Chapter 7: Debt Cancellation (continued), by Eric Toussaint

The Other Davos: Globalization of Resistances and Struggles
by Francois Houtart and Francois Polet

Chapter 7: Debt Cancellation (continued), by Eric Toussaint

The burden of debt on fragile economies is also a situation which calls for citizen solidarity movements across the world to say ‘No! We will no longer tolerate that our governments legitimate and support a system and institutions which have lost all capacity for respect of social rights and recognition of collective suffering’.

Radical progressive policies are necessary and possible. Part of the world population started to change its opinion starting during 1997-1998 following the setback of the policies imposed jointly by governments applying neo-liberal dogmas, by the owners of national and foreign capital and by multilateral financial institutions. As citizens of South-East Asia, Russia, Brazil, Mexico, Venezuela, Argentina, Central America, Africa, many of these populations experienced a deterioration in their living conditions following the neo-liberal hurricane. For the 400 million inhabitants of the former Asian tigers and dragons, the IMF was tantamount to saying ‘I’m fired’. A large percentage of the citizens of the world (including people within Europe) question neo-liberal policies.

Amongst some of these groups the questioning takes contradictory and confused forms. The weakness of the radical left and the submission of the traditional left to the imperatives of the healthy market (i.e. to the owners of capital) in most countries leaves room for parties and movements which divert action and the conscience of the population towards the search for scapegoats from foreign countries or different religions.

Successfully resisting the continuing neo-liberal offensive is certainly difficult but those who undertake this battle are not short of support and have enjoyed partial successes. The fact that the French government under Lionel Jospin decided in October 1998 to withdraw from negotiations on the Multilateral Accord on Investment (MAI) was the result of a great opposition campaign launched by various movements, trade unions and parties in France, and also in the United States, the Third World and Europe in general.

The multinationals and the United States government will find another way to implement measures to help free movement of capital for those who own it, but they have suffered a significant setback, indicating that by mobilising forces, it is possible to force those in power to change tactic.

Another indication of the change, which began in 1997-1998 was that the United Nations Conference for Trade and Development and the G22 in September 1998 declared their support for the right of countries to declare a moratorium on the payment of their foreign debt. UNCTAD stated: “Countries under attack could decide on a moratorium of debt servicing so as to dissuade ‘predators’ and have a ‘breathing space’ permitting them to arrange a debt rescheduling plan. Article VIII of the IMP Statutes could provide the legal basis necessary for the declaration of a moratorium on debt servicing. The decision to impose a moratorium could be taken unilaterally by countries whose currency is under attack.” [UNCTAD, press release, 28/8/98]. These two institutions (UNCTAD and G22) certainly do not carry much weight compared to G7, IMF, WB and WTO, but by turning their backs on the immutable rights of the creditors, they show that governments on the periphery are finding it increasingly difficult to justify their acceptance of the neo-liberal globalisation.

The 1998 UNDP report indicated essentially that a tax of 4% of the wealth of the 225 richest people on the planet would bring in 40 billion dollars. This is the modest sum which needs to be invested each year in “social support” to guarantee universal access to drinking water within ten years (1,300 million individuals did not have access in 1997), universal access to basic education (1,000 million people are illiterate), universal access to basic healthcare (17 million children die each year from easily cured illnesses), universal access to adequate nourishment (2,000 million people suffer from anemia), universal access to sanitary infrastructures and universal access for women to gynecological and obstetric care.

This vast programme would only cost the modest sum of 40 billion dollars per year over 10 years [UNDP, 1998, 33]. Compare this also with other figures corresponding to certain expenditures which humanity could do without. In 1997, 17 billion dollars was spent on food for domestic pets in Europe and the United States, 50 billion dollars on cigarette consumption m Europe, 105 billion on alcohol consumption in Europe, 400 billion on drugs, military expenditure amounted to 780 billion and advertising expenditure was running at 1,000 billion (UNDP, 1998, 41 and 70].

The years 1999 and 2000 represent the jubilee in the Jewish and Christian tradition (which dominates the small world of G7 leaders). The jubilee tradition leads to reflections about the need for debt cancellation. Whilst a new debt crisis has exploded, it is more than time to mobilise action to support the complete cancellation of the debt of the peripheral countries.

We need to add as a matter of urgency that it is imperative to impose a tax on international financial transactions (as is called for by ATTAC). We should urgently instigate an inquiry into the resources held abroad by the rich citizens of the peripheral countries and the resultant expropriation, in certain cases, of these resources if they have been gained through means such as theft committed at the expense of the population of the peripheral countries (expropriated wealth should be returned to the people). Furthermore, a one-off 10% tax should be levied on the wealth of the richest 10% of households of each country. Strong measures should be taken to control the movement of capital, there should be a generalised reduction in working hours with wage guarantees and compensatory employment, there should be a guarantee of universal access to the land for all farmers and male/female equality should be ensured.

These are just some measures, which are incomplete and insufficient but nevertheless necessary if we wish to bring about a positive change in the satisfaction of basic human needs.