Committee for the Abolition of Illegitimate Debt

 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 more than 30 active organisations in over 30 countries across four continents, namely Africa, Asia, Latin America and the Caribbean, and Europe. Focusing as it does on debt and debt-related issues, its main action aims at elaborating and achieving radical popular alternatives resulting in a world based on sovereignty, solidarity and cooperation between peoples, respect for the environment, equality, social justice and peace.

  Political Charter

1. Debt as a device to transfer wealth and as a tool of political domination

In both the North and the South, debt is one of the devices used to transfer the wealth created by workers and small producers to the capitalists. Public debt is used by the creditors as an instrument of political and economic domination that establishes a new form of colonisation, with the local ruling classes taking their commission in the process. Abusive private debts claimed from the popular classes are a tool of dispossession and oppression.

2. Immediate and unconditional cancellation of public debt in countries of the South

The CADTM’s main objective is the immediate and unconditional cancellation of public debt of countries of the South 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. 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”.

3. Abolition of all odious, illegal and illegitimate public debts in countries of the North

The CADTM also aims for the abolition of all odious, illegal, illegitimate and unsustainable public debts in countries of the North.

In the economies of the most industrialised countries, public debt has risen sharply since 2008, first as a result of the multiple bailouts of large private banks, and then because of massive public interventions in the management of the pandemic in 2020-2021. In addition, in the neoliberal political context, enormous tax gifts to a tiny minority including the richest people and large corporations have forced states to borrow heavily in order to balance Balance End of year statement of a company’s assets (what the company possesses) and liabilities (what it owes). In other words, the assets provide information about how the funds collected by the company have been used; and the liabilities, about the origins of those funds. deficits. The neoliberal offensive that shut down 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.

ECB : http://www.bankofengland.co.uk/Pages/home.aspx funding for governments and public authorities, who as a consequence had to turn to private banks and the financial markets, has increased the cost of financing public debt. Public debt serves as a pretext for the pursuit of neoliberal policies that deteriorate social services and reduce social spending and public investment. This leads both to the degradation of living conditions of the overwhelming majority of the population and to a sharp increase in inequalities.

Since the early 1970s in the South and the 1980s in the North, ruling classes have succeeded in undermining workers’ social achievements and their direct and indirect wages. Through a strategy of repeated skirmishes, an ever-increasing part of the value produced by the working population has been clawed back by the ruling classes. Such attacks on the progressive and highly civilising social advances won through hard struggle up until the 1970s are unfair, immoral and reprehensible. We will strive to cancel those setbacks enforced by Capital in its offensive against Labour. The CADTM will support, and participate in, any social movement, organisation and/or trade union that acts to stop and reverse the dismantling of social achievements by the ruling classes, so as to restore what was lost and extend basic human and social rights to all spheres of human activity.

The multidimensional crisis of the capitalist system is manifesting itself in increasingly dramatic forms: the health crisis, the ecological crisis, the economic crisis, the rise of racism. Those crises first affect the popular classes. The negative effects are aggravated by the prolonged implementation of neo-liberal policies carried out under the pretext of debt repayment. Fundamental individual and collective freedoms are increasingly being violated. Freedom of movement, freedom of demonstrating, organizing and protesting, freedom of opinion and expression are particularly targeted.

4. CADTM international aims at achieving the following

In pursuit of the abolition of all illegitimate public debt in the North and in the South, CADTM International attempts to achieve the following:

a. Develop processes of popular education, raised awareness and self-organization of indebted peoples;
b. Set up debt audits, with citizen participation, aimed at rejecting all odious and illegitimate debt;
c. Prompt governments to make unilateral and sovereign decisions to cease repaying their debt, restructure or repudiate it to promote social justice;
d. Have them break off agreements with 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 and 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.

;
e. Establish a united front of countries that cease debt repayments;
f. Gain recognition for the Doctrine of 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. in international law;
g. Urge refusal of any conditions that lenders seek to impose;
h. Help 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 of the North;
i. Demand that Northern powers pay unconditional reparations to the countries of the South in the name of historic, social and ecological debt accumulated towards the countries of the South;
j. Take legal action against the international financial institutions;
k. Recover the costs of nationalising bankrupt private banks from the assets of the large shareholders and directors;
l. Replace the World Bank, the IMF 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.

by democratic institutions which prioritise the fulfilment of fundamental human rights in the fields of development finance, credit and international trade.
m. Terminate all political, military or economic agreements (so-called free-trade, investment and partnership agreements) which endanger the sovereignty of peoples and perpetuate the mechanism of dependence.
n. Put an end to the military presence of imperialist powers such as the USA or France in Africa and anywhere else.

Considering the crimes against humanity that were perpetrated including colonial plundering and the slave trade, we demand compensations and the restitution of stolen cultural goods and resources, as well as full formal apologies, not some vague “regrets” that some countries have paid lip service to.

5. Challenging illegitimate private debts claimed from the popular classes

It is also essential to challenge illegitimate private debts claimed from the popular classes. Excessive or usurious indebtedness existed long before the capitalist system but was reinforced in a sophisticated way with the development of capitalism. This is the case in the current neoliberal phase, which is forcing more and more households into debt in order to access services such as education, health, housing, energy, etc., that are not or no longer fully provided by the public sector as their social nature would require.

Private debt has been used for millennia as a mechanism to dispossess peasants of their land and dispossess artisans of their means of production. Slavery due to debt was rife throughout the ancient world for centuries. The system of illegitimate private debt usually imposes conditions of borrowing that make repayment impossible. This results in dispossession (dispossession of homesteads, land, tools) and/or the obligation to devote long years, or even decades, to repayment.

The extension of precarious contracts and the pervasiveness of subcontracting are some of the measures implemented by large companies to increase their profits at all costs. There is a huge army of workers who are exploited, deprived of rights, who live in precarious conditions and are employed as long as strictly necessary, outside any stable labour relationship, without a decent contract or wages, without paid holidays, without sick pay or the right to strike.

For all of them, borrowing has become a necessity now even in rich Western economies. The struggles against these illegitimate private debts have been going on for centuries and continue today, for example through:

a. peasant struggles for the cancellation of exorbitant debts in India;
b. the struggles of brick factory workers in Pakistan against new forms of debt-bondage;
c. women’s struggles against extortionate micro credit schemes in Morocco, Sri Lanka, Colombia and Bangladesh;
d. student struggles with the burden of student debt in the United States, Chile, Canada, South Africa or the United Kingdom;
e. the struggles of households that are victims of excessive mortgage Mortgage A loan made against property collateral. There are two sorts of mortgages:
1) the most common form where the property that the loan is used to purchase is used as the collateral;
2) a broader use of property to guarantee any loan: it is sufficient that the borrower possesses and engages the property as collateral. loans and of the financialisation of housing, resulting in evictions for default in Spain, the United States, Greece, Ireland, etc.

6. Legitimate public debt should fund an ambitious ecologist-feminist-socialist transition programme

Public borrowing is legitimate if it benefits legitimate projects and if lenders act with sincerity. Central banks in each country must be allowed to grant loans at zero 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. rate to public authorities. Moreover, a popular government will not hesitate to force big companies (foreign or domestic) and the richest households to contribute to the loan without profiteering from it, that is to say, at zero interest rate and without having to pay compensation for 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. . At the same time, a large part of the working class households who have savings would be offered publicly guaranteed savings and investment schemes tied to funding the legitimate projects mentioned below. This voluntary funding by the working class would be remunerated at a positive real rate. The mechanism would be highly legitimate because it would fund socially useful projects, and would also reduce and redistribute the wealth of the wealthiest while increasing the income of the labouring classes and securing their savings.

Public debt could be used to finance an ambitious programme for an ecologist-feminist, socialist transition, instead of enforcing productivist, extractivist and anti-social policies that favour competition between peoples. Public authorities may contract debts to

a. socialise social reproduction activities through developing free public services (education, health care Care Le concept de « care work » (travail de soin) fait référence à un ensemble de pratiques matérielles et psychologiques destinées à apporter une réponse concrète aux besoins des autres et d’une communauté (dont des écosystèmes). On préfère le concept de care à celui de travail « domestique » ou de « reproduction » car il intègre les dimensions émotionnelles et psychologiques (charge mentale, affection, soutien), et il ne se limite pas aux aspects « privés » et gratuit en englobant également les activités rémunérées nécessaires à la reproduction de la vie humaine. , culture, etc.);
b. finance the complete shutdown of thermal and nuclear plants;
c. replace fossil energies with renewable energies that respect the environment;
d. ensure food sovereignty and finance the conversion of the current farming system, which significantly contributes to the environmental crisis, so that farming becomes compatible with struggle against climate change and promotion of biodiversity by favouring an agro-ecological model and short circuits;
e. radically reduce road and air transport and develop collective transport by rail;
f. finance an ambitious programme of better quality housing that requires less energy;
g. put an end to discrimination and to the criminalisation of migrants as well as provide proper financing for a decent welcoming policy for migrants in full respect of the human rights of movement and settlement..

7. Cancelling illegitimate debt is not an end in itself

For the CADTM, cancelling illegitimate public debt is not an end in itself. It is a necessary but insufficient condition for ensuring the fulfilment of human rights. Thus it is necessary to look beyond the cancellation of illegitimate public debt to achieve a form of social justice that is environmentally sound. Debt is part of a system that must be fought as a whole. Together with debt cancellation, other radical alternatives must be brought into play. These include such measures as:

a. Eliminating hunger, poverty and inequality;
b. Guaranteeing women’s self-determination, which they claim through their struggles for emancipation from the prevailing extractivist, imperialist, capitalist and patriarchal system;
c. Effectively eradicating gender inequalities in all spheres of life, through such approaches as positive discrimination and popular education;
d. Promoting genuine freedom and equality for all in order to achieve a radical reorganisation of the structures of power and representation;
e. Imposing 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;
f. Putting a stop to Official Development Assistance ODA
Official Development Assistance Official Development Assistance is the name given to loans granted in financially favourable conditions by the public bodies of the industrialized countries. A loan has only to be agreed at a lower rate of interest than going market rates (a concessionary loan) to be considered as aid, even if it is then repaid to the last cent by the borrowing country. Tied bilateral loans (which oblige the borrowing country to buy products or services from the lending country) and debt cancellation are also counted as part of ODA. Apart from food aid, there are three main ways of using these funds: rural development, infrastructures and non-project aid (financing budget deficits or the balance of payments). The latter increases continually. This aid is made “conditional” upon reduction of the public deficit, privatization, environmental “good behaviour”, care of the very poor, democratization, etc. These conditions are laid down by the main governments of the North, the World Bank and the IMF. The aid goes through three channels: multilateral aid, bilateral aid and the NGOs. in its current form since it is basically an instrument of domination to the almost exclusive 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. of countries of the North, and replacing it with an unconditional ‘reparation and solidarity contribution’ in the form of grants independent of any other debt cancellations and would truly serve the interests of the receiving populations of the South, the level of these grants should be raised 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 industrialised countries;
g. Mobilising resources that do not generate indebtedness;
h. Implementing alternatives that liberate all men, women and children from all forms of oppression, whether social, patriarchal, neo-colonial, racial, caste-based, political, cultural, sexual or religious;
i. Implementing an ambitious environmental policy aimed at countering climate change;
j. Ensuring economic, political and food sovereignty for peoples;
k. Prohibiting patents on living organisms and banning all private patents on knowledge, technology, treatments and vaccines;
l. Achieving demilitarisation on a global scale;
m. Placing a ban on nuclear power, whether used for civil or military purposes; contrary to what is claimed by capitalist propaganda, this energy is in no way a solution for the climate and represents a great danger for the planet; the environmental, sanitary and political costs of its exploitation for local populations are exorbitant and the radioactive waste it generates - and which we do not know how to process - is an outrageous ecological debt imposed on future generations; moreover, as a tool of imperialist domination, nuclear power is a major obstacle to world peace;
n. Ensuring people’s right to move and settle freely;
o. 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 United Nations Convention on the Rights of the Child (1989) and its additional protocols; 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), the UN Declaration on the Rights of Peasants and Other People Working in Rural Areas (2018), the UN treaty on Transnational Corporations and Human Rights (2019, still being finalised ). Implementing the UN Secretary-General’s bulletin on special measures for protection from sexual exploitation and sexual abuse (2003 bulletin, ST/SGB/2003/13);
p. 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 such as the production and distribution of energies (in order to combat the ecological crisis), the banks and insurance companies (to create a public service for borrowing, savings, investment and insurance) and other sectors that are of vital importance to society.

8. It is imperative to get rid of the capitalist system

The CADTM clearly states that in order to move towards a socially fair and environmentally sustainable society, it is imperative to get rid of the capitalist system and to build a world in which the fulfilment of social and environmental needs determines political decisions.
We must fight the capitalist system which for two centuries since the beginning of the industrial revolution, has crushed people and been the global cause of a disastrous environmental crisis.

a. The capitalist system sees nature as resources to be exploited, commodified and privatised for maximum profit.
b. The capitalist system compels many countries and their peoples to extract their raw materials and to produce commodities Commodities The goods exchanged on the commodities market, traditionally raw materials such as metals and fuels, and cereals. for export markets at the lowest possible price.
c. The capitalist system pushes countries and peoples to grow agricultural products that they do not consume and to consume goods they do not produce.
d. The capitalist system develops nuclear power plants, against which we are fighting.
e. The capitalist system thrives on the weapons industry.
f. The capitalist system maintains and reinforces the exploitation and oppression of women and LGBTQI+
g. The capitalist system goes hand in hand with the debt system.

9. People must not be liberated they must liberate themselves

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 liberated, but to liberate themselves. Furthermore, experience has shown that privileged minorities cannot be counted on to take responsibility for people’s well-being. Reinforcing movements that contribute to social emancipation is a priority for the CADTM. The CADTM cooperates with all structures and movements that fight violence, harassment, and all forms of discrimination against women, LGBTQI+ and all oppressed minorities. Taking an internationalist approach, it is helping to build a broad-based movement which is popular, aware, critical and mobilised. Firm in the belief that the world’s struggles for emancipation must converge, CADTM International supports all organisations and coalitions, all mobilisations which work towards equality, social justice, the end of patriarchy and of capitalism, the conservation of nature and peace.