2023-09-10 15:59:13
Nina Guesne and Rouvenn Mikaya, participant in the young Franco-Quebec delegation to the UÉMSS
For Jean-Marie Harribey and Éric Toussaint, respectively from ATTAC France and the Committee against illegitimate debts CADTM, the global financial systems, made up of the World Bank, the International Monetary Fund, supported by central banks, have become real facilitators debt and impoverishment.
This article presents part of the content of the workshop Rebuilding a global financial system in the service of humans and the planet, presented at the initiative of the Committee against illegitimate debts CADTM and ATTAC France as part of the University of social movements and solidarity (UEMSS).
For Jean-Marie Harribey and Éric Toussaint, respectively from ATTAC France and the Committee against illegitimate debts CADTM, the global financial systems, made up of the World Bank, the International Monetary Fund, supported by central banks, have become real facilitators debt and impoverishment. Responsible for major national, even global, economic crises, in a world dominated by social inequalities, the two spokespersons explained why the workshop they are leading calls for “Rebuilding a global financial system in the service of humanity and the planet “.
The crises linked to the pandemic and Russia’s invasion of Ukraine have significantly contributed to a fall in export revenues around the world. There is no justification for increasing the key rates of certain central banks. The policy of the United States Federal Reserve has led to Ghana’s debt overhang, which has found itself in default, as a result of these unconventional policies of international banks and financial institutions which excessively raise borrowing rates.
Le cas du Sri Lanka
Sri Lanka has gradually become overly specialized in recent years, in agriculture dedicated to exports as well as in tourism. It had to demonstrate a certain competitiveness in order to be supported by the World Bank World Bank
BM The World Bank brings together two organizations, the IBRD (International Bank for Reconstruction and Development) and the AID (International Development Association). The International Bank for Reconstruction and Development (IBRD) was created in July 1944 in Bretton Woods (United States), at the initiative of 45 countries gathered for the first Monetary and Financial Conference of the United Nations.
In 2022, 189 countries are members.
Click for more details. . The State was already accumulating a deficit, when four shocks tipped the country’s trade deficit towards a more than considerable level of seriousness: 1) the succession of the Covid period, 2) the explosion of the war in Ukraine, 3 ) the increase in the price of chemical fertilizers and fuels, and finally 4) the increase in the interest rate Interest rate When A lend money to B, B repays the amount loaned by A (the capital), but also an additional sum called interest, so that A has an interest in carrying out this financial transaction. The higher or lower interest rate is used to determine the amount of interest.
Let’s take a very simple example. If A borrows $100 million over 10 years at a fixed interest rate of 5%, it will repay in the first year one tenth of the capital initially borrowed ($10 million) and 5% of the capital owed, i.e. $5 million, so in total 15 million dollars. The second year, he repays another tenth of the initial capital, but the 5% only concerns $90 million remaining due, or $4.5 million, so in total $14.5 million. And so on until the tenth year when he repays the last 10 million dollars, and 5% of this remaining 10 million dollars, or 0.5 million dollars, so in all 10.5 million dollars. Over 10 years, the total repayment will be $127.5 million. In general, the repayment of capital is not made in equal installments. In the first years, repayment mainly concerns interest, and the portion of capital repaid increases over the years. Thus, in the event of a cessation of repayments, the remaining capital due is higher…
The nominal interest rate is the rate at which the loan is taken out. The real interest rate is the nominal rate minus the inflation rate. . Sri Lanka was then forced to stop repaying its external debts.
What followed was a period of shortages and inflation Inflation Cumulative rise in all prices (for example, a rise in the price of oil, ultimately leading to an upward readjustment of wages, then the rise of other price, etc.). Inflation involves a loss in the value of money since over time, more money is needed to purchase a given commodity. Neoliberal policies primarily seek to combat inflation for this reason. , which amounts to 80% on food products. Half of the country finds itself below the poverty line. The icing on the cake: the government decides to pass a law banning chemical fertilizers in agriculture, which prevents farmers from following international prices: a measure which could not be properly welcomed in a context of crisis. The people then rise up against the president, who is removed from office.
The Sri Lankan people are marked by an initial period of suffering which is a direct result of the capitalist system and the policies of financial institutions. Currently a new president is in place, and appeals to the IMF IMF
International Monetary Fund The IMF was created in 1944 at Bretton Woods (with the World Bank, its sister institution). Its aim was to stabilize the international financial system by regulating the movement of capital.
To date, 190 countries are members (the same as the World Bank).
Click for more details. to repay a tiny part of the country’s debts. The IMF demands political changes in return for the loan, which once again impacts the people: increase in VAT, elimination of energy subsidies, etc.
Debt exchanges Debt
Multilateral debt : Debt owed to the World Bank, the IMF, regional development banks like the African Development Bank, and other multilateral institutions like the European Development Fund.
Private debt : Loans taken out by private borrowers regardless of the lender.
Public debt : All loans contracted by public borrowers. -nature: the case of Ecuador
Debt-for-nature swaps are a new way of subjecting a country to the policies of international financial institutions. This exchange takes place when a structure buys back the debt of a State for the cheapest, in exchange for which the country must respect certain commitments “for nature”.
This is the case in Ecuador, where a debt was bought back by a bank for less by requiring that the State pay a sum each month for the protection of a natural area in the Galapagos, which would subsequently be managed by the bank.
This situation is open to criticism from many points of view: first of all, it subsequently allows the bank to give itself a greener image among its consumers without stopping its other potential polluting investments. But this agreement also causes Ecuador to lose a part of its independence by preventing it from managing its entire monthly budget independently. Furthermore, it was revealed that if Ecuador itself managed the protection of the natural area in the Galapagos with the same amount of money, the actions implemented would be more effective than those managed by the bank.
Solutions … ?
So what are the solutions to an increasingly aggressive capitalist system? And from which debts arise, tax havens Tax havens
Tax haven Territory characterized by the following five (non-cumulative) criteria:
(a) opacity (via banking secrecy or another mechanism such as trusts);
(b) very low taxation, or even zero taxation for non-residents;
(c) legislative facilities allowing the creation of shell companies, without any obligation for non-residents to have a real activity in the territory;
(d) lack of cooperation with tax, customs and/or judicial administrations of other countries;
(e) the weakness or absence of financial regulation.
Switzerland, the City of London and Luxembourg host the majority of capital placed in tax havens. There are of course also the Cayman Islands, the Channel Islands, Hong Kong, and other exotic places. Wealth holders who want to escape taxes or those who want to launder capital that comes from criminal activities are directly helped by the banks which “pass” the capital through a succession of tax havens. The capital is generally first placed in Switzerland, the City of London or Luxembourg, then passes through other even more opaque tax havens in order to complicate the task of the authorities who would like to follow in their footsteps and ends up reappearing most of the time. time in Geneva, Zurich, Bern, London or Luxembourg, from where they can travel to other destinations if necessary. , vulture funds Vulture funds
Vulture funds Investment funds that buy debt securities from countries experiencing financial difficulties on the secondary market (the debt flea market). They obtain them at an amount much lower than their nominal value, by buying them from other investors who prefer to get rid of them at a lower cost, even if it means suffering a loss, for fear that the country in question defaults on payment. . The vulture funds then demand full payment of the debt they have just acquired, going so far as to attack the debtor country before courts which favor the interests of investors, typically the American and British courts. , debt-nature exchanges? The CADTM and Attac presented us with a variety of possibilities to counter this financial system in an anti-capitalist project. Here are a few :
create a wide variety of taxes in order to take into account social inequalities and not accentuate injustices; decentralize the tax system; ensure that basic products are exempt from VAT or any consumption tax; set up a annual salary ceiling, fight against vulture funds, tax evasion, etc.
To know more
regarding tax evasion, see Edward of Guise, Tax evasion, a key to public actionwhich also reports on a UÉMSS workshop.Denault, Alain2017, What is Total the sum of? Multinationals and perversion of lawpublished in Europe by Rue de l’Échiquier and in Quebec by ÉcosociétéSamson-Dunlop, François2019, How tax havens ruined my breakfastpreface by Alain Deneault, Écosociété.
Concerning tax evasion: here is the trailer for the film The (very) great escape, by Yannick Kergoat and Denis Robert, released in December 2022, available in streaming.
1694361879
#CADTM #ATTAC #debt #system #globalized #capitalism