Resisting the Debt System

10 August by Eric Toussaint , Ashley Smith

The combination of the pandemic, sharp global recession, inflation and interest rate hikes by central banks has triggered a new debt crisis throughout the Global South. The United Nations recently released a new report that found a total of fifty-two countries, nearly 40 percent of the developing world, in “serious debt trouble.” Already, the International Monetary Fund and World Bank are renegotiating their debt—not to abolish it, but to grant more loans and reschedule their loan payments—all to preserve the debt system that keeps the Global South under the yoke of Western capital.

Ashley Smith interviews Éric Toussaint about the history of this debt system and the new debt crisis.

Ashley Smith : Sovereign debt Sovereign debt Government debts or debts guaranteed by the government. has long been a critical issue for the Global South. What are the causes and history of this problem? How have the Western imperialist powers and their international financial institutions used the debt crisis to advance their interests? What impact has this had?

Éric Toussaint : Imperialist States have used debt throughout the history of capitalism to subordinate countries. Several Marxists analysed this, beginning with Karl Marx himself and followed most importantly by Rosa Luxemburg, along with many others. I expanded on their work in my book The Debt System.

The great powers created this system after States won their independence from colonial rule. In Latin America, great struggles against the Spanish empire led by José de San Martin and Simón Bolívar established newly independent States in the early nineteenth century. British capitalists offered them loans, trapping them in debt from their birth. From then on, these States were oppressed by Western imperialism and big finance.

Britain and other powers then used these States’ failure to make debt repayments to justify military intervention. They thus imposed free trade agreements to open up local markets for their corporations.

Luxemburg examined this in her book The Accumulation of Capital. One of her examples was British imperialism’s conquest and subordination of Egypt in 1882. She looked at several other examples in Latin America and Asia, especially China.

Thus, European imperialist powers as well as the United States established the debt system in the nineteenth century and expanded it throughout the world, including inside Europe itself against its less developed States. For example, British capital trapped Greece in debt after it established its independence in 1830 and used that as leverage to dictate the country’s economics and politics, in connivance with France and Tsarist Russia. 

In the early twentieth century, the United States in particular took advantage of countries’ failure to pay their debts to carry out military interventions throughout Latin America and the Caribbean. For instance, Washington used this alibi to invade Haiti in 1915, occupy it until 1934 and force it to make payments. So, debt was paired with military intervention as two key tools of imperial domination.

Ashley Smith : How did this debt system change during the Great Depression?

Éric Toussaint : The debt system was thrown into crisis in the 1930s. Germany suspended its loan payments in 1931, followed by Great Britain, Belgium, Italy and France, who all stopped making payments to the United States. Fourteen Latin American countries did the same. Thus, during the Great Depression, there was a general situation of suspension of payments on sovereign debt.

The debt system was thrown into crisis in the 1930s. Thus, during the Great Depression, there was a general situation of suspension of payments on sovereign debt.

This was one of the main reasons that the United States created the World Bank and the International Monetary Fund (IMF). During the Second World War, the Franklin D. Roosevelt Administration recognized that financial markets were in crisis and decided that the United States needed to develop new international institutions to enforce payment and finance the reconstruction of Europe.

They were also designed to maintain US imperial domination of countries that became independent through national liberation struggles and decolonization after the war. In essence, they set up the World Bank World Bank
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 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.
as their economic gendarmes for global domination over their former rivals and the Third World.

To give them some veneer of legitimacy, they were established as multilateral institutions that incorporated all the other great powers as well as the debtor countries. But the United States rigged those institutions with a weighted voting system that gave it the greatest share Share A unit of ownership interest in a corporation or financial asset, representing one part of the total capital stock. Its owner (a shareholder) is entitled to receive an equal distribution of any profits distributed (a dividend) and to attend shareholder meetings. of votes, guaranteeing that they would serve its interests.

After the war, the IMF and World Bank convinced many newly independent countries to take on more debt with the promise of development. Of course, the loans came with conditionalities that disciplined debtor countries to remain open to US and European capital.

Ashley Smith : How did the United States use the IMF and World Bank against the attempt by Third World States to liberate themselves from imperial dominance?

Éric Toussaint : The United States deployed them against attempts by States to implement endogenous processes of industrialization. Lázaro Cárdenas in Mexico, Juan Perón in Argentina, Gamal Abdel Nasser in Egypt, Mohammad Mosaddegh in Iran, Kwame Nkrumah in Ghana, Patrice Lumumba in Congo, Julius Nyerere in Tanzania, Jawaharlal Nehru in India and Sukarno in Indonesia all tried to pursue a strategy of import substitution in the hopes of independent development, free of the shackles of the imperial powers.

The Chinese and Cuban revolutions set even more radical precedents for breaking free of the imperialist debt system. All the States took advantage of the suspension of payments during the interwar period to advance this project.

The United States and other imperialist powers used the World Bank and IMF as instruments of revenge, a means to launch a counteroffensive against this Third World challenge to their dominance. As in the past, they combined economic coercion and military intervention.

The United States and other imperialist powers used the World Bank and IMF as instruments of revenge

The United States in particular mastered the art of creating policies of economic and social destabilization to facilitate military coups against radical governments. When faced with a leftist government in an underdeveloped country, Washington would get the World Bank and IMF to suspend their line of credit, wreaking economic havoc.

It then supported a military coup to bring “order” to the society. Afterwards, it would get the World Bank and IMF to reopen the spigot of loans, pumping money into the new dictatorships. Examples of this strategy are legion.

Washington overthrew Mosaddegh in Iran in 1953 and Jacobo Árbenz in Guatemala in 1954 and backed military putsches in Brazil in 1964, Chile in 1973 and a sequence of them in Argentina. They carried out similar operations in Asia and Africa, often backing brutal dictators like Mobutu Sese Seko in Zaire. Thus, while economic destabilization was key, Washington’s main instruments to reimpose their rule over the Third World were CIA operations, assassinations and direct military interventions.

Washington overthrew Mosaddegh in Iran in 1953 and Jacobo Árbenz in Guatemala in 1954 and backed military putsches in Brazil in 1964, Chile in 1973 and a sequence of them in Argentina

Robert McNamara is the best example of how these two arms of imperialism—the financial and the military—worked together to advance US interests. In the 1960s, he led the escalation of US intervention in Vietnam. After the Tet Offensive in 1968, he was nominated to be president of the World Bank, where he increased loans to Third World countries twelve-fold, mostly to dictatorships in Asia, Africa and Latin America.

By the time he resigned in 1980, his loan programme had set up whole swathes of the world for the debt crisis and the neoliberal offensive. Amid economic stagnation and rampant 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. , Federal Reserve FED
Federal Reserve
Officially, Federal Reserve System, is the United States’ central bank created in 1913 by the ’Federal Reserve Act’, also called the ’Owen-Glass Act’, after a series of banking crises, particularly the ’Bank Panic’ of 1907.

FED – decentralized central bank :
Bank Chair, Paul Volker, raised interest rates Interest rates When A lends money to B, B repays the amount lent by A (the capital) as well as a supplementary sum known as interest, so that A has an interest in agreeing to this financial operation. The interest is determined by the interest rate, which may be high or low. To take a very simple example: if A borrows 100 million dollars for 10 years at a fixed interest rate of 5%, the first year he will repay a tenth of the capital initially borrowed (10 million dollars) plus 5% of the capital owed, i.e. 5 million dollars, that is a total of 15 million dollars. In the second year, he will again repay 10% of the capital borrowed, but the 5% now only applies to the remaining 90 million dollars still due, i.e. 4.5 million dollars, or a total of 14.5 million dollars. And so on, until the tenth year when he will repay the last 10 million dollars, plus 5% of that remaining 10 million dollars, i.e. 0.5 million dollars, giving a total of 10.5 million dollars. Over 10 years, the total amount repaid will come to 127.5 million dollars. The repayment of the capital is not usually made in equal instalments. In the initial years, the repayment concerns mainly the interest, and the proportion of capital repaid increases over the years. In this case, if repayments are stopped, the capital still due is higher…

The nominal interest rate is the rate at which the loan is contracted. The real interest rate is the nominal rate reduced by the rate of inflation.
to nearly 18 percent in the United States. This triggered a deep recession undermining prices for key commodities Commodities The goods exchanged on the commodities market, traditionally raw materials such as metals and fuels, and cereals. , hammering Third World countries.

Robert McNamara is the best example of how these two arms of imperialism—the financial and the military—worked together to advance US interests

As a result, scores of countries could no longer afford their loan payments. The World Bank and IMF renegotiated their debts, granting them yet more loans on the condition that countries implement a programme of neoliberal 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).

—privatization, deregulation, cuts to their welfare states and opening their markets to multinational capital.

To combat this neoliberal offensive, Fidel Castro launched an international campaign for debt cancellation in 1985. It was endorsed by others including Thomas Sankara’s government in Burkina Faso. But they could not win over the bourgeois governments in the rest of the developing world.

As a result, the United States, joined by the European powers and Japan, successfully carried out their global neoliberal offensive. After the implosion of the Soviet Union, this was extended into Eastern Europe through shock therapy, establishing the integrated chains of production, delivery and sale of today’s global capitalism in the process.

Ashley Smith : Since the Great Recession, the debt crisis has grown even more acute. Why? What impact has this had on the most indebted economies?

Éric Toussaint : We are in a new conjuncture, a new debt crisis of enormous proportions that has been caused by four shocks to global capitalism. First was the coronavirus pandemic, which caused huge numbers of deaths throughout the world.

Second, the economic crisis triggered by the pandemic. This undermined economies in the developing world from Latin America to Asia to Africa. Countries like Sri Lanka and Cuba that had adopted an economic strategy based on tourism were particularly damaged when air travel was shut down.

These two shocks interacted, laying foundations for the new sovereign debt crisis. Right at the moment that States had to increase public expenditure to bail out businesses and support workers faced with unemployment caused by lockdowns and layoffs, their economies went into recession, drying up tax revenues. As a result, sovereign debt exploded.

The third shock was the Russian invasion of Ukraine. Right away, it set off massive speculative price increases in cereals like wheat. I say speculative because during the first few months of the war, there was no drop in cereal exports from Ukraine and Russia. Soon, however, exports were interrupted, choking supplies and driving up prices even more, until a deal was orchestrated to allow shipments to recommence. That agreement was called into question at the end of July 2023. There have also been price hikes for chemical fertilizer, oil and gas.

Nevertheless, prices spiked throughout the world and especially in countries that imported most of their food. In countries in Asia and Africa, inflation put enormous burdens on people, already impoverished by the recession, and now faced with the increased price of food.

The fourth shock was the unilateral decision by the US Federal Reserve, European 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.

and Bank of England to raise their 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. rates. In the United States, the Fed hiked their rates from near 0 to 5,25 percent, Bank of England did the same while the European Central Bank 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.
increased its own rate to 4 percent.

These hikes had a devastating effect on countries in the Global South. Financial capital, which had been buying sovereign bonds in those countries, realized that raised interest rates in the Global North meant they could make a higher rate of return by purchasing such bonds in the United States, Europe and Britain. Thus, we have seen a repatriation of finance capital from the South to the North.

Even worse, investment funds Investment fund
Investment funds
Private equity investment funds (sometimes called ’mutual funds’ seek to invest in companies according to certain criteria; of which they most often are specialized: capital-risk, capital development funds, leveraged buy-out (LBO), which reflect the different levels of the company’s maturity.
told States in the South that if they wanted to refinance their debt they would have to pay 9 to 15 percent interest rates; otherwise the funds wouldn’t buy their bonds. While countries had little choice but to agree, many are quite unable to make their payments at such high rates. As a result, we have a new sovereign debt crisis.

It has got so bad that even the World Bank and IMF are calling attention to the crisis. They are now arguing that it is necessary to reduce some of the debt or postpone payments so that countries can continue to pay back their loans. Thus, despite their crocodile tears, their aim is to protect and preserve their debt system, not abolish it.

Ashley Smith: In the past, sovereign debt in the Global South has been held predominantly by the United States, Europe, Japan, their banks, investment funds and the international financial institutions. Now China is a big holder of such debt. Why is that the case? How has that caused a schism between the Western powers and China over debt? Why has China been reluctant to agree to debt restructuring?

Éric Toussaint : The first thing to say is that China, despite all the media hype, is not the main creditor for the Global South. Private creditors like investment funds and big banks hold more than 50 percent of the developing countries’ sovereign debt. The other holders are the multilateral predators including the World Bank, the IMF and the traditional imperial powers in the Club of Paris. 

China has now established itself as a new creditor. Its State banks, State-owned enterprises and private enterprises have dramatically increased their loans to the Global South, becoming holders of large amounts of sovereign debt.

Unlike the World Bank and IMF, however, China does not impose neoliberal conditionalities and structural adjustment programmes. But let’s be clear, it is not philanthropy. It is a new capitalist superpower locked in competition against the United States, the European powers and Japan.

As such, it uses its loans to advance its interests. It funds countries to develop industries to export raw materials to China, open their markets to Chinese companies and secure their allegiance geopolitically.

to know more: China Seduces Africa: a Love Story or a Honey Pot? Is it that Simple?

Regarding the new debt crisis, the IMF and the World Bank have told China to reduce its holdings and renegotiate them. China has responded by saying that it is already reducing some debts, restructuring them and postponing payments. They are doing so to get indebted countries to adhere to their foreign policy dictates.

For instance, China has convinced fifteen to twenty countries in Africa to renounce recognition of Taiwan and force Taipei to close its embassies. As a result, there is only one country on the continent that recognizes Taiwan as an independent country.

At the same time, China has exposed the hypocrisy of the World Bank and the IMF’s claims that they cancel debt. It has pointed out that while the international financial institutions reduce portions of debt, they never cancel it. It has thus called the other powers’ bluff and exposed all their debt renegotiation as a charade.

China is right. Take the example of the Democratic Republic of Congo. The IMF and World Bank claim to have stopped the country’s repayment of its debt, but they are lying. In reality, they have set up a trust in which imperialist powers like France, Belgium and the Netherlands deposit funds for the DRC. The IMF and the World Bank then draw funds from that trust for repayment of their loans.

China has also objected to the imbalance of power in the IMF and World Bank. They have highlighted that the United States still holds more than 15 percent of the votes, enabling Washington to effectively control both of them. By contrast, China, despite its status as the world’s second largest economy, has only 6 percent. China has therefore requested the redistribution of voting rights.

Frustrated with Washington’s refusal to accede to its request, China has joined Brazil, Russia, India and South Africa to establish the BRICS Bank—the New Development Bank. It is headquartered in Shanghai and its new president is the former president of Brazil, Dilma Rousseff. China claims that it is an alternative to the World Bank and the IMF. It is not. It funds exactly the same kind of extractivist projects that Western capital has backed in the developing world.

Despite opening this multilateral bank, China’s main way of granting loans to countries is not through it, but through its State banks, State companies and private corporations. Why? Because China knows, just as the United States does, that while multilateral banks are useful, the best way to control countries is through bilateral financial relations. So China’s banks and corporations remain central to their international lending operations. 

They are adopting and adapting the strategy established by the United States with the Marshall Plan Marshall Plan A programme of economic reconstruction proposed in 1947 by the US State Secretary, George C. Marshall. With a budget of 12.5 billion dollars (more than 80 billion dollars in current terms) composed of donations and long-term loans, the Marshall Plan enabled 16 countries (notably France, the UK, Italy and the Scandinavian countries) to finance their reconstruction after the Second World War. after the Second World War. Washington provided grants and loans to countries in a bilateral fashion to fund reconstruction and secure its geopolitical influence against the Soviet Union. China is doing the same to secure allegiance from the Global South and compete with the old imperialist powers.

While we should call attention to this, we must avoid any demonization of China. It is no worse than the United States, France or Britain.

Ashley Smith : The Committee for the Abolition of Illegitimate Debt (CADTM), of which you are a key leader, has made debt cancellation one of its central missions over the last few decades. What do you advocate and how is the movement for a debt jubilee faring?

Éric Toussaint : The movement for debt cancellation is in a difficult situation. We were inspired by Castro’s call for abolition of the debt in 1985 and have campaigned for it ever since. We have made the demand central to global discussions but have also suffered some profound setbacks like Syriza’s capitulation to the European Central Bank and the international financial institutions in 2015.

Over the thirty-year period from 1985 to 2015, we have seen massive waves of struggle, reaching a high point through the Global Justice Movement of the early 2000s through 2008 when Ecuador under Rafael Correa suspended its debt repayments. In 2000, we organized 30,000 people to march against the World Bank in Washington and mobilized similar or more numbers against other summits of the international financial institutions and great powers.

Since Syriza’s capitulation in 2015, it has been more difficult to mobilize movements for cancellation, with some exceptions like Argentina, where hundreds of thousands of people protested in the streets against the IMF. But in general, States have balked at cancelling their debt and our movement has not been able to build popular mobilization on the scale of the early 2000s.

At the same time, the international network of the CADTM has actually expanded our geographical implantation and capacity. For example, a big Mexican coalition of more than twenty organizations just affiliated with us. It includes trade unionists as well as Zapatistas, feminist groups, peasant organizations, ex-Maoists, Trotskyists and others critically supporting Andrés Manuel López Obrador’s so-called progressive government. 

We have a very active organization in the U.S. colony of Puerto Rico and have built a large network in North Africa called the North African Network for Food Sovereignty. In addition to our long-established organizations in the French-speaking countries of West Africa, we have recently added new ones in East Africa, welcoming a group in Kenya, a pivotal English-speaking country in the struggle against debt.

As a result, we now have affiliates in over thirty countries. In general, the organizations are not massive, but they are militant and activist in nature. And our website receives over 200,000 visits a month.

We are bringing all our affiliates and partners in the struggle together in a counter-summit of social movements this October against the next assembly of the World Bank and IMF in Marrakesh, Morocco. It will be challenging to organize because of the repressive nature of the monarchy that rules the country. We have an organization there called ATTAC-CADTM Morocco that shares the international secretariat with CADTM- Belgium that will host the counter-summit. They are doing a remarkable job of preparation and mobilization and is associated with a number of organizations in Morocco and the Arabic-speaking region.

But, as an indication of the difficulties we face, ATTAC-CADTM Morocco has not been able to renew its legal status since 2002 and one of its members, Omar Radi, was sentenced to six years in jail for activism and his work as an investigative journalist. He has already served three of those years. Unfortunately, there is a clear risk that the monarchy will try to interfere with our counter-summit.

Some members of civil society, led by people known to have collaborated with the present government in the past, have called for a citizens’ initiative in parallel to the IMF-WB summit. They are trying to cause confusion and division among those involved in the international preparation of the counter-summit and to organize a summit that would be agreeable to the two institutions and the regime.

Not for nothing is this coalition from civil society called “International Parallel Summit to IMF and WB Meetings”. They have invited leaders of the IMF and World Bank to participate in a dialogue. They want to work with the international financial institutions, not challenge them or undermine their legitimacy. Thus will some of those participating in that alternative summit receive aid to attend and be coopted by the repressive Moroccan monarchy.

Let us recall that the Moroccan regime does not respect the right of peoples to self-determination, cracks down on social protest, does not respect freedom of speech, helps Fortress Europe to consolidate its inhuman migration policies and has recently officialized and stepped up its partnership with Israel, turning its back on the Palestinian people.

Despite the competition from civil society allied to the monarchy, we think we will be successful in organizing our counter-summit, because up until now the monarchy has balked at repressing foreigners from countries of the North. Of course, we expect the repressive regime to create problems for us, interfering with our ability to secure venues, but not to resort to overt repression.

In fact, we will use the counter-summit to help our comrades who have been repressed and jailed by the monarchy. We will bolster the campaign to free all the political prisoners in the country. So, we are confident and enthusiastic about exercising our civic rights and posing a challenge to the monarchy, the IMF and the World Bank.

Ashley Smith : Ukraine has come to the fore as one of the battlegrounds of this struggle for debt cancellation. Russia has laid waste to whole sections of the country in its imperialist invasion. Ukraine is already deeply in debt, an 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.
imposed since the 1990s. Many fear that the reconstruction of the country will only increase its indebtedness and play into the hands of multinational corporations. What is the alternative to such a neoliberal reconstruction of the country?

Éric Toussaint : The struggle for debt cancellation in Ukraine must be seen as a central part of our overall movement. It suffered a version of shock therapy at the hands of the Western powers after its independence in 1990 and, after eighteen agreements with the IMF and World Bank, saw its debt grow to $15 billion to the IMF and another $4 billion to the World Bank.

So these two institutions hold close to $20 billion of Ukraine’s external debt. They have every intention of using this debt to impose ever more radical neoliberal policies on the country—more privatization, more deregulation, more austerity and more openings for multinational capital. Cancelling the debt is really a precondition for any progressive reconstruction of the country after the war.

Already, the vultures of international capital are circling over Ukraine. The two biggest corporations positioning themselves to benefit from the country’s reconstruction are BlackRock and JP Morgan Chase. These two were central players at the recent Ukraine Recovery Conference held in Britain.

BlackRock wants to fund extractivist industries, especially in minerals, while JP Morgan is focusing on becoming central to the country’s finances. The entire process of the country’s reconstruction is designed to be controlled by big capitalist corporations and big capitalist powers. We should totally oppose this kind of reconstruction.

That also raises critical questions about Volodymyr Zelensky’s government. It has imposed its own neoliberal policies during the war, undermining in particular workers’ rights to unionization and endorsing the Western powers’ predatory plans for rebuilding Ukraine. We must work with our comrades in Sotsіalnyi Rukh, the Ukrainian Social Movement, to provide an alternative plan for a progressive reconstruction of the country.

From outside Ukraine, we have to convince international organizations in the movement for debt cancellation to oppose the Western powers and their neoliberal programme. In the United States, we have to pressure Jubilee USA, which tends to follow Washington’s lead, to join us in this opposition.

Ashley Smith : Why should the left and the international movement for debt cancellation support Ukraine’s struggle for self-determination and a progressive reconstruction of the country? How can such unity from below throughout the world be built?

Éric Toussaint : We have faced real challenges in building solidarity with Ukraine. This should not be surprising. People look at how the Western powers have supported Ukraine and accepted refugees, while they have refused to extend similar solidarity to other struggles for self-determination like Palestine’s and have blocked refugees from what are seen as racialized countries.

That hypocrisy makes some ask why they should support Ukraine’s struggle for self-determination and demand the cancellation of its debt when Ukrainians are privileged. Our task is to convince the international left, in particular in Latin America, Africa and Asia, that the imperialist powers are not in fact generous to the people of Ukraine.

The United States and other NATO NATO
North Atlantic Treaty Organization
NATO ensures US military protection for the Europeans in case of aggression, but above all it gives the USA supremacy over the Western Bloc. Western European countries agreed to place their armed forces within a defence system under US command, and thus recognize the preponderance of the USA. NATO was founded in 1949 in Washington, but became less prominent after the end of the Cold War. In 2002, it had 19 members: Belgium, Canada, Denmark, France, Iceland, Italy, Luxembourg, the Netherlands, Norway, Portugal, the UK, the USA, to which were added Greece and Turkey in 1952, the Federal Republic of Germany in 1955 (replaced by Unified Germany in 1990), Spain in 1982, Hungary, Poland and the Czech Republic in 1999.
powers are providing weapons to Ukraine as a proxy to weaken Russia. And they are granting it money to create dependency and impose their neoliberal programme on it. In reality, they are trying to manipulate and exploit Ukraine and its people.

But it’s not easy to convince people in countries who, quite rightly, see the United States and the European powers as their main enemy. This is why, in West Africa, some of those marching in demonstrations against Western imperialists carry Russian flags. Of course, they are not supporters of Vladimir Putin and Russian imperialism, but they see the Russian flag as some kind of alternative to the West and, in the case of countries like Mali, Burkina Faso and Niger, as an alternative to French imperialism.

We have to demonstrate that Russia is just another imperialist power, albeit a less powerful one. We will try to advance this argument at our counter-summit in Morocco. We have invited the Ukrainian socialist Yuliya Yurchenko as one of the speakers to make the case for solidarity with Ukraine.

This will be an important opportunity to build unity from below against imperialism, neoliberalism and illegitimate debt. But it won’t be easy. Twenty or thirty years ago, the global justice movement was more united and was not predisposed to supporting this or that imperialist power or camp.

But we will try to rebuild unity to resist both US and Russian propaganda and their appeal to sections of anti-imperialist movements. We must reject them both. To do this we need more education and a frankly Marxist analysis of imperialism today so that people can come together and build a common movement against the debt system without any exceptions.

We will try to do this at our counter-summit in Morocco and at the next World Social Forum in Nepal in February 2024. We are already working with our comrades from South Asia who understand that we must oppose both Russian imperialism and US/NATO imperialism. They are both enemies of the labouring classes of the world and of our collective struggle to abolish debt.

Eric Toussaint

is a historian and political scientist who completed his Ph.D. at the universities of Paris VIII and Liège, is the spokesperson of the CADTM International, and sits on the Scientific Council of ATTAC France.
He is the author of Greece 2015: there was an alternative. London: Resistance Books / IIRE / CADTM, 2020 , Debt System (Haymarket books, Chicago, 2019), Bankocracy (2015); The Life and Crimes of an Exemplary Man (2014); Glance in the Rear View Mirror. Neoliberal Ideology From its Origins to the Present, Haymarket books, Chicago, 2012, etc.
See his bibliography:
He co-authored World debt figures 2015 with Pierre Gottiniaux, Daniel Munevar and Antonio Sanabria (2015); and with Damien Millet Debt, the IMF, and the World Bank: Sixty Questions, Sixty Answers, Monthly Review Books, New York, 2010. He was the scientific coordinator of the Greek Truth Commission on Public Debt from April 2015 to November 2015.

Other articles in English by Eric Toussaint (621)

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Ashley Smith

Ashley Smith is a socialist writer and activist in Burlington, Vermont. He has written in numerous publications including Truthout, International Socialist Review, Socialist Worker, ZNet, Jacobin, New Politics, Harpers, and many other online and print publications. He is currently working on a book for Haymarket entitled Socialism and Anti-Imperialism.

Other articles in English by Ashley Smith (4)



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