Committee for the Abolition of Illegitimate Debt

It will come as no surprise to the hundreds of people gathered for a conference I have just returned from, that Greece’s ’bail-out’ package agreed 12 months ago has failed to provide a solution to the country’s debt problems.

 
Organised by an unprecedented cross-section of Greek civil society, the international event launched the call for Greece (and now Ireland) to open their debts to the people of those countries for a public discussion as to how just and legitimate those debts really are. Campaigners from Brazil, Peru, the Philippines, Morocco and Argentina told Greek activists to ’stand on their shoulders’ and not go through 30 years of devastating recession at the behest of international institutions like 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.

http://imf.org . 

 
The burgeoning European movement in opposition to debt repayments and austerity is making concrete links with groups from the global South, and it expresses a confidence and rationalism a million miles away from the governments of Greece and Ireland, which have followed policies which are punishing ordinary people in order to repay reckless bankers.

 
It is simply not possible that the policies being inflicted on Greece, Ireland and now Portugal will reduce the debt burden of those countries – the very opposite will happen, as was seen from Zambia in the 1980s to Argentina at the beginning of the last decade. Similar policies to those being inflicted on Europe saw Zambia’s debt-to-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. ratio double in the 1980s as the economy shrank. Argentina defaulted on its massive debts in 2001, after a 3-year recession brought about by IMF policies. Like Ireland today Argentina was told it had partied too hard, even though the debt had been run up by a disastrous set of privatisations and a currency peg foisted on the country by the same IMF. It’s economy started recovering within a month of the default.
 

So why then are these policies still being pursued? Almost every commentator has known from day one that the ’bail-out’ packages would not make the debts of Greece or Ireland sustainable. But delegates at this weekend’s conference were clear – that isn’t the point. The point is to recover as much of investors’ money as possible, however liable those investors were for the crisis, and transfer liability to society.

 
Even if Greece and Ireland need additional bail-out money or restructuring through some sort of bonds – the same measures imposed on Latin America in the 1980s which created mountains of debt so big that those countries are still suffering the fall-out – the private investors will have been paid out. The argument becomes one between German and Greek populations as to who will foot the biggest portion of the bill, creating a dangerous nationalism already very evident. 

 
European Commissioner for Economic Affairs Olli Rehn has continually told governments that these matters are best kept in the dark – public discussion is strongly discouraged. Those actually paying the price of austerity disagree, and campaigners in Greece and Ireland say the first step in any kind of just solution must be a debt audit – modelled on those carried out in developing countries like Ecuador.

 
A debt audit would provide people of Europe with the knowledge on which to base truly democratic decisions. As Sofia Sakorafa, the Greek MP who refused to sign the bailout terms and walked out of the governing party PASOK, put it at the conference “the answer to tyranny, oppression, violence and abuse is knowledge”. Andy Storey from Irish group Afri echoed this, saying the purpose of an audit is to “remove the mask of the financial system which controls our economy”.

 
The results of an audit can be rapid and concrete. Maria Lucia Fattorelli from Brazil is a veteran of debt audits, and helped Ecuadorian groups conduct an audit endorsed by President Correa in 2008. The Economist called Correa “incorruptible” when public spending rose, after his successful default on bonds following the audit. Taking action now could mean saving European countries from the three decades of stunted development experienced by Latin American countries.

 
But the activists gathered this weekend believed that a debt audit can be the start of something even more fundamental – a new way of thinking about economics. As Sakorafa put it, an audit is the start of regaining values and vision to show “beyond speculating market games, there are more valuable concepts; there are people, there is history, there is culture, there is decency.” 
 

Such a rejuvenation of political vision is vital if the crisis is not to cause impoverishment and spur inter-European hostility. On Sunday Irish economist Morgan Kelly said his country was heading for bankruptcy. A secret meeting of European leaders on Friday night came to the same conclusion about Greece – a country we are told is losing 1,000 jobs a day and where the suicide rate has doubled. Portugal’s €78 billion ’bail out’ package, dependent on a freeze in civil service pay and pensions, reduced compensation to laid off workers, and cutting unemployment benefits at exactly the time unemployment figures are reaching record levels, will have a similar impact. Everywhere emigrants are streaming out of these countries in search of better prospects.

 
No amount of compensation will repair the damage these policies will wreak on society - as delegates across the developing world testified too. There is no reason for Europe to wait 30 years to learn this lesson. A European and international movement must make up for the poverty of our leader’s vision. Such a movement feels like it may have been born in Athens.