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”),…

Jul 012013

By Nilton Viana, CADTM

João Pedro Stédile Interviewed by Brasil de Fato

arton9257-a407bBrasil de Fato — It is time for the government to ally itself with the people or pay the price in the future. This is one of the evaluations of João Pedro Stedile, national coordinator of the Movement of Landless Rural Workers (MST) on the recent mobilisations across the country.

According to Stédile, there is an urban crisis installed in Brazilian cities, provoked by the current stage of financial capitalism. “For people, large cities have becoming a living hell where they lose three or four hours a day in transit, which they could instead be using to spend with their family, studying or participating in cultural activities”, he says. For the MST leader, reducing public transport fare prices was of great interest to all the people and this was what the Free Fare Movement got right by calling for mobilisation on behalf of the interests of the people.

In this exclusive interview with Brasil de Fato, Stédile talks about the character of these mobilisations, and puts a call out: we must be conscious of the nature of these protests and go all out onto the street to fight for hearts and minds and politicise this youth who have no experience of class struggle. “The youth are tired of this way of doing bourgeois and money-driven politics”, he notes. And he issues a warning: the worst thing is that the parties of the institutional left, all of them, have adapted to these methods. Old and bureaucratised. Popular forces and leftist parties need to put all their energies to going out onto the street, because in every city, in every protest, there is now an ongoing ideological dispute between different class interests. “We need to explain to the people who are the main enemies of the people.”

Brasil de Fato: What is your analysis of the protests that have shaken Brazil in the last few weeks? What are the economic roots of these events?

Joao Pedro Stédile: There have been many opinions as to why these protests occurred. I agree with the analysis of Professor Erminia Maricato, who is one of our best specialists in urban issues and has worked in the Ministry of Cities under Olivio Dutra. She defends the thesis that there is an urban crisis in Brazil’s cities, a result of the current stage of financial capitalism. Due to an enormous amount of housing speculation, rent and land prices have increased 150% in the last three years. Without any government control, financial capital has promoted the sales of cars in order to send profits overseas and transformed our traffic into chaos. And in the last 10 years there has been no investment in public transport. The housing program “My home, my life” has driven the poor out to the periphery of the cities, where there is no infrastructure.


All this has generated a structural crisis where for people, large cities have becoming a living hell where they lose three or four hours a day in transit, which they could instead be using to spend with their family, studying or participating in cultural activities. Added to this is the poor quality of public services, especially health and education, from the primary and secondary level, where children leave without being able to write. And university education has become a business, where of 70% of university students’ diplomas are sold on credit.

And from the political point of view, why did this occur?

Fifteen years of neoliberalism plus the last 10 years of a government of class conciliation has transformed politics into a hostage of capital’s interests. Parties became old in their way of functioning and have been transformed into mere acronyms that mainly bring together opportunists interested in winning public posts or fighting over public resources for their own interests.

All the young people who were born after the right-wing parties were no longer in government have not had the opportunity to participate in politics. Today, to compete for any public post, for example, to become a local councillor, a person needs to have more than 1 million reales; to become a deputy costs around 10 million. The capitalist pay and the politicians obey. The youth are tired of this way of doing bourgeois and money-driven politics.

The worst thing is that the parties of the institutional left, all of them, adapted themselves to these methods. Which is what has generated repulsion towards the way parties behave among the youth. Young people are not apolitical; on the contrary, they are so much so that they took politics to the streets, even if they were not conscious of what this signified. But what they were saying is that they no longer tolerate seeing these political practices on television, seeing peoples’ votes taken hostage by lies and manipulation.

And why did the protests only explode now?

It was probably more a product of diverse factors regarding the psychology of the masses, than the result of some pre-planned political decision. We have the climate created by everything I have talked about, as well as the denunciations of corruption in relation of the stadiums being built, which was a provocation for the people. For example: Red Globo received 20 million reales of public money from the state government of Rio and the mayor’s office to organise a show of barely two hours around the match draw for the Confederations Cup. The stadium in Brasilia cost 1400 million and there are no buses in the city!

It is an explicit dictatorship that FIFA has imposed and all the government have subordinated themselves to.

The reinauguration of the Maracaná was a slap in the face of the Brazilian people. The photos were clear, in the most important temple of world football, there was not a single black or mestizo person!

And the increase in bus fares was the straw that broke the camel’s back. It was the spark that set alight the generalised sentiment of revolt, of indignation. Finally, the youth have stood up.

Why has the working class still not come out onto the streets?

It’s true; the working class has still not come out onto the streets. Those who have come out onto the streets are the children of the middle class, of the lower middle class and some youth of what Andre Singer calls the sub-proletariat, who study and work in the service sector, who have improved their purchasing power, but who want to be heard.

Reducing the fare was of great interest to all the people, and therein lies the success of the “free fare” movement, which knew how to call protests that were held in the name of the interests of the people. And the people supported the protests, as was expressed in their level of popularity among the youth, above all when they were repressed.

The working class takes it time to mobilise, but once it moves, it directly affects capital. Something that has not happened yet. I believe that the organisations that act as mediators for the working class have still not comprehended the moment we are in and are a bit timid. But I believe that the class, as a class, is also willing to fight. Look at the number of strikes for wage increases which have returned to 1980s level. I think it’s just a question of time, and if the right demands are raised that can motivate the class to mobilise.

In the last few days, we have sensed that in some of the smaller cities and in the periphery of the larger cities, mobilisations with very localised demands have begun to emerge. And that is very important.

And the MST and campesinos also have not mobilised yet …

That’s true. In the capitals where we have settlements and farming families live close by, we are participating. Moreover, I witnessed the warm reception we received when we arrived with our red flag and our demand for land reform and cheap and health food for all. I believe that in the next weeks we could see even bigger numbers joining in, including through staging campesino protests in the streets and municipalities of the interior. Among our activists all of them are going crazy wanting to enter into the fight and mobilise. I hope they are able to move quickly …

What is your opinion as to the origins of the violence that has occurred in some of these demonstrations?

First, we should put this in context. The bourgeoisie, via its television stations, has used the tactic of scaring people by only broadcasting propaganda that shows troublemakers and rioters. They are a minority and insignificant in front of the thousands of people that are mobilising. The right wing has a vested interest in convincing people that all this simply amounts to chaos, and in the end, if there is chaos, put the blame on the government and demand the presence of the armed forces. I hope that the government does not commit the brutish crime of calling on the national guard and the armed forces to repress the protesters. That is exactly what the right is dreaming about!

The scenes of violence are being provoked by the way in which the military police are intervening. There are organised rightist groups that are focused on creating provocations and looting. In Sao Paulo, fascist groups are active in the protests. In Rio de Janeiro, the organised militias that protect conservative politicians are also involved. It is also evident that there is a layer of lumpens that turn up to any popular mobilisation, whether in the stadiums, carnivals, even church parties, and try to make the most of it for themselves.


So we are faced with a class struggle in the streets or are we simply dealing with a youth that it demonstrating its indignation?

It is evident that there is a class struggle going on in the streets, even if for now it is at the level of an ideological dispute. What is worse is that the mobilised youth themselves, due to their class origins, are not conscious of the fact that they are participating in an ideological struggle.

Look, they are doing politics in the best way possible, in the streets. And they are writing on their placards: we are against parties and politics? That is why the messages on their placards have been so widely disseminated. In every city, in every protest, there is a permanent ideological dispute of struggle between class interests. There is a struggle to see if whether the ideas of the left or right will win over the youth. The ideas of the capitalists or the working class.

What are the objectives of the right and their proposals?

The ruling class, the capitalists and their ideological spokespeople whot appear on television every day have one big objective: wear down as much as possible the support for the Dilma [Rousseff] government, weaken the organisational forms of the working class, weaken the proposals for structural changes to Brazilian society and win the 2014 elections in order to reimpose their total hegemony over the command of the Brazilian state which is currently in dispute.

To achieve these objectives they are still testing, alternating their tactics. Sometimes they provoke violence in order to distract from the objectives of the youth. Sometimes they put messages on the placards of the youth. For example, in the demonstrations on June 22, even if small, in Sao Paulo it was totally manipulated by rightist sectors who put forward a sole focus on the struggle against PEC 37 [a proposal to amend the constitution and remove the power of the public ministry to investigate crimes], with the same placards … the exact same placards. No doubt the majority of the youth did not know what this was about. And it is a secondary issue with the working class, but the right wing is trying to raise the banner of morality, just like the National Democratic Union did in times gone by.

I have seen in the social media networks controlled by the right, that its banners are, as well as PEC 37: Expel Renan from the Senate, CPI [Commission of Parliamentary Inquiry] or transparency in spending on the World Cup; declare corruption to be a grave crime and put an end to the special protections for politicians. The fascist groups are already saying Dilma Out! and raising a number of accusations. Happily, these issues have nothing to do with the living conditions of the masses, even if the corporate media can manipulate them. And objectively, that are a shooting themselves in the foot. In the end, it is the Brazilian bourgeoisie, its business owners and politicians who are the most corrupt and corrupting. Who has appropriated the exaggerated spending on the World Cup? Red Globo and the contractor companies!

What are the challenges facing the working class, popular organisations and left parties?

There are many challenges. First, we must be conscious of the nature of these demonstrations and all go out onto the streets to fight for hearts and minds and politicise this youth that has no experience in the class struggle. Second, the working class needs to mobilise. Come out onto the streets, protest in the factories, farms and construction sites, as Geraldo Vandré would say. Raise their demands in order to resolve concrete problems of the class, from the political and economic viewpoint.

We need to take the initiative and guide public debate towards demanding the approval of laws to reduce the working week to 40 hours; demand that the priorities for public investment be health, education, land reform. But to do this the government must reduce interest rates and reallocate the resources from the primary surplus, those 200,000 million that each year go to only 20,000 rich people, rentiers and creditors of an internal debt that we never contracted, and reallocate them for productive and social investment.

It must approve an emergency decree so that for the next election a progressive political reform has been put in place, one that as a minimum institutes exclusive public funding for campaigns, the right to recall elected officials and the ability for the people to convoke popular referendums.

We need tax reform so that once again ICMS [a state sales tax] is paid on primary exports and the wealth of the rich is penalised while taxes are reduced for poor, who currently are the ones who pay more.

We need the government to suspend the auctioning off our oil and all private concessions for minerals and other public areas. There is no point investing all the royalties from oil in education if those royalties only represent 8% of the oil rent, and the remaining 92% goes to the transnational companies that will get control over the oil in these auctions!

A structural urban reform that once again prioritises quality and free public transport. It has already been proven that it will not be expensive or difficult to introduce free transport for the people in the capitals. And control housing speculation.

And finally, we need to make use of and approve a project for a national conference on media and communication, one that is broadly representative, to discuss democratising the media. To put an end to Globo’s monopoly, and ensure that the people and its popular organisations can have wide access to means for communication, to create their own media with public resources. I have heard from a diversity of youth movements that are organising the marches that perhaps this could be the one issue that unites them all: down with Globo’s monopoly!

But for these issues to reverberate more broadly in society and put pressure on the government and the politicians, we nee to mobilise the working class, this is the only way.

The social movements sent a letter asking to meet with President Dilma and she accepted and responded on television, what issues are you going to take to her?

I have faith that the meeting will happen soon. And there all of the social movements will send their young representatives that where in the streets, and will bring along a platform like the one I outlined. I hope that she has the sensibility to listen to the youth.

What should the government do now?

I hope that the government has the sensibility and intelligence to make use of this support, this clamour that is coming from the streets, which is simply a synthesis of a consciousness that exists more broadly in society that it is time to change. And change to benefit the people. For this, the government needs to confront the dominant class, in all aspects. Confront the rentier bourgeoisie, reallocating interest payments to investment in areas that resolve the problems of the people. Promote as soon as possible political and tax reforms. Sent in motion the approval of a law to democratise the media. Create mechanisms for massive investment in public transport, with the aim of making it free. Speed up land reform and a healthy food production plan for the internal market.

Guarantee the shift application of 10% of GDP towards public resources for education at all levels, from childcare centres in the big cities, quality primary education all the way to the universalisation of access to public university for young people.

Without this, people will feel deceived, and the government will have handed over the initiative over demands to the right, which will lead to new protests aimed at wearing down support for the government up until the 2014 elections. It is time for the government to align itself with the people, or pay the price in the future.

And what perspectives could these mobilisations bring for the country in the next few months?

Everything is still unknown. Because the youth and the masses are in dispute. That is why popular forces and leftist parties have to put all their energies towards coming out onto the streets. Protest, push to raise as banners of struggle demands that are in the interests of the people. Because the right will do the same, raising its conservative, backward demands of criminalisation and stigmatisation of the ideas of social change.

We are in the midst of an ideological battle, one which no one knows what the result will be. In each city, each protest, we need to fight for hearts and minds. And those that remain on the sideline, will be sidelined in history.

Translated for Links International Journal of Socialist Renewal by Federico Fuentes

Apr 072013

By Marie Dufaux, Eric Toussaint, CADTM


This is a historical moment. On 23 and 24 March 2013, a coalition of left secular Tunisian political parties (in which there are 11 political formations) organised a meeting of Mediterranean region progressive parties to call for the abolition of the odious and illegitimate debts of Northern and Southern Mediterranean countries. Two half-days of debate produced a final declaration and were followed by a grand public conference bringing together over one thousand people and all the strength of the left-wing groups united for a common cause. |1|

Below are highlights of Eric Toussaint’s speech at this first Mediterranean coordination meeting against debt, austerity policies, and foreign domination, and for a free, united, democratic, social, solidarity-based, feminist, and environmentally responsible Mediterranean region.

Eric Toussaint, President of CADTM Belgium stressed that this budding political alliance is the continuation of the struggle initiated by Thomas Sankara, President of Burkina Faso, who was assassinated on the 15 October 1987, after he called on the people of Africa and the rest of the World to unite in a common combat for the non-payment of the illegitimate debt. It also extends the struggle of the martyrs of the Arab Spring, including Chokry Belaid, assassinated on 6 February 2013, not to forget Ahmed Ben Bella, the first President of independent Algeria, who died in April 2012, |2| and who, towards the end of his life, had made the abolition of illegitimate debt one of his principal struggles.

This new coordination is facing another major challenge. All too often, left-wing parties limit their engagement to a radical denouncement of illegitimate debt without giving the question further importance in their day to day public activities. Once they start to approach positions of power, some of them abandon their promises to put an end to illegitimate debt, and end up agreeing with the terms of repayment.

Eric Toussaint presented the initial definition of odious debt as debt taken on by a dictatorial regime such as that of Ben Ali. According to international law, when such a regime falls, the part of the debt that is odious falls with it, and therefore should not in any case be repaid. Of course, we must often fight for international law to be respected. To achieve this goal, only a strong social movement can convince a government to suspend payments and repudiate odious debt. It is therefore essential to create a favourable balance of power in order to defy the creditors.

Today, international law defines odious debt in terms of three criteria: |3|
the non-consent of the people in the indebted state;
the lack of advantages for the people in the indebted state;
the creditors were aware that the loans they consented were not in the interest of the people and were not approved by them.

The debt “owed” to the Troika (European Central Bank, European Commission and the IMF) by countries like Greece, Ireland, and Portugal should be denounced because it corresponds to these criteria: 1. The people in the countries concerned did not give their consent, and many governments elected on anti-austerity programmes bend to the will of the Troika once they are in power; 2. This debt is not favourable to the people, on the contrary, it is linked to violations of their economic, social, and civil rights (reductions in social services and wages, large scale lay-offs, difficulty in gaining access to health services and education, repeal of collective bargaining agreements, disregard for the democratic choices made by electors, legislative power that bows down to the executive); 3. The creditors (the Troika and bankers), know perfectly well that the loans they advance are not in the interest of the people, because they are made in order to pay off the debt and in exchange for drastic austerity measures. It is the Troika itself that imposes these violations of human rights and dictates its conditions to governments and parliaments of indebted countries.

As for the governments that have come into power since 2011 after the dictators Ben Ali and Mubarak, they have themselves taken on new debt, which is much more to the advantage of the creditors than to the people. This is done to pay back the odious debts inherited from the previous dictatorial regimes and to pursue policies weakening their countries. Therefore, this new debt is also odious.

Tunisia and Egypt are currently negotiating new arrangements with the IMF. |4| This is a fruitless process. If these loans are granted, they will be illegitimate for at least two reasons: they will be used to continue making repayments on inherited odious debt, and they will be linked to policies that are contrary to the interests of the people in these countries.

Other elements that may make a debt illegitimate

On the one hand, the debt may be the consequence of unjust fiscal policies. In real terms, states accord fiscal advantages to big (national and international) companies and the wealthiest households, this reduces tax revenues and deepens public budget deficits. These practices increase public debt, because the governments must again borrow in order to finance their budget. Debt taken on in these conditions is illegitimate to begin with because it is socially unjust.

On the other hand, it may derive from bank bail-outs. Since 2007, governments of the most industrialised countries have flown to the assistance of private banks, that are responsible for the crisis, injecting billions of euros into their capital and/or providing other guarantees. Any debt taken on to finance these bail-outs is equally illegitimate.

Creditors and governments maintain that debt must always be repaid without questioning its origins, even if they are illegitimate. Then they justify the imposition of anti-social austerity policies by insisting on the effort necessary to balance the budget. It is within this context that a growing percentage of the people in Mediterranean countries (and beyond) are rejecting the repayment of illegitimate debt. In some countries (Tunisia, Greece, Portugal, Spain, and France) citizens audits have been called for in order to identify the illegitimate part of public debt. They are seeking to establish how, why, and by whom the debt was taken on, and if it has really been used in the interest of the people. These citizens audit committees are seeking to convince as many people as possible that illegitimate debt must be repudiated.

Saying “NO” to the Creditors

It is possible and necessary to defy the International Financial Institutions and the Troika, to refuse the diktats of the private creditors in order to create leeway for improving the situation of a country and its people. As we can see in the following examples of several countries that have dared to say “No” to their creditors, it is worth being adamant.

Argentina’s suspension of debt repayments

At the end of December 2001, after three years of economic recession (1999 – 2001) and pressure from a massive popular rebellion that caused the fall of President De La Rua, Argentina decided to suspend payments, amounting to about $90 billion. This represented an important portion of its commercial debt.

Part of the money freed up was reinvested in the social sector, particularly in benefits paid to unemployed ’Piqueteros’. Some would claim that the real reason why Argentina recovered as of 2003-2004 is only because of the increase in the prices of its exports.

This affirmation is, however, false, because if Argentina had not suspended its debt repayments, the revenue from exports would have been swallowed up by them. The government would not have had the means necessary to stimulate economic activity. In addition, thanks to this suspension of payments that lasted until March 2005, Argentina was able to impose a 50% reduction of this debt on its creditors.

The CADTM, as well as numerous social movements and leftist parties proposed to Argentina to abolish, not only the debt that concerned private creditors, but also the IMF and other public creditors. The Argentine government did not follow this recommendation.

It is important to note that Argentina has also suspended payment of $6.5 billion to the Paris Club since 2001. So we see that twelve years later Argentina is still holding out against the Paris Club. In spite of the 44 law suits brought before the World Bank and recent threats of expulsion from the IMF, Buenos Aires maintains its position. Argentina has not borrowed on the financial markets since 2001, but the country continues to function!

The Argentine experience must not be misinterpreted. It is not to be taken as an example, and we always need to adopt a frankly critical point of view. The Argentine government has maintained Argentina within the bounds of capitalism, no structural reforms have been undertaken, Argentine economic growth is largely based on the extraction and the exportation of primary products (genetically modified soya beans, ores,…). Nevertheless, what Argentina has demonstrated is that saying “No” to the creditors is possible. Elsewhere, an authentic left-wing government could go much further on the basis of this precedent.

Ecuador: audit and suspension of payment

Ecuador gives us another example. In July 2007, seven months after his election, the Ecuadorian President Raphael Correa decided to instigate an audit of the country’s debt and the conditions in which it was contracted. An audit commission, made up of 18 experts including the CADTM, was created for this purpose. Its final report was presented after 14 months of investigation. It showed in particular that numerous loans had been contracted in violation of basic rules. In November 2008, the new administration, on the basis of this report decided to suspend the repayment of bonds payable in 2012 and 2030. Finally, the government of this small country came out on top in the tussle with North American bankers and those holding Ecuadorian securities. It repurchased bonds for less than $1 billion, which had a nominal value of $3.2 billion. Public finance thus saved $2.2 billion dollars of debt stock to which must be added $200 million a year (between 2008 and 2030) in interest payments. This allowed the government to allocate more means to social projects in health, education, social assistance, and communication infrastructure development. The Ecuadorian constitution now prohibits private debt from being transformed into public debt and illegitimate debt from being contracted. |5|

In addition, Ecuador no longer recognises the World Bank’s jurisdiction in international disputes court. It has rejected free trade treaty propositions from the US and UE. The Ecuadorian President has announced his intention to audit the current bi-lateral investment treaties. Finally, the Quito authorities have put an end to the US military presence on its territory.

In the case of Ecuador, we must again be careful not to hold up this ongoing experience as a model to be emulated. Critical analysis remains indispensable. Nonetheless, the Ecuadorian audit and unilateral suspension of payments experience shows that saying “No” to creditors is perfectly possible, and there are advantages to be gained in terms of making more means available for public health, education, and other sectors.

Iceland’: refusal to pay the demands made by the Netherlands and the UK

After its banking system collapsed in 2008, Iceland refused to compensate the British and Dutch savers who had put deposits amounting to €3.9 billion into subsidiaries of Iceland’s failed private banks. The British and Dutch authorities covered the losses to their citizens and presented the bill to Iceland. Under popular pressure (demonstrations, occupations, and referendums), the Reykjavik authorities refused to pay. Britain put Iceland on its terrorist list, froze its assets and, in conjunction with the Netherlands, sued Iceland the EFTA court. |6| Meanwhile, Iceland has completely blocked the outflow of capital. In the end, Iceland is faring better than the other European countries that accepted the conditions imposed by creditors. Here again we must not present Iceland as a model to be imitated, but learn from its experience.

These examples demonstrate that saying “NO” to creditors leads neither to catastrophe nor to the collapse of a country.

We must also recall that these experiences were preceded or accompanied by a popular movement that put pressure on the governments concerned. It is therefore important, as Eric Toussaint reminded us, that knowledge of this at times, complex question must conveyed to the whole of the population. The task of a public audit is to raise public awareness. The illegitimacy of public debt must become visible to the majority of people.

To conclude this workshop, Eric Toussaint repeated that the above examples are not to be taken to as political models to be followed, but that these experiences are a source of important political lessons!

Translation : Mike Krolikowski and Charles La Via



|1| See Pauline Imbach, “Tunis: Birth of a Common Front of Political Organisations Against Debt”,…, published 25 March 2013.

|2| See Eric Toussaint, “Remembering Ahmed Ben Bella, first President of independent Algeria who passed away on the 11th April, 2012 at 96”,…, 12 April 2012.

|3| See CADTM,, and in particular Stéphanie Jacquemont, “Que retenir du rapport de l’expert de l’ONU sur la dette et les droits humains ?”,… , 25 January 2013 (articles in French only).


|5| See Eric Toussaint, “La Constitution équatorienne : un modèle en matière d’endettement public”,… , 27 December, 2010 (in French only).

|6| The EFTA (European Free Trade Association) court, which is in no way a progressive organisation, has judged in favour of Iceland’s position. See CADTM, “EFTA court dismisses ’Icesave’ claims against Iceland and its people”,…, 29 January 2013.

Mar 202013

By Renaud Vivien and Cécile Lamarque, CADTM


There are several legal arguments on which a suspension, or even a cancellation, of repayment of public debts can be based. In order to establish the invalidity of a loan agreement it is necessary to take into account not only the dispositions of the agreement but also the circumstances in which it was signed and the actual use of the borrowed money |1|. It will obviously be necessary to audit the debt to shed light on those various elements. Governments that wish to reduce their debts can use arguments from public international law, among which are those appearing below, in order to find legal grounds for cancellation/repudiation of part of their public debt |2|.
Defects of consent

The 1969 Vienna Convention on the law of treaties and the 1989 Vienna Convention on the law of treaties between States and International Organizations point to various defects of consent that can result in the loan agreement being void, among which are included:

absence of competence in a contracting party |3|. For instance, this violation was the legal motivation for Paraguay repudiating a debt amounting to USD 85 million in 2005. Indeed the Consul of Paraguay in Geneva who had signed the loan in the name of its government had no legal power to contract a loan with the private bank Overland Trust Bank |4| ;

direct or indirect corruption of a contracting party during negotiations |5|. An example could be contracts signed between Greece and the TNC Siemens, which has been charged by the German and Greek justice with paying Greek political, military and administrative officers commissions and bribes amounting to about one billion euro ;

coercion |6| through acts or threats of a contracting party. Coercion was used by the French in 1824 to force Haiti to pay a colossal ransom for the recognition of its independence. To this end thirteen French vessels with 494 cannons surrounded the island’s coasts with clear instructions: in case of refusal ports were to be closed by force. Coercion also raises the issue of a political balance of power that is favourable to creditors. Indeed when there is a lack of balance beteween the contracting parties, debtors’ freedom to negotiate is restrained, while creditors can have their way. This is how in 2010 the Greek government was under the pressure of the French and German authorities that wanted to guarantee their arms exports. The military-industria lobby managed to maintain an almost intact defence budget while the PASOK government agreed to major cuts in social expenditure ;

fraud |7|. If a State was led to contract a loan through the fraudulent conduct of another State or of an international organization that participated in the negotiations, it can point to fraud as invalidating its consent to be bound by the said contract. We can describe as fraudulent the acts of the IMF and of the World Bank considering the abyssal gap between their discourse and reality. Indeed in article 1 of its statutes the IMF defines one of its main purposes as to facilitate the expansion and balanced growth of international trade, and to contribute thereby to the promotion and maintenance of high levels of employment and real income and to the development of the productive resources of all members as primary objectives of economic policy |8|. In fact this institution, in coordination with the WB, does exactly the opposite and thus violates its own statutes. Unemployment steadily increases as a consequence of implementing measures that were recommended by the IMF and/or the WB. We can also notice a frequent diminution in the incomes of wage earners, small producers and the lower middle class. Not to mention widening social discrepencies in most countries where these institutions have been active |9|.

Illicit or immoral cause of the contract

This legal ground can be found in the civil or commercial national law of several countries. Among the illicit or immoral causes invalidating a loan contract we find:

the acquisition of military equipment. Article 26 of the 1945 Charter of the United Nations specifies that States have to regulate arms trade and limit to a minimum the resources they dedicate to military expenditure. Now we know that military expenditure increases globally year after year in violation of the UN Charter;

tied aid. Confronted as they were with massive recession and unemployment in the 1970s, rich countries decided to give purchasing power to the countries of the South so as to prompt them to buy goods produced in the North by granting them state to state loans, often in the form of export credits: this is called tied aid. For the borrowing countries it results in a significant increase in the cost of purchased goods and services and higher levels of indebtedness. According to a survey by the WB, from 1962 to 1987 African countries paid more for imported steel products than industrialized countries (up to 23 % more in the case of France ). This practice is all the more illegitimate as in most cases those tied loans do not meet the actual needs of the country but the commercial interests of the creditor. This motivated Norway to unilaterally and unconditionally cancel the debts of five countries, namely Ecuador, Egypt, Jamaica, Peru, and Sierra Leone in 2006 ;

The example of Norway

On 2 October 2006, during a press conference in Oslo, the Norwegian minister for international development, Erik Solheim, announced the unilateral and unconditional cancellation of debts owed by the five following countries: Ecuador, Egypt, Jamaica, Peru, and Sierra Leone, thus ackowledging Norway’s responsibility in their illegitimate debt. These cancellations amounted to about USD 80 million |10|. The decision was motivated by the fact that ‘the claims derived from a failed development project – the Ship Export Campaign of the late 70’s’: This campaign represented a development policy failure. As a creditor country Norway has a shared responsibility for the debts that followed. In cancelling these claims Norway takes the responsibility for allowing these five countries to terminate their remaining repayments on these debts |11|. For the first time in history, a country of the North admitted to being responsible for inadequate loan policy and took measures to remedy what had occurred. The decision represented a break with today’s tacit consensus within the Paris Club. Norway’s move is a significant step towards the recognition of creditors’ responsibility in the process of illegitimate debts. │

financing conditioned to structural adjustment. As claimed by special rapporteur Mohammed Bedjaoui in his draft article on succession in respect of State debts for the 1983 Vienna Convention: From the standpoint of the international community, an odious debt could be taken to mean any debt contracted for purposes that are not in conformity with contemporary international law and, in particular, the principles of international law embodied in the Charter of the United Nations |12|. In this respect multilateral debts contracted in the context of structural adjustments are odious and therefore illicit debts since the damaging nature of such policies has been abundantly shown, notably by UN bodies. Conditionalities atached to these debts manifestly violate various texts on protection of human rights. Surrender of the sovereignty of States is further aggravated by dispositions in most international loan contracts that stipulate that jurisdictions in the North are competent and that rules favourable to creditors have to be applied in case of dispute among contracting parties. In Ecuador the Commission of integral audit of public debt (CAIC) highlighted that the enforcement of policies by the World Bank and other multilateral institutions via programmes they have financed and conditionalities attached to loans means denying state soveneighty and interfering into its internal affairs. Many multilateral loans also violate economic, social and cultural rights. In its recommendations the CAIC proposes to stop paying several debts cliamed by multilateral institutions ;

projects that are either unprofitable or detrimental to populations or to the environment. Included amongst these projects are « white elephants », such as the Inga dam in the DRC (ex-Zaïre) which has been of no benefit to the population whatsoever: to date, less than 10 % of the Congolese population has access to electricity. Examples of debt generating projects are equally common in the north. We can cite the scandal of the 2004 Olympic games in Greece, to name but one. Although the Hellenic authorities foresaw expenditure in the range of 1.3 billion dollars, the cost of these games in fact exceeded 20 billion dollars ;

private debt transformed into public debt. The financial crises which occured during the 90s in south east Asia, Equador, Argentina, Brazil and Russia originated from measures extolled by the World Bank and the IMF, who impose the deregulation of the financial system and the prohibition of State control of the movement of capital. The result is that as a consequence of the reduction in the profits perspective, foreign capital has fled from these countries, causing a chain reaction of bankruptcy of banks. The debts of these private banks then became the public debts of States under the impetus of those responsible for these crises: the World Bank and the IMF. The world crisis, which erupted in 2007, aggravated the situation with regard to public finances and accrued the level of public debt (mainly in the north), so that banks in the north intervened in order to save the banks that had gone into bankruptcy. The cause of this public indebtedness in the south and in the north (linked to the nationalisation of debts in the financial sector) is, at the very least, immoral, given that those directly responsible for these crises are international financial institutions and private banks. The staggering increase of this public debt is also the result of neoliberal politics practiced during the 80s and 90s, the main characteristics of which were to reduce the taxes of the rich and of large companies. The State revenue was no longer sufficient and it was necessary to resort to public debt in order to finance the State’s expenditure. In Equador the CAIC condemned the transfer of private debts to the State, which occured in 1983 and 1984 under pressure from the IMF and the World Bank, while the country was crippled by a severe financial crisis. After this operation, which was extremely damaging to the nation, was made public, the new Constitution of Equador, adopted in September 2008, expressly forbade the transformation of private debts into State debts ;

the repayment of old illegal loans. According to the judicial argument regarding continuity of an offence, an illicit debt does not cease to be illegal following a renegotiation or restructuration process. To this effect, it retains its original vice and the offence lasts through time. Consequently, all public loans aimed at repaying old illegal debts are themselves illicit. The debt audit will allow light to be shed on the original illegal debt. For example, the argument of continuity of an offence has been used by the Audit commission in Equador (CAIC) to denounce the numerous irregularities (since the socialisation of private debts, of the Brady Plan |13| and of the restructuration of debts… |14|) which has led to the issuing of bonds for the commercial debt. Based on the audit results, the Equadorian authorities refused to pay this commercial debt to private international banks (« Global 2012 and 2030 » bonds). In June 2009, after a showdown with the bankers who held the titles of the Equadorian debt, the holders of 91% of the bonds in question accepted their repurchase by Equador at a reduction of 65% of the nominal value;

the repayment of debts already paid. The obligation of a state to honor its debts is notably limited by broad legal principles, such as equity, good faith, abuse of rights or the accumulation of wealth without cause. Yet the debts of developing countries have been repaid several times over: according to the statistics provided by the World Bank, the governments of developing countries have already repaid the equivalent of 98 times of what they owed in 1970, but in the meantime their debt has been multiplied 32 times. This implies that developing countries have the right to repudiate their debt and reclaim what has been unduly taken by their debtors, on the basis that they have been accumulating wealth without cause. This is also the stance taken by several national civil codes: the Argentinian civil code in articles 784 and those following, the Spanish civil code in articles 1895 and those following, the French civil code in articles 1376 and those following. Developing countries, but also countries in the north, are trapped in a vicious circle in which they borrow each year in order to be able to meet their repayments. This situation is namely the consequence of the brutal and unilateral increase in interest rates by the United States in 1979, the application of usurious interest rates or of the capitalisation of interest (anatocism), which is moreover prohibited or strictly controlled in several national judicial orders, for example in Équador, France, Italy, Germany…

Illicit use of lent money

The destination of borrowed funds is a determining factor when it comes to deciding on the legality of a debt. For this it is necessary to examine the nature of the lending regime, its behavior in terms of human rights, as well as the actual allocation of these funds. To this effect the following cases are deemed to be illegal:

 debt born of colonialisation. During the 50s and 60s the World Bank granted several loans to colonial metropolis nations, such as Belgium, France, Portugal and Great Britain, for projects that permitted them to maximize the exploitation of their colonies. The majority of these debts of colonial power issued by the World Bank were subsequently transferred to the ex colonies at the moment of their independence in the 60s, without their consent. Yet these debts arising from colonialization are void in the eyes of international public law. The Treaty of Versailles of 1919 states in article 255 that Poland is exonerated from paying « the fraction of the debt of which the Reparation Commission attributes the origin to measures taken by the German and Prussian governments for German colonialization of Poland ». A similar stance was taken in the 1947 peace treaty between Italy and France, which declares « inconceivable that Ethiopia should take on the burden of debts contracted by Italy in order to assure her domination of the Ethiopian territory ». Article 16 of the Vienna Convention of 1978 which governs the law of the Treaties does not say anything different : « A newly independent state is not under obligation to maintain a valid treaty nor to be party to it merely because on the date of succession of States the treaty was valid with regard to territory referred to in the succession of States» ;

 loans granted to dictatorships. The dictatorial nature of a regime under which a debt has been contracted allows its repayment to be challenged, even if the State representative who has concluded the loan had the competence to do so, by virtue of internal state law. In effect, in international law, debts contracted under dictatorships take on the qualification « odious debt », according to the doctrine of the same name written by Alexander Sack in 1927 : « If a despotic power contracts a debt not for the needs and in the interests of the State, but in order to strengthen his despotic regime, to repress the population combatting it, etc, that debt is odious for the population of the entire state […]. This debt is not obligatory for the nation, it is a regime debt, a personal debt of the power that has contracted it, consequently it falls along with the fall of this power ». Alexander Sack adds that when the creditors of such debts are aware of the cause they are lending for, they « have committed a hostile act towards the people ; they cannot therefore assume that a nation liberated from a despotic power will take on the « odious » debts that are the personal debts of this power |15| ». The doctrine of the odious debt therefore gives scope for invalidating several loans such as those contracted by dictatorships in Latin America from the 60s to the 80s, in Africa, with the emblematic case of Mobuto’s Zaire (1965-1997), by former Soviet bloc regimes such as the dictatorship of Nicolae Ceaucescu in Roumania, the dictatorships of South East Asia and the Far East (Ferdinand Marcos from 1972 to 1986 in the Philippines, Mohamed Suharto from 1965 to 1998 in Indonesia, dictatorial regimes in South Korea between 1961 and 1981, in Thailand between 1966 and 1988), the military junta in Greece from 1967 to 1974, the dictatorships in North Africa which fell at the beginning of 2011, such as that of Zine el-Abidine Ben Ali in Tunisia (1987-2011) and Hosni Moubarak in Egypt (1981-2011). Commenting on this doctrine of odious debt, legal counsellors of the First National Bank of Chicago point out that « the consequences for the loan agreements of a change of sovereignty partly depend on the use of the funds by the former State. If the predecessor’s debt has been qualified as « odious », in other words, if the funds have been used against the population, the successor cannot be made responsible for the debt » and adds that « commercial banks have to be on their guard about this doctrine [...] because succeeding governments have invoked doctrines based on the « odious » or « hostile » use of funds. The lenders should describe in detail the use to which the lent funds shall be put and, as far as possible, involve the beneficiary in the representation, guarantee and surveillance of the use of said funds |16| » ;

 loans to supposedly “democratic” regimes which violate jus cogens . All debt contracted by governments violating the imperative norms of international law as per jus cogens are also null and void, without it being necessary to prove that the creditors intended to become complicit in the exactions of these regimes. This assertion is upheld by the Vienna Convention on the 1969 Law of Treaties, which, in its Article 53, provides for the nullity of acts contravening jus cogens, bringing together, amongst others, the following norms: the prohibition of waging aggressive war, the prohibition of practicing torture, the prohibition of committing crimes against humanity, and the right of peoples to self-determination. As such, any loan granted to a regime that does not respect the fundamental principles of international law, whether democratically elected or not, is null. For example, we can cite the regime of Apartheid in South Africa or the Israeli Government. In this case, the destination of the loan is not requisite in classifying the debt;

loans misused with the complicity of the creditors. The Odious Debt Doctrine also touches on this category: “loans incurred by members of the government or by persons or groups associated with the government to serve interests manifestly personal — interests that are unrelated to the interests of the State.” Indeed, “debts must be contracted and the ensuing funds must be used for the needs and in the interests of the State.” In order to illustrate this aspect of the doctrine, we can cite the arbitral award handed down in 1923 in a case between the United Kingdom and Costa Rica. In 1922, Costa Rica enacted a law annulling all contracts passed by the former dictator Federico Tinoco between 1917 and 1919, and thus refused to honor the debt that it had contracted from the Royal Bank of Canada. This was therefore a case in which the doctrine was applied to a commercial debt. The ensuing dispute between the UK and Costa Rica was arbitrated by the President of the Supreme Court of the United States, Justice William Howard Taft, who declared that the decision of the Government of Costa Rica was valid, highlighting: “The case of the Royal Bank depends not on the mere form of the transaction but upon the good faith of the bank in the payment of money for the real use of the Costa Rican Government under the Tinoco regime. It must make out its case of actual furnishing of money to the government for its legitimate use. It has not done so. More recently, the CAIC in Ecuador demonstrated that certain loans had been deviated from their original “development” aims. Indeed, three loans from the Inter-American Development Bank (IDB), which were supposedly intended to benefit the agricultural, financial and transport sectors, were partially used to purchase Brady Bonds.

For unilateral action against illegitimate debt

There is no absolute obligation to repay debts under international law. By contrast, international law does require state authorities to protect human rights as a priority. Given the burden of sovereign debt and the impact of austerity measures on the populations of the Global North and South, governments must use their right to unilaterally suspend the repayment of their national debt, following the example of Argentina (in 2001), and Ecuador (in 2008); the latter having done so partially. During this period of debt-payment suspension (with a freeze on interest rates), it would be in the interest of these governments to audit their sovereign debt, both internally and externally, in order to identify any irregularities tarnishing loan contracts. They can then call upon the provisions of public international law (amongst others) in order to unilaterally declare the nullity of any illicit debts, as Paraguay did recently, in 2005. This example is not an isolated case. Throughout history, many governments have refused to repay debts inherited from preceding regimes, arguing that this debt was only bound to the regime in question, and not to the State |17|.

These unilateral actions do not contravene international law, as the sovereign decision to annul/repudiate debt does, indeed, come under the category of unilateral actions, which are sources of international law and can be used against creditors |18|. The CADTM is, of course, in favour of this type of unilateral action to protect human rights.

In this respect, initiating international arbitration on debt is not desirable. Indeed, this mechanism can only be fair and effective if human rights take precedent over creditors and if the people are not confined to the simple role of “witness”. However, the current political balance of power in favour of creditors threatens being detrimental to the peoples of the Global South and North. The rules of procedure underpinning arbitration and subsequent rulings are the result of negotiations between creditors and debtors. In this context, the legal notions that we have put forward would certainly not be accepted by the majority of creditors. We will, of course, recall the hostility of the World Bank toward the Odious Debt Doctrine in its report published in September 2007, entitled “Odious Debt: Some Considerations |19|.” The same is true for other legal arguments such as the unfounded accumulation of wealth, wilful misrepresentation, the misuse of powers, equity, good faith, etc.

Beyond the controversy over the notions of “odious debt” and “illegitimate debt,” the quasi-general hostility of creditors toward establishing a link between debt and human rights should be noted. Here we can refer to an interview with the current UN Independent Expert on Foreign Sovereign Debt, held in 2009: “the States of the North believe that the debt problem is in no way related to human rights, that it is purely economic, and that it should therefore be dealt with outside of the Human Rights Council and the UN General Assembly […] The opinions of the officials of the World Bank with whom I have consulted differ on this matter. Some categorically refute a human-rights-based approach in order to only consider the economic aspects of debt |20|.”

Therefore, if an arbitration action were to be initiated, the people would certainly be the losing party. This is because, on the one hand, the ensuing ruling would risk legitimising debts classified as “odious” and “illegitimate” by the social movements or governments that had identified them as such via an audit. The government of the indebted country would then be bound by the ruling and thus have to repay these debts to the detriment of the fundamental needs of its population. On the other hand, these rulings would constitute international jurisprudence, which would serve as a source of inspiration when ruling on future actions. When applied in this way, to the benefit of creditors owing to the current political balance of power, these rules would not favour “responsible” lending policies.

For all of these reasons, it would therefore be in the interest of these governments to take immediate, unilateral action on debt. This aligns with the example of the jurists in attendance at the 1st International Conference of Jurists held in Quito in 2008: “We support the sovereign actions of States which, on legal grounds, declare the nullity of illicit and illegal national debt instruments and with it the suspension of payments. |21|” The classification used (“illicit debt” or “illegitimate debt”) is of little relevance, we call on all borrowing governments, and also lending governments, to repudiate/annul all debts and austerity policies that are not in the interests of the population.

This is why the CADTM is also encouraging legislative initiatives and referendums against laws, regulations or agreements that are contrary to popular sovereignty or the respect of fundamental rights, whether these are currently in force or under negotiation. Public consultations on the non-repayment of a debt, similar to the referendum held in Iceland on the “Icesave” Act , are another example of the mechanisms that must be promoted and of which the results must be heeded by state authorities |22|.



|1| The consequences of re paying debts on human rights can be called upon to suspend repaying debts up to declaring some debts void.

|2| We must be aware that States can also use their own (public and private) law, which is not discussed here.

|3| Article 46 of the 1969 and 1986 Vienna Conventions.

|4| See Hugo Ruiz Diaz, ‘La dette du Paraguay auprès des banquiers privés : un cas de dette odieuse,’ 2nd section in ‘L’audit citoyen de la dette : un instrument de démocratisation des relations économiques et de contrôle démocratique des actes des gouvernements,’…
Article 50 of the 1969 and 1986 Vienna Conventions.

|5| Article 50 of the 1969 and 1986 Vienna Conventions.

|6| Article 51 of the 1969 and 1986 Vienna Conventions. Article 52

|7| Article 49 of the 1969 and 1986 Vienna Conventions.

|8| See…

|9| Éric Toussaint, The World Bank, a never ending coup d’état, VAK, Mumbai, 2007

|10| Contrary to current practice, this has fortunately not been included in the accounts of the Aid to Public Development (APD).

|11| See article, ‘Why Norway took Creditor Responsibility – the case of the Ship Export campaign’, written by Kjetil G. Abildsnes, March 2007.…

|12| Mohammed Bedjaoui, Ninth report on succession in matters other than treaties, Definition of an odious debt, 129,….

|13| In May 1989 the United States renouced the Baker plan (the call to private banks to finance only « well reputed » countries, to the advantage of the Brady plan which consists of reducing the debt, namely by creating parallel guarantees, and by applying tax relief on debts on the secondary market.

|14| These irregularities and illegitimacies have been underlined in the report presented by the sub commission of the commercial debt of the CAIC. See the CAIC website:

|15| Alexander Nahum Sack, Les Effets des Transformations des États sur leurs dettes publiques et autres obligations financières, Recueil Sirey, 1927.

|16| CAIC, Informe juridico, p. 191, available on the CAIC website

|17| CADTM, “Topicality of the Odious Debt Doctrine”, 2008,…

|18| Hugo Ruiz Diaz, “The Sovereign Decision to Declare Debt Null”, 2008,… (Available in French only)

|19| See:…. This report, largely botched, biased and condescending toward organisations acting for fair solutions to debt, sparked strong reactions.

|20| Renaud Vivien, “Interview with the UN Independent Expert on Foreign Debt: “I encourage all States to carry out debt audits””,… (Available in French and Spanish only)

|21| Conclusions of the 1st International Conference of Jurists, Quito, 8-9 July 2008,…. (Available in French and Spanish only)

|22| For information on the legal aspects of public consultation, read Alejandro Teitelbaum, “International, Regional, Subregional and Bilateral Free Trade Agreements”, CETIM Report No. 7, 2010, p. 24,…

Translation: Christine Pagnoulle, Ümit Hussein and Matt Jenkins


Feb 262013

Posted by greydogg, 99GetSmart

Source: CADTM International


Responding to direct racist threats from the nazi party Golden Dawn against one of the founding members of CADTM Greece Moisis Litsis*, the international CADTM network wishes to highlight how serious a danger the rise of fascism is, a development that is the direct consequence of the deterioration of social conditions imposed by creditors claiming that paying public debts is more important than fundamental human rights.

The neonazi magazine Stohos published a ‘biographical note’ on Moisis Litsis that list all his TU and political activities over the past two decades. Under the title ‘ESIEA (the journalists’ trade union) has a Jew as treasurer’, their racist libel further states, ‘he speaks perfect Hebrew, he loves Israel though he claims to be antisionist (but who would believe him)! … At the general assemblies of ESIEA, instead of talking about problems met by Greek journalists, Moisis Litsis will hold on about the Holocaust and the need to condemn the Golden Dawn’…

The steady deterioration of the social and economic crisis makes it possible for the far-right to demonize foreigners (immigrants, asylum seekers). It uses anti-Semitism so as to find scapegoats and obscure the real causes of the problems Greek people have to face behind a smoke screen. The brutal austerity measures enforced by the Troika on the Greek people lead many to try and find new ways of coping, not always shying away from the dark paths of fascism.

It has to be remembered, however, that the objective of Golden Dawn, a racist, violent and pogrom-inciting organization, is the destruction of any TU, political or cultural workers’ association, the crushing of all citizens’ resistance, the negation of the right to difference, and the extermination of those who are different or weaker, including physical extermination.

This racist, backwards, authoritarian and discriminatory backlash is one of the most worrying consequences of the ongoing process through which creditors destroy our social state for the sake of repaying a largely illegitimate debt.

The international CADTM network wishes to state again its complete solidarity with the Greek people in its struggle for sovereignty, against austerity policies, for the assertion of its rights and the cancellation of an odious and murderous debt. We cannot tolerate the murdering, bullying and provocative actions of a nazi party now represented in Parliament.

We join the many voices that are raised all over the world against the rise of fascism in Europe. Our struggle against austerity measures enforced to repay public debts cannot be dissociated from our struggle against fascism in Europe.

Our solidarity goes to Moisis Litsis, the Greek CADTM and all the left-wing forces fighting austerity policies and the system that breeds them.


* Moisis Litsis was one of the leaders of the eight month struggle fought by the workers of the Eleftherotypia newspaper. He is also a founding member of AIS (the Greek committee against the debt-CADTM and one of the main initiators of the European antifascist manifesto. (… )

Feb 172013

By Éric Toussaint, CADTM

From the series: Banks versus the People: the Underside of a Rigged Game! (Part 5)



“In order to facilitate the financing, insuring, and timeliness of all that trade, the volume of cross-border transactions in financial instruments has had to rise even faster than the trade itself. Wholly new forms of finance had to be invented or developed, credit derivatives, asset-backed securities, oil futures, and the like all make the world’s trading system function far more efficiently.

In many respects, the apparent stability of our global trade and financial system is a reaffirmation of the simple, time-tested principle promulgated by Adam Smith in 1776: Individuals trading freely with one another, following their own self-interest leads to a growing, stable economy.” Alan Greenspan |1|

The financial innovations presented as a panacea by Alan Greenspan have been a big flop, causing very serious economic and social damage. At the same time, the dictatorship of the markets and the ukases of the European troika have been infringing on the democratic rights of citizens everywhere. European treaties and the policies applied by successive governments have progressively chipped away at the peoples’ hard-won democratic rights: the legislative power has been increasingly dominated by the executive, the European parliament is a front piece for the European Commission, and there is less and less respect for what the electors try to say. Meanwhile, leaders hide behind the European treaties and repeat the old Thatcherite refrain: TINA (there is no alternative), to justify austerity and debt repayment. At the same time, they have been doing as much as possible to defy the economic and social rights conquered during the 20th century, on the one hand.(see Part 3 of this series); and, on the other hand, to prevent a new banking crisis from erupting. However, no seriously restrictive measures have been taken to impose a new discipline on banks and other financial institutions. The banks have not cleaned up their accounts since 2007-2008. Worse yet, they have been very active in creating new bubbles and new structured financial products.

In this fifth part of the series, |2| we look at how the banks have been bending over backwards to fund their activities, their almost total dependence on public assistance, the speculative bubbles that are in gestation, speculative financial innovations, the disastrous effects of the present banking system particularly in creating food crises, as well as the new risks that the modus operandi of banks has been creating for people. |3|

Medium- and long-term financing problems

We will first have a look at the financing side of bank operations, (i.e., bank liabilities), where banks are encountering big problems. Institutional investors (insurance companies, pension funds, other banks, and sovereign wealth funds among others) no longer have confidence in banks, and hesitate to buy their covered bonds issued in the hope of finding stable long-term financing. Even if some banks like France’s two biggest, BNP Paribas and Societe Generale or Spain’s second biggest bank BBVA, have found buyers for their bonds, the volumes issued in 2012 remain as low as in the previous years. According to the Financial Times, this might even be the worst year since 2002. |4|

As the banks cannot find sufficient long-term funding on the financial markets, they are vitally dependant on the 3-year ECB loans totalling €1 trillion at 1%, |5| and generally the liquidities made available by the central banks of the industrialised countries (particularly by the US Federal Reserve Bank, the ECB, Bank of England, National Bank of Switzerland, and the BoJ (Japanese Central Bank)).

Short-term financing problems

Much of their financing, other than deposit and savings accounts, which show no growth because of the crisis, must be found on the short-term market. According to the Liikanen report, the big European banks need €7 trillion from day to day. |6| The volume of banks’ short term debt increased significantly between 1998 and 2007, from €1.5 to €6 trillion, while from 2010 to 2012, it remained at €7 trillion! Where do banks find this short-term money? It is no longer, or hardly, available on the interbank markets, because the banks are too wary to lend each other money. They are thus dependent on Money Market Funds (MMFs) which have up to $2.7 trillion available for day-to-day trading depending on how the winds of crisis are blowing in Europe. |7| MMFs shut off the flow in June 2011, and reopen it when the ECB lent €1 trillion. |8| At any moment, they may close or restrict the flow again. The surest supply of funding is once again the central banks. The ECB has made massive loans at 0.75% (the current rate since May 2012).

The conclusion is clear: without the €1 trillion over three years and the day-to-day loans of the ECB and the national central banks linked into the Eurosystem (to which must be added the Bank of England and the National Bank of Switzerland), many big European banks would be menaced with suffocation and bankruptcy. This is more evidence that the banks have not cleaned up their accounts. They must find massive short-term funding, whereas they hold long-term assets of doubtful value. In many cases, the value of the assets on their balance sheets will not be realised when they come to maturity, and the losses suffered may absorb their whole capital.

The stock exchanges are blocked

Funding from the stock exchanges is also blocked The price of bank shares has dropped, on average, to a fifth of their 2007 level |9| (see charts in appendices). The institutional investors (insurance companies, pension funds, investment funds, banks, and others) are not inclined to buying shares of companies that are in bad shape. This is additional proof of the abysmal distance that exists between the theoretical functioning of capitalism as announced by its supporters and reality. In theory, the stock exchange is supposed to help listed companies gain access to long-term investment capital (shares are considered to be investments that must be kept for at least eight years). However, this scenario just doesn’t work, because the stock exchange is no longer a place where companies can find funding for a long time, but a place of pure speculation. That is why banks must be recapitalised with public money.

On other hand, according to the same theory, the stock exchange, by the price of its shares, is the real representation of a company’s value. From this point of view, the average 80% drop in the capitalisation value of banks suggests a very embarrassing revelation for their directors and for the pundits of the capitalist system.

We should also remember that banks use part of the cash supplied to them by the central banks to buy back their own shares. There are two reasons for this: to try to stop the value of their shares from falling, and to pay their shareholders for their shares. |10|

Banks funded by money coming from drug traffickingDrug trafficking money is another source used to fund banks. On 26 January, 2009, Antonio Maria Costa, Executive Director of the United Nations Office on Drugs and Crime (UNODC), declared to the on-line Austrian magazine |11| that some interbank loans were recently funded “by money from drug trafficking and other illegal activities.” Very recently, in December 2012, HSBC (UK, the second largest bank in the world in terms of assets) accepted to pay a record fine of $1.92 billion |12| to US authorities to put an end to the lawsuits being brought against it, in particular for charges of laundering money for the Mexican drug cartels. |13|

Time bombs in European and US bank assets

As seen above, banks assets are in reality, large financial time bombs that are already ticking.
In Europe, 70% of the structured financial products backed by commercial mortgages (CMBS – Commercial Mortgage-Backed Securities) that matured in 2012 were not paid! |14| These products were sold between 2004 and 2006, just before the subprime bubble burst, and they come to maturity from 2012 to 2014. According to the Fitch rating agency, only 24 of the 122 CMBS that matured in the first 11 months of 2012 were paid. In 2013-2014, the contracts that arrive at their term amount to €31.9 billion. In 2012, JP Morgan, the biggest US bank lost $5.8 billion on the European CMBS market through its London office because of the bad management by one of its agents nicknamed “the Whale”. |15| This did not stop Deutche bank or the Royal Bank of Scotland creating new CMBS for the European market! Why do these banks get involved in these operations? Because the high risk level is compensated by the expectation of higher returns than those on other products. Keep watch!

European and US banks still have several trillion dollars of residential mortgage-backed securities (MBS) on their balance sheets, notably subprime MBS and other categories of asset-backed securities (ABS). Banks have a hard time trying to unload these securities unless they accept important losses. At the end of December 2011, MBS could be sold for no more than 43% of their nominal value, but there were very few buyers. |16| Banks are very discrete about the exact volumes of MBS they hold on their balance sheets, and even more so concerning their off-balance sheet holdings.

Collateral loan obligations (CLO) are another structured product created during the period leading up to the subprime crisis, which raises concern while at the same time enticing the most aggressive European banks, such as the Royal Bank of Scotland into the fairy circle of high risk – high profits. CLOs were sold to gain funds for investors who wanted to buy companies by taking on more debt, playing on leverage to the maximum, which is known as a leveraged buy-out (LBO). These CLOs are now reaching maturity, and their owners are wondering how they will be paid. The European market is totally flat, but the US market has come back to life, selling $39 billion in 2012. Some European banks are also purchasing them because the possible gains are high given the risks involved. |17| Fragile, handle with care.

New bombs are being set

JP Morgan and other big banks have proposed to create structured products comparable to the subprime mortgages CDOs, for credit linked to international trade. Remember that Collateral Debt Obligations (CDOs) were created out of different types of mortgages, which the banks wanted to unload by securitising them (that is by transforming mortgages into a more easily tradable security). |18| JP Morgan wants to do it all over again with export credits instead of mortgages. It was this same bank that in 1994 created the ancestor of CDOs. |19| The export credit market is $10 trillion per year. JP Morgan is trying to persuade banks that are active in this market, to structure the credits into CDOs so as to render them more liquid. The official line is that this approach will reduce assets thereby reducing the leverage effect in accordance with the new Basel III regulations on the need to increase capital ratios (see Part 6 and the Basel III accords). In fact, for JP Morgan and the other big banks that are always seeking to achieve profitable financial innovation, this is a new mine to open and exploit on a major market. |20| Here again, if the JP Morgan strategy works well there are high prospects of more damage from a new bubble.

The frantic scramble for profit causes losses

A few examples illustrate the magnitude of the risks that banks continue to take. There was the blow to Societe Generale in France (€4.9 billion) resulting from the continual mishaps of its trader, Jerome Kerviel. This affair goes back to January 2008 and we might imagine that the banks would have since taken the lesson. Not at all! In September 2011, the Swiss bank UBS announced losses of $2.3 billion through unauthorised transactions by Kweku Adoboli, manager at Global Synthetic Equities Trading in London. Again in London, as mentioned above, JP Morgan’s “whale” lost $5.5 billion for “his” bank. These affairs are only the tip of the iceberg.

A speculative bubble has developed in Corporate Bonds

Many financial market observers and many fund managers consider that a speculative bubble has developed in the Corporate Bonds sector, bonds issued by big companies. There is thus, a new bubble forming on the debt of major corporations. Why has this $9.2 trillion market been creating a bubble? The return that banks and other institutional investors get from the United States treasury and the sovereign bonds of the main EU powers is at a historical low. The investors search around for a better sector, in which there is no apparent risk: corporate bonds of non financial companies gave a more attractive return of about 4.5%. Another reason that banks prefer to purchase obligations rather than take on loans is that obligations can be easily converted into cash on the secondary market if need be. |21| This rush on bonds caused a serious drop in their yield, which fell from 4.5% at the beginning of 2012 to 2.7% in September of that same year.

A major corporation like Nestle was able to issue €500 million in 4-year obligations offering no more than 0.75% p.a. This case is exceptional, but it shows that the rush on corporate bonds does exist. According to JP Morgan, the call for bonds is such that the yield on junk bonds was in free fall during the summer of 2012, dropping from 6.9% to 5.4%. If the trend continues, institutional investors may look elsewhere for better returns. |22|

The craving for profit is such that companies succeed in issuing PIK (Pay in Kind) bonds, which were trendy before 2006-2007 then found no new buyers until 2012. These bonds receive no interest until the capital is fully paid off. Of course, the promised final repayment is high, but there is a great risk that the company borrowing will not be in a position to either pay back interest or capital when the loan matures! It would in fact be prudent of a lender to ask why a company that is unable to pay regular interest over the duration of the loan will be able to repay the full amount at the end. |23| Once again the craving for profit and the availability of liquidity (because of central bank loans) has led to a keen interest for these high risk products.

The shortage of collateral |24|

Up to 2007-2008, the financial markets experienced a period of growth and exuberance. The Bankers and other institutional investors cross lent capital and structured products to each other in a joyful asset-go-round without any verification as to the credit worthiness or the capacities of those signing a contract to assume their responsibilities when it came to maturity. For example, bankers paid insurance premiums to Lehman Brothers and AIG to cover against the risk of payment defaults without first verifying whether they had the means to pay the indemnity if need be.

In most transactions, the borrower must put up an asset as a guarantee. This is called collateral. What often happened and still does is that the same collateral is used to guarantee several different transactions. A borrows from B and puts up collateral as a guarantee. B borrows from C and uses the same collateral as a guarantee, and so on. If the chain is broken anywhere, there is the risk of not finding the collateral. As long as the markets were euphoric and nobody asked embarrassing questions about collateral, business went on as usual. Since 2008, things have not quite been the same and the co-contractor who wants collateral may insist on having assurances that it is really available if need be, that its value is authentic and of that it is of good quality. Collateral circulates less and doubtful collateral is refused. |25|

It is reasonable not to accept toxic assets such as subprime CDOs as collateral. This has led to the beginning of a shortage of collateral. In 2011 and 2012, the Franco-Belgian financial company Dexia suffered from insufficiently good collateral, and was unable to cover its financial needs. In 2012, Dexia borrowed close to €35 billion from the ECB at 1% within the LTRO framework. The enormous loans from the ECB were insufficient, so Dexia, once again, turned to the French and Belgian States, in October-November 2012 for a €5 billion recapitalisation.

According to the Financial Times, Spanish banks have become experts in the creation of collateral. They create structured ABS products from doubtful mortgage credits and other equally doubtful products, and push them on the ECB as collateral for treasury needs. |26| So the ECB accepts this custom-made low quality collateral. This example offers more evidence of how the ECB bows down to the bankers.

In the context of collateral, we must also denounce the lies concerning government bonds that are supposedly giving the banks a headache. Government bonds are a much surer form of collateral than most private financial instruments. Banks do not hesitate to offer them as prime quality collateral for ECB loans.

Sovereign debts

Indeed, let us have another look at sovereign debt. Until now, it has not caused any banking catastrophes. Nevertheless, it is evident that in countries like Spain and Italy, the banks are making important purchases of the bonds issued by their own governments. They have two good reasons for acting in this way: on the one hand, they hold large amounts of liquidities lent by their central banks at very low interest rates (0.75 to 1%); on the other hand, their own country’s bonds are remunerated at much higher rates (4 to 7%). However, the austerity policies are so brutal that it is uncertain whether these governments will always be to pay them back. This problem is not an immediate threat, but the possibility of future difficulties must be considered. |27|

Sovereign debt is not the Achilles’ heel of private banksThe mainstream media permanently repeats the story told by bankers and politicians according to which sovereign debt represents a real danger. In order to clear up this issue and take away this old sovereign debt argument from those in power, who are using it to impose antisocial policies, we must develop convincing counter-arguments, which could be based on the data provided in this series. In a recent IMF report, |28| there is a chart on the percentage of sovereign debt in the assets of private banks in 6 key countries. According to this chart, government debt represents only 2% of the assets of British banks, |29| 5% for French banks, 6% for US and German banks, and 12% of the assets of Italian banks. Japan is the only country, among the 6 mentioned, in which government debt represents an important proportion of bank assets (25%). It is not every day that the IMF agrees with our arguments. However, the conclusion we draw from this data, and the one the IMF would clearly hesitate to make, is that it would be much easier to cancel illegitimate public debt than most people could imagine!

Shadow banking

One of the main causes of bank fragility is their off-balance sheet activities, which in some cases may be greater than their officially declared activities. The major banks continue creating ad hoc companies (Special Purpose Vehicles, MMFs) that are not considered as banks and do not have to comply with banking regulations. |30| Until now these companies could operate without control or, in the case of MMFs, with little control, lending to banks and conducting many kinds of speculative actions on a multitude of derivatives or raw materials (including foodstuffs) on futures markets or the over the counter (OTC) market, which is not regulated. The opacity is total or nearly so. Banks are not obliged to declare, in their accounts, the activities of the non-banking companies they create. The most dangerous activities are the ones conducted by Special Purpose Vehicles. If the losses of one of these companies causes their bankruptcy, the bank that created it is forced by its creditors to record this loss on its balance sheet, which may absorb the bank’s capital and cause it to go bankrupt (or perhaps be taken over by another bank or the government, or be given a public bailout). This is what has happened to Lehman Brothers, Merrill Lynch, Bear Stearns, the Royal Bank of Scotland, Dexia, Fortis, and several others since 2008.

Speculation on commodities |31|

Through their trading activities, banks are the biggest speculators on the over the counter and commodities futures markets. They have much greater means available than the other protagonists. See the website Commodity business awards (http://www.commoditybusinessawards….), where a list of important bankers and brokers on the commodities markets is available (whether on the commodities market where they are bought and sold, or on the underlying derivatives market). Among these banks, the ones most often mentioned are BNP Paribas, Morgan Stanley, Credit Suisse, Deutsche Bank, and Societe Generale.

What is more, the banks are trying to take direct control of the stocks of raw materials. This is the case of Credit Suisse which is associated with Glencore, |32| the world’s biggest raw materials brokerage company. Meanwhile, JP Morgan is seeking to purchase 61,800 tons of copper in order to influence copper market prices. |33|

These are the leading performers in the development of speculative bubbles formed on the commodities markets. |34| When the bubble bursts, the repercussions on the state of the banks will cause new damage. Not to mention, and much more seriously, the consequences on the people in the developing countries that export raw materials.

A look back at the fundamental role played by speculation in the dramatic increase in food and energy prices in 2007-2008Speculation on the principal markets in the United States on which world commodity prices are negotiated (farm products and raw materials) played a crucial role in the dramatic increase in food prices in 2007-2008. |35| These rising prices resulted in a big increase in the number of people suffering from hunger: more than 140 million additional people in one year, for a grand total of more than 1 billion (1 in 7 of the world’s population). Those involved in this speculation were not mavericks, they were institutional investors (or high rollers), including banks, |36| pension funds, investment funds, and insurance companies. Hedge funds |37| also played a role, even if they had much less impact than institutional investors. |38|

Michael W. Masters, who had been managing a Wall Street hedge fund for twelve years, provided evidence of this in his testimony before a Congressional commission in Washington on 20 May 2008. |39| He made the following declaration to this commission, which was making an official investigation into the possible role played by speculation in rising commodity prices: “You have asked the question ‘Are Institutional Investors contributing to food and energy price inflation?’ And my unequivocal answer is ‘YES’”. In his authoritative testimony, he explains that the increasing price of food and energy was not due to an inadequate supply but rather to a “demand shock” caused by the arrival of new participants in the commodities future market. On the futures market, participants buy the future production: the wheat that will be harvested in 1 or 2 years, or the oil that will be produced in 3 or 6 months. In “normal” times, the main participants in those markets are for example airline companies that buy kerosene, or food companies that buy grain. Michael W. Masters shows that in the United States, the capital allocated by institutional investors to the commodity index trading in futures markets rose from $13 billion dollars at the end of 2003 to $260 billion in March 2008. |40| During the same period of time, the prices of the 25 commodities that make up these market indices rose by 183%. He explains that it is a small market, |41| and if institutional investors such as pension funds and banks allocate 2% of their assets to it, this will change the situation drastically. The price of commodities on the futures market has an immediate repercussion on the actual price paid for these basic goods. He shows that institutional investors bought huge quantities of corn and wheat in 2007-2008, which produced a price spike.

It is worth noting that in 2008 the Commodity Futures Trading Commission (CFTC) considered that institutional investors should not be considered as speculators. The CFTC stated that institutional investors are commercial market participants, which enabled it to argue that speculation did not play a significant role in the dramatic rise in prices. Michael W. Masters is very critical of the CFTC, but Michael Greenberger, a Law professor at the University of Maryland, was even more adamant in his testimony before the Senate commission on 3 June 2008. Michael Greenberger, who was Head of the CFTC’s Division of Trading & Markets from 1997 to 1999, criticised the laxity of other CFTC Directors, who looked the other way when they saw manipulation of energy prices by institutional investors. He cites a series of declarations by CFTC Directors worth publishing in an anthology of hypocrisy and stupidity. Michael Greenberger considers that 80 to 90% of the stock market transactions in the US energy sector are speculative. |42|

On 22 September 2008, as financial turmoil was rocking the United States, and President Bush was proposing a $700 billion bank bailout plan, the price of soy beans shot up by 61.5% driven by speculation!

Jacques Berthelot also shows the crucial role played by bank speculation in the rising prices. |43| He gives the example of a Belgian bank, KBC, which ran an advertising campaign to market a new investment product offering customers the possibility to invest in six food raw materials. To convince its clients to put their money into its “KBC-Life MI Security Food Prices 3” investment fund, KBC’s advertisement encourages them to: “Take advantage of rising food commodity prices!” It presents the “shortage of water and farm land” as an “opportunity” since there is now a “shortage of food products, leading to rising food commodity prices.” |44|

Meanwhile, the US judicial system has ruled in favour of the speculators. This is what Paul Jorion denounces in an editorial published in Le Monde. He questions the decision made by a court in Washington on 29 September 2012, which rejected a proposal made by the CFTC “that aimed to limit the volume of positions a single participant can take on commodities futures market, so that he or she alone would not be able destabilise it.” |45|

Currency speculation

Banks are also the main participants on the currency markets, which they maintain in a permanent state of instability. Approximately 98% of foreign exchange activity is speculative. Only 2% is associated with the really productive economy, Foreign Direct Investments, effective international trade of goods and services, remittances by emigrants, and credit or debt repayment). Between €3 to €4 trillion transit daily through the foreign exchange markets! Banks also trade heavily on foreign exchange derivatives, which may cause considerable damage, not to mention the damage to society because of the instability of the currencies.

Over thirty years ago, James Tobin, long time advisor to US President J.F. Kennedy, suggested throwing sand into the wheels of international speculation. In spite of all the fine talk by some heads of States, the plague of foreign exchange rate speculation has worsened. Bank and other lobbies have so far averted having the smallest grain of sand disrupt their wheels from spinning or profits from accumulating. The decision taken in January 2013 by 11 eurozone governments to impose a tax of 0.1% on financial transactions is totally insufficient.

High–frequency trading

High-frequency trading enables orders to be passed on the markets in 0.1 milliseconds (one ten thousandth of a second). The “Regulations and banking activities separation act” put before the French national assembly by Pierre Moscovici, French finance and economy minister, on 19 December 2012 contains an interesting description of high-frequency trading: “High-frequency trading is a market activity entrusted to computers running on algorithms that combine observation and analysis of the market, and the placing of orders at ever higher frequencies. They may place several thousand orders per second on the same exchange platform, sometimes causing saturation. The risks are high in case of coding errors, these may cause absurd financial movements (the quasi-bankruptcy of the ’Knight Capital Group’ in August 2012 is an example). In 2011, high-frequency trading accounted for more than 60% of the orders on the Paris stock exchange, only 33% of which created a real transaction”. |46|

High-frequency trading is clearly linked to speculative operating: manipulate the financial markets in order to influence prices and extract a profit. Specialists are well aware of the most popular methods:

Quote Stuffing: “A tactic of quickly entering and withdrawing large orders in an attempt to flood the market with quotes that competitors have to process, thus causing them to lose their competitive edge in high frequency trading”. |47| |48|

Layering, high-frequency traders may use this method to sell a block of values at the highest possible price, they place a series of buying orders at price offers up to a ceiling price, and in this way create layers of orders, once the ceiling is reached they sell massively before the price has time to go down, and at the same time cancel the invalid orders. This process relies on the filling of their competitors sales ledger with offers to buy, and then surprising the market by inversing the movement. |49|

On 6 May 2010, Wall Street experienced a “flash crash” |50| typically caused by high-frequency trading including a ’quote stuffing’ operation. The Dow lost about 998.52 points (before recovering 600) between 2.42pm and 2.52pm. A fall of 9.2% in ten minutes, unprecedented in stock exchange history. This incident spotlights the involvement of high-frequency trading that corresponds to about two-thirds of transactions on Wall Street.

Such accidents will certainly happen again. The big banks that actively use high-frequency trading are opposed to banning the system or introducing any strict controls under the pretext of maintaining the greatest possible liquidity on the financial markets.

Proprietary trading

Proprietary trading: when banks trade for themselves, is an important banking activity, producing a great amount of revenue and profit, but carrying very heavy risks. Banks engage their own resources (equity, customer deposits, borrowings) to take positions (buy or sell) on the different financial markets: stocks and shares, interest rates, foreign currency, raw materials, derivatives, futures, forwards, commodities (including foodstuffs), and their futures and real estate. Trading is definitely a speculative venture, because it is based on short-term market movements greatly influenced by their own actions. One illustration of the speculative nature of trading is Societe Generale’s €4.9 billion loss in 2008 because of the positions, taken by one of its traders Jerome Kerviel, which engaged close to €50 billion. JP Morgan allowed $100 billion dollars to been engaged by a person on its London proprietary trading department staff known as the “Whale”. The sums involved by the banks in propriety trading action are so huge that the losses can menace the survival of the bank itself.

Short selling: another speculative activity

Short selling is the sale of a stock that we do not hold at the moment, but intend to buy later to balance the end of the account. For the Banque de France: “there are two kinds of short selling”:
• Covered short-selling: in this case, the seller has borrowed (or made a borrowing agreement for) the stock that he must eventually sell at the end of the operation. In fact, the stock that this person borrows will be sold, and he promises to return the same kind of stock to the lender;
• Naked or uncovered short selling: in this case, there is no borrowed stock or borrowing agreement before the sale of the stock. The seller must buy identical stock to be able to pass it on to the buyer”. |51|

According to the French banking federation, ’short “short selling is good for market vitality (…) it increases market cash flow.” |52| Who do they think they are kidding?

Who sells short and why?

Short selling is done by a large number of market participants, such as banks, hedge funds, and financial institutions such as pension funds and insurance companies among others. It is a purely speculative activity. A speculator gambles that the price of the share concerned will fall, and if his guess is right he purchases it at a lower price than that at which he sold it, and so makes a profit. This kind of practice undermines market stability. The sharp fall in the price of bank shares during the summer of 2011 was aggravated by short selling. It is easy to understand why this kind of activity should be quite simply prohibited. |53|


As they systematically use leverage, their equity is small compared to the risks they take. From their point of view this is the desired situation: have the least possible amount of equity in proportion to their assets. A low general profit / assets ratio can produce a high profit/equity ratio, if the equity is as low as possible. Imagine a profit of €1.2 billion with assets of €100 billion, which means a profit of level of 1.2%. However, if compared to equity of €8 billion, this becomes 15% profit. If the bank using leverage, then borrows €200 billion on the financial markets to purchase further assets. the volume of assets becomes €300 billion, the equity has remained the same at €8 billion, while the liabilities have also risen by €200 billion. If the bank continues to make a profit of 1.2% that becomes €3.6 billion. With equity still at €8 billion that means a Return on Equity (ROE) of 45%. This is the fundamental reason to increase leverage by borrowing.

As we saw in Parts 2 and 4 of this series, apparently minimal losses may be quickly followed by disastrous effects and the need for a bailout. In this example, a loss of €8 billion on total assets of €300 billion (a loss of 2.66%) would wipe out the equity and result in bankruptcy. This happened to Lehman Brothers, Merrill Lynch, and the Royal Bank of Scotland, among others. The IMF’s Global Financial Stability Report published in October 2012, considers that the leverage of European banks is 23:1 without taking derivatives into account. A ratio of 23:1 considering only tangible assets (without derivatives) is very high! |54| The real leverage effect is even more important, because banks have debts and assets that are off-balance sheet (notably a significant amount of derivatives).

Conclusion: The big banks continue playing with fire, because they are persuaded that governments will save them whenever necessary. They do not encounter any serious opposition from the authorities as they continue to trade (this question will be discussed in Part 6). At the same time, they are playing an ongoing game of brinkmanship. In spite of their continual marketing efforts to regain public confidence, they have no desire to change their objectives from seeking maximum and immediate profit, and gaining as much power as they can to influence government decisions. Their force corresponds to current government leaders’ decisions to give them total freedom of action. The leaders’ moralistic tones, insisting that banks should be more restrained in their bonuses and remunerations, are only for Public consumption.

Karl Marx writes in Capital that “At their birth the great banks, decorated with national titles, were only associations of private speculators, who placed themselves by the side of governments, and, thanks to the privileges they received, were in a position to advance money to the State’. This is just as applicable to today’s banks. |55|

Banks have a colossal capacity to wreak havoc. Those who believe that a humane capitalist bank is possible must wake up and realise this is pure fantasy. The entire banking system must be withdrawn from capitalist control, and without any compensation, in order to create a public service under the control of citizens, users, and banking sector workers. |56| This is the only way to guarantee the total respect of public service precepts concerning savings and credit that are in the interest of the community.

In Part 6, the new banking regulations will be analysed.

Translated by Mike Krolikowski and Charles LaVia

Part 1
Part 2
Part 3
Part 4


|1| Alan Greenspan, The Age of Turbulences, Penguin press, New York, 2007, p. 408.

|2| Part 1 of this series “2007-2012: Six years that shook the banking world” was published on 2 December, 2012. See 2007-2012: Six years that shook the banking world. Part 2 “The ECB and the Fed at the service of the major private banks” was published in 23 December 2012. Part 3 “The greatest offensive against European social rights since the Second World War” 12 January 2013, see…. Part 4 A journey into the vice ridden world of banking on 2 February 2013, See…

|3| The author would like to thank Olivier Chantry, Brigitte Ponet, Patrick Saurin, and Damien Millet for their advice.

|4| Financial Times, 27-28 October 2012.

|5| This loan that the ECB advanced to 800 European banks for a total of €1 trillion at 1% over 3 years was analysed in Part 2 of this series. See note 3 above.

|6| See Erkki Liikanen (chairperson), High-level Expert Group on reforming the structure of the EU banking sector, October 2012, Brussels. Erkki Liikanen is governor of the Finnish central Bank. At the initiative of Michel Barnier, eleven experts formed a work group to diagnose the situation of European banks and to propose reforms to the European banking sector. One of the interesting points of the Liikanen report is its official confirmation of the depravity of the banks, the staggering risks taken to make maximum profit. The group was created in February 2012, and delivered its report in October 2012. See :…
The data concerning the day-to-day financing needs is found in chart 2.5.1, p.27. This document will hereafter be called the Liikanen report.

|7| MMFs were described in Part 4 of this series.

|8| See Part 2 “The ECB and the Fed at the service of the major private banks,” published on 23 December 2012.

|9| Liikanen report, chart 2.4.1.

|10| The shareholders who sell their shares to their bank transform their paper certificates into cash. From the fiscal point of view, it is more advantageous to receive income on a regular basis by selling some shares than to receive a dividend.


|12| This fine is high compared to the fines usually paid by banks, but compared to its assets HSBC has paid a pittance. The amount paid by HSBC to US authorities ($1,920,000,000 or €1,443,000,000) represents less than 1/1000 of its assets (€1,967,796,000,000).

|13| We will come back to this question in Part 7 of this series.

|14| Financial Times, « Europe’s property loans unpaid », 4 December 2012, p. 23,…

|15| Financial Times, “Mortgage-backed securities make a comeback”, 15 October 2012,…

|16| Financial Times, 21 December 2011, p. 24

|17| Financial Times, “Traders warn of sting in tail for crisis-era securities”, 15 November 2012, p. 24

|18| Another objective was to reduce the amount of certain products in the total volume of assets, and replace them with more profitable ones.

|19| See Gillian Tett, Fool’s Gold, Little Brown and Co. 2009.

|20| Financial Times, “Banks test CDO-style finance for trade”, 9 April 2012.

|21| Besides, consumer or business loans are reducing or rising only marginally. This is the result of the banks applying stricter conditions to making loans. They prefer to buy securities (even high risk). Medium and small companies cannot float bonds on the financial markets and so are encountering difficulties in finding finance.

|22| See Financial Times, « Fears grow bond rush will turn to price rout », 22 November 2012 and Financial Times, “Funds warn of stretched European debt rally”, 17 October 2012.

|23| James Mackintosh, “Change would pop the corporate bond bubble”, Financial Times, 25 November 2012. See also the article mentioned above.

|24| Collateral: Assets that may be transferred or considered to be a guarantee in case of the incapacity to pay back a debt or cover an engagement. Source: Banque de France.

|25| See Manmohan Singh, “Beware effects of weakening collateral chains”, Financial Times, 28 June 2012.

|26| Financial Times, « Collateral damage », 25 October 2012

|27| The central theme of this series is the necessity to repudiate the public debts and socialise the banks. In doing so (with other important measures) a positive outcome to this crisis is perfectly possible.

|28| IMF, Global Financial Stability Report, Restoring Confidence and Progressing on Reforms, October 2012… , p. 52

|29| The debt figures here concern British public debt held by British banks. Ditto for the other countries.

|30| Liikanen Report, p. 77.

|31| What is briefly called “commodities” is the raw materials market. ( Foodstuffs, minerals, metals and precious metals, petroleum and natural gas products among others). Like other assets, commodity prices are in permanent negotiation whether that be on the spot market or in derivatives.

|32| Glencore was founded by Marc Rich. It is a trading and brokerage company based in Baar, Switzerland in the canton of Zoug well known to high level frauders. Marc Rich has been prosecuted several times for corruption and tax evasion. In 2011, the group claims to employe more than 2 700 persons in marketing and 54 800 persons (in 30 countries) directly or indirectly in its industrial activities. According to available data, in 2011 Glencore controlled about 60% of the world zinc market, 50% of copper, 30% of aluminium, 25% of coal, 10% of cereals and 3% of petroleum. This highly controversial society was awarded the 2008 Public Eye award as the most irresponsible of the multinationals See: Glencore has been considering merger with the Swiss Xstrata company, also brokerage specialists See…

|33| Financial Times, « JPMorgan copper ETF plan would ‘wreak havoc’ », 24 May 2012, p. 15

|34| Of course among the powerful actors on the commodities markets are the big companies specialising in mining, production and commercialisation such as Rio Tinto, BHP Billiton, Vale do Rio Doce; in petroleum, ExxonMobil, BP, Shell, Chevron, Total… ; and in foodstuffs, Cargill, Nestlé… and many others.

|35| Much of this text has already been published in: Eric Toussaint, “Getting to the root causes of the food crisis”, 21 November 2008,…

|36| In particular, BNP Paribas, JP Morgan, Goldman Sachs, and Morgan Stanley, and until they disappeared or were taken over, Bear Stearns, Lehman Brothers, and Merrill Lynch.

|37| Sovereign wealth funds are public institutions that in the vast majority of cases belong to emerging countries like China or oil exporting countries. The first sovereign wealth funds were created in the first half of the 20th century by governments that wanted to save some of their export revenues coming from oil or manufactured goods.

|38| World wide, at the beginning of 2008, institutional investors held $130 trillion, sovereign wealth funds $3 trillion, and hedge funds $1 trillion.

|39| Testimony of Michael W.Masters, Managing Member/Portfolio Manager Masters Capital Management, LLC, before the Committee on Homeland Security and Governmental Affairs United States Senate…

|40| “Assets allocated to commodity index trading strategies have risen from $13 billion at the end of 2003 to $260billion as of March 2008.”

|41| “In 2004, the total value of futures contracts outstanding for all 25 indexed commodities amounted to no more than $180 billion. Compare that with worldwide equity markets which totalled $44 trillion, over 240 times bigger.” Michael W. Masters points out that during that year, institutional investors invested $25 billion dollars in futures markets, which was equivalent to 14% of the market. He shows that during the first quarter of 2008, institutional investors greatly increased their investments in this market: $55 billion in the first 52 trading days of the year. Clearly enough to make commodity prices explode!

|42| See Testimony of Michael Greenberger, Law School Professor, University of Maryland, before the US Senate Committee regarding “Energy Market Manipulation and Federal Enforcement Regimes,” 3 June 2008, p. 22.

|43| Jacques Berthelot, « Démêler le vrai du faux dans la flambée des prix agricoles mondiaux » (Distinguishing what is true from what is false in skyrocketing world food prices), 15 July 2008, p. 51 to 56. On line:…


|45| Paul Jorion, « Le suicide de la finance » (The suicide of finance), Le Monde, 9 October 2012.

|46| « Loi de régulation et de séparation des activités bancaires », December 2012,…

|47| Read more:…


|49| See:…

|50| The US FDIC and the SEC have produced a detailed report on the 6 May 2010 “Flash Crash” “Findings Regarding the Market Events of May 6, 2010”,…

|51| See p. 42 :…

|52| French Banking Federation activities report 2010 (Fédération bancaire française (FBF), Rapport d’activités 2010, Paris, 2011).

|53| The question of Credit Default Swaps (CDS) will be discussed in Part 6. For more information, see CDS and rating agencies: factors of risk and destabilization by Eric Toussaint, 23 September 2011,…

|54| IMF, Global Financial Stability Report, Restoring Confidence and Progressing on Reforms, October 2012 p.31…

|55| Karl MARX, 1867, Capital, volume I, chapter 31.…

|56| As mentioned in Part 4, a small cooperative banking sector must co-exist alongside the public sector.

Eric Toussaint, Senior Lecturer at the University of Liège, is the President of CADTM Belgium (Committee for the Abolition of Third-World Debt), and a member of the Scientific Committee of ATTAC France. He is the author, with Damien Millet, of AAA. Audit Annulation Autre politique (Audit, Abolition, Alternative Politics), Seuil, Paris, 2012.