Committee for the Abolition of Illegitimate Debt

The Troika Troika Troika: IMF, European Commission and European Central Bank, which together impose austerity measures through the conditions tied to loans to countries in difficulty.

IMF : https://www.ecb.europa.eu/home/html/index.en.html ’s first victims are the populations of Greece, Portugal, Ireland, Cyprus and Spain. In view of the financial distress of these countries, the Troika, enjoying a position of relative strength, imposed a ‘memorandum’ on them. This is a programme listing the austerity measures that the governments concerned must apply to the letter if they want access to the Troika’s loans. The measures include job cuts in the civil service, reduction of social expenditure budgets, a rise in indirect taxation such as VAT, the lowering of the minimum wage, and so on.

Several official reports published between 2013 and 2014, including one by the Council of Europe’s Human Rights Commissioner [1] or another by the UN Expert on debt  [2], emphasize that the memoranda bring about the degradation of populations’ living conditions. Among these reports can also be found the legal opinion of Law Professor Andreas Fischer-Lescano, commissioned by the Austrian Chamber of Labour (Vienna) [3].

The jurist takes pains to demonstrate that the Troika’s programmes are illegal by virtue of European and International Law. These memoranda violate a series of fundamental rights, such as the right to health, to education, housing, social security, fair pay and private property; and also freedom of association and of collective negotiation. All these rights are protected by numerous legal texts at both European and International level, such as the European Union’s Charter of Fundamental Rights, the European Convention on Human Rights, the European Social Charter, the two UN pacts on human rights, the UN Charter, the UN Convention on the Rights of the Child, the UN Convention on the Rights of Persons with Disabilities; and also by the conventions of the International Labour Organization (ILO) which have the status of General Principles of Law (GPL), as the legal study points out.
The list of articles violated by the memoranda, meticulously compiled by Professor Fischer-Lescano, is remarkable and falls under the legal responsibility of the three organizations forming the Troika. Here his report makes an important point: it is incumbent not only on States but also upon international organizations such as 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 , the European Commission, 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.

to respect human rights as they are laid down by European and International conventions as well as in the GPL and international custom.

The claims in this legal study are based on articles of conventions such as the European Union’s Charter of Fundamental Rights (article 51), on numerous judgments and pronouncements handed down by the International Court of Justice (World Court or ICJ) [4] and the EU Court of Justice [5], and by verdicts returned by Committees of the UE [6] and the UN [7].
Fischer-Lescano also reminds us that when States make decisions within international organizations, they are bound to respect the treaties on the protection of human rights that they have ratified individually as well as the GPL and international custom. These are obligations which hold in all circumstances. Consequently the Troika and the States may not use the crisis as a pretext to suspend their obligations regarding the protection of human rights.

The Troika is under obligation both to respect and to protect human rights, in other words, they must prevent them from being violated by a third party. Yet by imposing the memoranda, it is doing exactly the opposite. Moreover the study emphasizes how governments are legally compromised through their implementation of austerity programmes which inevitably lead them to flout human rights. Even though the complicity of the governments concerned cannot be denied, it would be wrong to lay all the blame at their door, thus exempting the Troika from accountability. The European Commission, the ECB and the IMF must accept full legal responsibility from the moment negotiations begin and the memoranda are signed.

Another reason why the memoranda are illegal is that the Troika goes far beyond its attributions. The European treaties do not confer upon it the power to legislate on the right to strike, health, freedom of association, education and fixing salary levels. Furthermore the total exclusion of the European Parliament from the process of drawing up and signing the memoranda violates the principle of separation of powers upheld in Article 10 of the Treaty on the EU and the rules of legal process as laid down by Article 218 of the Treaty on the Functioning of the EU.

The conclusion cannot be gainsaid: these programmes are illegal and the Troika’s actions are fraudulent. This will have at least three consequences. 
Firstly, the memoranda must be abrogated. As recommended by the study, the European Parliament would be well advised to demand their cancellation before the ICJ. Governments, compelled by popular mobilization, can very well declare these austerity programmes legally null and void, if they have the political will to do so.

Secondly, loans granted by the Troika in return for the implementation of the memoranda are de facto odious and should therefore be cancelled unconditionally. Please note that the legal argument 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. and the CADTM’s position are quoted in the study [8]. Repayment of the debt could be suspended with immediate effect, in view of the fact that human rights take precedence over all other commitments of the State, including to its creditors, as stipulated in Article 103 of the UN Charter.

Thirdly, the European Commission, the ECB, the IMF, the States that implement these illegal austerity programmes as well as the States that draw up the programmes within those same institutions must be prosecuted in a court of law.

Translated by Vicki Briault and Christine Pagnoulle