International investors have imposed their will on the world by means of a “creditors cartel”â€”embodied in the IMF, the World Bank, the G-7/8, and their creatures and allies. They have imposed cruel and destructive policies on the people of debtor countries. The elites that control most debtor governments have often cooperated with the foreign investors and enriched themselves. Now the people of Argentina have said: Enough!
As long as Argentines act alone, the creditors cartel will have the power to impose further cruelties on themâ€”and they’re preparing to do so. But there’s a strategy for turning the tables on the moneylenders.
Popular organizations from all over the world are meeting at the end of January in Porto Alegre, Brazil. They have the opportunity to fire a (non-violent) shot that will be heard around the world: The launching of a global campaign for a debtor’s cartel.
It is common knowledge among lendersâ€”but a secret they keep from borrowersâ€”that creditors are dependent on their major debtors for their own well-being. If debtors can’t or won’t service their debts, creditors are left holding the bag. But the only way today’s debtor countries can take advantage of such dependence is to break out of the current framework in which each debtor country approaches its problems separately, as a matter between it and the creditors cartel. Just as a worker is individually powerless before a boss but strong in a union with other workers, so today’s debtor countries need to work together to limit their domination by international creditors. Once debtor countries begin dealing collectively with their creditorsâ€”summed up in the phrase “debtors cartel”â€”the result could be a radical shift in the global power configuration.
The threat of a collective moratorium on debt repayment provides the implicit equivalent of a strike. It provides a way to block the kind of reprisals by the debtors cartel that are now being threatened against Argentina.
Of course debtor governments and the elites that control them are unlikely to pursue such a strategy on their own initiative. But the emergence of a global justice movement, combined with the growing rejection of neoliberalism among the people of the debtor countries, opens new possibilities for pressuring them to do so â€“ or for replacing them with others who will. Here’s a resolution embodying that strategy that anyone is welcome to borrow or adapt.
1. International investors have cooperated through a united frontâ€”the IMF, the World Bank, the G-7/8, and their minions. But they have required debtor countries to negotiate with them one by one.
2. The effect is a drastic imbalance of power that has devastated both poor countries (“Less Developed Countries” or “LDCs”) and industrializing ones (“Newly Industrialized Countries” or “NICs”).
3. While debtor country governments and elites have too often cooperated with foreign investors for their own enrichment, Argentina has shown that popular movements can force policies to change. But governments that abandon neoliberal policies face the threat of devastating reprisals from the creditors cartel. The solution is debtor solidarity.
4. We demand that the creditors and those who represent them, including the IMF, the World Bank, and the G-7/8, agree to bargain with debtor countries collectively.
5. We will campaign for debtor governments to develop a united front with each other and with popular movements to press this demand.
6. We will campaign for them to back this demand with the threat of a joint moratorium on debt payments. Such a moratorium should continue until the creditors and their representatives agree to negotiate with the debtor nations, in consultation with popular representatives, on an agenda that includes the following:
Capping the percentage of export earnings that can be required for debt service. This is essentially a way of refusing to run debtor countries economies to service their debts rather than to meet the needs of their people.
Eliminating loan conditionalities that prevent countries from expanding domestic markets, providing credit for their farmers and businesses, and using what resources they have to develop their own economies rather than paying interest to the global rich.
Canceling the debt of the poorest countries.
Providing international support for nationally-imposed “capital controls” that limit the flow of speculative capital into and out of countries.
Reducing the power of the IMF and other international financial institutions and substituting a system of overlapping organizations representing particular regions and particular functions, such as environment and health, coordinated through the UN system.
Replacing IMF “rescue operations” with an insolvency mechanism for indebted countries, with arbitration panels representing both debtors and creditors, which would take into account the need for social safety nets to protect a minimum of human dignity of the poor.
Implementing an international “Tobin Tax” on flows of speculative “hot money” to reduce international financial volatility and provide resources for poorer countries.
Such an idea is already in the wind, promoted by groups like Jubilee South, whose South-South Summit Declaration stressed â€œthe need for collective action among the Southâ€ and the formation of a strategic alliance to unite on issues like â€œdebt repudiation.â€
Similarly, representatives of popular organizations in 13 African countries meeting in Lusaka, Zambia, called for “collective repudiation of illegitimate foreign debt payment” and “linking our arms across the borders” to create “pressure on our leaders to establish a Debtors’ Cartel.”
The idea has also been widely discussed in the PT, the Brazilian party whose most visible leader, Lula, is the current front-runner in the upcoming presidential election.
Next steps can be as simple as adding such debtor country cooperation to local and national movement programs; including it in the demands of mass actions opposing structural adjustment; and injecting it into election campaigns, demanding that parties claiming to oppose IMF policies pledge such international cooperation.
Such an approach also provides a natural linkage to workers in the North. IMF conditionalities forced countries such as South Korea, Brazil, and Russia to export manufactured goods at rock-bottom prices based on depression-level wages.
This has contributed substantially to mass layoffs and unemployment, especially in U.S. manufacturing. A joint attack on structural adjustment-style policies and support for growth driven by domestic demand in Third World countries could serve as the basis for a powerful alliance between First World labor and a wide range of forces in the Third World.
Even the threat of a concerted default is a financial atom bomb; brandishing it might change the entire dynamics of global financial relations.
Jeremy Brecher, Tim Costello, and Brendan Smith are the authors of Globalization from Below: The Power of Solidarity (South End Press) and the producers of the video documentary Global Village or Global Pillage? For more information about their work, visit www.villageorpillage.org.