Committee for the Abolition of Illegitimate Debt

FOR A SOUTH BANK IN ACCORDANCE WITH PEOPLES’ RIGHTS, NEEDS, POTENTIALITIES AND DEMOCRATIC VOCATION

Dear Sirs,

The undersigned networks, organizations, and social movements, actively engaged in the struggle against the tragedy of the external debt and the perverse policies and practices of he existing international financial institutions, are writing to you in the understanding that the decision of your governments to create the South Bank can mean an enormous step and opportunity for Latin America and the Caribbean as well as for other regions of the South.

Over recent decades the region has experienced repeated cycles of financial peaks followed by disasters that have deeply marked the involution of living and working conditions and of public and social expenditures.

It is not enough to redress the negative consequences of our recent history which are well known; it is necessary as well to generate an alternative regional financial system that is consistent with the need to give absolute priority to the overcoming of the poverty, marginality and structural underdevelopment caused by the huge public and social costs of the financial disasters, the policies of deregulation and privatization promoted and conditioned by the lending institutions, and the growth of a gigantic illegitimate debt.

It is evident that the existing international financial bodies - 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 , WB 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.

, IDB - have become more and more discredited for the nature of their policies, their anti-democratic character, and the lack of transparency of their actions, to the point that not only are their results questioned, but also the very architecture of the current financial and monetary system.

We believe that the South Bank must be part of a unitary regional response, together with the founding of a South stabilization fund, a common regional currency, the undertaking of audits of internal and external debt claims, and the non-payment of those debts illegitimately demanded of our countries. A response that contributes to the cutting the ties of dependency with uncertain and highly speculative global capital markets, enabling the region to channel its own savings power, stop capital flight, and invest its resources in accordance with the social and economic needs of the people.

The sole formulation of the need for an autonomous financial institution is not enough even if it is very important. The debate on the implementation of an autonomous South-South bank is of utmost importance, and for that reason we support the demand of many organizations and movements in the region, that national and regional instances be created immediately in order to insure the necessary information, participation, and consultation with the organizations in societies which will be affected by the creation of the South Bank.

At the same time, and at the current instance of definitions, we think that it is essential that the South Bank start out with clear definitions regarding its resources, objectives, organization, regulations, decision-making, management, and operations, in such a way that:

1. It defines as its central goal the promotion of the member countries’ and the region’s own development with sovereignty and in solidarity. Development defined as the unfolding of the attributes, resources, and potential of persons, communities and peoples; a process that cannot take place without their being the principal protagonists.
2. It constitutes its capital and management structure in an egalitarian way among the member countries.
3. It clearly defines that credit allocations will be for the strengthening of the public and social sector; giving priority to the redistribution of wealth and to environmental protection; contributing to the overcoming of existing asymmetries; and responsive to peoples’ lives and welfare, for their economic, social, cultural, and environmental rights and for their right to their own development and self-determination. For this reason we propose that the South Bank direct its financing to socially and environmentally sustainable projects and do not use them to fund IIRSA and other mega projects, as well as extractive, contaminating or socially exclusive investments that do not rely on the agreement and do not benefit the affected populations.
4. It explicitly establishes open mechanisms for public information and control, establishing that the bank’s officials and employees will have no personal immunity or fiscal privileges, that the rendering of accounts will be made known and put to the consideration of Parliaments and of civil society, and that all information shall be considered public.
   We believe that all of the above is in keeping with the Ministers’ Statement of Quito, May 3^rd, 2007, where it points out: “The people have given their governments a mandate to provide the region with new instruments of integration for development that must be based on democratic, transparent, and participatory schemes that are responsible to their constituencies.”

The current regional and international economic and financial situation is favourable to take concrete steps in this direction, but it may not last. We hope that this historic possibility is put to use in order to create a truly Peoples’ South Bank.

Sincerely,

SIGNATURES :

Personal signatures :