Committee for the Abolition of Illegitimate Debt

On Thursday January 25 a third meeting of the world’s richest countries took place with great pomp in Paris in order to find funds for Lebanon. By giving hundreds of billion dollars, France and the United States claim to help this country that is crippled by its debt and was a victim of Israel’s military aggression in the summer of 2006.

Back in August 2006, the CADTM wrote, “From now on, Lebanon will have to call on foreign capital for help to rebuild itself. This implies a renewed increase in the country’s debt and new economic measures 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/ which determine it. As a result, the Lebanese people will have to pay very dearly, in the coming years, for the consequences of this war inflicted by Israel in violation of the international treaties that govern relationships between States.” Given the current situation, every word of this is more than ever true.

A sizable portion of the 7.6 billion dollars promised during the Paris conference corresponds to loans that will therefore have to be fully reimbursed. They will inflate a huge debt that has already reached $41 billion and represents 180% of the country’s 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. !

This debt allows creditors to maintain their grip upon the Lebanese economy. This is the reason why Prime Minister Fouad Siniora has proposed a reform programme that serves their interests. The CADTM condems this programme of ultra-liberal reforms which hits poorer people hard while favoring a minority of the population and the larger companies in the wealthy countries: an increase in VAT, privatisations of several companies such as mobile telecommunications in 2007 and Lebanon Telecom in 2008, a reduction in the number of state employees, etc.

This very self-interested aid from the richest countries strengthens Fouad Siniora’s government and serves their political interests as well. Far from proposing a solution for the Lebanese people, the Paris Club Paris Club This group of lender States was founded in 1956 and specializes in dealing with non-payment by developing countries.

does not at all seek to fight poverty or break the powerful domination mechanism of debt.

Once again, the CADTM states that the only possible solution for Lebanon lies in immediate cancellation of its debt, the abolition of structural adjustment policies and the creation of a fund for reconstruction which would be fed FED
Federal Reserve Officially, Federal Reserve System, is the United States’ central bank created in 1913 by the ’Federal Reserve Act’, also called the ’Owen-Glass Act’, after a series of banking crises, particularly the ’Bank Panic’ of 1907.

FED – decentralized central bank : http://www.federalreserve.gov/ by reparations paid for by Israel. A contribution from the United States, who supports and finances the state of Israel, should be added. Only then will it be possible to say that justice has been done to the Lebanese people.