Committee for the Abolition of Illegitimate Debt

 Preamble

CADTM International is a network of some 30 active organizations in over 30 countries across four continents

In 1989, the Bastille Appeal was launched in Paris. It invited popular movements throughout the world to unite in demanding the immediate and unconditional cancellation of the debt of the so-called developing countries. This crushing debt, along with the neo-liberal macro-economic reforms imposed on the South since the debt crisis of 1982, had led to the explosion of inequality, mass poverty, flagrant injustice and the destruction of the environment. It was in response to this appeal, and in order to fight against the overall degradation of living conditions of the majority of peoples, that the CADTM was founded in 1990. Nowadays, CADTM International is a network of some 30 active organizations in over 30 countries across four continents. Focusing on the debt and debt-related issues, the principal aim of its actions and the radical alternatives it proposes is to work towards a world based on sovereignty, solidarity and cooperation between peoples, respect for the environment, equality, social justice and peace.

 Political Charter

1 – In the South

Public debt (external and domestic) involves a massive transfer of wealth from the peoples of the South to the creditors, while the local dominant classes skim off their commission during the transfer. Both in the Northern and Southern hemispheres, debt is a mechanism used to transfer wealth created by workers and small producers to the benefit of capitalists. Debt is used by lenders as an instrument of political and economic domination which establishes a new form of colonialism. Despite their vast natural and human resources, the people of the South are being bled dry. In most countries of the South, the amount spent each year in repayment of public debt comes to more than that spent on education, health, rural development and job creation all together. The debt relief initiatives of recent years have been a mere mockery, as the stringent conditions they come with do more harm than good to the countries which are supposed to be the “beneficiaries”.

2 – The abolition of illegitimate debt demanded from countries of the South

The CADTM’s main objective is the immediate and unconditional cancellation of public debt of countries of the South and the abandonment of <htmlstructural adjustment policies

The CADTM’s main objective is the immediate and unconditional cancellation of public debt of countries of the South and the abandonment of structural adjustment Structural Adjustment Economic policies imposed by the IMF in exchange of new loans or the rescheduling of old loans.

Structural Adjustments policies were enforced in the early 1980 to qualify countries for new loans or for debt rescheduling by the IMF and the World Bank. The requested kind of adjustment aims at ensuring that the country can again service its external debt. Structural adjustment usually combines the following elements : devaluation of the national currency (in order to bring down the prices of exported goods and attract strong currencies), rise in interest rates (in order to attract international capital), reduction of public expenditure (’streamlining’ of public services staff, reduction of budgets devoted to education and the health sector, etc.), massive privatisations, reduction of public subsidies to some companies or products, freezing of salaries (to avoid inflation as a consequence of deflation). These SAPs have not only substantially contributed to higher and higher levels of indebtedness in the affected countries ; they have simultaneously led to higher prices (because of a high VAT rate and of the free market prices) and to a dramatic fall in the income of local populations (as a consequence of rising unemployment and of the dismantling of public services, among other factors).

IMF : http://www.worldbank.org/ policies. In pursuit of this objective, here are some of the aims that CADTM International seeks to promote by its actions:

• To disseminate information, raise awareness, and help indebted peoples to get organized.
• To set up debt audits, with citizen participation, as a preliminary to rejecting all odious and illegitimate debt.
• For governments to make unilateral and sovereign decisions and, having declared their public debt null and void, to cease to repay it.
• For them to break off agreements with 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 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.
  
  .
• To establish a united front of countries who cease debt repayments.
• To gain recognition for the odious debt Odious Debt According to the doctrine, for a debt to be odious it must meet two conditions:
  1) It must have been contracted against the interests of the Nation, or against the interests of the People, or against the interests of the State.
  2) Creditors cannot prove they they were unaware of how the borrowed money would be used.
  
  We must underline that according to the doctrine of odious debt, the nature of the borrowing regime or government does not signify, since what matters is what the debt is used for. If a democratic government gets into debt against the interests of its population, the contracted debt can be called odious if it also meets the second condition. Consequently, contrary to a misleading version of the doctrine, odious debt is not only about dictatorial regimes.
  
  (See Éric Toussaint, The Doctrine of Odious Debt : from Alexander Sack to the CADTM).
  
  The father of the odious debt doctrine, Alexander Nahum Sack, clearly says that odious debts can be contracted by any regular government. Sack considers that a debt that is regularly incurred by a regular government can be branded as odious if the two above-mentioned conditions are met.
  He adds, “once these two points are established, the burden of proof that the funds were used for the general or special needs of the State and were not of an odious character, would be upon the creditors.”
  
  Sack defines a regular government as follows: “By a regular government is to be understood the supreme power that effectively exists within the limits of a given territory. Whether that government be monarchical (absolute or limited) or republican; whether it functions by “the grace of God” or “the will of the people”; whether it express “the will of the people” or not, of all the people or only of some; whether it be legally established or not, etc., none of that is relevant to the problem we are concerned with.”
  
  So clearly for Sack, all regular governments, whether despotic or democratic, in one guise or another, can incur odious debts. doctrine in international law.
• To urge refusal of any conditions that lenders seek to impose.
• For citizens of the countries of the South to recover assets formerly embezzled by corrupt leaders of the South, with the complicity of banks and governments.
• For the Northern powers to pay unconditional reparations to the countries of the South in the name of historic, social and ecological debt accumulated with regard to the countries of the South.
• For legal action to be taken against the international financial institutions.
• In cases where bankrupt private banks have been nationalized, for the total recovery of costs from the assets of the large shareholders and directors.
• For the World Bank, the IMF and the WTO 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 be replaced by democratic institutions which prioritize the fulfilment of fundamental human rights through development finance, credit and international trade.
• For the termination of all agreements (economic, political, military, etc.) which endanger the sovereignty of peoples and perpetuate the mechanism of dependence.

3 – In the North

In the economies of the most industrialized countries, public debt has risen sharply as a result of the multiple bailouts of large private banks in Europe, North America and Japan. In addition, in the neoliberal political context, enormous tax gifts to a tiny minority including the richest people and large corporations have forced states to borrow heavily in order to 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. deficits. The neoliberal offensive that shut down 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 funding for governments and public authorities, that as a consequence had to turn to private banks and the financial markets, has increased the cost of financing public debt.

The accumulation of public debt and its repayment act as a powerful mechanism for the transfer of the wealth produced by Labour to Capital, in the North of the planet as in the South.

The public debt serves as a pretext for the pursuit of neoliberal policies that reduce social spending and public investment. This leads both to a deterioration of the living conditions of the overwhelming majority of the population and to a sharp increase in inequalities.

The CADTM is in favour of cancelling illegitimate public debts and considers that governments must take unilateral action to restructure or repudiate their debt in favour of social justice. The participation of citizens in auditing processes is one of the courses of action supported by the CADTM.

Since the early 1970s in the South and the 1980s in the North, ruling classes have succeeded in undermining the workers’ social conquests and their direct and indirect wages. Through a strategy of repeated skirmishes, an ever-increasing part of the value produced by the working population has been clawed back by the ruling classes. Such attacks on progressive and highly civilizing social conquests won over in hard struggles until the 1970s are unfair, immoral and reprehensible. We will strive to cancel those setbacks enforced by Capital in its offensive against Labour. The CADTM will support, and participate in, any social movement, organization and/or trade union that acts to stop and reverse the dismantling of social conquests by ruling classes to restore what was lost and extend basic human and social rights to all spheres of human activities.

4. The system of illegitimate private debts

This debt system is much older than the capitalist system itself which strengthened and refined it. This is the case in the current neoliberal phase, which is forcing more and more households into debt in order to access services such as education, health, housing, energy, etc., that are not or no longer fully provided by the public sector as their social nature would require,.

Private debt has been used for millennia as a mechanism for dispossessing peasants of their land, dispossessing artisans of their means of production. Slavery due to debt bondage was rife throughout the ancient world for centuries.

The system of illegitimate private debts usually involves the imposition of conditions of borrowing that make repayment impossible. This results in dispossession (dispossession of homesteads, land, tools and equipments for work) and/or the obligation to devote long years, or even decades, to repayment.

The extension of precarious contracts and the pervasiveness of subcontracting are some of the measures implemented by large companies to increase their profits at all costs. There is a huge army of workers who are exploited, deprived of rights, who live in precarious conditions and are employed only as long as strictly necessary, outside any stable labour relationship, without decent contract or wages, without paid holidays, without sick pay or the right to strike.

For all of them, borrowing has become a necessity now even in rich Western economies.

The struggles against these illegitimate private debts go back centuries and continue today, for example through:
 • peasant struggles for the cancellation of exorbitant debts in India;
 • the struggles of brick factory workers in Pakistan against new forms of debt-bondage;
 • women’s struggles against extortionate microcredit schemes in Morocco, Sri Lanka, Colombia and Bangladesh;
 • student struggles with the burden of student debt in the United States, Chile, Canada, South Africa, or the United Kingdom;
 • the struggles of households victims of excessive 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. loans and of the financialization of housing resulting in evictions for default in Spain, the United States, Greece, Ireland, etc.

5. In the Global North as in the Global South, we must fight the capitalist system, which destroys Nature

We must fight the capitalist system which for two centuries since the beginning of the industrial revolution, has ejected waste and effluents into the atmosphere that are the cause of global warming and the global ecological crisis.

In the North as in the South of the Planet, it is necessary to defeat a system that preys on Nature, and its resources that It considers to be commodities Commodities The goods exchanged on the commodities market, traditionally raw materials such as metals and fuels, and cereals. to grab, exploit and commercialise in order to create maximum profits.

A capitalist system that compels many countries and their peoples to extract their raw materials and to produce for export markets at the lowest possible price.

A system that continues to emit massive quantities of greenhouse gases almost as fast as it emits promises, usually at international conferences, to stop doing so.

A system that pushes countries and peoples to grow agricultural products that they do not consume and to consume goods they do not produce.

A system that develops nuclear power plants against which we are fighting.

A capitalist system that maintains and reinforces the exploitation and oppression of women.

A capitalist system that goes hand in hand with the debt system.

6- Legitimate public debt should fund a grand ecologist-feminist-socialist transition programme

The public debt should be a financial instrument for a grand ecologist-feminist-socialist transition programme, instead of being used to impose anti-social, extractivist and productivist policies, creating competition among peoples.

The public authorities may resort to borrowing for:

• financing the complete shutdown of nuclear and thermal power plants;
• replacing fossil fuels with renewable energies that respect the environment;
• financing a conversion of today’s agriculture, which contributes significantly to climate change and is a major consumer of chemical inputs responsible for the decline in biodiversity. It is a question of reconstructing agricultural activities in an orientation compatible with reducing and eliminating climate change by promoting in particular local and short supply chains and by producing organic food;
• drastically reducing road and air transport in favour of public railway transport;
• financing a vast program of development of a better quality affordable homes for all that consume much less energy and respect the ecological limits of our environment;
• socialising and developing free essential public services (education, health, culture, etc.)
  Public borrowing is only legitimate if it benefits projects that are themselves legitimate and lenders act in due sincerity.

A popular government will not hesitate to force big companies (national or foreign) and the richest households to contribute to the loan without profiteering from it, that is to say at zero interest rates Interest rates When A lends money to B, B repays the amount lent by A (the capital) as well as a supplementary sum known as interest, so that A has an interest in agreeing to this financial operation. The interest is determined by the interest rate, which may be high or low. To take a very simple example: if A borrows 100 million dollars for 10 years at a fixed interest rate of 5%, the first year he will repay a tenth of the capital initially borrowed (10 million dollars) plus 5% of the capital owed, i.e. 5 million dollars, that is a total of 15 million dollars. In the second year, he will again repay 10% of the capital borrowed, but the 5% now only applies to the remaining 90 million dollars still due, i.e. 4.5 million dollars, or a total of 14.5 million dollars. And so on, until the tenth year when he will repay the last 10 million dollars, plus 5% of that remaining 10 million dollars, i.e. 0.5 million dollars, giving a total of 10.5 million dollars. Over 10 years, the total amount repaid will come to 127.5 million dollars. The repayment of the capital is not usually made in equal instalments. In the initial years, the repayment concerns mainly the interest, and the proportion of capital repaid increases over the years. In this case, if repayments are stopped, the capital still due is higher…

The nominal interest rate is the rate at which the loan is contracted. The real interest rate is the nominal rate reduced by the rate of inflation. and without compensationfor inflation Inflation The cumulated rise of prices as a whole (e.g. a rise in the price of petroleum, eventually leading to a rise in salaries, then to the rise of other prices, etc.). Inflation implies a fall in the value of money since, as time goes by, larger sums are required to purchase particular items. This is the reason why corporate-driven policies seek to keep inflation down. .

At the same time, a large part of the working class households who have savings would be offered publicly guaranteed savings and investment schemes tied to funding the legitimate projects mentioned above. This voluntary funding by the working class would be remunerated at advantageous 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. rates.

This mechanism would be highly legitimate because it would fund socially useful projects, and also would reduce the wealth of the wealthiest while increasing the income of the labouring classes and securing their savings.

7- The cancellation of illegitimate debt is not an end in itself

For the CADTM, the cancellation of illegitimate debt is not an end in itself. It is an essential condition – albeit insufficient – for ensuring the fulfilment of human rights. Thus it is necessary to look beyond the cancellation of public debt for the means to achieve a form of social justice that is environmentally sound. Debt is part of a system that must be combated in its entirety. Together with debt cancellation, other radical alternatives must be brought into play. These include such measures as:

• eliminating hunger, poverty and inequality;
• guaranteeing women’s self-determination, which they claim through their struggles for emancipation from the reigning extractivist, imperialist, capitalist and patriarchal system;
• effective eradication of inequality between men and women in all matters, through such approaches as positive discrimination and popular education;
• promoting genuine freedom and equality for all in order to achieve a radical reorganization of the structures of power and representation;
• ensuring equality between men and women in all spheres of life
• imposing a new financial discipline by re-instating strict regulation of the flow of capital and goods, taxing capital (global taxes, wealth taxes), lifting bank secrecy, and banning tax havens, speculation and usury.
• putting a stop to official development assistance ODA
  Official Development Assistance Official Development Assistance is the name given to loans granted in financially favourable conditions by the public bodies of the industrialized countries. A loan has only to be agreed at a lower rate of interest than going market rates (a concessionary loan) to be considered as aid, even if it is then repaid to the last cent by the borrowing country. Tied bilateral loans (which oblige the borrowing country to buy products or services from the lending country) and debt cancellation are also counted as part of ODA. Apart from food aid, there are three main ways of using these funds: rural development, infrastructures and non-project aid (financing budget deficits or the balance of payments). The latter increases continually. This aid is made “conditional” upon reduction of the public deficit, privatization, environmental “good behaviour”, care of the very poor, democratization, etc. These conditions are laid down by the main governments of the North, the World Bank and the IMF. The aid goes through three channels: multilateral aid, bilateral aid and the NGOs. in its current form since it is basically an instrument of domination to the almost exclusive 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. of countries of the North, and replacing it with an unconditional ‘reparation and solidarity contribution’ in the form of grants independent of any other debt cancellations and would truly serve the interests of the receiving populations of the South, the level of these grants should be raised to 1% of the Gross Domestic Product 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. of the most industrialized countries, re-naming it the “reparations and solidarity contribution” and excluding from its calculation any amounts related to debt cancellation or not serving the interests of populations in the South;
• mobilizing resources that do not generate indebtedness;
• implementing alternatives that liberate all men, women and children from all forms of oppression, whether social, patriarchal, neo-colonial, racial, caste-based, political, cultural, sexual or religious;
• implementing an ambitious environmental policy aimed at countering climate change;
• ensuring economic, political and food sovereignty for peoples;
• prohibit the patenting of living organisms;
• achieving demilitarization on a global scale;
• placing a ban on nuclear power, whether used for civil or military purposes; contrary to what is claimed by capitalist propaganda, this energy is in no way a solution for the climate and represents a great danger for the planet; the environmental, sanitary and political costs of its exploitation for local populations are exorbitant and the radioactive waste it generates - and which we do not know how to process - is an outrageous ecological debt imposed on futures Futures A futures contract is a standardized advance commitment, negotiated on an organized futures market, to deliver a specified quantity of a precisely defined underlying asset at a specified time – the ‘delivery date’ – and place. Futures contracts are the most widely traded financial instruments in the world. generations; moreover, as a tool of imperialist domination, nuclear power is a major obstacle to a world at peace;
• ensuring people’s right to move and settle freely;
• affirming the superiority of human rights over commercial law, and obliging governments, international financial institutions and companies to respect the various international instruments in force, such as the Universal Declaration of Human Rights (UDHR, 1948), the Convention on the Political Rights of Women (1952), the International Covenant on Economic, Social and Cultural Rights (ICESCR, 1966), the International Covenant on Civil and Political Rights (ICCPR, 1966), the Convention on the Elimination of all forms of Discrimination against Women (CEDAW, 1981), the Declaration on the Right to Development (DRD, 1986), the United Nations Convention on the Rights of the Child (1989) and its additional protocols; the International Convention on the Protection of the Rights of All Migrant Workers and Members of their Families (1990), the Declaration on Human Rights Defenders (1998) and the Declaration on the Rights of Indigenous Peoples (2007), the UN Declaration on the Rights of Peasants and Other People Working in Rural Areas (2018), the UN treaty on Transnational Corporations and Human Rights (still under negotiation);
• ensuring people’s sovereignty over their lives and their future, which means placing natural resources in the public domain, together with the results of Research & Development, other common assets of humanity and strategic sectors of the economy such as the production and distribution of energies (in order to combat the ecological crisis), the banks and insurance companies (so as to create a public service for borrowing, savings, investment and insurance) and other sectors that are of vital importance to society.
• abandoning a capitalist system based on the quest for maximum private profit, growth and individual advantage, with a view to building a society in which social and environmental needs are at the heart of political choices.

8 – The CADTM supports the self-empowerment of oppressed people

To bring about such changes and to achieve social emancipation, CADTM International believes that it is for the people themselves to rise to the challenge. What they need is not to be freed, but to free themselves. Furthermore, experience has shown that privileged minorities cannot be counted on to take responsibility for people’s well-being. As the Bastille Appeal declared in 1989: “only the solidarity of peoples will bring economic imperialism to an end. This solidarity does not mean in any circumstance that one should support those regimes which worsen the poverty of their countries, which stifle the voices and rights of peoples”. Reinforcing social movements is a priority for the CADTM. Taking an internationalist approach, it is helping to build a broad-based movement which is popular, aware, critical and mobilized. Firm in its belief that the world’s struggles for emancipation must converge, CADTM International supports all organizations and coalitions which work towards equality, social justice, the conservation of nature, and peace. The CADTM cooperates with all structures and movements that fight violence, harassment and all forms of discrimination against women, LGBTQI+ people and all oppressed minorities.