Now more than ever, supporting abolition of the debt is a priority!

5 May by Brigitte Marti


Photo Credit 1: Sara Bakhshi

The covid 19 pandemic has demonstrated that the neoliberal system that leads the world is detrimental to health care systems, public services, and bad for people, especially for the poor and third world populations. We should remind the globalized neoliberal leadership that they asserted not long ago that austerity measures were indispensable to save the economy of an indebted country. There was no alternative. Austerity policies were touted as the only way to save the population of a country. Now, those same countries have their underfunded public services and health care systems unable to guarantee proper safeguards to the people. This scenario exposes that the distribution of poverty is based on exploitation that is gendered, racialized, and divided by class.

The abolition of the public debt in third world countries has been discussed in supranational assemblies such as the EU, but what exactly is public debt? In the 1980s, “development” became synonymous with Structural Adjustment Programs, (SAPs), which forced developing countries to incur enormous public debt. The purpose of building public debt is to indebt the entire society, begetting a system of inequality. Today those countries subjected to SAPs are facing the coronavirus pandemic without health resources as they have been whittled away to satisfy repayment of the debt.

OXFAM’s recent press release reveals two faces of the same coin. One pertains to public debt management of the third world countries and the other one to the budget priorities imposed on these countries. According to Oxfam, 64 countries of the Global South have to spend more on repayment of their “public debt” than health care. For instance, Ghana spends 11 times more on its public debt than on its health care system. Although this reality is not new, it has gone mostly unnoticed and not been considered as a risk for the population. Oxfam highlights that 500 million people in the Global South could face dire poverty, according to UN researchers. Already, 265 million people are facing acute hunger, according to the WHO, showing that “the pandemics are also hunger.”

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
and 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.

promoted Structural Adjustment Programs, SAPs. Will it be time for the IMF to repay its ethical debt to these countries, now that these countries are facing pandemics without protection of any kind? The people in these countries, far from being protected by development, have lost their protection, because the governments of indebted countries were forced to serve the market, not the people. The great ideal of human rights has too often been a place mediated through the neoliberal market-take-all ideology.

The overwhelming influence of the US economic power has influenced the way health care systems around the world work, and the US health care system is the worst system among the OECD OECD
Organisation for Economic Co-operation and Development
OECD: the Organisation for Economic Co-operation and Development, created in 1960. It includes the major industrialized countries and has 34 members as of January 2016.

http://www.oecd.org/about/membersandpartners/
countries. It is a for-profit Profit The positive gain yielded from a company’s activity. Net profit is profit after tax. Distributable profit is the part of the net profit which can be distributed to the shareholders. system that has no 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. in providing care for the sake of care. In this system, money should not be spent on health care or public services but only on a guaranteed return on investment, removing the idea that health is a basic necessity to guarantee human rights. This approach to health care has dominated the world’s health systems for decades, infecting universal health care system like a contagious virus.

Rebecca Solnit recently asserted: “Coronavirus does discriminate because that’s what humans do.” But who are the ones who discriminate? We certainly don’t feel that we do, and still, we do. We do by not paying attention to systems that promote discrimination while asserting that they do the opposite. We need to organize to persistently denounce, expose, and fight what the globalized neoliberal economy has created. The coronavirus has shown that the prescriptions made by the neoliberal even liberal economists, the gurus of modern power, kill. They warped any political debate to install a mechanism of inequality keeping the entire society eternally indebted. Politics of austerity have spread in every possible niche, including in industrialized countries, affecting all public services. Every nation has seen the number of their hospital beds melting away. France, which had the best health care system in 2000, has seen its health care stripped;, for example the number of beds for 1000 people went from 11 in 1980 to 6 in 2019. In the US that number went from 7.9 in 1970 to 2.8 in 2016. By the same token, funding allocated to fundamental research on virology was curtailed. When the coronavirus spread, the absence of adequate health care resources and research transformed the contamination into a health crisis. This situation is cruel and absurd, and people are starting to talk about it.

Women, especially women in the Global South, are the most vulnerable to reductions of public services. About 2/3 of their work is unpaid work. This unpaid work represented about 13% of total GDP GDP
Gross Domestic Product
Gross Domestic Product is an aggregate measure of total production within a given territory equal to the sum of the gross values added. The measure is notoriously incomplete; for example it does not take into account any activity that does not enter into a commercial exchange. The GDP takes into account both the production of goods and the production of services. Economic growth is defined as the variation of the GDP from one period to another.
in 2018. This discrimination is systemic and profoundly anchored in the patriarchal system. Their unpaid work accounted for 13% of global GDP in 2018. It is particularly important in third world countries.

The priorities have not been on health, clean water, education, local agriculture. They have not been on building a more just society between the North and the South, between the wealthy and the poor. Being poor is determined by gender, race and class. This health crisis has demonstrated that neoliberal leadership had no interest in the protection of the population. In this time of pandemic, the populations who are paying a heavy price are the most vulnerable of the society, whether they live in developing countries, refugee camps, prisons and jails in the United States, or detention centers. This pandemic also offers a window to build kindness and expand global solidarity at the grassroots level. Debunking the official mythical discourse through a transnational feminist lens has to occur to transform the system. The priorities are clear, treating life with respect is the basic of global well-being. This means remove the financial burden on the poor as the wealthy have built hell. Support debt abolition!

Support the abolition of the debt : http://www.cadtm.org/English

Source: Women in and Beyond the Global



Brigitte Marti

Member of Women Included
Website: https://womenincluded.org/en/

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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