Committee for the Abolition of Illegitimate Debt

Political Charter of CADTM International adopted in Belém in January 2009

 Preamble

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 25 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.

Since the CADTM was founded, there have been significant changes in the international context, not least regarding the nature of indebtedness: domestic public debt has dramatically increased. From a global viewpoint, two major opposing trends can be seen to have developed internationally. On the one hand, the neo-liberal capitalist offensive, whose principal proponents are the G7, 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 , the 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.

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.

, all of whom cater to the interests of multinationals and international financial capital, has become more widespread and entrenched. On the other hand, a counter-trend of powerful social movements against the neo-liberal offensive has been emerging since the end of the 1990s, especially in Latin America. The struggle of the international social movements has been strengthened, in the belief that “other worlds are possible”. Presidents advocating a break with neo-liberalism have been elected; initiatives to audit debt and suspend repayments on external public debt have been taken; recovery of State control over strategic sectors and natural resources has been envisaged. At the same time, neo-liberal projects such as the ALCA or resistance to imperialism in Iraq, Palestine and Afghanistan have failed. How power relations will evolve between these two opposing trends largely depends on how the peoples of the world will respond to the many facets of the international crisis – financial, social, political, environmental, cultural, as well as food, energy and climate.

 Political Charter

1. 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 CADTM’s main objective is the immediate and unconditional cancellation of Third World debt 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 and take action.
•  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 these governments to break off agreements with the IMF and the World Bank.
•  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 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. For the CADTM, cancellation of the 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.
•  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.
•  raising the level of public development aid (this aid to be given exclusively in the form of unconditional donations) 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 free 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 re-stabilizing the climate.
•  ensuring economic, political and food sovereignty for peoples.
•  placing a ban on the patenting of living organisms.
•  achieving demilitarization on a global scale.
•  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 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).
•  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.
•  abandoning a capitalist system based on the quest for maximum private 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. , growth and individual advantage, with a view to building a society in which social and environmental needs are at the heart of political choices.

4. 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.

Translated by Francesca Denley, Vicki Briault and Judith Harris