Committee for the Abolition of Illegitimate Debt

Dear Presidents,

Please receive the greetings of the undersigned social movements and
organizations, labour unions, churches and NGOs, gathered in networks and
organizations that make up the Social Movement on Debt in South America.

In the midst of the Week of Action Against Debt and International
Financial Institutions, the mission of this letter is to ask your
governments – in the face of the financial and ideological crisis of the
economies of the global North – to take urgent action to: a) comply with
the commitment to build a sovereign and independent financial order in
South America, expressed in the Quito Declaration of May 3, 2007, signed
by the Ministers of economy and finance of Argentina, Bolivia, Brazil,
Ecuador, Paraguay, and Venezuela, when the process of founding the Bank of
the South began; and b) move forward in the transformation of the economic
policy based on financial and trade liberalization, and unlimited growth,
towards one focused on the integration of the region’s peoples in a
framework of sovereignty and respect for human, collective and
environmental rights.

In that regard, we specifically ask you to:

• Ensure the realization of comprehensive and participatory Audits of
public credit, with the aim of stopping payments on illegitimate debts and
putting an end to the impunity with which the international financial
system has operated in our countries;
• Launch the Bank of the South, as a sovereign instrument for financing
development based on economic, social, and ecological justice for the
peoples of the region. Including in all instances, egalitarian
decision-making mechanisms (one country, one vote) with the participation
of social movements, and effective tools for transparency.
• Initiate the process of discussion on the other financial instruments Financial instruments Financial instruments include financial securities and financial contracts.
proposed in the Quito Declaration (Stabilization Fund and a South American
Monetary Unit), in order to ascertain whether they can serve to keep the
reserves of our countries in the region, and for the promotion of trade
with justice for and among our peoples.
• Halt and cancel the ongoing negotiations of free trade agreements with
the European Union, the United States of North America, China, and India,
among others.
• Review and reverse the investment protection treaties, including
withdrawal from the International Center for the Settlement of Investment
Disputes (ICSID ICSID The International Centre for the Settlement of Investment Disputes (ICSID) is a World Bank arbitration mechanism for resolving disputes that may arise between States and foreign investors. It was established in 1965 when the Washington Convention of that year entered into force.

Contrary to some opinions defending the fact that ICSID mechanism has been widely accepted in the American hemisphere, many States in the region continue to keep their distance: Canada, Cuba, Mexico and Dominican Republic are not party to the Convention. In the case of Mexico, this attitude is rated by specialists as “wise and rebellious”. We must also recall that the following Caribbean States remain outside the ICSID jurisdiction: Antigua and Barbuda, Belize, Dominica (Commonwealth of) and Suriname. In South America, Brazil has not ratified (or even signed) the ICSID convention and the 6^th most powerful world economy seems to show no special interest in doing so.

In the case of Costa Rica, access to ICSID system is extremely interesting: Costa Rica signed the ICSID Convention in September, 1981 but didn’t ratify it until 12 years later, in 1993. We read in a memorandum of GCAB (Global Committee of Argentina Bondholders) that Costa Rica`s decision resulted from direct United States pressure due to the Santa Elena expropriation case, which was decided in 2000 :
"In the 1990s, following the expropriation of property owned allegedly by an American investor, Costa Rica refused to submit the dispute to ICSID arbitration. The American investor invoked the Helms Amendment and delayed a $ 175 million loan from the Inter-American Development Bank to Costa Rica. Costa Rica consented to the ICSID proceedings, and the American investor ultimately recovered U.S. $ 16 million”.

https://icsid.worldbank.org/apps/ICSIDWEB/Pages/default.aspx ), as well as other changes imposed in regulatory
frameworks dealing with capital movements, as a result of application of
the neoliberal model which today exhibits with absolute brutality its own
bankruptcy.

These demands are made on the basis of numerous observations and
reflections within our movement about the grave situation developing, some of which we note below:

1. The current financial crisis through which the economies of the global
North are passing, calls into question the essence of neoliberal ideology
and overturns the dogmas that say: “the market regulates itself”, "the
State is not the solution but the problem,“”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. mobilizes growth,“”excessive profit is based on risk,“”the transfer of state functions to
the private sector is more efficient,“”economic growth is the only way
out of poverty" and so on. The financial crisis unleashed in the United
States of America - which was touted as the engine of the global economy -
has made painfully clear the risk of having our markets open and our
countries dependent on external demand. The paradigm that preaches that
the more we open our economies, the more we would experience price
stability and growth with social welfare has also clearly shown its
fallacy.

2. The principal criticisms relate to the need for more regulation,
control and state intervention, and to the rejection of greed as the
overriding principle of business. This marks an ideological collapse of
neoliberalism.

3. The same evidence that shows that the global financial (dis)order
supported by 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 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.

and other
institutions serves no other purpose than – via conditionalities - the
imposition of the policies now put into question throughout the world. The
very countries considered by these institutions as the example to follow,
are the ones now facing serious problems of financial fragility.

4. The relationship between this crisis and the system of indebtedness
imposed on our countries in other circumstances, cannot escape our
analysis. That system has been used to plunder the wealth and resources of
our countries in order to nurture the growth of the casino economy whose
implosion today, as occurred with the explosion of the debt crisis in
1982, threatens the very existence of entire peoples. As long as the
impunity of that system remains intact, and the accumulation of
illegitimate debt claims it has spawned continues to be serviced, it will
be impossible to break with its logic and build a new regional and global
financial order.

5. The realities of insolvency and billionaire rescue packages carried out
at the cost of common people’s lives and taxes, not only reveal the
weaknesses of the system. They also require a strong response from the
governments of the South in order to reduce the impact of this crisis by
ensuring the implementation of a new order that meets the needs and rights
of peoples. This is even more urgent as other crises, such as the food,
climate, and energy crises, also express the failure of this model while
at the same time threatening to kill millions of people the world over.

6. One of the most worrying aspects of this crisis is that, similar to
previous ones and including in particular the debt crisis unleashed in
1982, the powerful seek to resolve it on the backs of the people. So much
so that it is workers and employees in the North, including among them
millions of immigrants from the South, who will bear the initial brunt of
the measures thus far announced by the U.S. government, as well as its
European peers, in order to bail-out the greed of the financial sector.

7. That same greed, which fuels the capitalist system that prioritizes
private accumulation over the collective well being, is clearly expressed
today in the socialization of the losses, whereas the benefits have always
been privatized.

8. The economies of our peoples and of our countries will undoubtedly be
affected - to a greater or lesser extent - by the irresponsible financial
and political management of governments and hegemonic interests of the
North, starting with the immediate threat of job losses as a result of a
fall in external demand.

9. What appears stronger than ever is the contradiction that despite the
fact that our countries hold large levels of international reserves,
governments fail to invest the necessary resources to ensure people’s
rights and the promotion, preservation and protection of the environment.
In this model there always is some justification to prevent an equitable
distribution of the wealth that is generated. If not for imported
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. , it is the financial crisis, but it is always investment and
public spending on behalf of people’s basic needs that are the first to be
cut-back or “adjusted”.

10. The concern about the amount of international reserves that our
countries have deposited in U.S. Treasury bills becomes even more serious,
considering that it is by far the most indebted country of the world.
Furthermore, in order to secure and maintain reserves at these levels,
governments have resorted to a highly problematic increase in domestic
borrowings.

11. The non-transparent management of the present financial crisis,
expressed in the financial rescue packages and negotiations, makes it more
important to establish permanent mechanisms for transparency and the
auditing of public debt as key components in the process of building and
operating a new financial order in South America. It is critical that the
governments of South America come together to support and multiply
throughout the region, in a coordinated way, the initiative of the
Ecuadoran government in this regard. Conducting such public Audits will
not only contribute to resolving outstanding debt claims, but it will also
provide essential elements for achieving a “Never Again” to market
terrorism.

We are convinced that the financial crisis that has erupted in the very
heart of the most important neo-liberal economy, not only requires strong
and concerted responses from the governments you preside, but also that it
can become a critical opportunity conducive to reorienting production to
the domestic market and to moving forward in the promotion of a just and
sustainable South American integration, based in solidarity among peoples
and countries.

To regain our sovereignty and build a South America that is financially
autonomous is now more necessary than ever; and as we proposed at the
Peoples’ Social Summit in Cochabamba, Bolivia, in December 2006, as in
subsequent gatherings, it is a necessary step in order to ensure the
changes needed to achieve real social, economic, and environmental
development for all the peoples of the region.

Recognizing that it is people who are the real sources of financing, the
new regional financial instruments, such as the Bank of the South, must
maintain their counter- hegemonic spirit; for that reason they must be
financed with resources from the region so as to have no pressure or
conditionalities of any kind. They should also build transparent and
participatory processes of deliberation and implementation in order to
meet the objectives laid out in its Founding Act and avoid the problems
now faced by many financial institutions.

In that spirit, we take this opportunity to highlight the importance of
convening social movements and organizations, including and in particular
in times of crisis, in order to discuss together and build agreements
around possible ways forward. On other occasions we have expressed
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. to participate actively in the creation of the South Bank, an
initiative that should be up and running and is already long delayed. We
would like now to reaffirm that willingness and specifically, to request a
meeting with the ministerial committee of the Bank of the South, at some
point in the agenda of its next meeting. We would also like to request
that a dialogue be established regarding the various concerns and
proposals identified here, during the upcoming meetings of UNASUR and
other instances of integration in the region.

In closing, we reiterate that the time is now to retake control of the
financial, fiscal, and natural resources of our countries, in support of
the collective social and environmental welfare of our peoples.

Sincerely yours,

Jubileo Sur/Américas - Red Latinoamericana sobre Deuda, Desarrollo y Derechos - Red Internacional Comité por la Abolición de la Deuda del Tercer Mundo - Amigos de la Tierra América Latina y Caribe - Grito de los Excluídos Continental - Alianza Internacional de Habitantes - Mesa de Coordinación Latinoamericana de Comercio Justo - Confederación Sindical de las Americas - International Gender and Trade Network - Programa sobre Deuda Externa Ilegítima de la Federación Luterana Mundial - Red Intercontinental de Promoción de la Economía Social Solidaria Latinoamérica -Justicia, Paz, Integridad de la Creación-Coordinación Laíca – Red de Mujeres Transformando la Economía (REMTE) – Marcha Mundial de Mujeres (MMM) -

National support:

Argentina - Diálogo 2000, Fundación SES, ATTAC, CEASOL, Ecoportal.Net, No Más Pobreza, Periódico El Espejo, Cátedra Nacional de Economía Arturo Jauretche, Liga Argentina por los Derechos del Hombre, Movimiento SI de los Pueblos (MoSIP), Espacio Ecuménico Bolivia - Fundación Jubileo Bolivia Brazil – Rede Jubileu Sul Brasil, Rede Brasil sobre Instituciones Financieras Multilaterales, Políticas Alternativas para el Cono Sur (PACS), Auditoria Cidadã da Dívida, Consulta Popular Santa Catarina, Instituto Socioambiental da Baía da Ilha Grande – RJ (ISABI), Assembléia Permanente de Entidades de Defesa do Meio Ambiente do Estado do Rio de Janeiro (APEDEMA-RJ), Forum Brasileiro de ONGs e Movimentos Sociais para o Meio Ambiente e o Desenvolvimento (FBOMS), Rede Brasileira de Justiça Ambiental (RBJA), Gt Racismo Ambiental da RBJA Colombia - Campaña Colombiana “En Deuda con los Derechos”, Corporación Mujeres y Economía / Jubileo Sur Colombia, Unión Nacional de Empleados Bancarios de Colombia (U.N.E.B) Chile – Asociación Nacional de Mujeres Rurales e Indígenas (ANAMURI) - Cuba - Capítulo Cubano de la Alianza Social Continental Ecuador - Centro de Derechos Economicos y Sociales (CDES), Jubileo 2000 Red Guayaquil, Centro de Documentación en Derechos Humanos “Segundo Montes Mozo S.J.” (CSMM) El Salvador - Red Sinti Techan Haiti- Plateforme Haïtienne de Plaidoyer pour un Développement Alternatif (PAPDA) Honduras - Bloque Popular Honduras Mexico - Consejo Mexicano de Empresas de la Economía Solidaria, A.C., Movimiento Mexicano de Afectados por las Presas y en Defensa de los Rios, Red Mexicana de Afectados por la Mineria, Jubileo Sur México Nicaragua - Movimiento Social Nicaraguense Otro Mundo es Posible Paraguay - Coordinadora Nacional de Organizaciones de Mujeres Trabajadoras Rurales e Indigenas (CONAMURI), Iniciativa Paraguaya de Integración de los Pueblos Peru - Red Jubileo Perú, Hermanitas de la Asunción del Perú, Foro-Red Paulo Freire, Grupo Red de Economía Solidaria del Perú, Red Peruana de Comercio Justo y Consumo Ético, Plataforma Interamericana de Derechos Humanos, Democracia y Desarrollo (PIDHDD), CJS, Hermanas Dominicas de Sta. Maria de las Fuentes, Instituto para el desarrollo y la Paz amazonica - de San Martin Puerto Rico - Grito de l@s Excluid@s de Puerto Rico Uruguay – Plataforma DESCAm, Universidad Popular Joaquín Lencina, REDES - Amigos de la Tierra Venezuela - Red Venezolana contra la deuda/CADTM