Press release

CADTM urges all developing countries to turn down the G8 injunctions

16 July 2006


The two measures that emerged from the 2005 G8 G8 Group composed of the most powerful countries of the planet: Canada, France, Germany, Italy, Japan, the UK and the USA, with Russia a full member since June 2002. Their heads of state meet annually, usually in June or July. summit no longer delude anyone as they turned out to be no more than empty promises: a debt cancellation for poor countries and more aid for Africa. Actually those countries’ predicament is getting worse by the day.

What emerged from the 2006 G8 summit (remembering that the G8 is a G7 that tolerates Russia and made the most of Constantine Palace in St Peterburg for this year’s meeting) ? Apparently eyes were rivetted on the planet’s hot spots: the Middle East and North Korea. Energy was a haunting issue, whether we think of oil (the price of which has never been so high), gas (with Russia as a major exporting country), or nuclear power (in Iran and North Korea). Infectious diseases and education were merely mentioned for the sake of the summit’s public image.

In fact the G8 had to face one of the most uncomfortable situations it ever found itself in. Currency reserves in developing countries have never been so high: over USD 2,100 bn, 925 bn for China only. This far outreaches the combined reserves of the USA and EU and means that developing countries are net creditors for developed countries and could thus easily break away from the injunctions of the G8 and the international institutions that faithfully serve it. The demands for economic liberalisation, for cancelling subsidies for basic commodities Commodities The goods exchanged on the commodities market, traditionally raw materials such as metals and fuels, and cereals. , and for more privatisations only serve the interest Interest An amount paid in remuneration of an investment or received by a lender. Interest is calculated on the amount of the capital invested or borrowed, the duration of the operation and the rate that has been set. of the powerful. But this would require a political determination among leaders of the South to oppose such demands, which is far from being the case. Only the action of citizens in the South can bring their governments round to act in the interest of their population.

CADTM claims that developing countries ought to leave the IMF IMF
International Monetary Fund
Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.

http://imf.org
, the World Bank World Bank
WB
The World Bank was founded as part of the new international monetary system set up at Bretton Woods in 1944. Its capital is provided by member states’ contributions and loans on the international money markets. It financed public and private projects in Third World and East European countries.

It consists of several closely associated institutions, among which :

1. The International Bank for Reconstruction and Development (IBRD, 189 members in 2017), which provides loans in productive sectors such as farming or energy ;

2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;

3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.

As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.

and the World Trade Organisation WTO
World Trade Organisation
The WTO, founded on 1st January 1995, replaced the General Agreement on Trade and Tariffs (GATT). The main innovation is that the WTO enjoys the status of an international organization. Its role is to ensure that no member States adopt any kind of protectionism whatsoever, in order to accelerate the liberalization global trading and to facilitate the strategies of the multinationals. It has an international court (the Dispute Settlement Body) which judges any alleged violations of its founding text drawn up in Marrakesh.

, thus making these institutions invalid. They could pool half of their currency reserves to build new institutions that would actually aim at meeting fundamental human needs, which is not currently the case.

Citizens of the South have been compelled to pay back several times largely odious debts that were contracted by governments without any democratic consultation. CADTM considers that developing countries should come together in a united front determined not to pay back their debts.

CADTM also speaks up against the repression directed against the social movements that wanted to demonstrate their opposition to the recent G8 summit in Russia.

Finally CADTM regards the G8 as a thoroughly illegitimate instance. We support the Peoples’ Forum that was held in Gao (Mali) at the same time as the G8 summit and we will keep fighting the logic put forward by the G8 as we launch massive actions on the dates of the IMF and WB autumn meetings on 19 and 20 September.




Translation: Christine Pagnoulle

CADTM

COMMITTEE FOR THE ABOLITION OF ILLEGITIMATE DEBT

35 rue Fabry
4000 - Liège- Belgique

00324 226 62 85
info@cadtm.org

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