in keeping with their economic and political weight in the international institutions.

In spite of having to face a worsening economic crisis and very gloomy prospects for 2012, the governments of the industrialized countries refuse to take the elementary measures needed to put the private financial sector in order and to give a boost to the economy: separating deposit and commercial banks, prohibiting certain speculative transactions, taxing financial transactions, capping directors’ fees with very strict controls on bonuses, reprisals against tax havens, increases in public expenditure to boost employment, protecting the purchasing power of wage earners and claimants... Of all these measures which at one moment or another during the crisis have been suggested by leaders such as Nicolas Sarkozy, the host of the G20 summit, none have been put into practice. Yet such measures constitute the absolute minimum for a programme like the one Franklin F. Roosevelt adopted to get the USA out of the great depression.

B. Obama and the European leaders have chosen otherwise: massive structural support for banks and other financial institutions to avoid massive serial bankruptcy, together with reinforcement of neoliberal policies (reduction of public spending, reduction of household and population purchasing power, the destabilization of salaried employment, a new wave of privatizations, increases in indirect taxation). There is no doubt about the consequences of these choices: pauperism of the majority of the population in the countries concerned, aggravation of the inequality gap, the risk of increasing bankruptcy in the banking sector, as no serious limit has been placed on their speculative activities, slow economic growth with periods of recession for the next ten to fifteen years, the continuation of structural indebtedness on the part of public authorities because of insufficient fiscal revenues, and the continuation of the Eurozone crisis.

The gulf between realpolitik and the ​​ranting speeches against market abuse is obvious in the following passage from the summit’s final Declaration : “We will not tolerate a return to the behaviors observed in the financial sector before the crisis, and we will strictly control the application of our commitments regarding banks, the over-the-counter derivatives Derivatives A family of financial products that includes mainly options, futures, swaps and their combinations, all related to other assets (shares, bonds, raw materials and commodities, interest rates, indices, etc.) from which they are by nature inseparable—options on shares, futures contracts on an index, etc. Their value depends on and is derived from (thus the name) that of these other assets. There are derivatives involving a firm commitment (currency futures, interest-rate or exchange swaps) and derivatives involving a conditional commitment (options, warrants, etc.). markets and pay practices.”

Particularly lethal in the developing countries, especially in Africa : the nutrition crisis, principally provoked by speculation on agricultural produce, was also on the G20 agenda but gave rise to no particular decisions; the declaration merely mentions that there must be “a reduction in the effects of price volatility”.

After the G20, the European “indignés” and the Occupy Wall Street movement see their convictions reinforced. Those who supposedly pilot the planet are incapable of finding the right solutions and have put their whole weight against the idea that a people may pronounce an opinion on the neoliberal policies they impose. The lesson will not be forgotten. Clearly, the need for a different, truly democratic, international architecture, has become a matter of urgency. Anti-capitalist choices must now be made: the dictatorship of the creditors refused. Banks must be expropriated without indemnity, by the people; there must be repudiation of illegitimate debt and radical redistribution of wealth.

Translated by Mike Krolikowski and Vicki Briault