Committee for the Abolition of Illegitimate Debt

 1. What is the current social, economic and political situation?

On the whole the situation is bad and has got worse with the impact of CoVid-19:

• The political colours of governments vary according to countries; they are led by social-democracy in Portugal, Spain, Scandinavia and Croatia, by the far-right in Serbia, by parties claiming to be centre-right as in France, or by coalitions as in Germany until the elections end of September 2021, Belgium or Italy,… As a rule, a right-wing ideology prevails in the media and in the governments. No government has so far initiated real social policies. All are more or less caught in the neo-liberal logic. Most governments include technocrats who implement a neo-liberal if not nationalist ideology, notably in Bosnia-Herzegovina, Serbia, Hungary and Poland. Embezzlement and corruption are major issues in Serbia and Montenegro (while also present elsewhere).
• The economic situations vary depending on whether we consider countries of the periphery such as Romania, Bulgaria, countries from the former Yugoslavia, euro area countries such as (Croatia, Greece, Spain, Portugal,…) or dominant economies such as Germany, France, the Netherlands, Belgium, Austria, or again those in an intermediate position such as Italy. The general trend, however, is a worsening of the difficulties as a result of the Covid pandemic which badly impacted the economies and of the economic crisis that had started even before.
• Consequently, the social situation is not favourable to the popular classes. The majority of the people are badly hit by job losses (or the absence of jobs), losses in incomes, more precarious contracts, governments’ attacks on the rights of workers and social rights in general.

 2. Is there a public debt crisis in the offing?

All countries have experienced a significant increase in their public debt, but the consequences are not the same everywhere. Roughly speaking, we can distinguish between

• Countries of the dominant economies (Germany, France, the Netherlands, Belgium, Austria): sharp increase of the debt. European and national recovery plans often will provoke later new austerity measures. However, in the short term, there is no public debt crisis. Countries that are perceived as economically (and politically) reliable will still be supported by financial markets and EU institutions.
• Countries of the periphery (Spain, Italy and Portugal) : there is a significant increase of the debt. European and national recovery plans amount to new austerity measures. Deeply weakened by the 2008 financial crisis and the interventions of 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 (Spain, Portugal, Greece, Cyprus, Ireland), those countries have not yet fully recovered and can rely on less and less manoeuvring room to relaunch their economies, with defaulting or near defaulting banks.
• Countries of the former Yugoslavia within the EU (Croatia & Slovenia): sharp increase of the debt. European and national recovery plans amount to new austerity measures.
• Countries of the former Yugoslavia outside the EU (Bosnia, Montenegro, Serbia) : they are developing countries. Sharp increase of the debt, economies that are among the weakest on the European continent and are still reconstructing. As they are outside the EU they are not subject to constraints nor can benefit of the same financing possibilities. Corruption and cronyism absorb a large part of financing. They are closely monitored by the IMF, and very dependent on foreign creditors such as China, which uses them for its new silk roads. In Montenegro, a never finished ‘motorway’ financed by China resulted in an abysmal debt and the abandon to the private sector of a significant part of the public heritage.

 3. What are the current major struggles? Are there significant victories or defeats?

On the whole protest movements have been hampered by the restrictive ‘health’ measures. While there have been some protests for climate justice – such as the mobilization during COP26 in November 2021 with some 100,000 demonstrators in the streets of Glasgow – and for social justice (in all its forms), as well as to defend Labour rights, these are not massive radical movements that could force governments to yield Yield The income return on an investment. This refers to the interest or dividends received from a security and is usually expressed annually as a percentage based on the investment’s cost, its current market value or its face value. . We must remember though that in Western Europe in 2020 we have had significant decolonial and anti-racist mobilizations (Black Lives Matter). In Poland women mobilized against the anti abortion law.

We can observe a significant decline of citizens’ confidence in parties and trade unions, to the benefit of more self-organized ‘civic’ movements. There has been a noticeable change in this respect over the last 5 to 10 years, without its so far resulting in any real victory.

 4. Are there struggles against illegitimate debt (whether public or private)?

On the whole, in EU countries, there is no significant questioning of public debt, of its payment, and even less any real struggle to expose illegitimate public debts. But NGOs in several countries claim the cancellation of debt (and illegitimate debts) of countries in the South.

On the other hand, we can note a questioning and mobilization against illegitimate private debts in the field of housing, 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. , education etc., focusing on the role played by 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. .

The transversal nature of debt has been brought out by the current crisis, and the issue of the debt is increasingly taken on board by citizens’ movements, including the youth who mobilize on the ecological issue.

 5. What are the main initiatives launched by the various organizations that are members of the CADTM network?

• Political interpellations to cancel the debt of countries of the South and struggle against private creditors, notably towards the voting a law (Belgium/France)
• Studies on debt (Italy)
• Insisting on the public debt issue in political and alterglobalization contexts

 6. Are there continental initiatives or initiatives concerning several organisations in the same region?

• Project ReCommons Europe https://www.cadtm.org/Impact-of-European-policies-on-the-Global-South-and-possible-alternatives
• Mobilizations for climate justice (see this very good call : https://www.cadtm.org/On-September-24-we-will-strike-to-demand-for-intersectional-climate-justice )
• Initiatives for lifting patents on vaccines, medicines and treatments and against Big Pharma see https://www.cadtm.org/More-than-350-personalities-from-all-over-the-world-support-the-Manifesto-End and https://www.cadtm.org/Video-Health-for-All-Demand-a-waiver-on-patents
• Initiatives on a European level to stand up for the rights of refugees and migrants
• Italy: the CADTM joined the Society of Care that brings together associations dealing with environmental, social, pacifist and feminist issues, sharing a common agenda of struggle and organizing spaces for debate and mobilization
• Bosnia-Herzegovina, Montenegro, Serbia and Albania: current struggle to save the wild rivers in the Balkans, against the announced construction of small hydroelectric power plants.

 Debt situation in the EU

From March 2020 in connection with the multidimensional crisis that was hitting European countries, governments, the European Commission and 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.

https://www.ecb.europa.eu/ecb/html/index.en.html adopted a policy of ‘whatever it may cost’ to use a phrase of French president Macron. Strict rules against fiscal deficit were provisionally abandoned and governments made massive public loans, which resulted in a 15 to 20% debt increase in most countries.

Some left-wing people cheered. Governments with socialist participation as in Spain and Portugal rejoiced at the possibility to call on new European funds either as loans or as grants. Actually grants are very limited and conditioned on the implementation of new neoliberal structural measures. The CADTM denounces illusions about financial measures taken by the EU (see in French https://www.cadtm.org/La-centralite-du-capital-financier-dans-la-solution-europeenne-a-la-crise). CADTM Europe had suggested another approach as early as April 2020: http://www.cadtm.org/We-Won-t-Pay-for-Their-Crises-Anymore.

EU policies on external debt:

In the context of the health crisis, Europe joined the call of the IMF and of the Paris Club Paris Club This group of lender States was founded in 1956 and specializes in dealing with non-payment by developing countries.

to suspend the debt service Debt service The sum of the interests and the amortization of the capital borrowed. of the most indebted countries for an initial period of 6 months, later extended to one year. This is insufficient for several reasons:

• At the end of this period, their debt service will still have to be paid, which means that this measure is a mere temporary palliative that does not solve any structural problem.
• - A large part of expenses during the pandemic have been exceptional expenses of public resources to tackle the health crisis.
• The difficulty of getting access to vaccines, largely because of patents that were not lifted, also exacerbated North/South inequalities, notably in terms of trade dissymmetry. EU politicies induce future debts in countries of the South since they do not boost their manufacturing capacities or demand a lifting of patents (on the contrary, they opposed the lifting proposed by 105 countries of the Global South) and maintain an aggressive policy in terms of external trade.