Madrid Manifesto against Illegitimate Debt and Vulture Funds

26 April 2023 by CADTM

From Friday, April 21, to Sunday, April 23, 2023, the days against illegitimate debt and vulture funds were held in Madrid. These were organised by ATTAC Spain, CADTM International, the Platform against Vulture Funds, the Citizen Audit of the Debt in the Health Sector, Ecologistas en Accion, the Coordination for the Right to Housing in Madrid, various neighbourhood associations in Madrid, etc.

At the end of the three days of conferences and debates, a manifesto was adopted. It is as under:

Over the past decades, the global economy has been characterised by the supremacy of financial capital, both politically and economically. This would not have been possible without the great transformations of the 1980s, which laid the foundations for accumulation in the 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. of capital, thanks to the globalisation of the economies through the opening up to the outside world, in particular the liberalisation of the international financial markets, and also thanks to the liberalisation and privatisation of the basic production sectors, as well as the constant decline in the share Share A unit of ownership interest in a corporation or financial asset, representing one part of the total capital stock. Its owner (a shareholder) is entitled to receive an equal distribution of any profits distributed (a dividend) and to attend shareholder meetings. of wage earnings in the national income.

History is marked by a recurrence of crises that indicate a series of weaknesses intrinsic to the functioning of the capitalist system. The nature of financial crises has as a common substratum that financial systems enter into a credit expansion beyond rational parameters and that the resources offered by financial institutions, both public and private, produce spirals of indebtedness among economic agents.

Fifteen years ago, one of the worst debt crises originated in the US banking system and spread to all financial systems. In Europe, it exploded in the form of a banking crisis, as banks held 80% of the mortgages.

The European authorities and the Spanish state reacted with a package of measures to save the banks. As a result, millions of people lost their jobs, their housing, and their social protection, and women were particularly affected.

The recipe 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.

, the European Commission, and 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.
was the imposition of austerity policies with cuts in social rights. The priority was to save the system and restore confidence in the financial sector.

Now, fifteen years later, we wonder whether we are in the same or worse situation.

The public debt situation in European countries has worsened considerably compared to pre-pandemic levels. Three years after the Covid-19 health emergency and after almost two years of public investment and aid aimed at reviving the economy and containing the energy crisis, member states are arriving with high levels of debt—in the case of the Spanish state with a central public debt of 116% of 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.
and peripheral governments such as the Valencian Country with more than 50% of its GDP—with large companies with historic profits, and with a good part of the European citizenry in difficulty.

The main cause of this rise is the decision by governments not to tax the big corporations that have taken advantage of the health and energy crises and the war to illegitimately increase their profits. Instead of funding public spending by raising taxes on the richest, especially those who got richer during the crisis at the expense of people’s misfortune, governments have once again resorted to illegitimate debt.

Currently, in the Spanish State, annual debt service Debt service The sum of the interests and the amortization of the capital borrowed. payments considerably limit investments to cover the basic social needs essential for citizens, such as health, housing, social services, education, etc. The debt is proving unsustainable.

Faced with this alarming state of public debt, the European Commission (EC) presented a proposal in November 2022 to reform the European economic governance framework in order to discuss and negotiate with the Member States a return to the Stability and Growth Pact (SGP). This is the sacrosanct maxim of not exceeding a “3% deficit” and “60% public debt” in the name of the stability of the European economy and the euro.

The Commission says that it is time to take stock of the situation and consider how to return to the SGP. This is worrying because it raises the question of who will pay for all this debt and whether a new wave of cuts and austerity policies is expected.

Meanwhile, the global financial casino runs its course and continues to pose a major risk to society; the lobbies Lobby
A lobby is an entity organized to represent and defend the interests of a specific group by exerting pressure or influence on persons or institutions that hold power. Lobbying consists in conducting actions aimed at influencing, directly or indirectly, the drafting, application or interpretation of legislative measures, standards, regulations and more generally any intervention or decision by the Public Authorities.
erode democracy, and the global debt increases; systematic tax evasion is now endemic and structural; big private capital has taken control of the so-called ecological transition; and big investment funds Investment fund
Investment funds
Private equity investment funds (sometimes called ’mutual funds’ seek to invest in companies according to certain criteria; of which they most often are specialized: capital-risk, capital development funds, leveraged buy-out (LBO), which reflect the different levels of the company’s maturity.
colonise essential public services and the productive economy.

With 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.
’s decision to raise 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.
sharply, following the example of the US Federal Reserve 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 :
, the new public and private debt crisis that was maturing has taken on acute forms, mainly affecting the countries of the South. Gradually, this rise in interest rates will make the repayment of public and private debt increasingly unbearable. Movements against illegitimate debts, which had receded in recent years during the period of easy money, will have to be revived.

We believe that this meeting in Madrid gives us the opportunity to open a new space for public debate on the root causes of the crisis and what we want to do with the financial sector. We must defend our future and impose a socially just solution to the current debt. We are determined to intensify the fight for democratic control of finance and the socialisation of the banks. The economy must serve politics, and politics must serve human needs.

We condemn the negative impact of a short-term vision of financial markets that govern the ways in which societies develop, fuel social inequalities, poverty, centralist, authoritarian, and austerity state policies, the collapse of public services, and climate change, and therefore, with reference to the debt, we demand:

1. An end to the austerity policies imposed in the name of debt repayment by the international financial institutions and the States, as well as an end to the extractivist and colonial policies imposed by the 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).


In the Spanish state, the end of the false political and economic decentralisation of the autonomous model of the ’common regime’, which subordinates the development of nations and regions and their citizenship to the preservation of a political, economic, and media elite that bases its power on the reinforcement of the domination of state capital.

2. Organising citizen debt audits that identify illegitimate and unsustainable debts with the aim of cancelling them, promotes an effective and fair debt relief process and provides a way out of the debt trap in which many citizens, companies and countries are caught. This debt relief process is part of the development of new economic frameworks that move away from productivism and strengthen social justice.

3. Prioritising the general interest before debt repayment. In this sense, we propose the abrogation of Article 135 of the Constitution, which places the repayment of the debt before any social expenditure.

4. Creating a public banking and insurance service so that it is managed under citizen control in the general interest. Similarly, for cases where depositors’ interests are to be safeguarded due to the failure of retail banks, create a special crisis fund in all countries, fed by an emergency tax on financial companies.

5. To put an end to tax evaders’ impunity by generalising the automatic exchange of banking and tax data as well as the permanent abolition of banking secrecy so that states can know and seize the funds hidden in tax havens. In Spain, put an end to the tax domicile of companies in territories where their economic activity is not carried out.

6. To seek to recover state sovereignty from the power of the market with a highly progressive income tax system.

7. Putting the European Central Bank (ECB) at the service of the general interest (and no longer at the service of the markets), which requires, as a priority, placing the ECB, which is responsible for monetary policy and banking supervision, under democratic control by repealing the ban on states and governments borrowing from their central banks. Cancel the eurozone debts held by the ECB, which represent on average 25–30% of the sovereign debt Sovereign debt Government debts or debts guaranteed by the government. of each eurozone country.

Regarding hedge funds Hedge funds Unlisted investment funds that exist for purposes of speculation and that seek high returns, make liberal use of derivatives, especially options, and frequently make use of leverage. The main hedge funds are independent of banks, although banks frequently have their own hedge funds. Hedge funds come under the category of shadow banking. and vulture funds Vulture funds
Vulture fund
Investment funds who buy, on the secondary markets and at a significant discount, bonds once emitted by countries that are having repayment difficulties, from investors who prefer to cut their losses and take what price they can get in order to unload the risk from their books. The Vulture Funds then pursue the issuing country for the full amount of the debt they have purchased, not hesitating to seek decisions before, usually, British or US courts where the law is favourable to creditors.
, it is necessary to :

1. Inform and explain to the public the serious and enormous damage that vulture funds can cause to our lives.

2. In the sphere of basic services, whether public or private, such as housing, education, health, social services, care for the elderly or the environment, we call for the implementation of measures to prohibit the entry of speculative funds into these sectors and to promote a form of management that is geared towards meeting the needs of citizens.

3. To promote a law against vulture funds in the Spanish State, similar to the Belgian law which prevents these funds from doing harm, as they enrich themselves by destroying the fundamental rights of the population.

Until such time as this law is passed, we propose to prevent these funds from receiving public money if they do not comply with a minimum level of transparency that includes revealing the identity of their shareholders, who enrich themselves in opacity by destroying the fundamental rights of the population.

4. Promote the development of similar regulations of international scope, starting with the European Union, as vulture funds often use the courts of “friendly” countries to circumvent state laws.

5. The disappearance of tax havens.

So let us dream a bit... The above will mean that the warnings and demands of the social and citizen movement have finally been heard by the international, European and state authorities, which has finally resulted in the implementation of radical reforms to regulate the economic-financial system. Their decisions must be inspired by the general interest, the voice of the citizens. In addition, environmental issues and the fight against inequalities must become a priority.


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