Support CADTM Pakistan and strengthen its campaign for the abolition of Pakistan’s foreign debt

24 September 2010


Call for solidarity with the Pakistani people! Make a donation to support CADTM Pakistan and strengthen its campaign for the abolition of Pakistan’s foreign debt

Pakistan has recently gone through unprecedented floods which have affected almost 21 million people. Immediate needs for the displaced people living in camps are huge (drinking water, medical care Care Le concept de « care work » (travail de soin) fait référence à un ensemble de pratiques matérielles et psychologiques destinées à apporter une réponse concrète aux besoins des autres et d’une communauté (dont des écosystèmes). On préfère le concept de care à celui de travail « domestique » ou de « reproduction » car il intègre les dimensions émotionnelles et psychologiques (charge mentale, affection, soutien), et il ne se limite pas aux aspects « privés » et gratuit en englobant également les activités rémunérées nécessaires à la reproduction de la vie humaine. , food, etc.) and the sums pledged by the “international community” for emergency relief are far from being sufficient: the UN asked for $460 million dollars and only got 294 million.

Reconstruction will be one of the greatest challenges as the scale of damage is tremendous : houses, schools, hospitals, roads, bridges, power lines, communication infrastructure, etc. have been destroyed. Another huge challenge is agriculture. The floods, which have hit particularly fertile lands, have swept crops and livestock away, thus making food prices skyrocket and jeopardizing the country’s food security and sovereignty.

The donor countries and the International Financial Institutions such as the International Monetary Fund 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
(IMF), 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 Asian Development Bank (ADB) intend to benefit from Pakistan’s reconstruction since they have promised to increase their lending to the country. The new loans are added to an already high amount of debts ($54 billion), the majority of which is “odious debt Odious Debt According to the doctrine, for a debt to be odious it must meet two conditions:
1) It must have been contracted against the interests of the Nation, or against the interests of the People, or against the interests of the State.
2) Creditors cannot prove they they were unaware of how the borrowed money would be used.

We must underline that according to the doctrine of odious debt, the nature of the borrowing regime or government does not signify, since what matters is what the debt is used for. If a democratic government gets into debt against the interests of its population, the contracted debt can be called odious if it also meets the second condition. Consequently, contrary to a misleading version of the doctrine, odious debt is not only about dictatorial regimes.

(See Éric Toussaint, The Doctrine of Odious Debt : from Alexander Sack to the CADTM).

The father of the odious debt doctrine, Alexander Nahum Sack, clearly says that odious debts can be contracted by any regular government. Sack considers that a debt that is regularly incurred by a regular government can be branded as odious if the two above-mentioned conditions are met.
He adds, “once these two points are established, the burden of proof that the funds were used for the general or special needs of the State and were not of an odious character, would be upon the creditors.”

Sack defines a regular government as follows: “By a regular government is to be understood the supreme power that effectively exists within the limits of a given territory. Whether that government be monarchical (absolute or limited) or republican; whether it functions by “the grace of God” or “the will of the people”; whether it express “the will of the people” or not, of all the people or only of some; whether it be legally established or not, etc., none of that is relevant to the problem we are concerned with.”

So clearly for Sack, all regular governments, whether despotic or democratic, in one guise or another, can incur odious debts.
” since it was contracted during Musharraf’s previous dictatorial regime.

It is absolutely necessary to demand another response to the crisis in Pakistan. It cannot be accepted that in such circumstances the Government of Pakistan continue repaying its creditors (every year $3 billion is dedicated to debt servicing) and mortgage Mortgage A loan made against property collateral. There are two sorts of mortgages:
1) the most common form where the property that the loan is used to purchase is used as the collateral;
2) a broader use of property to guarantee any loan: it is sufficient that the borrower possesses and engages the property as collateral.
the future of its citizens by going into more debt. The immediate and unconditional abolition of Pakistan’s foreign debt is a matter of international justice and solidarity.

CADTM Pakistan, together with other social movements, associations, trade unions and political parties [1], has launched a campaign calling for the immediate suspension of repayments, the refusal of new loans and the unconditional abolition of Pakistan’s foreign debt. The campaign has already received national and international support. However it is necessary to raise awareness in Pakistan and elsewhere in order to intensify the pressure put on lending countries and institutions as well as on the Government of Pakistan. [2]

To bring your support to CADTM Pakistan, make a donation to CADTM Belgium. All the money collected will be transferred to CADTM Pakistan.
You can make a donation by international transfer to CADTM’s bank account, with the following mention : “support CADTM Pakistan” IBAN : BE06 0012 3183 4322 –Swift Code : GEBA BE BB

Thank you for your support!




Footnotes

[2Avaaz has launched a petition to call for the cancellation of Pakistan’s debt. To sign on, see : http://www.avaaz.org/en/pakistan_cancel_the_debt

CADTM

COMMITTEE FOR THE ABOLITION OF ILLEGITIMATE DEBT

8 rue Jonfosse
4000 - Liège- Belgique

00324 60 97 96 80
info@cadtm.org

cadtm.org