The debt bomb In his new book Your money or your life, Eric Toussaint describes the way in which third world debt increases the power of imperialist states and multinational corporations. This interview was first published in Spectre magazine • One of the issues discussed in your book is the increasing concentration of wealth in fewer and fewer hands. You say that in 1996, the richest 348 people in the world owned one thousand billion US dollars; two year later, the richest 200 had that much money. Is it some inherent feature of the system, or is it something new and disfunctional? Eric Toussaint: If there was a sort of world government capable of defending the general interest of capitalism, this concentration of wealth, which of course is just a tiny part of total global demand, would be condemned something that goes against the general interest of the capitalist system.
But there is no such government, no central management of the system. On the contrary, capitalism is a mode of production which is, to some extent, anarchic in its functioning. Global impoverishment poses problems for the rate of growth, by putting a brake on the realisation of the value of the sum of goods produced. But this does not stop each capitalist from pursuing his or her own immediate interests, which include the reduction of wages. The result is that each individual capitalist contributes to this impoverishment.
In addition, the capitalist seeks advantage in the competition with others, and this can lead to concentration of ownership, hostile takeovers and so on. The resulting oligopoly (fomination of the market by a few firms) can also be and Reagan, neoliberalism made its comeback.
Now, however, it's entering a new crisis, because the economic model which it advocates is itself in crisis. The rate of growth in the industrialised countries remains very low, and the South East Asian countries which are supposed to be its big success are experiencing huge problems. In three great regions of the world where we had been told that the neoliberal model has triumphed—Latin America, Central and Eastern Europe, and South East Asiawe have witnessed crises of the system.
Public opinion is increasingly calling into question the model and the tenets upon which it's based for example, the idea that private enterprises are necessarily more efficient than those in public ownership.
All these privatisations have shown this to be untrue, while it is also evident that privatised concerns have lost any commitment to public service. People see the need for renewed regulation by the state.
We've seen such economic instability, the growth of speculation, International Viewpoint #317-318 January 2000 29
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* the debt bomb the collapse of a number of important finance houses. Moreover, in this last case governments have intervened to prevent an individual instance of instability mutating into a full-scale systemic crisis — an example was when the US central bank, the Federal Reserve, used direct, authoritarian methods to rescue the hedge fund Long Term Capital Management.
A true neoliberal would have said, let it go bankrupt, the state should not intervene, the market must decide who
A lot of people began to think, well, these people don't respect their own principles, and if they don't respect them when it comes to rescuing rich investors why not drop them when it's a matter of the common interest, of the good of humanity?
The result is that a growing section of the world's population is returning to the view that the fundamental elements of life — water, air, the general environment, the food supply - are public goods, not private goods.
They are blaming privatisation, deregulation and so on for mad cow disease, for the dioxin scandal, for all kinds of environmental degradation, for exposing us to the dangers of genetic manipulation of foodstuffs.
More people are convinced that the general interest would best be served by such matters as water distribution being brought into public ownership, or that public bodies should regulate the distribution of food.
This represents the return of a socialist way of looking at things, even if the term socialist' remains discredited in many people's eyes by the experience of Stalinism in the east
International Viewpoint and social democracy in the west. As recent elections have shown, people look at Schroder or Blair and they're not too happy with what they see. • A major theme of your book, and of your broader political work, is the problem of Third World countries' indebtedness. How did most African countries and many poorer countries elsewhere came to be burdened by such huge, unserviceable debts? Poorer countries were encouraged by western banks to borrow money during
The present debt which first blew up in 1982, is due to the combined effects of the sudden increase in interest rates by the US Federal Reserve towards the end of 1979, the fall in export revenues and a halt in further loans from banks.
It has been managed by the governments of the North and multilateral financial institutions — the IMF and World Bank - in order to force back into a cycle of dependence those countries of the Third World and Eastern Europe which had succeeded in acquiring a certain level of industrialand therefore a measure of muscle. As for the least developed countries, their subordination to the interests of the leading industrial powers has been enhanced.
1982 and 1998, countries of the periphery - that's to say those of the Third World Central and Eastern Europe — repaid more than four times the total sum they had borrowed. Despite this, their total debt grew by precisely the same
International creditors - the IMF, World Bank, the Club of Paris (a
Г grouping of western creditor nations) and the Club of London (made up of western private banks) dictate terms, most importantly in the form of Structural Adjustment programmes (SAPs), which are no more than a tool designed to bring the debtor countries to heel. • What are the general effects of this debt burden, on the countries themselves, and internationally? The debt system is an enormous mechanism for transferring the wealth of wage-earners and small producers of the South to the capitalists of both North and South. It isn't only the capitalists of the rich countries which benefit, but privileged elites within the Third World who profit from impoverishment of their own populations.
In 1998 $250 billion was repaid by the Third World countries (excluding the former Soviet Bloc) - and only $40 billion received in Development Aid (ODA). Moreover, this transfer of wealth is not only attractive in a direct sense, but because it enhances the domination of the most industrialised nations-the member states of the G7—over the periphery.
In recent years we've seen that, by reinforcing the debt, the G7 countries and the multinational corporations (MNCs) based in them have succeeded in forcing those countries which had created for themselves a certain space for manoeuvre — South Korea, Brazil, Mexico — to accept SAPs dictated by the IMF and World Bank.
Behind these SAPs you can clearly see the interests of western multinationals, which have been able, for half price for all new readers!
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example, to buy — acquiring it in dribs and drabs - parts of South Korean corporations.
The most striking result of the debt, however, is of course the direct impoverishment of huge swathes of the world's people. There is a large number of countries in which more than half the population is living below the level of absolute poverty - defined by the World Bank as US$1 a day. • In your book you criticise the "dollar a day" definition of poverty. Yes, because for example if you go to Brazil, or even a much poorer country such as Senegal, you simply can't survive on $1 a day. The fact that people do survive on such an income, is because of collective solidarity which doesn't work through cash but through mutual aid, women's domestic labour, things which stand outside the framework of market relations.
Some of the effects of this terrible impoverishment were brought out at the recent conference held in Lusaka on the subject of the AIDS pandemic. Life expectancy in certain African countries — Uganda, Tanzania, Rwanda — will fall by up to 12 years in the next decade. This is directly linked to the debt crisis, by the simple fact that the countries which have suffered most from AIDS have paid out, between them, four times as much in exterior debt repayments as they have been able to spend on addressing the crisis through health education or health care. Most people in these countries have no access to basic health care, yet the debt must be repaid. It's significant, too, that no G7 minister was present at this conference.
When the G7 met earlier this year in Cologne and was presented with a petition of 17 million signatures organised by the debt relief campaign Jubilee 2000 with the support of celebrities like the rock singer Bono, they had to come up with some response. But the media's attention moves on. When it comes to proposing concrete measures, these heads of state are nowhere to be found. Neither are the journalists. • In the short term, what can and what should be done? The debts must be annulled. In order to achieve that, however, we must create very different relations of forces than exist today. It wouldn't be hard for the system to annul Third World debts, because they represent only a small proportion of the world's total public external debt — about $2,000 billion, compared to around $6,000 billion of debt of the EU member states. So, if they worked together, the EU, USA and Japan could annul Third World debt without posing any threat to the world's financial system.
But it isn't going to happen. It's only by challenging the existing arrangements of power that things will be changed - by a political struggle. • Every time there is a crisis in a developing country, such as that in East Timor now, we in the West are asked by a range of organisations to give as generously as possible. Every time you respond to such appeals, however, you're aware that emergency aid is by definition no solution to the problems that lay behind the crisis, behind all of these crises. What can we in the west do about those fundamental problems? Well, the political struggle to which I've just referred needs to be combined with other campaigns, to change the trade relations between North and South to make them more equitable, to establish a new global economic order.
Then there is the question of the complicity between the North's financial institutions and the rich elites of the bnshertek аЯн.
South. For example we need a public inquiry into the location of funds salted away in western banks or stock portfolios by Third World dictators and the capitalists who surround them, and a means of returning these funds, where they are the result of theft, to the peoples from whom they have been stolen.
We also a tax on capital transfers, something like the so-called Tobin tax. There are numerous proposals worthy of consideration.
A movement, ATTAC, has grown up internationally to campaign for such a tax, though it lacks support in Britain and other English-speaking countries, and is also weak in the Netherlands and, with the exception of Norway, in the Nordic countries.
At the moment it's strongest in the Latin countries of Europe, and in certain developing countries, notably Brazil. the Philippines and South Korea.
As an international campaign ATTAC can play an important role in unifying activists in different kinds of campaigns. The interests of international solidarity groups, feminists, environmentalists, trade unionists, people campaigning against unemploy-
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* the debt bomb ment, are all touched by the failure to tax speculative capital and the resulting instability, the financialisation of the economy.
One important matter which ATTAC hasn't taken up, however, is the development of increasingly aggressive military alliances, principally NATO. • We have seen force used recently, and a complete and unilateral redefinition by NATO of its role in the world. Are we facing a real threat of militarism? Some say that NATO'S attack on Yugoslavia means that nothing will ever be the same again. Well, I don't agree completely with that statement, but I would agree that the recent war reinforced the US position of leadership, its status as principal power at every level—military, economic, political...
This habit of military intervention to create or support states resulting from fragmentation of bigger states is leading to the existence of numerous nations whose fragility makes them easy prey for the multilateral financial institutions.
Look at the way in which the European Union and United States intervened in Bosnia - the turningpoint was already evident. The Dayton Accords which ended the Bosnian War state that the president of Bosnia's Central bank must be a citizen neither of Bosnia nor of any of its neighbouring countries. The appointee is in fact a western European whose salary is paid by a western multilateral financial institution, the European Bank for Reconstruction and Development. (EBRD). In other words, one of the fundamental institutions characterising a sovereign state is, in the case of Bosnia, completely controlled by external forces. Naturally if foreign powers pay the bank president's salary he or she can only follow the wishes of these powers. So what we're seeing in Kosova was already happening Bosnia.
Apart from this quibble, I agree with
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Amsterdam 32 International Viewpoint #317-318 January 2000 your remark. Fundamental changes have taken place in the last few years which force us to reassess the question of how to combat these military alliances, force progressive opinion to make this one of our priorities.
Not only Kosova, but the Gulf War and armed attacks on Afghanistan and Sudan in 1998, all clearly show that if it believes that its national security interests are threatened, the US will not be restrained by any idea of respect for national sovereignty.
On this point, however, I want to make one thing clear. I do not believe that we should support the creation of a European army or reinforcement of European armed forces to put them on a footing to be deployed anywhere and everywhere in the world. We have to struggle against EU militarism as well as its US counterpart. We should be campaigning for the dissolution of military pacts, a graduated but total demilitarisation, an end to the arms industry, and the development of radical, peaceful solutions to conflicts. • Because the same processes are going on in almost every country of the world, a response which attempts to organise across borders and other traditional barriers is imperative. Do you think the European Union stands in the way of such cooperation, or is it reformable? International cooperation is indeed vital. I am neither 'pro-European' nor nationalist. We need an alternative European project as an element of a new international order, a Europe which admits to an historic debt to the peoples of the periphery, one which would find ways of transferring wealth from rich to poor instead of in the opposite direction. I would like to see a Europe which took sides against existing global power relations, instead of one which seeks to for global leadership with Japan and the US. But any such Europe, a people's Europe, would have to ensure maximum autonomy of its constituent peoples, suppressing international frontiers, but not national identities and different cultures. * - Eric Toussaint is Chair of the Committee for the Abolition of Third World Debt, based in Brussels and known by its French initials, CADTM. He was speaking to Steve McGiffen (Spectre's editor) and Marjorie Tonge. For more information, contact Committee for the Cancellation of the Third World Debt 29 rue Plantin 1070 Bruxelles tel (322) 527 59 90 fax (322) 522 62 27 <cadtm@skynet.be> http://users.skynet.be/cadtm There are two English editions of Your Money or Your Life: The Tyranny of Global Finance. 1) by Pluto Press, 1999, London-UK (ISBN 0 74531414 0 pbk) and Mkuki na Nyota Publishers, Dar es Salaam- Tanzania (ISBN 9976 973 54 3 pbk) 322pp 2) by VAK Vikas Adhyayan Kendra, 1999, BombayIndia, 302pp. The English translation is by Raghu Krishnan. First published in French: La Pinance contre les Peuples, Edit Luc Pire-Bruxelles / CADTMBrussels / Syllepse-Paris / CETIM-Geneve, 1998, 396pр. Second edition published in September. 99. There are also editions in Spanish (Nueva Sociedad, Caracas), Turkish (Yazhin Istambul), Dutch (VUB Press Brussels) and German (Neue ISP Verlag, Cologne)
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