[The magazine ‘Tiempo Argentino’ interviewed, from Buenos Aires, Éric Toussaint, spokesperson for the international network of the Committee for the Abolition of Illegitimate Debt.]
Jorge Muracciole: The CADTM speaks of a new international debt crisis. What are the root causes of this newly emerging debt crisis?
Éric Toussaint: There has been a succession of external shocks, originating in the countries of the North, impacting the South and triggering an aggravation of debt-related issues. The first shock resulted from the effects of the pandemic in the geographical North, then on the populations of the South. The effects were particularly drastic in countries like Peru, Ecuador and Brazil. The pandemic had serious economic repercussions, exacerbated by the cost to States of the fight against the virus. In many cases this brought on an increase in external and internal indebtedness. In 2020 and 2021, many governments preferred to finance the fight against the effects of the pandemic with debt rather than tax the huge economic conglomerates such as “Big Pharma” or GAFAM (Google, Amazon, Facebook, Apple, Microsoft), all of which made tens of billions of dollars in profits from the pandemic.
Jorge Muracciole: And the other shocks?
Éric Toussaint: The second one was Russia’s invasion of Ukraine, which generated great speculation on behalf of the oligopoly that has the most control over world trade prices for cereals. This forced up the price of wheat and other cereals, as Ukraine and Russia are major exporters of these products. The speculation was set in motion by the oligopolistic market as 80% of the international cereal trade is controlled by four multinational corporations (three from the USA and one European). The price of fertilizers and fuel also increased. This new scenario severely penalized the countries of the South who are net importers of cereals, particularly on the African continent, from Egypt to Senegal to Tunisia.
These external shocks meant that public indebtedness soared, as governments refused to fund the increased spending they were faced with through taxation of the gas and petroleum companies, the big retailing companies or the big agri-business corporations. The wealthiest 1% were not asked to contribute and continued to become richer and richer, in unheard-of proportions.
The third shock element was the unilateral decision by the US Federal Reserve, the European Central Bank and the Bank of England, starting in 2022, to drastically raise interest rates, going from 0.25 % to 5.25 % in the United States and the United Kingdom, and from 0 % to 4.25 % in the Eurozone. The financial consequences of these moves have been extremely tough for the countries of the South. The financial flows that formerly were directed towards the South, in view of these new rates in the main countries of the North, have been directed to buying up government bonds in European countries or the United States, which offer greater yields and greater security. Lenders in the North are demanding ever higher interest rates from the South. The ruling classes of the South are also making a profit, buying internal and external public debt paper.
Jorge Muracciole: The present historic context is quite different from that of the 1980s, when there was a significant external debt crisis opposed by leaders such as Fidel Castro or Thomas Sankara, then president of Burkina Faso in Africa.
Éric Toussaint: The similarities come from the unilateral expansion of the US Federal Reserve and the central banks of Europe. A major difference is that in the present situation, there are no leaders like Fidel Castro of Cuba or Thomas Sankara, the young leader of Burkina Faso. In today’s indebtedness situation, the progressive governments are not as radical, as creative or as brave as the governments that led the opposition to increased debt repayments in the 1980s. Even the present Cuban government does not defy its creditors, and keeps a low profile when prosecuted by vulture funds in British courts of law. As for Burkina Faso, there is a gaping chasm between actual practice and the radical discourse of the president, Captain Ibrahim Traoré, regarding the country’s creditors and their predatory economic model. Indeed, Burkina recently signed, in early July 2023, an agreement with the IMF for 300 million dollars. In the case of Mali, the government is also keeping up its payments. In Niger, the military junta has just appointed Ali Mahamane Lamine Zeine as prime minister, who formerly worked for the World Bank and the African Development Bank in Chad. This dyed-in-the-wool neoliberal was Niger’s Minister of Finance from 2003 to 2010 under President Mamadou Tandja. We could also cite the attitude of the Sri Lankan government when, just after a popular uprising against the presidential clan in 2022, the new government made a very harsh agreement with the IMF. Not to mention the Argentine government which, by making a damaging agreement with the IMF, encouraged the sudden rise of the far right in the preliminaries of August 2023.
There is a shortage of leaders ready to oppose creditors and take action to change the balance of power in favour of the people. We have to rely on grass-roots mobilization and the ability of the popular classes to recognize the true nature of what is going on, and to campaign for profound structural change. It is with this in mind that the Committee for the Abolition of Illegitimate Debt has called for a peoples’ counter-summit to be held in Marrakesh in October, on the occasion of the Annual Meetings of the World Bank and the IMF, also to be held in Morocco.
Jorge Muracciole: The indigenous peoples, especially those in the Argentine province of Jujuy, are fighting for their rights to the land and against appropriation by the extractive companies trying to usurp it in collusion with the provincial government. These practices are part of the many actions of the big mining companies managing one of the world’s largest deposits of lithium.
Éric Toussaint: That exemplary struggle in the north of Argentina is a clear demonstration of people’s resistance to extractivism. Such struggles are being waged not only in the Global South, but also in other latitudes, in the open-cast mines of Germany or by the outstanding movement of the Swedish activist, Greta Thunberg. Seeing the development of ever-harsher repressive measures inflames young people in the underprivileged areas of the Paris suburbs and other French towns.
Jorge Muracciole: We note that in countries that pride themselves on being examples of democracy, there is a tendency towards authoritarianism. This was apparent in France during the protests against the pension counter-reform. Protesters were subjected to harsh repression and there was a blatant disregard for legal process. In several countries the far right is flying high, profiting from people’s disillusionment and dissatisfaction. It’s happening in Argentina with the Milei phenomenon.
Éric Toussaint: For decades, in the countries of the South, the issue of debt has served as a pretext to apply structural adjustment policies diametrically opposed to the needs of populations. The year 2023 has beaten all records for the greatest number of fiscal adjustments. The IMF is on the offensive in all countries. Over the last three years, it has agreed over 100 loans to numerous countries, taking advantage of the pandemic and, more recently, the economic effects of the war in Ukraine, with privatization programmes and programmes reducing workers’ rights. The IMF is far stronger than it was twenty years ago. In 2005, countries like Brazil and Argentina had repaid their debts to the IMF in advance in order to free themselves of the conditionalities. Whereas with the new loan to Argentina and a hundred other countries like Egypt, Ghana, and others in Asia (Pakistan, Sri Lanka, Bangladesh), violent policies with cold-blooded adjustments are implemented.
Jorge Muracciole: In the editorial of the CADTM’s magazine “Les Autres Voix de la Planète” (The Other Voices of the Planet), it is emphasized that in the North as in the South, debt is at a crossroads, and that the only way of dealing with it is to intensify our struggles.
Éric Toussaint: We must have a diagnosis that faithfully reflects reality. From 1985 until 2015, there was a boom in anti-debt movements; from when Argentina decided not to pay its debt at the end of 2001, and Ecuador chose non-payment of debt and an audit at the beginning of the Rafael Correa administration in 2008-2009, until Syriza triumphed in 2015. Since Syriza’s capitulation, anti-debt movements have been in a state of reflux. The challenge now is to tackle the latest debt crisis. Bring together more and more social forces and focus their efforts on intercontinental and international levels to carry out audits, suspensions of payment and debt repudiation.
Jorge Muracciole: The struggle against Capitalism has become more urgent due to its predatory nature and its destruction of the environment.
Éric Toussaint: It would be illusory to imagine that Capitalism in its present configuration could be reformed. For a short period after World War II, within the context of Capitalism itself, some social concessions were made, and there were even some developmental measures. Today we are faced with a Capitalism “running on empty”, enmired in crises, with the ecological, climatic and environmental crises, as well as a food crisis, with more than 250 million more people suffering from hunger in 2023 than in 2014. We are witnessing a global crisis of Capitalism that must be faced with a global response – an anti-capitalist, feminist, ecologist and antiracist response.
(Eric Toussaint is a historian and political scientist who completed his Ph.D. at the universities of Paris VIII and Liège, is the spokesperson of the CADTM International, and sits on the Scientific Council of ATTAC France. He was the scientific coordinator of the Greek Truth Commission on Public Debt from April 2015 to November 2015. He is the author of several books. Courtesy: The Committee for the Abolition of Illegitimate Debt (CADTM), an international network of activists founded on 15 March 1990 in Belgium that campaigns for the cancellation of debts in developing countries and for “the creation of a world respectful of people’s fundamental rights, needs and liberties”.)
