Committee for the Abolition of Illegitimate Debt

Brid Brennan from the Transnational Institute

Earlier this week in Geneva, the Europe Third World Center (CETIM), FoEI and the TNI - whom are members of the GCDCP - called for a meeting to discuss the steps of dismantling the power of TNCs, and where the panel lies in terms of its second year of the IGWG process. Chairing the process was Ecuadorian ambassador, Maria Fernanda Espinosa, in addition to other members of the panel including Jean Ziegler, former Special Rapporteur on the Right to Food, and Alfred de Zayas, Special Rapporteur on the new economic order. According to Brennan, real advancements were made to the process of calling for an internationally binding instrument on TNCs, and it was recognised that the transnational political power has reached a stage that is not sustainable.

Brennan states that the highlight of the meeting was being able to show a 3 minute clip of Berta Caceres giving her interview last year to the UN Special Rapporteur of indigenous peoples, which represented the problems of corporate-led development and the constructive effort needed between governments, social movements and expert voices to move forward on the binding treaties. Brennan states that in addition to side meetings, organisations associated with the campaigning have been protesting the assassination of Berta. The Trade in Services Agreement (TISA) Campaign also provided a message of solidarity by the leader of the Sahrawi people (many of which are imprisoned due to disputes over their natural resources in the Western Sahara) and called for access to justice for Berta, her family, and the Lenca people. A call was also made for the safety of Gustavo Castro, who was injured during the assassination but is being kept under force in Honduras.

According to Brennan, the establishment of a binding instrument on TNCs has been contested, particularly by northern governments, and several attempts have been made to derail the process. Brennan states that conducting a report on the status has been politically challenging due to the diverse aspects of corporate power, however, the March 11 report will formally establish the processes of the UN Human Rights Council by laying out the landscape and noting the success of the Working Group’s first session. Brennan and 2 other members of the campaign will give an oral statement at the meeting, and will be delivering the following 3 key messages:

1. Despite the general agreement that all companies and businesses should abide by human rights, the specific focus should be placed on TNCs, due to their privileges and protections that are assured by existing bilateral investment treaties, free trade agreements, and instruments such as the Investor-State Dispute Settlement mechanism.

2. The treaty should address the question of the operations of international financial bodies such as 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 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.

in its 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, and their specific roles in financing mega projects. The provisions of the Treaty should also be applied to the role of other powerful financial corporations and Banks - such as those now involved in the Aqua Zarca dam - the Dutch bank FMO, the German giants - Voith and Siemens, and the Finnish FinnFund.

3. In order for the treaty to be effective, an enforcement body must be established in order to apply sanctions to TNCs and pursue consequences for violation of the treaty.

In addition to these objectives, the GCDC will continue working to articulate and strengthen the application of the People’s Treaty, which is a product of a consultative process across many social movements and affected communities to strengthen international human rights laws and laws applied to corporations. According to Brennan, this is particularly important as it will recognise the resistance of the affected communities and give acknowledgement in areas such as food sovereignty, energy sovereignty, water justice, and overall question of the commons. In the coming year of 2016 and 2017, Brennan claims this will be a parallel work and will be included in the demands and proposals that will go forward to the IGWG. She further states that while much importance will be placed on the functioning of the IGWG in Geneva, the real work - the political commitment to see the treaty process through to 2017 - will depend very much on the work done on the ground in different countries and regions.