Every country has a capitalist class that sees its own interest in imposing the debt system. “That is why the opposition to it is inside the system, between the dominant classes and the people”

Every country has a capitalist class that sees its own interest in imposing the debt system. “That is why the opposition to it is inside the system, between the dominant classes and the people”, says the historian and political scientist, Eric Toussaint, who is the spokesperson for The Committee for the Abolition of Illegitimate Debt (CADTM), an association founded in Belgium in the early 1990s which now has more than thirty affiliates in as many countries. He spoke at the workshop The Debt System: a simple matter of lending money or a system of international oppression? that was held on the 18 June 2019 on the premises of the press agency DIRE. Eric Toussaint held a press conference to introduce the Italian edition of his latest book The Debt System – A History of Sovereign Debts and their Repudiation published by Bordeaux in Rome. “My study concentrates on examining the last two centuries of human history through the perspective of sovereign debt. I wanted to show that the hierarchy of the World is intimately tied to the way countries become indebted and how indebtedness functions. I show how governments and the financial powers have wielded the weapon of odious debt in order to subjugate countries and peoples. They can only gain freedom through the periodic abolition of illegitimate debt.”

The political scientist claims, “The dictatorship of debt is not inevitable. History shows that several countries have successfully abolished their debts towards their creditors”.

During the press conference on Eric Toussaint’s book, Father Alex Zanotelli, a Catholic missionary for Comboniani Cordis Iesu, made several declarations: “The World’s financial system behaves like the Mafia; it is urgent to establish a moratorium. A debt becomes odious if it causes poverty. Indeed I see little difference between the Mafia and the ruling system. It is an absurd system that instead of being centred around the economy is centred around finance. This system has allowed 1% of the World’s population to possess the same amount of wealth as the remaining 99%”, went on the missionary. “10% of the population consume 90% of the goods produced. Those who possess everything must arm themselves to defend the continuity of the system. Last year $1800 billion was spent on armaments. That is close to $5 billion a day to enable those who control the World’s resources to perpetuate the system. A debt becomes odious when it brings no advantages for the population and engages the complicity of the lenders.”

According to Father Zanotelli, to get out of the debt trap it would be necessary to apply a moratorium on debt repayments, suspend austerity measures, prohibit transactions with tax havens, clamp down on tax evasion, introduce a tax on financial transactions and create a citizens’ movement for the popular voice to be heard.

Cristina Quintavalla (CADTM-Italy) continued, “The European Union practises a debt policy that is stifling Africa. Refusing a society the means it needs puts it on the edge of a new crisis.

Debt is a self-serving mechanism that maintains the dictatorship of the financial markets and forces the States to serve the interests of private investors

Debt is a self-serving mechanism that maintains the dictatorship of the financial markets and forces the States to serve the interests of private investors. This situation is the direct result of pressures from the International Monetary Fund (IMF), the World Bank (WB) and the European Central Bank (ECB) that imposes bail-out policies in accordance with its neoliberal ideology.”

The expert says: “I have in mind the role of the ECB who ‘help’ populations and countries to repay debts they have inherited. This coercion has forced through the underselling of whole economic sectors to private operators, accompanied by denying the rights of populations and the ancestral rights of communities to dispose of their own resources.”

Also, multilateral agreements between Europe and Africa “have devastating effects, such as abolishing import duties. There is yet another World-wide crisis looming. The debt of poor countries increased by 50% in 2016, affecting their GDP with interest rates between 22 and 42%. All this produces more internal conflict, war, migration, high prices and environmental damage.”

CADTM – Italy is also scrutinizing military spending: “We are witnessing forced militarisation under pressure from NATO and with the complicity of the European Union to impose wide-scale restructuring in countries considered to be strategic. It is no coincidence that about thirty communications corridors are being developed, one of which is high speed train links,” concluded Quintavalla.

Father Janvier Yameogo from Burkina Faso declared: “Our President Sankara was assassinated because he refused to pay the debt. The Bible prohibits this kind of capitalism as usury.”

Thomas Sankara “was assassinated by a front of foreign and domestic forces in and around his country who wished to prevent him from tracking down and strongly denouncing injustice and the odious character of poor countries’ debts.” Looking back on the months leading up to the assassination of the Burkina Faso President, the priest has no doubt where the responsibilities lie. A guest of the agency DIRE for this meeting about debt, Yameogo is employed at the Vatican State communications agency but on this occasion he is speaking on his own behalf and he informs us of Thomas Sankara’s declarations at the meeting of the Organisation of African Unity (OAU) – the predecessor of today’s African Union—in Addis Ababa in July 1987, three months before he was assassinated. Sankara declared that the debt could not be paid because it was of colonial origin. He continued with a call for solidarity, “I suggest that we create the Addis Ababa club to refuse the debt all together, because if Burkina Faso alone refuses to pay, I will not be among you at your next meeting. Do not let them assassinate us.” (https://www.youtube.com/watch?v=e8PCuwBnhtk) The other African leaders present chuckled politely but we know full well that, on 15 October 1987, Sankara was assassinated. Father Yameogo concluded, “Both the Bible and the Koran prohibit this kind of capitalism that, as Pope Francis also says, is usury.”
In July 1987, three months before he was assassinated. Sankara declared that the debt could not be paid because it was of colonial origin

Éric Toussaint: “Salvini will make an agreement favourable to the banks. He could interrupt debt repayments to the ECB, but I don’t believe he will. The ECB holds €360 billion of Italian bonds. If he was truly prepared to face off Brussels, as he says, he would proceed towards ceasing repayment of these bonds. Maybe I’m wrong but I don’t believe that he will do that. If he did he would enter into conflict with Italian bankers and the financial institutions,” said the economist and political scientist Eric Toussaint in reply to a question on the Italian situation.

“In Italy, the studies done by CADTM could be crucial in raising the population’s awareness of the question of unjust debt. Yet I don’t believe the present government will take steps to repudiate debt. Salvini will come to an agreement with the European Commission that favours the Italian banks. We must denounce the illegitimate part of the debt and call for a popular government that will enforce respect on questions of debt justice.”

Vittorio Lovera (CADTM-Italy) launched an alert: “There is the risk of another financial bubble before 2021, which Italy would have to face after the most unfair fiscal reform.”

“All the macroeconomic data available indicate the risk of a financial bubble next year that will be more serious than the one that burst in the 2007-2008 period, causing an uncontrollable explosion of inequality.”

The CADTM has made a thorough study of the effects of tax reforms on Italian debt to explain why, instead of reducing inequality, they aggravate it

“In Italy, those who are calling themselves ’innovators’, promising a reduction of taxes to relaunch consumption, are in fact driving the country in the opposite direction. The CADTM has made a thorough study of the effects of tax reforms on Italian debt to explain why, instead of reducing inequality, they aggravate it.”

“Cumulated losses of tax revenues since 1974, caused by reducing taxes on upper bracket contributions, total €146 billion that the State recovers by issuing new bonds for the banks to purchase” says Lovera. “In this way debt and compound interest have increased by €295 billion, the equivalent of 13% of public debt that in April of this year rose to €2373 billion. It is not sure that there is a shortage of money; there can be as much as is required. In fact, Italy is a virtuous State. If the deposit banks were to assume their role as local financiers there would be far fewer problems.”

On the debt question Toussaint said: “a new international crisis has started. It is not as spectacular as in 1982 but we shall shortly be seeing its consequences.

“The next International debt crisis has already started: this time it has less spectacular characteristics than in 1982. We shall see in the coming years, new developments that will require new understanding from the Citizens of Europe in order to react appropriately. Rather than once again blaming the citizens of the ‘periphery’, whether within or outside of the European Union, , it is essential to understand that the capitalist system itself, and the debt system that is an integral part of it, are the fundamental causes of indebtedness-related problems.”

In his latest Book The Debt System – A History of Sovereign Debts and their Repudiation published by Haymarket Press, (2019), Eric Toussaint predicts the bursting of a new debt crisis having its epicentre in South America. In light of recent events the author considers that his predictions are confirmed. Argentina has entered into a terrible debt crisis and has had to borrow $57 billion from the IMF, the biggest loan the Fund has ever granted. Argentine currency has lost 50% of its value and interest rates are at around 45%. We see – as he predicted in 2017 – the beginning of a new international debt crisis. It is a little slower because the President of the US has held the US Federal Reserve in check from programmed interest rate changes. “Generally,” says Toussaint, “it is the decisions taken by the central powers and their central banks that are the cause of crisis in the peripheral countries. Last year it was Argentina, but look also to Africa. Mozambique offers a terrible and classic case of a population suffering from indebtedness. Many other African countries and people are directly threatened by this new crisis.”

Translated by Mike Krolikowski and Vicki Briault