Committee for the Abolition of Illegitimate Debt

The debt in the RD Congo has recently been reduced, from 13,704 to 2,931 billion US dollars, as a consequence of the RD Congo reaching the completion point at the conclusion of the HIPC Heavily Indebted Poor Countries
HIPC In 1996 the IMF and the World Bank launched an initiative aimed at reducing the debt burden for some 41 heavily indebted poor countries (HIPC), whose total debts amount to about 10% of the Third World Debt. The list includes 33 countries in Sub-Saharan Africa.

The idea at the back of the initiative is as follows: a country on the HIPC list can start an SAP programme of twice three years. At the end of the first stage (first three years) IMF experts assess the ’sustainability’ of the country’s debt (from medium term projections of the country’s balance of payments and of the net present value (NPV) of debt to exports ratio.
If the country’s debt is considered “unsustainable”, it is eligible for a second stage of reforms at the end of which its debt is made ’sustainable’ (that it it is given the financial means necessary to pay back the amounts due). Three years after the beginning of the initiative, only four countries had been deemed eligible for a very slight debt relief (Uganda, Bolivia, Burkina Faso, and Mozambique). Confronted with such poor results and with the Jubilee 2000 campaign (which brought in a petition with over 17 million signatures to the G7 meeting in Cologne in June 1999), the G7 (group of 7 most industrialised countries) and international financial institutions launched an enhanced initiative: “sustainability” criteria have been revised (for instance the value of the debt must only amount to 150% of export revenues instead of 200-250% as was the case before), the second stage in the reforms is not fixed any more: an assiduous pupil can anticipate and be granted debt relief earlier, and thirdly some interim relief can be granted after the first three years of reform.

Simultaneously the IMF and the World Bank change their vocabulary : their loans, which so far had been called, “enhanced structural adjustment facilities” (ESAF), are now called “Growth and Poverty Reduction Facilities” (GPRF) while “Structural Adjustment Policies” are now called “Poverty Reduction Strategy Paper”. This paper is drafted by the country requesting assistance with the help of the IMF and the World Bank and the participation of representatives from the civil society.
This enhanced initiative has been largely publicised: the international media announced a 90%, even a 100% cancellation after the Euro-African summit in Cairo (April 2000). Yet on closer examination the HIPC initiative turns out to be yet another delusive manoeuvre which suggests but in no way implements a cancellation of the debt.

List of the 42 Heavily Indebted Poor Countries: Angola, Benin, Bolivia, Burkina Faso, Burundi, Cameroon, Central African Republic, Chad, Comoro Islands, Congo, Ivory Coast, Democratic Republic of Congo, Ethiopia, Gambia, Ghana, Guinea, Guinea-Bissau, Guyana, Honduras, Kenya, Laos, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Myanmar, Nicaragua, Niger, Rwanda, Sao Tome and Principe, Senegal, Sierra Leone, Somalia, Sudan, Tanzania, Togo, Uganda, Vietnam, Zambia. (Heavily Indebted Poor Countries) initiative on 1 July 2010. The total reduction should be 12.3 billion; 11.1 billion as a result of the HIPC Initiative and 1.2 billion as a result of the Multilateral Debt Relief Initiative (MDRI). According to the Congolese government, this constitutes the most significant debt relief to have benefitted a country in the south within the scope of these two initiatives (HIPC and MDRI). But in return the government has been forced to submit to the dictates of International financial institutions, which are the inevitable consequence of the relief conceded by the creditors of 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. : a debt entered into by a dictator, General Mobutu, which has not benefitted the population in any way and which occured with the complicity of western creditors.

Why hasn’t the government exposed the odious nature of this debt, and repudiated it? The answer can be summarised as follows: for fear of feeling isolated in an unjust world where those who control the finance have imposed, by means of the debt, another form of colonisation. Instead of throwing off the yoke of this neocolonialism, the DRC has, like the other countries classed as HIPC, chosen to submit to the injunctions of 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.

, 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 Paris Club Paris Club This group of lender States was founded in 1956 and specializes in dealing with non-payment by developing countries.

within the framework of this initiative with the humiliating term Heavily Indebted Poor Countries!

From the standpoint of the social movements we cry out loud and strong that the DRC is neither poor nor heavily indebted. It is for this reason that in 2007 we sent a petition to the president demanding an audit of the debt in order to discover the truth about this debt that has been imposed on us, ascertain who are the responsible parties and sanction them with reparations for the damages caused to the Congolese people. Of this correspondance, only the Senate, copied into the debt letter, confirmed receipt.

Our stance regarding the audit remains unchanged, particularly given that at the moment of the pronouncement the Congolese authorities made explicit reference to the odious debt. To give an example, the government’s spokesperson declared,“this odious debt has just been relieved“. More serious still, the authorities speak of a “great victory for the Congolese people who have endured sacrifices for many years“.

Before explaining these sacrifices we should return to the origin of this Congolese debt. Since independance in 1960, Belgium and the World Bank have organised the illicit transfer of the debt entered into by the former colonial metropole with the World Bank onto the shoulders of the Congo. Yet the Treaty of Versailles prohibits the transfer of colonial debts. Secondly, there is the debt entered into by the dictator Mobutu, financially supported by the capitalists. The latter contracted debts in order to build a number of “white elephants“ for the benefit of western multinationals; the Inga 1 and 2 hydroelectric dams with a transport line of current stretching 2000 kilometres from Inga to the mining region of Katanga in the direction of Zambia. This line, built to supply electricity to companies, does not benefit the Congolese people. Many villages remain in darkness, as well as certain towns, such as Kananga in Kasaï. For Inga 2, where there are 8 turbines, Belgium sold 4 turbines which have never operated...

Another example is the steel industry in Malaku, built by the Italians, which recycles scrap metal from Europe instead of using iron from the Congo. France alleges to have installed communication and radio materials with the company Thompson, which have never functioned. France has also built a 22 storey trade centre which, to date has never been used, owing to lack of air conditioning. Germany has built cement works at Kimpese in the Bas Congo region,which has never operated beyond 30% of its capacity.

There are plenty of other examples: namely in the military cooperation where fighter planes such as Mirages and other was material was sold to the dictator Mobutu in the context of the cold war, weapons which have also served to repress the Congolese people. The height of injustice, it’s for these debts that the Congolese people have ebdured and continue to endure the sacrifices to which the Congolese authorities refer today. That is why we refuse to ay these debts!

What exactly do these scarifices consist of? Here are some examples. Education is at the parents’ expense, to the point where at the moment over 30% of children do not attend school. After they have given birth, women and their babies are taken hostage by the hospitals because they are unable to pay the fees. Despite the fact that the DR Congo is the second largest freshwater reserve in the world, only 17% of the population has access to safe drinking water and children continually die of hydric diseases. Only 1% of the population has access to electricity in a country that possesses this dam in Inga. 17 % of the population suffers from malnutrition, etc. Teachers’ and public servants’ salaries are 40 dollars a month, which gives them only enough to live on for 10 days. How is it possible to live with dignity in such conditions and speak seriously of the millenium objectives for development (MOD)?

Our Constitution is violated every day. To give some examples, the government has been unable to provide the provinces with the funds for operating as indicated in the Constitution for decentralisation. The provinces therefore remain unfunded. The local elections have not yet been organised owing to a lack of funds. The government, which made an agreement with China for building infrastructures was forced to review its agreement under pressure from the IMF. The sovereinty of the DR Congo is thereby confiscated as our right to development. Our social rights continue to be flouted, while the pronouncement that we are a HIPC is supposed to free financial resources and teachers’, public servants’, doctors’, magistrates’, etc strikes follow. The authorities ask the workers to wait for payment of their delayed salaries...

The fight against the debt must continue and must go hand in hand with the fight against 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. , these private companies that purchase, at a very low cost, on the secondary debt market, the debts of developing countries unknown to them, in order to force them, by legal means, to repay them at an exhorbitant price, in other words, the initial sum of the debts, plus 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. , penalties and various legal expenses. In this way the vulture fund FG Hemisphere obtained the right by the tribunals to confiscate during the next 15 years the revenue from the sale of electrical current in South Africa for the sum of 105 million dollars. But there is also all the pressure of the country’s resources linked to leonine contracts signed by the Congolese authorities and multinationals such as the Canadian company First Quantum, etc. This pillage of Congolese resources is facilitated by the laws voted by the Congolese parliament in order to satisfy the creditors: the TVA law, laws of public procurement, the law on the business climate in order to align with the rules of the WCO, etc. Finally, what can we say of the UN mission in the DR Congo? Each year this UN mission costs 1 billion dollars, without achieveing any positive results. Women continue to be raped a few metres away from these peacekeeping soldiers who are sometimes themselves involved in these atrocities.

Let’s stop payment of the debt and let’s put an end to foreign interference in the DR Congo!