Sep 152015

By Eric Toussaint, CADTM, 99GetSmart

Eric Toussaint, CADTM

Eric Toussaint, CADTM

Another way is possible …

Chapter titles:

  • The Citizen Audit Commission of 2011
  • The position of SYRIZA’s leadership regarding the citizen audit committee of 2011
  • SYRIZA’s program in the legislative elections of May-June 2012
  • Late 2012: SYRIZA’s leadership moderates its positions
  • October 2013: Alexis Tsipras calls for a European conference on public debt
  • SYRIZA becomes the leading party in Greece with the May 2014 European elections
  • The January 2015 victory5.
  • The fatal agreement of 20 February 2015 with the institutional creditors
  • A different policy was desirable and possible
  • The Truth Committee on the Greek Public Debt is launched
  • The Greek government refrains from making use of the audit
  • From the referendum on 5 July to the agreement of 13 July 2015
  • The lessons of the capitulation of 13 July 2015
  • A parallel currency as part of “Plan B”

Subtitles in the video by snakearbusto


Jul 192015

By Éric Toussaint, Rosa Moussaoui, CADTM, 99GetSmart

Éric Toussaint before the Greek Parliament on 17 June 2015, in the presence of Zoe Konstantopoulou, president of the Greek Parliament and several ministers

Éric Toussaint before the Greek Parliament on 17 June 2015, in the presence of Zoe Konstantopoulou, president of the Greek Parliament and several ministers

Éric Toussaint interviewed by Rosa Moussaoui, Special envoy in Athens for  L’Humanité

Has Athens really been subjected to a financial coup d’état over recent weeks as claimed by many Greek and foreign observers?

Éric Toussaint: Yes and no. What was decisive was the result of political decisions made by political institutions, though obviously complicit with financial interests. The coup d’état was not directly led by financial powers, but by institutions, the European Commission and the heads of State and Government of the Eurozone. Germany was not the only country involved. Mariano Rajoy in Spain, or Pedro Passos Coelho in Portugal, not to mention the Finnish, Latvian and other decidedly neoliberal governments clearly wanted to demonstrate to their respective populations that the options presented to the European peoples by the Syriza government were unworkable. So the primary motivation was political. Clearly though the private banking sector and the multinational corporations also wanted to show that it is impossible to turn away from austerity policies. However, it must be remembered that Greece’s principal creditors are public institutions; since 2012 when they managed to unload their Greek debt, private banks are not the most interested party. The debt restructuring that took place permitted them to comfortably withdraw. Today, despite the failure of the economic policies that have been imposed on Greece, the European Commission, the ECB and the Eurozone countries are adamant that Greece continues on the path of neoliberalism. Remember that the IMF is also a political institution.
Alexis Tsipras expected assurances for debt relief in return for his capitulation to the austerity policies. The creditors have merely acquiesced to a discussion scheduled for this year on a possible debt restructuring starting from 2022. Why this obstinacy, while the IMF itself now considers the debt as unsustainable?
Éric Toussaint: I think that a Debt Restructuring is feasible before 2022. The creditors will say “not before 2022” because they know that this plan will not work and that the debt payment will be unsustainable. They will restructure this debt provided the neoliberal reforms are pursued. Debt is a means of blackmail, an instrument of domination. Basically, in the Greek case, the creditors are not so much motivated by profit, pertinent as it is, as by teaching a lesson to their own people and the peoples of other peripheral countries that there is no question of deviating from the model. For Hollande to say, “Look, even Tsipras and the radical left cannot escape the economic stranglehold!” is a way of vindicating his own abdication in 2012 on the promise to renegotiate the European treaty on fiscal stability.

Did Tsipras have any other choice vis- à-vis the violent attacks from the creditors? Does the alternative boil down to an exit from the Euro?

Éric Toussaint: I don’t think so. The choice was not necessarily between Grexit and remaining in the Euro Zone equipped with a new austerity plan and continuing to pay the debt. It was possible to stay in the Euro Zone by disobeying the creditors through legal means. Human rights violations are at stake here. The Greek authorities should have suspended the debt payment; retrieved control over the Bank of Greece (Antonis Samaras appointed its CEO, who has not served the interests of the country); and created a complementary electronic currency that could have helped to cope with the liquidity crisis, whilst remaining within the Euro Zone.

The State should also have taken the following steps:
1. Organize an orderly liquidation of banks and transfer the assets to the public sector (guaranteeing deposits up to € 100,000) whilst ensuring the protection of small shareholders and recovering the cost of cleansing the banks from the wealth of major international shareholders.
2. Reduce VAT on goods and basic utility services; reduce direct taxes on low income and assets; and levy heavy taxes on the income and wealth of the richest 10% (particularly the richest 1%).
3. Stop privatization and reinforce public services.

After the Greek Parliament adopted the disastrous agreement of 13 July, the prospect of a voluntary exit from the Euro is obvious. That there is no favourable solution for the peoples within the Euro Zone is now evident to more and more Greek and other European people. In case of a voluntary exit from the Euro Zone, the above propositions remain fully valid and a redistributive monetary reform must accompany them (see Greece: Alternatives to the Capitulation).

The ECB, one of the masterminds of the coup, is flooding the financial markets with liquidity and boosting speculation. Can capital generation serve the real economy, social needs and human development?

Eric Toussaint: Of course but this not what the ECB has been doing! Mario Draghi is not “independent”. He is the interface between major private banks and the governments of the Euro Zone. The ECB has deliberately destabilized the Greek economy to suit its own as well as other creditors’ purpose.

Translation : Suchandra de Sarkar, Mike Krolikowski and Christine Pagnoulle


Eric Toussaint, Author

Eric Toussaint, Author

Eric Toussaint is a historian and political scientist who completed his Ph.D. at the universities of Paris VIII and Liège. He is the President of CADTM Belgium, and sits on the Scientific Council of ATTAC France. He is the co-author, with Damien Millet of Debt, the IMF, and the World Bank: Sixty Questions, Sixty Answers, Monthly Review Books, New York, 2010. He is the author of many essays including one on Jacques de Groote entitled Procès d’un homme exemplaire (The Trial of an Exemplary Man), Al Dante, Marseille, 2013, and wrote with Damien Millet, AAA. Audit Annulation Autre politique (Audit, Abolition, Alternative Politics), Le Seuil, Paris, 2012. See his Series “Banks versus   the People: the Underside of a Rigged Game!” Next publication : Bankocracy Merlin Press, Londres, May 2015 (English version).

Since the 4th April 2015 he is coordinator of the Truth Commission on Public Debt.


Jul 172015

By Eric Toussaint, CADTM, 99GetSmart


On 5 July 2015, by a referendum initiated by the government of Alexis Tsipras and the Hellenic Parliament, the Greek people overwhelmingly rejected the austerity measures imposed by the institutions that were known as the Troika. It was a splendid victory for democracy.

However the agreement reached on Monday, 13 July will lead to fresh austerity measures over several years. This completely contradicts the will of the Greek people expressed in the referendum. During the night of 15th to 16th July, it was adopted thanks to the support of four right-wing parties (PASOK, Potami, New Democracy, Independent Greeks) that brought their votes to Tsipras while 32 Syriza MPs voted against and 7 abstained.

This agreement forces Syriza to abandon essential commitments made during the 25 January 2015 election campaign, which led to its historically significant victory. Syriza has binding responsibilities towards the Greek people and it is tragic that they were not respected, especially since the people very clearly showed their support both on 25 January and 5 July 2015. |1|

The Greek government’s concessions to the creditors include pension cuts (Syriza had promised to restore a 13th month to people who receive pensions of less than 700 euros per month) and an extension of the retirement age; wages will remain restrained; labor relations will become more precarious; there will be an increase in indirect taxes, including those paid by lower income earners; the continuation and acceleration of privatization; the accumulation of new illegitimate debts to repay previous debts; the transfer of valuable Greek assets to an independent fund; further relinquishing of key elements of sovereignty, giving an upper hand to the creditors in matters of legislative power, etc.

Contrary to claims that in return for these detrimental concessions Greece will get three years of respite and will significantly boost its economic activity, it will in fact be impossible to create the primary fiscal surplus announced in the plan considering the continued check on household purchasing power and public expenditure.

Harmful consequences are inevitable: in a few months or early next year at the latest, creditors will attack the Greek authorities for failing to comply with their commitments in terms of primary fiscal surplus and will introduce new demands. Neither the Greek people nor their government will have any respite. The creditors will threaten to bring the promised disbursements to a halt if new austerity measures are not implemented. The Greek authorities will be caught up in a spiral of concessions.

The Truth Committee on Public Debt established by the President of the Greek Parliament has documented in its preliminary report made public on 17 and 18 June 2015 that the debt claimed by the present creditors must be considered illegitimate, illegal and odious. |2| The Committee has also shown that its repayment is unsustainable. On the basis of arguments derived from international and domestic law, the Greek government should have taken a sovereign decision to suspend debt repayment for the time that the debt audit takes to run its full course. Such a suspension of debt payment is quite possible. Since February 2015, Greece has paid €7 billion to creditors without receiving the €7.2 billion previously agreed upon in the bailout program that ended 30 June 2015. Other amounts that should have been paid to Greece have not been transferred: the interest earned by the ECB on Greek securities, the projected balance for the recapitalization of banks, etc. If Greece suspends debt payment to its international creditors, it will save nearly €12 billion by the end of 2015 and the creditors would be compelled to make concessions. |3| A radical reduction in the amount of debt could lead the way either to negotiation or to repudiation.

Contrary to the widespread claim that suspending payment would result in exiting the euro, it would have been possible to stay in the Euro if a series of sovereign measures of self-defense and economic recovery such as a strict control on banks, currency, and taxation (see below) had been implemented. It would have been perfectly possible to eschew the ECB’s, the Eurogroup’s and the EC’s unacceptable and illegitimate injunctions. The Tsipras government decided otherwise, and this has led to a tragic subordination to EU supervision, to more austerity and to the selling off of the Greek national heritage.

It is now clear that negotiations cannot convince the European Commission, the IMF, the ECB and the neoliberal governments in other European countries to take measures that respect the rights of Greek citizens as well those of the people in general. The referendum of 5 July, to which those institutions were fiercely opposed, did not convince them. Instead, in contradiction with basic democratic rights, they have radicalized their demands. Without taking strong and sovereign measures of self-defense, the Greek authorities and the Greek people will not be able to put a stop to the human rights violations perpetrated by the creditors. A host of measures should be taken at EU level to restore social justice and true democracy. Technically, it is not difficult but it must be noted that with the balance of power prevailing in the European Union, the countries with progressive governments can hope neither to be heard nor supported by the European Commission, the ECB, or the European Stability Mechanism. On the contrary, these institutions as well as the IMF and the neoliberal governments are actively opposing the current Greek experiment to demonstrate to all the people of Europe that there is no alternative to the neoliberal model. However, if the Greek authorities adopt strong measures they can gain genuine concessions or simply force the institutions to recognize the decisions taken. It is also vital to find an alternative strategy by initiating massive popular mobilizations in Greece and other European countries. The Greek authorities could draw on that to thwart the attempts to isolate them — attempts that the forces opposed to change in favor of social justice will waste no time in making. In turn, such a stand from the Greek government would empower popular mobilizations and encourage the mobilized people to have confidence in their own strength.

On top of the suspension of the payment of illegitimate, illegal, odious and unsustainable debt, here are a number of alternatives to the conditions in the agreement between Tsipras and the creditors, to be urgently submitted to democratic debate, that are likely to help Greece recover:

1. The Greek state is by far the main shareholder of the major Greek banks (representing more than 80% of the Greek banking sector) and it should therefore take full control of the banks in order to protect citizens’ savings and boost domestic loans to support consumption. First, the State should have assumed its majority stake in the banks and turned them into public-sector companies. Then, the State would have organized the orderly liquidation of these banks whilst ensuring the protection of small shareholders and savers (guaranteeing deposits up to 100,000 €). The State would have recovered the cost of cleansing the banks from major private shareholders who have caused the crisis and then abused public support. To do this it would have had to seize part of their assets which reach far beyond the banking sector. A ’bad bank’ should have been created to isolate and hold toxic assets with a view to their liquidation. Those responsible for the banking crisis should have been sued to pay once and for all. The financial sector must be thoroughly cleaned up and made to serve the people and the real economy.

2. The Greek authorities should retrieve control over the central bank. Yannis Stournaras, the current CEO (appointed by the government of Antonis Samaras), invests all his energy in preventing the changes that the people call for. He is a Trojan Horse that serves the interests of large private banks and neoliberal European authorities. The central bank of Greece should be made to serve the interests of the Greek population.

3. The Greek authorities also had the opportunity to create an electronic currency (denominated in euros) for internal use in the country. The public authorities could raise pensions and salaries in the public services and grant humanitarian aid to people by opening credit accounts for them in electronic currency that could be used for several kinds of payment: electricity and water bills, payment for transport and taxes, purchases of food and basic goods, etc. Contrary to a baseless prejudice, even private businesses would do well to voluntarily accept the electronic method of payment as it will allow them to sell their goods and settle payments to the government (payment of taxes and for the various public services they use). The creation of this additional electronic currency would reduce the country’s needs in euros. Transactions in this electronic currency could be made by mobile phones as is the case today in Ecuador.

4. The restrictions on capital flows must be maintained while the price of consumer goods must be controlled.

5. The privatization agency must be dissolved and replaced by a national
asset management agency (with an immediate halt to privatizations) which will be responsible for protecting the public assets while generating revenue.

6. New measures should be adopted to achieve more tax justice, reinforcing those already taken, notably by levying heavy taxes on the richest 10% of the population (particularly the richest 1%), both on their income and on their assets. Similarly, it would be beneficial to significantly increase the tax on big companies’ profits and to withdraw the tax exemptions for ship-owners. Heavier taxes should be imposed on the Orthodox Church, which only paid a few million euros in taxes in 2014.

7. Taxes on small incomes and wealth and on essential goods and services should be significantly reduced. This would benefit the majority of the population. A whole series of basic utility services should be free (public transport, electricity, and water to a certain limited level of consumption, etc.) These social-justice measures would revive consumption.

8. The fight against tax evasion should be intensified by establishing substantial deterrents. Considerable amounts can thus be recovered.

9. An extensive public plan for job creation should be implemented to rebuild the public services destroyed by years of austerity (for example, health and education) and to pave the way for the necessary ecological transition.

10. This support to the public sector should be accompanied by measures which provide active support to small private ventures that are key elements in the Greek economy.

11. Public domestic borrowing measures may be adopted by issuing public debt securities within national borders. In fact, the State must be able to borrow to improve the living conditions of the population, for example by carrying out public utility works. Some of this work can be financed by the current budget through assertive policy choices, but government borrowing could enable other projects, broader in scope — for example the massive development of public transport to replace private cars; developing the use of renewable energy; creating or reopening local railway services throughout the urban and semi-urban sectors of the country; renovating, rehabilitating or constructing public buildings and social housing while reducing energy consumption and providing quality amenities. Such measures can also finance the ambitious plan for job creation outlined above.

It is urgent that a transparent policy of public borrowing be defined. Our proposal is:

1 Public borrowing should aim at guaranteeing an improvement in living conditions, discarding the logic of environmental destruction.

2. Public borrowing must contribute to a redistribution of wealth and to reducing inequalities. That is why we propose that the financial institutions, large private corporations and wealthy households be legally bound to purchase – commensurate with their wealth and income – non-indexed government bonds at 0% interest. The remaining population can voluntarily acquire government bonds at an interest rate that will ensure a genuine and positive return (e.g. 3%), above inflation. So if the annual inflation is 2%, the interest rate actually paid by the State for the corresponding year will be 5%. Such a policy of positive discrimination (similar to those adopted against racial oppression in the US, the caste system in India, or gender inequalities) will result in tax justice and less inequality of wealth distribution.

Finally, the Greek authorities should ensure that the Audit Committee as well as other committees working on the memoranda and on war damages can continue their task.

Other additional measures that can be democratically debated and implemented on an urgent basis might complement these first emergency measures based on the following five pillars:

- Socializing banks and a part of currency creation.
- Preventing tax evasion and establishing a fair tax reform to provide the State with the necessary resources for implementing its policies.
- Protecting public property, including the national heritage, and placing it at the service of the entire community.
- Rehabilitating and developing public services.
- Supporting local private enterprises.

It is also important to launch Greece into a process of structural democratic change with active citizen participation. To achieve this constituent process, Greece must convene an election of a Constituent Assembly to draft a new democratically chosen Constitution. Once the Constituent Assembly – which should operate on the basis of grievances and proposals received from the people – adopts the draft, it will be submitted to popular vote.

Exiting the Euro Zone. After the Greek Parliament adopted the disastrous agreement of 13thJuly on the 16th, an alternative must include the possibility of voluntarily exiting the Euro Zone if the Greek people support this prospect. This option is comforted by the Greek Parliament’s capitulation on July 16th and by the very content of the agreement. Moreover the Greek people will soon understand that if they want a future that includes justice and emancipation, Greece must get out of the euro zone. In this case, the above propositions remain valid, especially the socialization of banks similar to the nationalization of France’s banking system after the Liberation. These measures should be combined with a significant monetary reform, inspired by the system implemented by the Belgian government after World War II. This reform will specifically aim at deflating the incomes of those who got rich at the expense of others. The principle is simple: during the changeover to another currency, there should be no automatic parity between the old and the new currency (the existing euro against a new drachma, for example) beyond a certain limit.

The amount exceeding the limit must be blocked in an escrow account and its origin must be justified and authenticated. In principle, any amount exceeding the specified ceiling will be exchanged at a less favourable rate (for example, two former euros against one new drachma). When a criminal origin can be proved, the sum may even be forfeited. Such monetary reform would distribute part of the wealth in a more socially just manner. Another objective of the reform is to reduce the money in circulation in order to fight inflationary trends. To be effective, strict control over capital movements and foreign exchange must be established.

Here’s an example (of course the rates are indicative and may be modified after analyzing the distribution of liquid household savings and the adoption of stringent criteria) :

€1 would be exchanged against 1 new drachma (n.D.) up to 200,000 euros
€1 = 0.7 n. D. between 200,000 and 500,000 euros
€1 = 0.4 n. D. between 500,000 and 1 million euros
€1 = 0.2 n. D. above 1 million euros

If a household owns € 200,000 in cash, it gets 200,000 n.D in exchange.
If it has € 400,000, it gets 200,000 + 140,000 = 340,000 n.D
If it has € 800,000, it gets 200,000 + 210,000 + 120,000 = 530,000 n.D
If it has € 2 million, it gets 200,000 + 210,000 + 200,000 + 200,000 = 810,000 n.D

A genuine alternative logic can be triggered and Greece can finally liberate itself from its creditors’ control. The peoples of Europe could again believe in a change that favors justice.

Translation by Suchandra de Sarkar in collaboration with Christine Pagnoulle, Mike Krolikowski and Snake Arbusto.


|1| The author thanks Stavros Tombazos, Daniel Munevar, Patrick Saurin, Michel Husson and Damien Millet for their advice when he was drafting this document. However, the author takes full responsibility for the content of this text.

|2| See:

|3| €6.64 billion and €5.25 billion respectively, will be paid to the ECB and the IMF by 31 December 2015. Source: Wall Street Journal, consulted on 12 July 2015.


Eric Toussaint, Author

Eric Toussaint, Author

Eric Toussaint is a historian and political scientist who completed his Ph.D. at the universities of Paris VIII and Liège. He is the President of CADTM Belgium, and sits on the Scientific Council of ATTAC France. He is the co-author, with Damien Millet of Debt, the IMF, and the World Bank: Sixty Questions, Sixty Answers, Monthly Review Books, New York, 2010. He is the author of many essays including one on Jacques de Groote entitled Procès d’un homme exemplaire (The Trial of an Exemplary Man), Al Dante, Marseille, 2013, and wrote with Damien Millet, AAA. Audit Annulation Autre politique (Audit, Abolition, Alternative Politics), Le Seuil, Paris, 2012. See his Series “Banks versus the People: the Underside of a Rigged Game!” Next publication : Bankocracy Merlin Press, Londres, May 2015 (English version). Since the 4th April 2015 he is coordinator of the Truth Commission on Public Debt.

Jun 252015

By Truth Committee on the Greek Public Debt, CADTM, 99GetSmart


In June 2015 Greece stands at a crossroad of choosing between furthering the failed macroeconomic adjustment programmes imposed by the creditors or making a real change to break the chains of debt. Five years since the economic adjustment programmes began, the country remains deeply cemented in an economic, social, democratic and ecological crisis. The black box of debt has remained closed, and until now no authority, Greek or international, has sought to bring to light the truth about how and why Greece was subjected to the Troika regime. The debt, in whose name nothing has been spared, remains the rule through which neoliberal adjustment is imposed, and the deepest and longest recession experienced in Europe during peacetime.

There is an immediate need and social responsibility to address a range of legal, social and economic issues that demand proper consideration. In response, the Hellenic Parliament established the Truth Committee on Public Debt in April 2015, mandating the investigation into the creation and growth of public debt, the way and reasons for which debt was contracted, and the impact that the conditionalities attached to the loans have had on the economy and the population. The Truth Committee has a mandate to raise awareness of issues pertaining to the Greek debt, both domestically and internationally, and to formulate arguments and options concerning the cancellation of the debt.

The research of the Committee presented in this preliminary report sheds light on the fact that the entire adjustment programme, to which Greece has been subjugated, was and remains a politically orientated programme. The technical exercise surrounding macroeconomic variables and debt projections, figures directly relating to people’s lives and livelihoods, has enabled discussions around the debt to remain at a technical level mainly revolving around the argument that the policies imposed on Greece will improve its capacity to pay the debt back. The facts presented in this report challenge this argument.

All the evidence we present in this report shows that Greece not only does not have the ability to pay this debt, but also should not pay this debt first and foremost because the debt emerging from the Troika’s arrangements is a direct infringement on the fundamental human rights of the residents of Greece. Hence, we came to the conclusion that Greece should not pay this debt because it is illegal, illegitimate, and odious.

It has also come to the understanding of the Committee that the unsustainability of the Greek public debt was evident from the outset to the international creditors, the Greek authorities, and the corporate media. Yet, the Greek authorities, together with some other governments in the EU, conspired against the restructuring of public debt in 2010 in order to protect financial institutions. The corporate media hid the truth from the public by depicting a situation in which the bailout was argued to benefit Greece, whilst spinning a narrative intended to portray the population as deservers of their own wrongdoings.

Bailout funds provided in both programmes of 2010 and 2012 have been externally managed through complicated schemes, preventing any fiscal autonomy. The use of the bailout money is strictly dictated by the creditors, and so, it is revealing that less than 10% of these funds have been destined to the government’s current expenditure.

This preliminary report presents a primary mapping out of the key problems and issues associated with the public debt, and notes key legal violations associated with the contracting of the debt; it also traces out the legal foundations, on which unilateral suspension of the debt payments can be based. The findings are presented in nine chapters structured as follows:

Chapter 1, Debt before the Troika, analyses the growth of the Greek public debt since the 1980s. It concludes that the increase in debt was not due to excessive public spending, which in fact remained lower than the public spending of other Eurozone countries, but rather due to the payment of extremely high rates of interest to creditors, excessive and unjustified military spending, loss of tax revenues due to illicit capital outflows, state recapitalization of private banks, and the international imbalances created via the flaws in the design of the Monetary Union itself.

Adopting the euro led to a drastic increase of private debt in Greece to which major European private banks as well as the Greek banks were exposed. A growing banking crisis contributed to the Greek sovereign debt crisis. George Papandreou’s government helped to present the elements of a banking crisis as a sovereign debt crisis in 2009 by emphasizing and boosting the public deficit and debt.

Chapter 2, Evolution of Greek public debt during 2010-2015
, concludes that the first loan agreement of 2010, aimed primarily to rescue the Greek and other European private banks, and to allow the banks to reduce their exposure to Greek government bonds.

Chapter 3, Greek public debt by creditor in 2015, presents the contentious nature of Greece’s current debt, delineating the loans’ key characteristics, which are further analysed in Chapter 8.

Chapter 4, Debt System Mechanism in Greece reveals the mechanisms devised by the agreements that were implemented since May 2010. They created a substantial amount of new debt to bilateral creditors and the European Financial Stability Fund (EFSF), whilst generating abusive costs thus deepening the crisis further. The mechanisms disclose how the majority of borrowed funds were transferred directly to financial institutions. Rather than benefitting Greece, they have accelerated the privatization process, through the use of financial instruments.

Chapter 5, Conditionalities against sustainability, presents how the creditors imposed intrusive conditionalities attached to the loan agreements, which led directly to the economic unviability and unsustainability of debt. These conditionalities, on which the creditors still insist, have not only contributed to lower GDP as well as higher public borrowing, hence a higher public debt/GDP making Greece’s debt more unsustainable, but also engineered dramatic changes in the society, and caused a humanitarian crisis. The Greek public debt can be considered as totally unsustainable at present.

Chapter 6, Impact of the “bailout programmes” on human rights, concludes that the measures implemented under the “bailout programmes” have directly affected living conditions of the people and violated human rights, which Greece and its partners are obliged to respect, protect and promote under domestic, regional and international law. The drastic adjustments, imposed on the Greek economy and society as a whole, have brought about a rapid deterioration of living standards, and remain incompatible with social justice, social cohesion, democracy and human rights.

Chapter 7, Legal issues surrounding the MOU and Loan Agreements, argues there has been a breach of human rights obligations on the part of Greece itself and the lenders, that is the Euro Area (Lender) Member States, the European Commission, the European Central Bank, and the International Monetary Fund, who imposed these measures on Greece. All these actors failed to assess the human rights violations as an outcome of the policies they obliged Greece to pursue, and also directly violated the Greek constitution by effectively stripping Greece of most of its sovereign rights. The agreements contain abusive clauses, effectively coercing Greece to surrender significant aspects of its sovereignty. This is imprinted in the choice of the English law as governing law for those agreements, which facilitated the circumvention of the Greek Constitution and international human rights obligations. Conflicts with human rights and customary obligations, several indications of contracting parties acting in bad faith, which together with the unconscionable character of the agreements, render these agreements invalid.

Chapter 8, Assessment of the Debts as regards illegtimacy, odiousness, illegality, and unsustainability, provides an assessment of the Greek public debt according to the definitions regarding illegitimate, odious, illegal, and unsustainable debt adopted by the Committee.

Chapter 8 concludes that the Greek public debt as of June 2015 is unsustainable, since Greece is currently unable to service its debt without seriously impairing its capacity to fulfill its basic human rights obligations. Furthermore, for each creditor, the report provides evidence of indicative cases of illegal, illegitimate and odious debts.

Debt to the IMF should be considered illegal since its concession breached the IMF’s own statutes, and its conditions breached the Greek Constitution, international customary law, and treaties to which Greece is a party. It is also illegitimate, since conditions included policy prescriptions that infringed human rights obligations. Finally, it is odious since the IMF knew that the imposed measures were undemocratic, ineffective, and would lead to serious violations of socio-economic rights.


Debts to the ECB should be considered illegal since the ECB over-stepped its mandate by imposing the application of macroeconomic adjustment programs (e.g. labour market deregulation) via its participation in the Troïka. Debts to the ECB are also illegitimate and odious, since the principal raison d’etre of the Securities Market Programme (SMP) was to serve the interests of the financial institutions, allowing the major European and Greek private banks to dispose of their Greek bonds.

The EFSF engages in cash-less loans which should be considered illegal because Article 122(2) of the Treaty on the Functioning of the European Union (TFEU) was violated, and further they breach several socio-economic rights and civil liberties. Moreover, the EFSF Framework Agreement 2010 and the Master Financial Assistance Agreement of 2012 contain several abusive clauses revealing clear misconduct on the part of the lender. The EFSF also acts against democratic principles, rendering these particular debts illegitimate and odious.

The bilateral loans should be considered illegal since they violate the procedure provided by the Greek constitution. The loans involved clear misconduct by the lenders, and had conditions that contravened law or public policy. Both EU law and international law were breached in order to sideline human rights in the design of the macroeconomic programmes. The bilateral loans are furthermore illegitimate, since they were not used for the benefit of the population, but merely enabled the private creditors of Greece to be bailed out. Finally, the bilateral loans are odious since the lender states and the European Commission knew of potential violations, but in 2010 and 2012 avoided to assess the human rights impacts of the macroeconomic adjustment and fiscal consolidation that were the conditions for the loans.

The debt to private creditors should be considered illegal because private banks conducted themselves irresponsibly before the Troika came into being, failing to observe due diligence, while some private creditors such as hedge funds also acted in bad faith. Parts of the debts to private banks and hedge funds are illegitimate for the same reasons that they are illegal; furthermore, Greek banks were illegitimately recapitalized by tax-payers. Debts to private banks and hedge funds are odious, since major private creditors were aware that these debts were not incurred in the best interests of the population but rather for their own benefit.

The report comes to a close with some practical considerations.

Chapter 9, Legal foundations for repudiation and suspension of the Greek sovereign debt, presents the options concerning the cancellation of debt, and especially the conditions under which a sovereign state can exercise the right to unilateral act of repudiation or suspension of the payment of debt under international law.

Several legal arguments permit a State to unilaterally repudiate its illegal, odious, and illegitimate debt. In the Greek case, such a unilateral act may be based on the following arguments: the bad faith of the creditors that pushed Greece to violate national law and international obligations related to human rights; preeminence of human rights over agreements such as those signed by previous governments with creditors or the Troika; coercion; unfair terms flagrantly violating Greek sovereignty and violating the Constitution; and finally, the right recognized in international law for a State to take countermeasures against illegal acts by its creditors , which purposefully damage its fiscal sovereignty, oblige it to assume odious, illegal and illegitimate debt, violate economic self-determination and fundamental human rights. As far as unsustainable debt is concerned, every state is legally entitled to invoke necessity in exceptional situations in order to safeguard those essential interests threatened by a grave and imminent peril. In such a situation, the State may be dispensed from the fulfilment of those international obligations that augment the peril, as is the case with outstanding loan contracts. Finally, states have the right to declare themselves unilaterally insolvent where the servicing of their debt is unsustainable, in which case they commit no wrongful act and hence bear no liability.

People’s dignity is worth more than illegal, illegitimate, odious and unsustainable debt

Having concluded a preliminary investigation, the Committee considers that Greece has been and still is the victim of an attack premeditated and organized by the International Monetary Fund, the European Central Bank, and the European Commission. This violent, illegal, and immoral mission aimed exclusively at shifting private debt onto the public sector.

Making this preliminary report available to the Greek authorities and the Greek people, the Committee considers to have fulfilled the first part of its mission as defined in the decision of the President of Parliament of 4 April 2015. The Committee hopes that the report will be a useful tool for those who want to exit the destructive logic of austerity and stand up for what is endangered today: human rights, democracy, peoples’ dignity, and the future of generations to come.

In response to those who impose unjust measures, the Greek people might invoke what Thucydides mentioned about the constitution of the Athenian people: “As for the name, it is called a democracy, for the administration is run with a view to the interests of the many, not of the few” (Pericles’ Funeral Oration, in the speech from Thucydides’ History of the Peloponnesian War).

Here the German translation:…

Jan 272015

Posted by SnakeArbusto, 99GetSmart

The Troika imposes policies that are destroying social rights in Greece


“An audit committee of the Greek debt could show that 80% of the debt required by the troika is illegal,” said Mr. Toussaint on an interview with Christina Vasilaki, stoKokkino`s correspondent in Brussels.

Éric Toussaint, Senior Lecturer at the University of Liège, is president of CADTM Belgium (Committee for the Abolition of Third-World Debt), and a member of the Scientific Committee of ATTAC France.

“An audit committee of the Greek debt could show that 80% of the debt required by the troika is illegal,” said Mr. Toussaint making reference to Article 7, paragraph 9 of the European Regulation on countries in program adaptation, according to which:

“A Member State subject to a macroeconomic adjustment programme shall carry out a comprehensive audit of its public finances in order, inter alia, to assess the reasons that led to the building up of excessive levels of debt as well as to track any possible irregularity”.

Radio interview transcribed by SnakeArbusto:

CV Which is the EU Regulation that Syriza’s demand for an audit of debt could be based on?

ET In May 2013 the European Parliament and the European Commission adopted a Regulation requiring all countries who sign a Memorandum of Agreement–as in the present case of Greece,  Ireland, Portugal, and Cyprus. Article 7 of this Regulation says that governments will carry out a comprehensive audit of the debt contracted by the country and to identify possible irregularities. So, Paragraph 9 of this Article of the Regulation allows a government headed by SYRIZA to create, immediately, such a commission in implementation of the Regulation.

CV What can be revealed by this audit?

ET For me it’s very clear that the debt contracted by Greece with the Troika, which represents 80% of the Greek debt now, is clearly illegitimate because the Troika has imposed policies on Greece which have destroyed part of the economy of Greece and destroyed the social rights and the economic rights of the population.

CV Do you believe that it’s necessary to write off part of the Greek debt? And what would be the result for access to the international markets in the long term?

ET As you know we have had more than 600 restructurings of debt since 1950. A lot of countries have suspended payment of the debt, and in the case of Greece, if Greece succeeds in imposing a large cancellation of its debt, which is totally possible, I think there is no real problem, after several years, (for Greece) to go back to the market if Greece needs it. But also you could imagine some alternative way of financing Greek development – fiscal reform (), reducing the taxes paid by the poor and increasing the taxes paid by the richest 1% of the population and big private enterprises could allow the government to raise sufficient money to not be obliged to go to the market and contract new debt.

CV Could the extension of the maturity of the loan and the reduction of the interest rates be an alternative solution?

ET Greece needs a real cancellation of a big part of its debt. And for the other part of the debt which will not be cancelled, abolished, a reduction of the interest rates and an extension of the maturity of payment is necessary, I suppose, too. But it’s not an alternative to the cancellation. It’s complementary to cancellation. You need both things.

Radio Interview @

Jan 172015

By Takis Fotopoulos, 99GetSmart


Abstract : The aim of this article is to show the extreme hypocrisy of the Transnational Elite in its lamenting of the actions of Islamic terrorism and its effects. Yet, it can easily be shown historically that it was the same elite and its client regimes, which effectively created Islamic terrorism by extinguishing the secular national liberation movements in the Arab world and by destroying, in the process, hundreds of thousands of lives, as well as the infra-structures of well-functioning social states.

Yesterday, Paris saw the “biggest” rally in France’s history, as the French Interior Ministry described it. This was of course hardly surprising, as the entire political part of the Transnational Elite (TE ― i.e. the elites which run the New World Order of neoliberal globalization, based mainly in the G7 countries), attended it. On top of this, it was a prominent country-member of the same elite that organized it. The main aim of the rally was ostensibly to condemn terrorism. Yet, as I will try to show, it was the same TE, which also created the phenomenon of Islamic terrorism, particularly during the period of the thirty years or so since the emergence of the NWO, which is defined by two parallel systemic events. First, the rise and mass expansion of the transnational corporations that today rule the world economy and the consequent phasing out of economic and national sovereignty that is replaced by a new form of transnational sovereignty shared mainly by the members of the TE and, second, the parallel collapse of “actually existing socialism” in the form of the Soviet bloc.

The concept of modern terrorism derives from the French revolution, where terrorism was only state terrorism, although this concept has been distorted in the NWO to fit its own needs, so that it is not defined anymore on the basis of who carries it out and why, as in the past, but almost exclusively on the basis of the methods and tactics used and, particularly, of targeting civilians.[1] This means that if a conquering army occupies your country, kills women and children in their thousands and then, in desperation, you kill women and children of the occupying country, wherever you find them, the crimes of the occupying army will be as a rule pardoned, as a kind of collateral damage or “error,” whereas your action will be characterized as crime and either you will be killed instantly in action, or you will rot in prison for the rest of your life.  Needless to add that, on the basis of this convenient (for the TE) definition of terrorism, most of liberation or anticolonial movements would have been characterized as terrorist, including the ANC and the Algerian FLN. This is why Hamas, for instance, has been defined today as terrorist because it has killed a few hundred Israeli civilians in its history, while the thousands of Palestinian civilians and many children among them, killed by the Israeli security services, settlers and others, were just characterized as “collateral damage,” if not “human shields” used by their parents!  No wonder that in yesterday’s mass rally the Israeli PM was a prominent guest and he did not even have any qualms about comparing the Paris attack at Charlie Hebdo with the “rocket” attacks on Israeli cities [2] (which had perhaps fewer victims than the former!) characterizing Palestinian resistance as “terrorist”!

The new “ideology” used to justify the present war on terrorism is expressed in terms of the “barbaric” methods used by the ISIS jihadist, despite the fact that the elites were fully aware of the fact that the same (mostly) jihadists, with the elites’ connivance, used exactly the same methods against the Libyan and Syrian peoples in the past few years to achieve “regime change” in the corresponding cases. It is therefore clear that the elites have simply adopted a convenient definition of terrorism, which, however, has nothing to do with the historical origin of the term and its traditional meaning.

On the basis of this distorted definition of terrorism, in retrospect, it is relatively easy to see who and how has created the phenomenon of modern terrorism, or what I would better call transnational terrorism. In fact, transnational terrorism is a new phenomenon, characterizing the New World Order of neoliberal globalization, namely, terrorism that is controlled by the TE and its client states. As I argued elsewhere,[3] transnational terrorism is, in effect, the form that state terrorism takes today against the victims of neoliberal globalization, and its main weapons are either economic violence (e.g. Greece, Portugal, Spain etc.), or physical violence (Iraq, Libya, Syria, Ukraine etc.).

Thus, it can be easily shown that a lot of today’s butchers of ISIS, Al Nusra etc.  carried out similar (if not worse) massacres in the recent past. First, in Libya, in 2011 when they were playing the role of NATO infantry. Next, after finishing their “work” there, many of those jihadists moved to Syria, where they continued the same project. That time, the aim was the destruction of the Assad regime, which was based on the Ba’athist national liberation movement, and its replacement by a theocratic caliphate.[4] At least this is what the gullible followers of these organizations believed, not being usually conscious of the actual role they played  as instruments of the TE and its client criminal regimes in the region, e.g. Saudi Arabia and Qatar, which excelled in organizing crimes against the peoples of Libya and Syria. Finally, when these organizations began attacking the direct instruments of the TE in the area (e.g. the “Free Syrian Army”), which were earmarked to succeed Assad and transform the country into an informal protectorate of the NWO (something like Greece), then the TE decided that their time was up. In other words, ISIS simply functions at present as the pretext for the continuation of the “long war,” this time against Syria. That is, the main objective has always been to crush the national liberation movement in Syria today, and Iran tomorrow, whether this is achieved by a coup “from above” (the traditional military coup), or “from below,” (the “Maidan” model), or whether it is done by external intervention combined with a “coup from below” (the Libyan model).

So, as in the case of traditional state terrorism, in the pre-globalization era of nation-states its victims were mainly individuals or organizations resisting the concentration of power in the hands of national elites, in today’s transnational terrorism, the victims of it are mainly states that have not been fully integrated into the NWO, either because they are based on national liberation movements (e.g. the Ba’athist regimes in Iraq and Syria, or Jamahiriya in Libya) or because they are based on peoples who have a vivid memory of self-determination and are struggling to maintain their national and economic sovereignty in the globalization era (Russia).

However, to understand the nature of political Islamism, from which Islamic terrorism emerged, we have to go back to the former’s historical development, particularly in the post-1948 period. The earliest main expression of political Islamism, which was supported by the Western elites, was the Muslim Brotherhood (MB) but in the last few years, following its failure in Egypt, the TE shifted its sympathies from the MB to the Salafists and the jihadists supported by the Gulf regimes and particularly Saudi Arabia. Both the Muslim Brotherhood and the Salafists have used violence in their clashes with Arab secularism and particularly the Arab regimes based on national liberation movements. No wonder that both the MB and the Salafists were supported at times by the Western elites and the TE today. This is how political Islam gave rise to Islamic terrorism. But let us see, in some more detail, this process.

The Muslim Brotherhood, which initially expressed the Islamist movement, was formed with the active support of the British colonialists and expressed “the most reactionary, antidemocratic and against social progress version of the newborn ‘political Islam’.”[5] Their main aim has always been the Islamization of Egypt’s political and cultural institutions and the promotion of sharia as the basis for legislation. This is summed up by its main slogan used worldwide: “Islam is the solution”. So, the old Islamic movement, i.e. the Muslim Brotherhood in Egypt, which later expanded all over the Middle East, was a traditionally conservative movement mainly concerned with the cultural aspects of colonization and later of globalization. The Brotherhood has always made pragmatic alliances with regimes ― those of King Farouk from 1936; the Free Officers under Nasser (who ousted Farouk in 1952); and Sadat from 1970 (who used the Brothers against the Nasserites and the Left). The tactical alliance with the Free Officers, however, was inevitably short lived as they had divergent political goals: the Officers believed in a secularist national liberation movement whereas the “Brothers” in an Islamist regime. No wonder that a failed attempted assassination of Nasser in 1954 led to the brutal suppression of the Muslim Brotherhood and the imprisonment and sentencing to death of Sayyid Qutb, one of its leading ideologues, which led to the jihadist movement. In fact, a year after Qutb’s death in 1966, Ayman al-Zawahiri, aged 16 at the time, set up a jihadist cell at his school and invited a few friends to join. In May 2011, Zawahiri became the leader of Al-Qaida, following the murder of Osama bin Laden by US Special Services. As Fawaz A Gerges pointed out, “the birth of the jihadist movement cannot be understood without reference to this great clash between the Muslim Brotherhood and Nasser’s forces”.[6] This early clash developed later on into a clash between the Muslim Brotherhood and Ba’athists in Iraq and Syria and in the last couple of years into a clash between Salafists and the MB, which in 2014 was declared a terrorist organization by Saudi Arabia.

The Brotherhood’s relation to Western powers had started early on, and even during the Second World War, the British viewed the Brotherhood as a possible counterweight against the secular nationalist party, the Wafd, and the communists.[7] But it was in the post-Second World War period, and particularly since 1946-1948, when two crucial events took place, almost at the same time, which marked the post-war period in the Middle East and the entire world, i.e. the beginning of the Cold War in 1946 and the establishment of the Zionist Israeli state in 1948 on occupied Palestinian land. In the immediate post-war period, i.e. during the Cold War, the main division was between pro-Soviet and pro-Western Arab countries. Then, with the rise of Arab nationalism and Arab socialism, on the one hand, a kind of front developed between the supporters of national liberation (Nasser’s Egypt, the Ba’athist regimes in Iraq and Syria, Libya’s Jamahiriya) and, on the other, the front of Western stooges emerged (i.e. the reactionary Gulf regimes, Jordan, Morocco etc.).

However, the NWO that was imposed on the Middle East, first through economic means and corruption in Egypt, and then through brutal military violence by the TE in Iraq and Libya, completely changed the balance of power within the Arab World. Particularly when the client Muslim Brotherhood regimes that emerged in Tunisia and Egypt during the Arab “Spring,” under the cover of “revolutionary movements,” played a leading (and dirty) role in the destruction both of Libya and of Syria. It was of course hardly surprising that the TE backed the MB when one takes into account its real nature, as Samir Amin stressed:

“The Muslim Brotherhood is committed to a market-based economic system of complete external dependence. They are in reality a component of the comprador bourgeoisie. They have taken their stand against large strikes by the working class and against the struggles of poor peasants to hold on to their lands. So the Muslim Brotherhood are “moderate” only in the double sense that they refuse to present any sort of economic and social program, thus in fact accepting without question reactionary neoliberal policies, and that they are submissive de facto to the enforcement of U.S, control over the region and the world. They thus are useful allies for Washington (and does the US have a better ally than their patron, the Saudis?), which now vouches for their “democratic credentials”.”[8]

On the other hand, Ba’athism was a synthesis of nationalism (initially in the form of pan-Arabism) and Arab socialism, in so far as it adopted socialist principles like the public ownership over the strategic sectors of the economy, the belief that socialism is the only way to develop an Arab society that is truly free and united, and secularism. In other words, Ba’athism was mainly a left-wing Arab-centric ideology, a kind of “socialism with Arab characteristics.” In fact, the most important characteristic of Ba’athism was its anti-imperialist nature. The Western hostility against it, in fact, began in the mid-seventies, as it did also in the Syrian case, when the Iraqi Ba’athists embarked on a program of Arab socialism that culminated in the nationalization of oil, seeking to achieve a form of economic independence to complement political independence. Then, they soon realized that they had to de-integrate Iraq’s economy from the capitalist market economy and minimize free enterprise on the means of production, with the ultimate objective to establish an Arab socialist society in which all citizens would enjoy the benefits of development. Clearly, therefore, the main economic aim of the campaign on Iraq was to return oil exploitation to the Western powers and reintegrate the Iraqi economy into the world capitalist market. This aim was confirmed by later reports according to which State Department blueprints, sent to Congress before the invasion began, laid out a vision for Iraq’s reconstruction that would move the country aggressively toward “self-managed economic prosperity, with a market-based economy and privately owned enterprises that operate in an environment governed by the rule of law.”[9]

This is why the Ba’athist regime in Syria as well as the Iraqi Ba’athist regime in Iraq had to be destroyed. Their secular, multi-ethnic and multi-faith societies, and, even more important, their historical foundation on national liberation movements, which by definition were enemies to the NWO, were obviously anathema not only to the TEs but also to the reactionary regimes belonging to the Cooperation Council for the Arab States of the Gulf (GCC) and Turkey ― the main client regimes (together with Jordan) in the area. The campaign to destroy Iraq began early on with the Gulf War, followed by heavy sanctions and frequent bombings, which culminated with the invasion and occupation of the country for a ten year period leading to hundreds of thousands of Iraqi lives being destroyed in the process. This was followed by similar processes in Libya and finally in Syria. Yet, although such huge crimes never led to any demonstrations in the West comparable to yesterday’s demonstration, the resentment created among the Arab populations was growing all the time and in the absence of any strong secular national liberation movements (which have been effectively destroyed by the TE) their only way to express their anger against the West was to join the various Islamic terrorist movements, mostly supported by the Gulf States and particularly Saudi Arabia and Qatar.

It is of course not surprising that Saudi Arabia and its ideology was enthusiastically embraced in the West, both in the pre-globalization era and at present. In fact, Saudi Arabian Salafis seem to be even more reactionary than Muslim Brothers. As Benjamin Schett wrote in a significant recent article on Salafism/Wahhabism:

Wahhabi ideology serves U.S. interests for several reasons. Its followers’ archaic perception of society makes them reject any kind of progressive social change. Therefore they are well equipped to push back socialist, secular or nationalist movements, whose independence-oriented policies are a threat to America’s geopolitical agenda. Although Wahhabism certainly is not representative of the majority of Sunni Muslims, Wahhabi Muslims are Sunni extremists, which causes them to maintain an extremely hostile stance towards Shi’te Islam.[10]

So, Saudi Salafists were useful to the TE both in the pre-globalization era, because it was a useful tool in the hands of Western elites to fight Soviet influence and pan-Arabic socialism, as well as in the NWO because they were a valuable tool in the hands of the Transnational Elite to fight any nations resisting the abolition of their sovereignty within the New World Order (NWO) of neoliberal globalization. This was clearly shown, for instance, when Saudi Arabia supported in every possible way the Salafi jihadis, who butchered the peoples of Libya and Syria. In fact, it was only very recently that they stopped supporting their offspring, ISIS, when they had become targeted by the Transnational Elite for attempting to follow their own line in building an Islamic State.[11] Unsurprisingly, the methods used by ISIS, like beheading, which were repeated ad nauseam by the TE media in order to terrorize Western middle classes and justify its “war on terrorism,” have in fact been practiced for years by its client Saudi regime, with nobody in the “civilized” West bothering much about it, as long as they were able to keep expanding their highly profitable business of arms selling to the regime.

In conclusion, it is the TE itself, which today pretends it suffers because of the activities of Islamic terrorists, that, in fact, bears the main responsibility for Islamic terrorism. Not just in the simple sense that it funded and supported jihadists fighting national liberation regimes in Iraq, Libya or Syria, as the degenerate Western Left argues but, even more important, because, historically, it did everything possible to assist the flourishing of Islamic terrorism. In other words, the massive support the TE  provided over time to political Islamism and Islamic terrorism, in its campaign to destroy Arab national liberation movements, had led to the flourishing of an “army” of jihadists, lacking of any political ideology for national liberation and against globalization and relying instead on religious irrationalism. This was of course the desired by the TE aim, in order to prevent them from understanding who their real enemy is, so that they could organize accordingly to fight it. Yet, even if the aim of many (but by no means all) of these jihadists is irrational, i.e. to create a caliphate, this does not prevent them from understanding that, even achieving this aim, they have to fight against the TE, which, all these years, has destroyed their countries and/or their fellow believers.

* The article was also published simultaneously in


[1] See e.g. Seumas Milne, “Terror and tyranny,” The Guardian (25/10/2001).

[2] “Hezbollah leader on Charlie Hebdo: ‘Extremists more offensive to Islam than cartoons’,” RT (10/1/2015).

[3] see Takis Fotopoulos, The New World Order in Action: Integrating Eastern Europe and the Middle East (Published shortly by Progressive Press), ch. 9.

[4] ibid.

[5] Samir Amin, “2011: An Arab Springtime? Reflections from Egypt”, Europe solidaire sans frontiers (15/5/2011).

[6] Fawaz A Gerges: “This Brotherhood has a real sense of purpose,” Independent (7/2/2011).

[7] Jack Shenker & Brian Whitaker, “A rare glimpse into the world of the Muslim Brotherhood,” The Guardian (9/2/2011).

[8] Samir Amin, “2011: An Arab Springtime? Reflections from Egypt”,

[9] Jonathan Weisman and Mike Allen “Officials Argue for Fast U.S. Exit From Iraq,” Washington Post (21.04.2003).

[10] Benjamin Schett, “US Sponsored “Islamic Fundamentalism”: The Roots of the US-Wahhabi Alliance,” Global Research (7/9/2012).

[11] See Takis Fotopoulos, The New World Order in Action: Integrating Eastern Europe and the Middle East.

Nov 232014

By Eric Toussaint, 99GetSmart

We don’t owe, we won’t pay

We don’t owe, we won’t pay

This article reviews a number of developments that occurred between 2000 and 2014 related to the debt issue, various aspects of the international crisis |1|, international financial institutions, the scope of attacks against social and economic rights, and CADTM priorities.

Several changes have occurred since the end of the 1990s.

1. Several countries in the South have moved away from neoliberal policies

After over twenty years of neoliberal policies and multiple forms of resistance, towards the end of the 1990s and at the beginning of the new millennium, several Latin American nations disposed of their neoliberal presidents thanks to massive social mobilisations and elected heads of state who implemented policies that meet the people’s interests. The people of those countries wanted to free themselves from measures derived from the ‘Washington consensus,’ as imposed by the IMF and the World Bank (privatisations, cuts in public services, ‘liberalisation’ of trade that deprives small local producers of any protection, enforced commodification, destruction of decent jobs, cancellation of subsidies for food staples and services such as water, electricity, gas, and transport). These policies were implemented on the pretence of repaying their public debts, much of which was illegitimate or illegal, as was the case in Venezuela, Ecuador, Bolivia… |2| Ecuador’s government took a remarkable initiative in 2007-2008 when it carried out a complete audit of its debt with the active participation of representatives from social movements |3|. On the basis of this audit, it then suspended repayment of the part of the external debt identified as illegitimate, and imposed a significant reduction of the debt to its creditors |4|. This made it possible to increase social spending. Unfortunately, this initiative did not snowball as had been hoped, since other countries in the area did not follow suit.

On the upside, let us note that the governments of these three countries also increased taxation on large foreign corporations that exploit these countries’ natural resources. This development significantly boosted their tax revenues, and made it possible to increase social spending.

Moreover, citizens in these three countries democratically adopted new Constitutions, which include a measure on the removing of elected representatives at mid-term.

Finally, it should also be added that Bolivia in 2007, Ecuador in 2009, and Venezuela in 2012 took the wise step of leaving the WB International Centre for Settlement of Investment Disputes (ICSID).

The International Centre for the Settlement of Investment Disputes (ICSID),The ICSID was founded in 1966, with the purpose of providing a means of conciliation and arbitration to settle investment disputes between contracting States and nationals of other contracting States. To put it simply, it is an international arbitration tribunal, which deals with disputes arising between a private investor from a contracting party State and the State where the investment is based. The Centre’s jurisdiction (article 25) extends to disputes of a legal nature, relating directly to an investment, between a contracting State (or a government organisation or body dependent on that State and designated by it to the Centre) and a national from another contracting State.

The Centre is usually designated as competent to deal with disputes arising within the context of bilateral investment agreements. Thus, almost 900 bilateral treaties on the promotion and protection of investments explicitly name the Centre as the instance for settling disputes between the private investor of a contracting party, on the one hand, and the State where the investment concerned is based, on the other. The Centre’s arbitral sentence is mandatory and cannot be appealed (article 53). The ICSID is a member of the World Bank Group, but from an institutional point of view, it is an autonomous international organisation, which completes the Bank’s range of intervention.

There is no obligation to have recourse to the ICSID for conciliation or arbitration. However, once the parties are engaged, neither may withdraw unilaterally from the ICSID’s arbitration. Once the ICSID has made a decision, all the countries that have ratified the convention, even if they are not involved in the dispute, must acknowledge and apply the decision. Since 1978, the ICSID’s area of jurisdiction has been extended. A whole new set of rules allow it to intervene in cases that do not fall within the domain of the convention. Thus, it can now intervene in arbitration procedures even when one of the parties to the dispute is a State or the national of a State that has not ratified the convention. It can also be called on to bear witness on facts in a case.

Until the mid-1980s, the disputes dealt with by the ICSID arose from agreements made under investment contracts. Since then, it has dealt increasingly with disputes arising from agreements made under bilateral treaties.

The World Bank’s spider web 

The World Bank’s subsidiaries (the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA), and the International Centre for the Settlement of Investment Disputes (ICSID)) have been designed to weave an even tighter web.

Let us take a theoretical example to illustrate the effects of their policies. The World Bank grants a loan to the government of a country if it promises to privatise its water distribution and purification system. In this process, the public company is sold to a private consortium including the IFC, a World Bank subsidiary.

Then the population affected by the privatisation protests against the sudden sharp increase in rates and the fall in the quality of the service provided, and the government turns against the predatory transnational company, the dispute is dealt with by the ICSID, which thus finds itself on both sides of the judge’s bench.

A situation has been reached where the World Bank Group is present at every level: it imposes and finances privatisation via the IBRD and IDA, it invests in the privatised company through the IFC, it provides the company with guarantees covering it against political risk, through the good offices of the MIGA, and it judges any disputes that may arise through the ICSID.

This is exactly what happened in El Alto, Bolivia, between 1997 and 2005.

2. Increases in raw materials prices and currency reserves

In 2003-2004, the prices of raw materials and agricultural products began to rise |5|. This situation enabled the developing countries |6| exporting such products to increase their revenues, especially in strong currencies (dollar, euro, yen, and pound). Certain developing countries used the additional revenues to increase social spending, while most of them accumulated foreign exchange reserves |7| or purchased US Treasury Bonds—thus contributing to financing the leading world power. In other words, they increased their loans to the world’s principal economic power, thus contributing to maintaining its domination by providing it with the means to continue living on credit and maintaining a large trade deficit. An explanation for this is that the US borrows large amounts from countries that are prepared to purchase its debt instruments (US Treasury Bonds).

The table below indicates the volumes of US Treasury Bonds and other treasury bonds held in March 2014 by a number of developing countries. China alone has lent the USA $1,270 billion (from its foreign reserve exchange accumulated through its trade surplus with the USA), and therefore holds more than one fourth of US external public debt.

Developing countries that are creditors of the USA: values of US Treasury Bonds (in $billionsdollars) held in March 2014 |8|


The yield on US Treasury Bonds and other government bonds is from 0 to 2.57% in function of the maturity (one month = 0.01%, while 10 years = 2.57%) |9|. Given the inflation rate in the US, the real yield is very low, or even negative, which enables the US to finance itself at a very low cost.

3. The loss of power of the World Bank and IMF vis-à-vis certain developing countries

The increase in foreign exchange reserves and the decision of some governments in the South to use part of them to increase social spending and infrastructure investments have contributed to decreasing the influence of the IMF, World Bank, and most industrialised countries over some of the developing countries |10|. This loss of influence also comes from the fact that China and the other ‘BRICS’ (Brazil, Russia, India, China, and South Africa), especially Brazil, have greatly increased the number of their loans to certain developing countries.

4. China becomes a powerful creditor

Another factor has reinforced this phenomenon: a rapidly expanding China has become the world’s workshop, and has accumulated huge currency reserves (mostly in dollars). In December 2013, China’s foreign exchange reserves reached $3,821 billion |11|. It has significantly increased its international trade, particularly with developing countries on various continents. It has also increased very significantly its loans to African, Latin-American, and many Asian countries. Its loans are now competing with those of the World Bank and the IMF, other multilateral financial institutions and the governments of the most industrialised countries. That has reduced the ability of these institutions and of countries in the North to exert pressure on some developing countries. However, we should remain vigilant regarding these large debts taken on by developing countries. China is a new capitalist power, which does not give anything away, and its investments are aimed at ensuring its control over the raw materials it needs and over the markets to which it exports its manufactured goods.

5. In 2014, the BRICS (Brazil, Russia, India, China, and South Africa) announced the creation of a multilateral bank that would belong to them |12|

If this bank begins doing business one day (which is not sure), it will not be an entity capable of offering a positive alternative for developing countries, because the governments founding it are seeking to create a bank which will directly serve their interests (ensuring sources of raw materials and outlets for their exportations) and not those of the people.

6. Increases in internal public debt

Over the past 20 years, internal public debt has increased significantly. In a significant number of developing countries, it has become greater than external public debt (see table below on Argentina, Brazil, Colombia, Ecuador, and Mexico). This is true for all of the richest developing countries, particularly for the so-called ‘emerging’ economies.

Comparison of external and internal public debt (in $billions and as a % of total debt) for some Latin American countries (2000-2013) |13|



However, we should not be fooled. The domestic banks that issue loans to the public authorities of their country in the local currency are often in fact subsidiaries of foreign banks, and the loans in local currency, in many cases, are pegged to a strong currency (generally the dollar). This means that if the local currency is devalued or the value of the strong currency increases, the amount to be reimbursed increases considerably |14|. It also means that the major foreign banks are making large profits from the internal public debt. For example, Santander, the principal Spanish bank, makes enormous profits from the loans granted by its subsidiaries in Brazil |15| and other Latin American countries to public authorities by buying government securities from them. The same is true of other banks like Citigroup/CitiBank, which have a strong presence in Mexico, and the Spanish bank BBVA, present in several Latin-American economies, not to forget the British bank HSBC, which is particularly active in Asia.

7. The food and climate crisis

In 2007-2008, the peoples of the developing countries were faced with a sharp increase in the price of foodstuffs. This situation resulted in food riots in 18 countries. The number of people suffering from hunger, which was approximately 900 million before the crisis, increased by nearly 120 million, bringing the total to over one billion in 2009. As we will see farther on, that figure has gradually been reduced, but the fact can only alert us to the incredible vulnerability of hundreds of millions of people. This dramatic situation is directly linked to other factors related to the global crisis and the debt system. One thing is certain: the rising price of food staples and increasing number of human beings suffering from hunger are not the result of a lack of food resources throughout the world. Some of the factors behind this global food crisis, which is keeping one out of eight humans in a permanent state of hunger, are financial speculation on the prices of basic food items (and fuels) on the over-the-counter market in Northern countries, as well as the promotion of agro-fuels in Northern and some Southern countries— including Brazil —, land grabbing, the ‘free-trade’ agreements imposed on Southern countries, the end of subsidies for basic food staples and to local producers in Southern countries, and the priority given to cash crops intended for exportation to the detriment of local market gardening… |16|

In addition, the effects of the ongoing climate crisis are increasingly dramatic in developing countries. Here again, the policies rolled out by the World Bank in particular, and the productivist capitalist system in general, are part of the problem and not part of the solution |17|.

8. Debt is one of the core concerns in Northern countries, where it is considered to be the consequence of the crisis that erupted in 2007-2008

The crisis caused by major private banks in the US and Europe has generated a strong increase in the debt of the countries concerned. Private and public debt have become core concerns in Northern countries, particularly within the European Union and the United States. That is why the CADTM has engaged in more studies and actions targeting the countries of the North, while still not neglecting the South. The lessons drawn from the Third World debt crisis in 1980-1990 are very valuable for understanding the events that followed the crisis of 2007-2008 and taking action in its aftermath |18|. The countries in the North where people have been the most severely affected are Greece, Ireland, Iceland, Portugal, Spain, Cyprus, Romania, Hungary, the Baltic Republics, Bulgaria, and Italy. The policies being applied by creditors in the most industrialised countries in the North today closely resemble those that were imposed on the countries of the South in the 1980s, which caused and exacerbated third world debt.

9. Centre/Periphery relations within the European Union based on domination 
The existence of a common economic, trade, and political zone enables European transnational corporations and the economies of the Centre of the eurozone to profit from the debt crisis in the Periphery countries (Spain, Greece, Portugal, Ireland, Cyprus, and countries in central Europe and the Balkans), as well as in Italy, to make their companies more profitable and make points in terms of competitiveness with respect to their North American and Chinese competitors. At the current stage of the crisis, the aim of countries in the Centre of the eurozone is not to relaunch growth and reduce asymmetries between the strongest and weakest economies in the EU.

In addition, European leaders believe that the collapse of Southern Europe is going to translate into opportunities to privatize corporations and public goods massively at cut-rate prices. The intervention of the Troika and the active complicity of governments in the Periphery are helping them. The dominant classes in the countries in the Periphery are in favour of these policies, because they are counting on getting a part of the cake they have been drooling over for years. The privatisations in Greece and Portugal prefigure what is going to occur in Spain and Italy where the public commodities up for grabs are far more lucrative, given the size of these two economies.

The close ties between government leaders and Big Capital are no longer even concealed. Individuals from the world of high finance, and in particular the investment bank Goldman Sachs, are now at the head of several governments, in key ministerial positions, and President of the ECB |19|.

10. The crisis and the increase in public debt are misleading arguments exploited in the greatest offensive against human rights in Europe since the end of WWII.

Governments and employers use countless deceitful arguments in the greatest offensive in Europe since WWII against the economic and social rights of most people. Increasing unemployment, more and more debt to repay, the constraint of balanced budgets and the competitiveness of the European countries, between themselves, and on the world markets, are all used as postulates to attack and whittle away at social spending and public services.

For the Capitalists the agenda is greater insecurity for the workers, to reduce the worker’s capacity to organise and resist, while imposing lower wages and less benefits, at the same time as maintaining big differences between EU workers in order to increase the competition between them, and to precipitate them into the debt trap.

The report ‘Safeguarding human rights in times of economic crisis’ by Nils Muiznieks, Commissioner for Human Rights at the Council of Europe (4 December 2013) draws an unforgivable picture of the consequences of the austerity measures applied in Europe. The sectors of education, health, employment, justice, housing, water distribution, and subsistence are all damaged by the nefarious effects of these policies. Nils Muiznieks stresses the inefficiency of austerity plans and their counter-productive results, which in the long term will cause necessary increases in public spending |20|.

Here are the opening paragraphs of the introduction to this important report: ‘Europeans are living through the deepest economic recession since World War II. What began as a meltdown in the global financial system in 2008 has been transformed into a new political reality of austerity, which threatens over six decades of social solidarity and expanding human rights protection across Council of Europe member states.

Austerity measures have exacerbated the already severe human consequences of the economic crisis marked by record levels of unemployment. The whole spectrum of human rights has been affected and many vulnerable groups of people have been hit disproportionately. Poverty, including child deprivation, is deepening and is likely to have long-term effects.’

11. This is a worldwide attack on Labour by Big Capital.

What wage earners, pensioners and beneficiaries are going through in Cyprus, Ireland, Greece, Spain, and Portugal, among others, was imposed on the populations in developing countries during the debt crisis in the 1980-1990s. In the 1990s, during and after the Reagan presidency, the workers in North America were attacked, the Thatcher regime in the UK attacked British workers and similar policies were then applied throughout Europe, including in the ex-eastern bloc countries, which were subjected to the harsh policies imposed on them by their governments and by the IMF. According to the International Labour Organisation’s Global Wage Report 2012-13 ‘In Russia, for example, the real value of wages collapsed to less than 40 percent of their value in the 1990s, and it took another decade before wages recovered to their initial level.’ |21|. Then starting in 2003-5, although less harshly than in the Third World countries (the World’s poorest countries and the emerging economies), the attack turned against German workers. The harmful effects are still felt today by many people, even if Germany exports and the explosion of part-time work has limited the number of unemployed and part of the working class has not been directly affected.

This offensive, which started at the beginning of the 1980s, has intensified since 2007. The International Labour Organisation has analysed a shorter period (1999-2011) and made the following interesting remark: ‘Between 1999 and 2011, average labour productivity in developed economies increased more than twice as much as average wages. In the United States, real hourly labour productivity in the non-farm business sector increased by about 85 per cent since 1980, while real hourly compensation increased by only around 35 per cent. In Germany, labour productivity surged by almost a quarter over the past two decades while real monthly wages remained flat.’ |22|. Further on, the ILO indicates: ‘The global trend has resulted in a change in the distribution of national income, with the workers’ share decreasing, while the share of income earned by Big Capital has increased in most countries. Even in China, a country where wages roughly tripled over the last decade, GDP increased at a faster rate than total wages, and hence the share going to labour went down.’ |23|

Evolution of wages as a percent of global GDP (1980-2011) |24|



This significant global trend is the demonstration of the increased added-value extracted from Labour by Capital.

12. Illegitimate personal debts

The CADTM has started focussing on a new field of analysis and intervention in the ‘debt system’. While whole populations are direct victims of the ‘debt system’, so are individuals: Indian farmers are being driven to suicide (more than 270,000 between 1995 and 2011 |25|), hoping to free their family from the burden of debt; millions of families are being dispossessed by the repossession of their homes by the creditor banks, mainly in the US (since 2007, 14 million families, unable to pay their mortgages, have been evicted from their homes by banks). The same is true in Spain, where about half a million families have been evicted |26|, in Ireland, in Iceland, in several central European countries and the Balkans. Women (men too) are victims predatory micro-credit systems in the South. English, Chilean, and North American students are over-indebted and needy or in downright misery, (the total amount of student debt in the United States exceeds $1 trillion, the equivalent of the external public debt of Latin America and Sub-Saharan Africa combined).

In fact, if one goes beyond appearances, it is not a collection of individual victims of injustice. These individuals are part of the classes being exploited and robbed by the capitalist system: the small farmers of the South, urban and rural proletariat of the North and South, educated youth from the working classes … Among the victims, women are the most exposed to class and gender exploitation: patriarchy and Capitalism work hand-in-hand to perpetuate a system of oppression and exploitation.

13. Lower interest rates in the United States and Europe have decreased the cost of debt in the South, creating a dangerous feeling of security

The lower interest rates imposed by the central banks of the most industrialised countries starting in 2007-2008 |27|, in order to help their major private banks and capitalist corporations, resulted in a lower cost to refinance the debt in developing countries. The combined low interest rates and high revenues from the exportation of raw materials have created a dangerous feeling of security for the governments of developing countries. However, the situation may be reversed in the near future: the price of raw materials could drop and interest rates may finally go up again |28|.

We must pay careful attention to this situation, and ask the governments in Southern countries to take advantage of the current economic situation that is relatively favourable to their country, and put in place policies in favour of basic human rights and nature protection. In sum, we must make a radical break with the current model of development.

14. Public and private debt has increased throughout the world, and the BIS itself has spoken of the ‘debt trap’

Private and public debt have skyrocketed in an extremely dangerous way since the beginning of the 2000s. First, there was an enormous increase in private debt (of financial corporations (banks in particular), non-financial corporations, and households), principally in the most industrialised countries. Then public debt literally exploded because of how the crisis was managed in the interest of Big Capital. In the most developed countries, public debt has increased by about 40% since 2007 |29|. Meanwhile, the debt of non-financial corporations has risen 30% throughout the world. Household debt has decreased (in response to attacks on buying power, jobs, and general living conditions, those ‘at the bottom’ have paid off their debts). The debts of financial corporations (major private banks in particular) remain the highest (they are much great than public debt), because their books have not really been cleaned up contrary to the reassuring speeches delivered by government leaders. The Bank for International Settlements (BIS), which is a forum for the principal central banks on the planet, launched an alert in its Annual Report published in June 2014 by speaking of the ‘debt trap’! Obviously, we are not astonished to learn that the BIS recommends we should continue pursuing neoliberal policies |30|, whereas in reality we must make a radical break with them.

15. The debt of developing countries, which represents a tiny portion of world debt, also increased

It is important to highlight that the total debt of all developing countries (internal + external public and private debt combined) represents only about 5% of total world debt. Meanwhile, public and private debt in the most industrialised countries, where only 15% of the world population lives, account for 95% of total world debt. The external public debt of all the developing countries (about $1.8 trillion), where 85 % of the world population lives barely represents 1% of total world debt. These figures clearly show how easy it would be to cancel this debt.

In reality, more than ever before, developing countries are net financial creditors of the most developed economies. These figures do not include the ‘ecological and historic debts’ people in developing nations could demand from the dominant classes of the most developed countries (and from the dominant classes in the developing countries, who have been complicit with those in the North).

Overview of the evolution of public debt

Evolution of the external public debt of developing countries from 1980 to 2012 (in billions of dollars) |31|



* PECOT = central and eastern European countries + Turkey

We observe that external public debt continued to rise from 2000 to 2012, particularly in Latin America, and in the countries of central and eastern Europe + Turkey (PECOT) as well as in south Asia.

Evolution of the external debt of developing countries and of the resources used to pay it back from 1980 to 2012 (in $billions) |32|





We observe a constant increase in the total volume of external debt. In terms of repayments, between 2005 and 2012, it is especially the ones made by private companies that increased. That means that private companies (industrial, commercial, banking, and so on) took on large amounts of external debt, and if there is a crisis, there is a very high risk that these debts will have to be paid back by the government, which has already occurred many times in the recent past.

16. Poor countries issue and sell external debt bonds on international markets

Rwanda and Senegal, two poor and heavily indebted countries, have sold public debt bonds on the financial markets of the North. This has never been seen before in the last 30 years. The Ivory Coast, having emerged from a situation of civil war just a few years ago, has also issued bonds although it is also one of the poor and heavily indebted countries. Kenya and Zambia have also issued debt bonds. This testifies to a highly peculiar international situation: the financial investors of the North hold huge cash assets, and faced with very low interest rates in their region, are on the lookout for higher yields. Senegal, Zambia, and Rwanda promise a yield of 6 to 8% on their bonds. They therefore attract financial companies, which seek to place their cash on a provisional basis even if the risks are high. The governments of these poor countries become euphoric and try to make their people believe that happiness is just around the corner although the situation may take a dramatic turn. These leaders are accumulating debt in a completely irresponsible way, and when the economic situation deteriorates, it will be their people who will have to foot the bill.
Furthermore, the bonds they issue are linked to contracts including clauses that could be real time bombs. We must require public authorities to make the contents of these contracts accessible to the public.

17. The Fed is destabilizing emerging market economies

When the US Federal Reserve System (the Fed) hinted in May 2013 that it would gradually normalize its policy, there was an immediate negative impact on the ‘emerging’ economies. What changes were proposed?

1. Reducing purchases of toxic assets |33| from the US banks, made to relieve them of this burden.
2. Reducing the acquisitions of US Treasury Securities from these banks, which the Fed does in order to give them cash injections |34|.
3. Raising interest rates (0.25% today).

This announcement itself was enough to lead major financial companies in the US and other countries (banks and their satellites in the shadow banking system, mutual funds, etc.) to pack-off some of their liquid investments from the emerging market economies (EMEs). This destabilized those economies: plunge in stock markets and currency depreciation (Indonesia, Turkey, Brazil, India, South Africa …) |35|. In fact, the low interest rates prevailing in the US and Europe, combined with the central banks’ massive cash injections in the economy, have always set financial companies on the trail of maximum profit by investing in the EMEs, which offer better returns than the North. The outflow of financial investment from the EMEs towards the most industrialized economies can be explained by the fact that the financial companies expected attractive returns in the North as soon as the Fed hiked interest rates |36|. These companies thought that other ‘investors’ would withdraw their capital from these countries and it was better to act first. A herd mentality response resulted in a self-fulfilling prophecy.

Finally, the Fed did not raise interest rates and waited till the end of 2013 to reduce purchases of structured securities and treasury bills from banks. The dust has almost settled.

The situation in June 2013 gives some idea of ​​what might happen if the Fed increases interest rates significantly. The Bank for International Settlements (BIS), the central banks’ central bank, says ‘Capital flows could reverse quickly when interest rates in the advanced economies eventually go up or when perceived domestic conditions in the host economies deteriorate. In May and June 2013, the mere possibility that the Federal Reserve would begin tapering its asset purchases led to rapid outflows from funds investing in EME securities’ (BIS, 84th Annual Report, 2014, p. 76,…)

The BIS brings to light a worrying trend: financial companies that invest part of their assets in EMEs do so in the short term. They can swiftly withdraw their funds if they discover other profitable avenues. The BIS says, ‘A higher proportion of investors with short-term horizons in EME debt could amplify shocks when global conditions deteriorate. Highly volatile fund flows to EMEs indicate that some investors view their investments in these markets as short-term positions rather than long-term holdings. This is in line with the gradual shift from traditional open or close-end funds to exchange- traded funds (ETFs), which now account for around a fifth of all net assets of dedicated EME bond and equity funds, up from around 2% 10 years ago… ETFs can be bought and sold on exchanges at a low cost, at least in normal times, and have been used by investors to convert illiquid securities into liquid instruments.’ (BIS, 84th Annual Report, 2014, p. 77,…).

In short, the wellbeing of the EMEs depends a great deal on the policy followed by the most industrialised economies (especially the US, Europe, and Japan). A hike in interest rates in the US may result in a significant outflow of volatile capital invested in EMEs with higher returns in mind.

In addition, roughly 10% of the debt securities maturing from 2020 or later are callable, and an unknown proportion have covenants that allow investors to demand accelerated repayment if the borrower’s conditions deteriorate.’ (BIS, 84th Annual Report, 2014, p. 76.…) This means that financial companies that purchased debt securities maturing in a relatively distant future (2020 or later) can demand accelerated and full repayment from a crisis-hit country. Obviously, this can only aggravate the situation of an indebted country: all inflows will stop simultaneously. This is another reason why the populations of developing nations need to be aware of the serious dangers posed by their country’s public debt. Payment of the illegitimate portion of the debt must be challenged immediately.

The decline in revenues from raw material exports is another factor that might lead to a fresh and acute debt crisis in developing countries, since China – a major consumer of raw materials for its manufacturing industry – has reduced its huge imports. A drop in the price of raw materials can be fatal to the economic health of developing countries, which depend mainly on exports. In this respect, raw materials prices might also drop if the Fed increases interest rates, as this reduces speculation responsible for high prices. The combined effect of a hike in interest rates and a decline in raw material prices could produce a situation similar to what happened in the early 1980s, when the debt crisis exploded in developing countries. It is imperative to learn from that crisis and to act, so that the Southern people do not have to foot the bill again.

18. Vulture funds |37|

Public debt has become the target of the speculative strategies of ‘litigating creditors, known as ‘vulture funds’. These are private investment funds, most of them located in tax havens, which specialise in buying up debt securities from States that are in default or on the verge of default. They then sue these States in the courts of English-speaking countries, demanding that they reimburse their debt at its nominal value, with the addition of interest, penalties for late payment, and court costs. Unlike traditional creditors, they refuse to participate in any negotiation and restructuring operation, preferring judicial solutions, and in case of non-payment, seizure of debtors’ assets (diplomatic properties, revenues from exports, and various assets invested abroad). Since the 2000s, some twenty States that are among the most heavily indebted on the planet have fallen prey to these strategies, in South America (Argentina, Nicaragua, Honduras, and Peru) and Africa (Sierra Leone, the Republic of the Congo, and Uganda), during major judicial-financial battles that are still in progress today. Since 2007, the phenomenon has been directed against countries in Southern Europe (Greece, Spain, and Portugal). In the future, vulture strategies are likely to prosper in the South and North. Newly issued debts continue to be placed under American or British law, which is favourable to creditors, and certain countries are again contracting debt on the international capital markets and show a preference for indebtedness to China, which will encourage future debt repurchases on secondary markets.

Argentina was in the spotlight in 2014, when the US Supreme Court rejected an appeal by the Argentine government, and ruled in favour of the vulture funds NML and Aurelius, forcing Argentina to pay them $1.33 billion. Argentina adopted a law on 10 September 2014 aimed at providing it with a mechanism to defend itself against vulture funds. The CADTM would like to point out, however, that the best defence against them consists in refusing to recognise the competence of foreign courts in settling claims with creditors and inserting a clause in contracts stipulating that the local courts have jurisdiction.

19. Citizen audits

In recent years, movements have developed to work towards conducting a citizen audit to identify illegitimate, odious, and illegal debts. These movements in several countries |38| provide an opportunity for interesting and enriching reflection to clarify which parts of public debt should not be paid. With no claim to being exhaustive, we can propose the following definitions:

a) Illegitimate public debt: debt contracted by government authorities with no concern for the general interest or in such a way as to be detrimental to it.

b) Illegal public debt: debt contracted by the government authorities in flagrant violation of the prevailing legal order.

c) Odious public debt: credits extended to authoritarian regimes or which impose conditions for reimbursement that violate fundamental social rights.

d) Unsustainable public debt: debt whose reimbursement condemns the people of a country to impoverishment and deterioration of health and public education, increased unemployment, or problems of malnutrition. In other words, debt whose reimbursement makes it impossible for government authorities to guarantee fundamental human rights.

A citizen audit of public debt, combined in certain cases with unilateral sovereign suspension of its payment, can enable the illegitimate, unsustainable, and/or illegal part of the debt to be abolished/repudiated and the remaining part to be greatly reduced. It is also a way of discouraging this type of indebtedness in the future.

20. By way of conclusion: the impact of the ‘debt system’ – more topical than ever

The ‘debt system’ exploits public resources to pay creditors, to the detriment of people’s needs and fundamental rights. The relationship between creditors and debtors is therefore terribly unbalanced in favour of the former. One aspect common to the Latin American external debt crisis that erupted in 1982 and the euro crisis since 2010 is that in both cases the first reaction was to deny the evidence and do nothing. Subsequently, the measures taken are set up in favour of the creditors’ interests. In order to try to inverse the public deficit trend and thus be able to pay off the debt, adjustment or austerity policies are applied, whatever the price to be paid by the people, who are victims of the crisis. The creditors, supported by local elites, demand that the debt be reimbursed and that the adjustments be made to prioritise this repayment instead of all social needs, thus negatively affecting people’s most basic rights. The measures put in place also prove to be counter-productive, because they only make the problem worse. Excessive indebtedness becomes a structural problem.

The ‘debt system’ aggravates inequalities. Debt enables a privileged minority to monopolise a series of financial revenues that enable it to increase its wealth permanently. By consequence, the State loses resources necessary to satisfy people’s fundamental needs. The richest minority accumulates wealth, inequalities grow, and the increased power of the few enables them to exert greater pressure on public authorities with regard to policies. The rise in debt, and its concentration in a few hands, leads to a redistribution of income in favour of the richest members of society, which in turn is both the cause and consequence of heavier exploitation of labour and natural resources. In response, the CADTM, together with other organisations, argues that it is essential to audit public debt under citizen control in order to clarify its origins and determine which part should be considered illegitimate and/or illegal and therefore cancelled.

However, the CADTM is denouncing the entire debt system. It is the same mechanisms of domination and exploitation that govern public debts and illegitimate private debts, respectively subjugating people as collective subjects and as lower social class individuals (indebted small-scale farmers, families expelled from their homes by banks, women trapped by the micro-credit system in Southern countries, over-indebted students, etc.)

Of course, cancelling all illegitimate debts needs to be backed by other measures. For example, the socialisation of the banking and insurance sector to transform it into a public service, a radical reform of the tax system in favour of the overwhelming majority of the population, the expropriation of the energy sector and transformation into a public service, a radical reduction of working hours combined with job creation and increases in salary and social benefits, the improvement and extension of public services, the improvement of redistributive retirement pension systems, effective equality between men and women, and radical political reforms including changed constitutional processes. The aim is for these measures to be part of a vast plan for social, ecological, and political transition in order to get out of the devastating capitalist system. The struggle against the ‘debt system’ as a whole, more necessary than ever in both southern and northern countries, is part of the much broader-based struggle for a world freed from all forms of oppression and exploitation.

Translation by Christine, Snake, Mike, Charlie and Adam. Thanks a lot to all of them !


|1| For want of space, some aspects of the crisis, such as the climate crisis, are merely mentioned. The text does not cover every aspect of the international context. N.B. all figures are expressed in US dollars = $, unless specified.

|2| Éric Toussaint, Bank of the South An alternative to the IMF World Bank (CADTM, 2014). Available on line:…. We can also mention the massive and victorious mobilisation of the Argentine people in December 2001 in order to oust Fernando De la Rua’s neoliberal government.

|3| The CADTM participated directly in the presidential commission that led the audit of the Ecuadorian debt. Éric Toussaint, « An III de la révolution citoyenne en Équateur », 22 October 2009,… (not available in English).

|4| Éric Toussaint, « Les leçons de l’Équateur pour l’annulation de la dette illégitime », 29 May 2013,… (not available in English). Recently, however, Ecuador’s government seems to have shifted back to a more traditional (and harmful) approach: loans from China, a first loan from the World Bank (since 2005) in 2014, new issue of Ecuadorian securities on the financial markets led by Citibank and Crédit Suisse. This is worrying.

|5| This was a reversal of the previous trend. Generally speaking, the prices of raw materials dropped sharply as of 1981 and remained low until 2003-2004.

|6| Note on terms used: In the text that follows, the terms ‘developing countries’ (DCs) and ‘developed countries’ are simply the terms already used by the international institutions– because most of the data analysed comes from these institutions. The terms used to designate the countries targeted for World Bank development loans have changed throughout the years. At first, they were known as ‘backward regions’, then ‘under-developed countries’, and finally, ‘developing countries’, some of which are now called ‘emerging countries’. Nonetheless, it is important to recall the ideological and Western-centric connotations of this terminology. Indeed, essentially it takes into account only the economic dimension of development, and implies that there is only one model of development (the Western industrial and ‘extractivist’ capitalist model), and that certain countries are ‘behind’ and must catch up with other countries who are ‘further ahead’. The CADTM vehemently rejects this vision of the world. Likewise, when we make use of the terms such as ‘Southern countries’ and ‘Northern countries’, we are conscious that they are incorrect from a strictly geographic point of view.

|7| Bank for International Settlements (BIS), 84th Annual Report 2014, Basel, June 2014, p. 102, table V.1. Annual changes in foreign exchange reserves.

|8| Calculated by CADTM on the basis of US Treasury Department data, Major foreign holders of treasury securities, March 2014,…

|9| See the yields published by the US Treasury:… (accessed 24 September 2014 ).

|10| The IMF has, however, succeeded in returning to the forefront of the scene in western Europe with the crisis that has severely affected the weakest Eurozone countries (Greece, Ireland, Portugal, Cyprus, Slovenia, and two Baltic Republics, Estonia and Latvia).

|11| Bank for International Settlements (BIS), 84th Annual Report 2014, op.cit.

|12| See Daniel Munevar’s (CADTM economist) critical analysis, ‘BRICS Bank: Is it an alternative for development finance?’, 28 July 2014,…. See also, Benito Pérez/Éric Toussaint, ‘The alternative, would be a Bank of the South, not the BRICS Bank’, interview of Éric Toussaint, Le Courrier, 19 August 2014 (…).

|13| Inter-American Development Bank (IADB), Latin American Macro Watch Data Tool. The data for Argentina’s debt correspond to 2012 instead of 2013.

|14| That is what happened between May and December 2013 for countries such as Turkey, Indonesia, and Brazil.

|15| In the case of Brazil, in 2014, government officials borrowed from private banks at an interest rate of 11%, while inflation was 6.5 %, which means hefty profits for the bankers.

|16| Éric Toussaint, ‘Une fois encore sur les causes de la crise alimentaire,’ (‘More on the causes of the food crisis’), 9 October 2008,… (in French). See also: Damien Millet and Éric Toussaint, ‘Pourquoi une faim galopante au XXIe siècle et comment l’éradiquer ?’ (‘Why is hunger still rampant in the 21st century and how to eliminate it?’), 24 April 2009,… (in French); Éric Toussaint, ‘Banks speculate on raw materials and food’, 10 February 2014,…

|17| Éric De Ruest and Renaud Duterme, La dette cachée de l’économie, Paris: Les Liens qui Libèrent, 2014. See… (in French).

|18| Éric Toussaint, « Du Sud au Nord : crise de la dette et programmes d’ajustement », 4 June 2014,… (not available in English).

|19| Éric Toussaint, ‘Bankocracy: from the Venetian Republic to Mario Draghi and Goldman Sachs’, 11 November 2013,…


|21| ILO Global Wage Report 2012-2013, Executive Summary, Geneva, December 2012.

|22| ILO, ibidem, pp. VI-VII.

|23| ILO, ibidem, p. VII. The same report also underscores the increasing differences between low and high incomes in each country.

|24| UNCTAD, Trade and development report 2013, United Nations, New York and Geneva, 2013, p.15. Available at…

|25| According to Law in India, normally, if the head of a family dies, his debt cannot be transmitted to his family. This is one of the reasons some Indian agricultural smallholders commit suicide hoping to thus free their families from debt. However, this does not always work in practice. Swallowing pesticides is one of the most common methods used to commit suicide. It is also worth nothing that outside India, in Europe, especially in France there is an alarming rate of suicide among small farmers.

|26| Éric Toussaint, ‘Banks and the New “Too Big to Jail” Doctrine’, 9 March 2014,…; ‘Bank abuses in the real estate sector and illegal foreclosures in the United States’, 4 April 2014,…

|27| In November 2014, the key interest rate of the US Federal Reserve stands at 0.25 %, that of the European Central Bank is 0.05 %, the Bank of England 0.5 %. The rate of the Bank of Japan has been 0% since the country entered a crisis in 1990.

|28| For raw materials, the price of a barrel of oil dropped significantly from May to November 2014. As I am writing these lines on 9 November 2014, the price of a barrel of oil was $105 on 1 May, 2014 and reached its lowest level in 13 years on 7 November 2014 ($83 dollars). As for interest rates, since June 2014 the US Federal Reserve has been suggesting they will soon increase. Although the Fed’s key rate is very low today (0.25%), the situation must be monitored closely. To that effect, see point 17 about what happened in 2013 when the economies of certain emerging countries were strongly shaken up.

|29| This is the estimate provide by the Bank of International Settlements (BIS): 84th Annual Report, op.cit., p. 10, Figure I.1. (June 2014)

|30| Bank of International Settlements (BIS), Ibidem, page 17.

|31| World Bank, International Debt Statistics,…

|32| World Bank, op.cit. Debt servicing is the total amount of repayments for interest and capital.

|33| The Fed has bought huge amounts of Mortgage-Backed Securities (MBS) from US banks. Its purchases of such assets between 2008 and early 2014 were worth more than $1.5 trillion. During 2012-2013, it purchased toxic assets worth $40 billion per month from banks and real estate agencies that guarantee mortgages, to reduce their burden. By the end of 2013, it started to make fewer purchases, which went up to $35 billion per month by March 2014. By October 2014, the Fed was holding $1.7 trillion in MBS, or about 21% of the total volume of such assets, an enormous amount. The Fed finally stopped purchasing MBS in November 2014.

|34| By October 2014, the Fed was holding US Treasury Securities worth $2.45 trillion. Please note, contrary to popular belief, the Fed does not buy Treasury Securities directly from the Treasury, it buys them through open market operations from private banks which had acquired them previously. See the US laws on this matter:…

|35| The Bank for International Settlements (BIS) describes this situation as follows: – ‘The first episode was abrupt and generalised in nature, with sharp asset price movements ending a period of fairly stable interest and exchange rates. As the sell-off spilled over from advanced economies, EMEs experienced a sharp reversal of portfolio flows, especially in June 2013. . . EME equities fell by 16% before stabilising in July, and sovereign bond yields jumped more than 100 basis points, driven by rising concerns over sovereign risk… At first, the indiscriminate retrenchment from EMEs affected many currencies simultaneously, leading to correlated depreciations amid high volatility. The currencies of Brazil, India, Indonesia, South Africa and Turkey depreciated by more than 10% against the US dollar during the first episode…. Brazil, India, Indonesia and Russia each lost more than $10 billion in reserves. Countries with rapid credit growth, high inflation or large current account deficits were seen as more vulnerable and experienced sharper depreciations.’ (BIS, 84th Annual Report, 2014, pp. 27-28).…

|36| For an analysis of what happened in 2013, please read Daniel Munevar’s “Inestabilidad en los mercados emergentes: El fin de un ciclo?” available only in Spanish here :… (1st part) and… (2nd part).

|37| I would like to thank Louise Abellard for her contribution to this point.

|38| Brazil, Spain, Portugal, France, Belgium, and others.

Éric Toussaint is a historian with a doctoral degree in political science. He is the spokesperson for CADTM International, and the author of several books translated into English, including Bankocracy (Merlin Press, 2015), The Life and Crimes of an Exemplary Man (CADTM, 2014), A Glance in the Rear View Mirror. Neoliberal Ideology from its Origins to the Present (Haymarket Books, Chicago, 2012), and The World Bank: A Critical Primer (Pluto Press, London, 2008).

Nov 012014

By Eric Toussaint and Tassos Tsakiroglou, CADTM


• Manuel Valls and Matteo Renzi are asking for more time to reduce their countries’ deficits, offering in exchange reforms that would make their countries more competitive. Is this a real challenge to the European austerity consensus? Can this bring about some advantages?

I think their request will be refused. The European Commission wants to continue to apply its brutal austerity policies over the whole of the European Union, in particularly to the peripheral countries (Cyprus, Greece, Ireland, Spain, Portugal and the central and eastern European countries), but also to countries like France, Italy, Belgium, the Netherlands, Austria and Germany. If the French and Italian governments managed to persuade the European Commission to abandon austerity policies, that would be welcome, but it’s impossible. Even as they are making these requests to the European Commission, Mr. Hollande and Mr. Renzi are keeping up the pressure on the labour market, making it more precarious. In Italy, for example, Mr. Renzi is attacking the remaining social achievements that Mr. Berlusconi failed to destroy. What’s more, we know that the Valls government in France is favourably inclined towards the big corporations, banks and insurance companies.

• Alexis Tsipras has called for an international conference for the abolition of the debt of the Southern European countries that are affected by the crisis, similar to what was done for Germany in 1953, when 22 countries, including Greece, cancelled a large part of the German debt. Is this a realistic possibility today?

This is a legitimate demand. Unlike Nazi Germany, Greece has not caused any conflict on European soil. The Greek people can strongly insist that the Greek debt is illegal or illegitimate and should be cancelled, just as the German debt was in 1953. |2| However, I don’t think that SYRIZA and other European political forces can convince the European institutions to get together around a table to do the same as was done for Germany in 1953. Although this request is legitimate, and this is why I have supported the Tsipras candidature to the Presidency of the European Commission |3|, it will not be possible to bring the governments of the main European economies and the EU institutions to the table on this agenda.

The experience of the last ten years has shown that unilateral sovereign acts can get results. The creditors that reclaim the payment of an illegitimate debt and impose violent measures that attack fundamental human rights, including economic and social rights, must be refused. I think that Greece has strong arguments for forming a government that would have popular support for working in this direction. Such a popular leftist government could establish a debt audit committee that would include a large popular democratic participation. This audit committee would unilaterally suspend repayments and finally repudiate the part of the debt that it identifies as illegal and/or odious.

• In Greece, SYRIZA is topping all the polls and several of its leaders have declared that any debt negotiation will be done within the Eurozone context and will not be a unilateral decision. What do you have to say about this?

Yes, I know the official SYRIZA position. Personally, I try to show that another way is possible. It’s clear that most of the Eurozone governments and the ECB will not agree to an important reduction of Greek debt. So, in spite of SYRIZA’s willingness to negotiate, I think it will be impossible to come to terms with all. This requires a more radical approach – there is no other possibility – just as was done by Iceland after 2008, Ecuador in 2007 – 2009 and Argentina between 2001 and 2005.

Since then, those governments have made a series of mistakes and abandoned their radical positions. This why they are in great difficulty today, as is the case of Argentina, that I have recently visited. The Argentine parliament has passed a law that means Argentina must, from now on, act in a sovereign fashion in the management of its debt. It was agreed to create a Congressional Audit Committee that will sit for three months; we will see whether this does come about.

• You have said that reducing public debt is necessary, but not sufficient to bring the EU countries out of the crisis, that other strong measures will be necessary in different sectors. Can you, briefly, tell us more?

First of all, nationalize the banks – I prefer to use the term socialization. I think that the Greek banks, and the banks of other countries, should become public and be put to the service of the population, in a framework of strict regulations imposing the rules and the objectives fixed by the population. Controlling the circulation of capital is also essential, in particularly that made by the big financial institutions. I am not talking about remittances of 1,000 or 2,000 euros, but large sums, which would require authorization by controlling authorities, without which a guilty bank would be sanctioned by heavily dissuasive fines and the revocation of its banking licence. This measure must be seriously applied. It would be a protection for ordinary users who make reasonably-sized international transfers of money. Tax reform is also very important: reduce taxes paid by the majority of the population and greatly increase, on a progressive scale, those imposed on the richest households and international companies, whether national or foreign.

• And for Greece?

SYRIZA made interesting propositions during the 2012 elections. If there is a SYRIZA government the unjust laws (in particular, those that abolished collective bargaining between labour and employers) that were passed under pressure from the Troika must be repealed. Other necessary measures would include: radical tax reform favouring social justice and redistribution of the country’s wealth; the abolition of the most unfair taxes paid by the poor and increased taxation of the rich; an audit of the debt and the repudiation of the part identified as illegal and/or odious; socialization of the banks and control of the movement of capital.

• As Naomi Klein has said, “Neoliberal capitalism is fundamentally at war with life on Earth”. Recently, hundreds of thousands of people have taken to the streets in many countries to protest against climate change. What does this mean?

This very important because, worldwide, more and more people are becoming aware that we are facing global problems: global inequalities damage the climate, push people to migrate, and cause wars. International protest movements are fundamental and essential. Nevertheless, they need to be strengthened. I am impatient to see greater, and stronger, worldwide mobilisation of the peoples.

Translated from French to English by Snake Arbusto, Vickie Briault and Mike Krolikowski.

The original Greek version is available here :
Translated by Christian Haccuria, from Greek to French.


|1| The original version appeared on Sunday, 20 October 2014 in the Greek centre-Left daily Εfimerida ton Syntakton (Journal of Editors):, «Νόμιμο το αίτημα Τσίπρα για διεθνή διάσκεψη για το χρέος». The French version was reviewed by Éric Toussaint.

|2| See the article: Eric Toussaint, “The cancellation of German debt in 1953 versus the attitude to the Third World and Greece”, published 18 August 2014.

|3| In 2014, when the new President of the EU Commission was designated, the European Left parliamentary group had nominated Alexis Tsipras as a candidate against Jean-Claude Juncker (supported by the European People’s Party and the European Socialist group) and a liberal.

Mar 082014

Posted by SnakeArbusto, 99GetSmart

Source: CADTM Europe


The CADTM affirms its full and complete solidarity with the people of Cyprus and their organisations struggling against privatizations in the energy, telecoms, and shipping sectors – privatizations required by the Memorandum imposed by the Troika in March 2013. Cyprus is the fourth country to be placed under the budgetary supervision of the European Union, after Greece, Ireland and Portugal.

In the face of the demonstrations of 27 February (a 3-day renewable strike by Electricity Authority of Cyprus workers and a strike by longshoremen at the ports of Limassol and Larnaca), the Parliament was unable to reach a majority to adopt the initial bill (25 votes for, 25 against, 5 abstentions; a majority of 29 is required for adoption). The following day the government handed in its resignation. The media, in total complicity with the Troika, have observed total silence over this situation – an extraordinary one, to say the least.

Despite the refusal expressed by the population in the streets, the Cypriot legislators have just adopted (4 March), by a vote of 30 to 26, a bill that is only a slightly modified version of the one they had themselves rejected the preceding week and which would result in the privatisation of the major public services: EAC (electricity), CYTA (telecoms), and CPA (the port authority). This new version of the law claims to guarantee the jobs of the employees of these companies, but no one actually believes that.

Adoption of the law was a condition for the granting of a new 236-million € tranche of the 10-Bn € loan granted by the Troika in March 2013.

The causes of the crisis in Cyprus have been clearly identified: 

1) A hypertrophied banking system
 that was completely out of control. The banks, who have considerable liquid assets provided by the “financial markets,” have recklessly made risky investments.

In 2012, Cyprus’s banks speculated on the restructuring of the Greek debt – 40% of their external commitments, which cost them 4.5 Bn €, or the equivalent of a quarter of Cyprus’s GDP, and brought on the collapse of this overinflated sector (whose assets represent seven times the country’s GDP).

These private losses were then promptly transformed into public debt. These debts are totally illegitimate and must be abolished, along with those stemming from the assistance plan!


In 2009 and 2010, Cyprus’s public debt was only 52.4% and 60.8% of GDP, whereas in the Euro zone as a whole it was 80% of GDP in 2010.

In Germany, the percentage was 74.5% in 2009 and 82.5% in 2010.

2) A tax situation that is highly advantageous for companies: Corporate tax, which until the Memorandum was at an official rate of 10%, has only been raised to 12.5% (not enough to resolve the budget deficit).

To obtain the 10-Bn € assistance plan from the Troika (9 Bn € from the ECB and 1 Bn € from the IMF), Cyprus’s government also agreed to the restructuring of its banking system, a 10% reduction in public expenditures, and the privatization of the island’s main public sectors.

The IMF, represented in Cyprus by a former executive of Lehman Brothers, itself recognizes the economic ineffectualness of such measures. The IMF’s goal is not to provide support for the population of Cyprus, but to protect and guarantee the interests of the creditors! That is why the agents of the IMF must be run out of Cyprus, along with the representatives of the European Commission and the ECB!

Aside from the obvious risk of growth in unemployment (forecast to reach 19.4% in 2014), Cypriots fear skyrocketing prices, with wages and pensions already reduced by 20% in one year. The people’s mobilisation, practically uninterrupted for months, goes well beyond the industry sectors that are directly concerned.

Rubbish bins brought by the population are piled up in front of bank branches. There are regular interruptions of electrical power and the people are besieging the Parliament and official buildings. All sectors, both private and public, are present around the Parliament, demonstrating their opposition to the Troika’s structural adjustment plan.

The CADTM considers:

  • that the entire debt of Cyprus to the Troika is illegitimate and odious, and must be abolished in its entirety;
  • that the austerity plan imposed by the Troika must be revoked.

The population does not want to pay for the speculators and the wealthiest 1%. International solidarity must organise as soon as possible in support of this exemplary struggle. The CADTM will do all it can.

Translation by Snake Arbusto

Photo : CC – Eu Council Eurozone
Discussion before the meeting begins : Christine LAGARDE, IMF ; Thomas WIESER, President of the EFC (Economic and Financial Committee) and Michael SARRIS, Finances Minister of Cyprus (on the right).

Oct 072013

By Eric Toussaint, CADTM

Translated by Judit Harris, Snake Arbusto and Charles La Via


In 2014, the World Bank and the IMF will turn 70, and in October 2013, they will hold their usual annual meeting in Washington. Many organisations, including the CADTM, are joining together to call for a worldwide week of action against illegitimate debt and international financial institutions, from 8 to 15 October 2013. This article assesses the performance of the IMF and the World Bank, and offers ideas for a new international financial system.

  • 1) Since their creation in 1944, the World Bank and the IMF have actively supported all dictatorships and corrupt U.S.-allied regimes.
  • 2) In flagrant violation of the right of people to control their own destinies, they have trampled on the sovereignty of countless States, in particular through conditionalities they impose on them. These conditionalities impoverish people, increase inequalities, hand the country over to transnational corporations, and modify States’ legislation (profoundly reforming the Labour, Mining, and Forestry Codes, and abrogating collective bargaining agreements) to cater to foreign creditors and “investors.”
  • 3) In spite of having learned of massive misappropriations, the World Bank and the IMF have maintained or increased the amounts lent to corrupt and dictatorial regimes, allied with the Western powers (see the classic case of Congo-Zaire under Marshal Mobutu analysed in the 1982 Blumenthal report).
  • 4) Through their financial support, they aided Habyarimana’s dictatorship in Rwanda until 1992, which enabled a five-fold increase in his army. The economic reforms they imposed in 1990 destabilised the country, and exacerbated latent contradictions. The genocide that had been prepared for since the end of the 1980s by the Habyarimana regime was perpetrated beginning 6 April, 1994, resulting in the death of almost a million Tutsis (and moderate Hutus). Subsequently, the World Bank and the IMF demanded that the new Rwandan authorities reimburse the debt contracted by the genocidal regime.
  • 5) They also supported dictatorial regimes in the other camp (Romania from 1973 to 1982, China from 1980) in order to weaken the USSR before its collapse in 1991.
  • 6) They supported the worst dictatorships up until they were overthrown: Suharto in Indonesia from 1965 to 1998; Marcos in the Philippines between 1972 and 1986; Ben Ali in Tunisia and Mubarak in Egypt until they were overthrown in 2011.
  • 7) They have actively sabotaged progressive experiments in democracy (from Jacobo Arbenz in Guatemala and Mohammad Mossadegh in Iran in the first half of the 1950s and Joao Goulart in Brazil in the early 1960s to the Sandinistas in Nicaragua in the 1980s, and of course including Salvador Allende in Chile from 1970 to 1973. The full list is much longer).
  • 8) The very people who are the victims of the tyrants financed by the World Bank and the IMF are forced by these same institutions to reimburse the odious debts these authoritarian, corrupt regimes have contracted.
  • 9) The World Bank and the IMF have also forced countries that became independent at the end of the 1950s and in the early 1960s to repay the odious debt contracted by former colonial powers when they colonised these countries. This is true, for example, of the colonial debt contracted by Belgium with the World Bank in order to fund its colonisation of the Congo in the 1950s. We must remember that this type of transfer of colonial debt is prohibited by international law.
  • 10) In the 1960’s, the World Bank and the IMF provided financial support to countries like apartheid South Africa under and Portugal, which was keeping colonies in Africa and the Pacific under its yoke despite the fact those countries were under an international financial boycott imposed by the UN. The World Bank has supported a country that annexed another by force (Indonesia’s annexation of East Timor in 1975).
  • 11) On the environmental front, the Bank continues to pursue a productivist policy that is disastrous for people and detrimental to nature. It has also succeeded in being assigned the role of managing the emissions trading market.
  • 12) The World Bank finances projects that flagrantly violate human rights. For instance, many components of the “transmigration” project in Indonesia, which was directly supported by the World Bank, , may be considered to be crimes against humanity (destruction of the natural environment of native peoples, enforced displacement of populations). More recently, the World Bank financed, in its entirety, the ironically-named “Voluntary Departure” operation in the DRC, a severance program that violates the rights of 10,655 employees of Gécamines, the public mining company located in Katanga. These workers have still not been paid their back wages and the compensation required by Congolese law.
  • 13) The World Bank and the IMF contributed to the emergence of factors that caused the outbreak of the 1982 debt crisis : a) the World Bank and the IMF encouraged countries to contract debts under conditions that led to their over- indebtedness; b) they drove, and even forced, countries to remove capital- movement and exchange controls, thereby increasing the volatility of capital and significantly facilitating its flight; c) they drove countries to abandon import substitution industrialisation and replace it with a model based on export promotion.
  • 14) They have concealed dangers such as over-indebtedness, payment crises, and negative net transfers, which they themselves detected.
  • 15) From the start of the crisis in 1982, the World Bank and the IMF systematically supported creditors and weakened debtors.
  • 16) The World Bank and the IMF have recommended, and even imposed, policies that put the burden of debt on common people, while favouring the most powerful.
  • 17) The World Bank and the IMF have attempted to spread an economic model that systematically increases inequalities between and within countries.
  • 18) In the 1990s, the World Bank and the IMF, with the complicity of government leaders, extended structural adjustment policies to the majority of the countries of Latin America, Africa, Asia, and Central and Eastern Europe (including Russia).
  • 19) In the latter countries, massive privatisations have been carried out to the detriment of the common good and have brought colossal wealth to a handful of oligarchs.
  • 20) They have strengthened major private corporations and weakened both public authorities and small businesses. They have exacerbated the exploitation of employees and made their employment more precarious. They have done the same to small businesses.
  • 21) Their self-proclaimed fight against poverty fails to conceal the actual policy that reproduces and aggravates the very causes of poverty.
  • 22) The liberalisation of capital flows, which they have systematically encouraged, has increased the incidence of tax evasion, flight of funds and corruption.
  • 23) The liberalisation of trade has strengthened the strong and weakened the weak. The majority of small and medium businesses in developing countries are unable to withstand competition from large corporations, both in the North and the South.
  • 24) The World Bank and the IMF act in conjunction with the WTO, the European Commission, and willing governments to impose an agenda that is radically opposed to ensuring basic human rights.
  • 25) Since today’s crisis hit the European Union, the IMF has spearheaded the move to impose on the peoples of Greece, Portugal, Ireland, Cyprus, and other countries the same policies that were imposed on the peoples of the developing countries and Central and Eastern Europe in the 1990s.
  • 26) The World Bank and the IMF, which preach good governance in one report after another, are in fact themselves engaged in dubious conduct.
  • 27) The two institutions keep most countries marginalised even though they represent most of its members, preferring to back a handful of governments in wealthy countries.
  • 28) In a nutshell, the World Bank and the IMF are despotic machines in the hands of an international oligarchy (a handful of major powers and their transnational corporations) that enforce an international capitalist system that is detrimental to mankind and the environment.
  • 29) The destructive actions and policies of the World Bank and the IMF must be denounced in order to put to an end to them. The debt these institutions are trying to collect must be abolished, and they themselves must be brought to justice.
  • 30) A new international, democratic financial system must be found as soon as possible to promote the redistribution of wealth and to support people’s efforts to achieve development that is socially just and respectful of nature.

Build a new international financial system

Paths must be chosen that radically redefine the foundations of the international financial system (its missions, operations, and so on.) Let us consider the example of the WTO, the IMF, and the World Bank.

In terms of trade, the new WTO should work to have a series of fundamental international agreements adopted, based on the Universal Declaration of Human Rights and all the fundamental treaties concerning human rights (individual or collective) and environmental rights. Its function would be to supervise and regulate trade so that it would strictly comply with social (International Labour Organisation – ILO conventions) and environmental standards. Such a definition is in direct contradiction with the WTO’s current goals. This obviously implies a strict separation of powers. It is out of the question for the WTO, or for that matter any other organisation, to have its own tribunal. Therefore, the Dispute Settlement System must be eliminated.

The organisation that could replace the World Bank should be highly regionalised (banks in the South could be brought together within it). Its role would be to supply loans with very low or no interest and grants, which could only be given on condition that they be used in strict adherence to social and environmental standards, and more generally, respect of fundamental human rights. Unlike the current World Bank, this new bank which the world needs would not seek to defend the interests of creditors, while forcing debtors to submit to an all-powerful market. Its primary mission would be to defend the interests of the people who receive the loans and grants.

Meanwhile, the new IMF, should recover part of its original mandate to guarantee currency stability, fight speculation, keep watch over movements of capital, and act to prohibit tax havens and tax evasion. To attain this goal, it could assist in the collection of various international taxes by working with national authorities and regional monetary funds.

All these solutions require the development of a coherent international financial system that is hierarchical and has an internal division of powers. The UN could be its cornerstone, provided that its General Assembly becomes the actual decision-making body – which implies eliminating the status of permanent member of the Security Council (and the associated veto power). The General Assembly could delegate specific missions to ad hoc entities.

Another issue that has not yet been sufficiently investigated is that of an international legal mechanism, an international judicial power (independent of the other international bodies) which would complement the existing system, mainly made up of the International Court of Justice in The Hague, and the International Criminal Court. With the neoliberal offensive of the past thirty years, trade law has increasingly overshadowed public law. International institutions like the WTO and the World Bank operate with their own tribunals – the Dispute Settlement System within the WTO and the ICSID within the World Bank, whose role has increased out of all proportion. The UN’s Charter is regularly violated by permanent members of its own Security Council. New zones outside the rule of law have been created (Guantánamo, where the USA denies its prisoners all legal rights). The United States, after having condemned the International Court of Justice in The Hague (where they had been convicted in 1985 of aggression against Nicaragua), refuses to recognise the International Criminal Court. All this is grounds for great concern, and means that initiatives must be taken immediately to bolster an international judicial body.

In the meantime, institutions like the World Bank and the IMF must be held accountable fortheir actions before national jurisdictions |1|, the debts they are trying to collect must be cancelled, and action must be taken to prevent the harmful policies they recommend or impose from being applied.

Translated by Judit Harris, Snake Arbusto and Charles La Via


|1| As of today, there is still no competent international jurisdiction for trying the crimes of the World Bank and the IMF.

Éric Toussaint, doctor of political science, is president of the CADTM Belgium (Committee for the Abolition of Third World Debt, He is the author of The World Bank : A critical Primer, London, Pluto Press, 2008,…

His latest book is Procès d’un homme exemplaire (The Trial of an Exemplary Man), Édition Al Dante, Marseille, September 2013. He is co-author with Damien Millet of Debt, the IMF, and the World Bank: Sixty Questions, Sixty Answers, Monthly Press, New York, 2010…); La dette ou la vie (Debt or Life?) co-published by CADTM- Aden, Liège-Brussels, 2011. Prix du Livre Politique awarded by the Foire du Livre Politique in Liège…

See also Eric Toussaint, doctoral thesis in political science, presented in 2004 at the Universities of Liège and Paris VIII: “Enjeux politiques de l’action de la Banque mondiale et du Fonds monétaire international envers le tiers-monde” (“Political aspects of the World Bank and the International Monetary Fund actions toward the Third World”),…