Europe should learn from Argentina's experience of fighting off vultures, before it's too late
Last year we won a campaign against what we call vulture funds - companies that buy up defaulted developing country debt cheaply in order to sue the country concerned for the full value of that debt. These companies have blighted countries like Democratic Republic of Congo, Zambia and Liberia for years, threatening to drain their already depleted treasuries in order to make a substantial profit.
The day before the British Parliament was dissolved for the 2010 election, parliamentarians passed a law that effectively made such activity impossible against low income countries in UK courts - at least on the basis of old debts.
Made permanent two months ago, the law contributed to vulture funds backing off from a case they brought against Liberia in the UK last year. What could have cost Liberia $40million ended up being settled for $3million - good news for one of the most impoverished countries in the world.
The British law against vulture funds is a world first, but it is only one small step towards a more just debt system. As things stand, the law protects up to 40 very poor countries. But dozens more indebted countries from Ecuador and Peru to Vietnam and Tajikistan, not to mention Greece and Portugal, are not protected by the law.
Finance is able to go on profiting from a country's debt crisis. And it's something Europe might need to wake up to pretty soon.
Last month a case against Argentina in a UK court highlighted this need for further change. A vulture fund called NML has been after Argentina for years. NML is a subsidiary of Elliott Associates, a US hedge fund that pioneered 'vulture fund' activity by winning a case against Peru in the 1990s, getting back 400% what they paid for Peru's debt.
Argentina carried out one of the biggest defaults in history back in 2001 when the people of that country decided they'd had enough of implementing IMF policies which were only deepening their crisis. As an aside, activists had been pushing for Argentina to have some of its debt cancelled for many years, regarding it as illegitimate. The country first became indebted under the brutal dictatorship of the late 1970s and early 1980s, a period is known as the 'dirty war' in Argentina, when 30,000 people were 'disappeared' and loans poured into the military, speculation, capital flight and interest payments.
In any case, default was undoubtedly the right thing to do. After several years of stagnation Argentina's economy started growing within a few months.
Even when right, default is never pain-free. Argentina has spent many years convincing its creditors to accept a write down on their debts - essentially accepting they will not get all of their money back, and agreeing to a restructuring under which they will get some of it back.
Vulture funds have prolonged this difficult process significantly. In fact vultures never risked losing out in a default because they only buy debt cheap after a default has already occurred, or at least when it's in sight. They then harass the country concerned to pay up, even while other creditors accept a more reasonable approach.
NML, based in the Cayman Islands, has been harassing Argentina through foreign courts for years. It claims Argentina owes it for bonds which it bought for only half their face value. Last month it won a stage of its case in London, when the UK high court ruled that Argentina's state immunity cannot be used to prevent NML from enforcing previous court judgments against the country.
NML is part of a lobby group called the American Task Force Argentina which is trying to change US law to give more protection to the vultures. Their activities include pressuring the US Government to ensure no World Bank funds are given to Argentina and trying to throw Argentina out of the G20. In other words, they aim to capture US foreign policy in order that this handful of creditors get paid.
Argentina's problems today could well become Europe's problem tomorrow. A recent article claims that hedge funds are buying up Greek debt on the so-called 'secondary debt market'. Just as in the NML case, Greek debt is currently selling for 50 percent of its face value. The vultures could make a lot of money - and if Greece does default as seems almost certain, they will hound the country for years to come.
There are solutions to these practices, but they involve governments taking action which would protect people from the unscrupulous demands of vulture investors. This in turn means challenging the notion that the rights of finance trump the rights of people.
A piece of legislation proposed by Congresswoman Maxine Waters in the US House of Representatives in 2009 would have capped the profits vultures could make on country debt to a certain percentage of what they paid for the debt. This would mean the type of legal activities vultures engage in against Argentina would be unprofitable.
Another solution which has been on the table for many years is the idea of a Debt Court - a neutral body at an international level which could write off debt which is unjustly contracted or is unpayable. Again, such a body would have the effect of making future loans more responsible because of the risk that irresponsible loans will not be paid back.
One way or another we must move the balance against the 'right of finance', towards the right of the people. This has been a serious matter for developing countries for many years. As the European crisis lurches into default, it's time for people in the developed world to make sure their countries' debt does not become rich pickings for the most unscrupulous of companies.
This article first appeared on the Huffington Post UK.
Tuesday 2 August 2011
Debt audits and a new economic vision
It will come as no surprise to the hundreds of people gathered for a conference I have just returned from, that Greece’s ‘bailout’ package agreed 12 months ago has failed to provide a solution to the country’s debt problems.
Organised by an unprecedented cross-section of Greek civil society, the international event launched the call for Greece (and now Ireland) to open their debts to the people of those countries for a public discussion as to how just and legitimate those debts really are.
Campaigners from Brazil, Peru, the Philippines, Morocco and Argentina told Greek activists to 'stand on their shoulders’ and not go through 30 years of devastating recession at the behest of international institutions like the International Monetary Fund.
The burgeoning European movement in opposition to debt repayments and austerity is making concrete links with groups from the global south, and it expresses a confidence and rationalism a million miles away from the governments of Greece and Ireland, which have followed policies which are punishing ordinary people in order to repay reckless bankers.
It is simply not possible that the policies being inflicted on Greece, Ireland and now Portugal will reduce the debt burden of those countries – the very opposite will happen, as was seen from Zambia in the 1980s to Argentina at the beginning of the last decade. Similar policies to those being inflicted on Europe saw Zambia’s debt-to-GDP ratio double in the 1980s as the economy shrank. Argentina defaulted on its massive debts in 2001, after a 3-year recession brought about by IMF policies. Like Ireland today Argentina was told it had partied too hard, even though the debt had been run up by a disastrous set of privatisations and a currency peg foisted on the country by the same IMF. Its economy started recovering within a month of the default.
So why are these policies still being pursued? Almost every commentator has known from day one that the ‘bailout’ packages would not make the debts of Greece or Ireland sustainable. But delegates at last weekend’s conference were clear – that isn’t the point. The point is to recover as much of investors’ money as possible, however liable those investors were for the crisis, and transfer liability to society.
Even if Greece and Ireland need additional bailout money or restructuring through some sort of bonds – the same measures imposed on Latin America in the 1980s which created mountains of debt so big that those countries are still suffering the fall-out – the private investors will have been paid out. The argument becomes one between German and Greek populations as to who will foot the biggest portion of the bill, creating a dangerous nationalism already very evident.
European Commissioner for Economic Affairs Olli Rehn has continually told governments that these matters are best kept in the dark – public discussion is strongly discouraged. Those actually paying the price of austerity disagree, and campaigners in Greece and Ireland say the first step in any kind of just solution must be a debt audit – modelled on those carried out in developing countries like Ecuador.
A debt audit would provide people of Europe with the knowledge on which to base truly democratic decisions. As Sofia Sakorafa, the Greek MP who refused to sign the bailout terms and walked out of the governing party PASOK, put it at the conference ‘the answer to tyranny, oppression, violence and abuse is knowledge’. Andy Storey from Irish group Afri echoed this, saying the purpose of an audit is to ‘remove the mask of the financial system which controls our economy’.
The results of an audit can be rapid and concrete. Maria Lucia Fattorelli from Brazil is a veteran of debt audits, and helped Ecuadorian groups conduct an audit endorsed by President Correa in 2008. The Economist called Correa ‘incorruptible’ when public spending rose, after his successful default on bonds following the audit. Taking action now could mean saving European countries from the three decades of stunted development experienced by Latin American countries.
But the activists gathered this weekend believed that a debt audit can be the start of something even more fundamental, a new way of thinking about economics. As Sakorafa put it, an audit is the start of regaining values and vision to show ‘beyond speculating market games, there are more valuable concepts; there are people, there is history, there is culture, there is decency’.
Such a rejuvenation of political vision is vital if the crisis is not to cause impoverishment and spur inter-European hostility. On Sunday Irish economist Morgan Kelly said his country was heading for bankruptcy. A secret meeting of European leaders on Friday night came to the same conclusion about Greece, a country we are told is losing 1,000 jobs a day and where the suicide rate has doubled. Portugal’s €78 billion ‘bailout’ package, which is dependent on a freeze in civil service pay and pensions and reduced compensation to laid off workers, and cuts unemployment benefits at exactly the time unemployment figures are reaching record levels, will have a similar impact. Everywhere emigrants are streaming out of these countries in search of better prospects.
No amount of compensation will repair the damage these policies will wreak on society - as delegates across the developing world testified too. There is no reason for Europe to wait 30 years to learn this lesson. A European and international movement must make up for the poverty of our leader’s vision. Such a movement feels like it may have been born in Athens.
This article appeared in Red Pepper.
Organised by an unprecedented cross-section of Greek civil society, the international event launched the call for Greece (and now Ireland) to open their debts to the people of those countries for a public discussion as to how just and legitimate those debts really are.
Campaigners from Brazil, Peru, the Philippines, Morocco and Argentina told Greek activists to 'stand on their shoulders’ and not go through 30 years of devastating recession at the behest of international institutions like the International Monetary Fund.
The burgeoning European movement in opposition to debt repayments and austerity is making concrete links with groups from the global south, and it expresses a confidence and rationalism a million miles away from the governments of Greece and Ireland, which have followed policies which are punishing ordinary people in order to repay reckless bankers.
It is simply not possible that the policies being inflicted on Greece, Ireland and now Portugal will reduce the debt burden of those countries – the very opposite will happen, as was seen from Zambia in the 1980s to Argentina at the beginning of the last decade. Similar policies to those being inflicted on Europe saw Zambia’s debt-to-GDP ratio double in the 1980s as the economy shrank. Argentina defaulted on its massive debts in 2001, after a 3-year recession brought about by IMF policies. Like Ireland today Argentina was told it had partied too hard, even though the debt had been run up by a disastrous set of privatisations and a currency peg foisted on the country by the same IMF. Its economy started recovering within a month of the default.
So why are these policies still being pursued? Almost every commentator has known from day one that the ‘bailout’ packages would not make the debts of Greece or Ireland sustainable. But delegates at last weekend’s conference were clear – that isn’t the point. The point is to recover as much of investors’ money as possible, however liable those investors were for the crisis, and transfer liability to society.
Even if Greece and Ireland need additional bailout money or restructuring through some sort of bonds – the same measures imposed on Latin America in the 1980s which created mountains of debt so big that those countries are still suffering the fall-out – the private investors will have been paid out. The argument becomes one between German and Greek populations as to who will foot the biggest portion of the bill, creating a dangerous nationalism already very evident.
European Commissioner for Economic Affairs Olli Rehn has continually told governments that these matters are best kept in the dark – public discussion is strongly discouraged. Those actually paying the price of austerity disagree, and campaigners in Greece and Ireland say the first step in any kind of just solution must be a debt audit – modelled on those carried out in developing countries like Ecuador.
A debt audit would provide people of Europe with the knowledge on which to base truly democratic decisions. As Sofia Sakorafa, the Greek MP who refused to sign the bailout terms and walked out of the governing party PASOK, put it at the conference ‘the answer to tyranny, oppression, violence and abuse is knowledge’. Andy Storey from Irish group Afri echoed this, saying the purpose of an audit is to ‘remove the mask of the financial system which controls our economy’.
The results of an audit can be rapid and concrete. Maria Lucia Fattorelli from Brazil is a veteran of debt audits, and helped Ecuadorian groups conduct an audit endorsed by President Correa in 2008. The Economist called Correa ‘incorruptible’ when public spending rose, after his successful default on bonds following the audit. Taking action now could mean saving European countries from the three decades of stunted development experienced by Latin American countries.
But the activists gathered this weekend believed that a debt audit can be the start of something even more fundamental, a new way of thinking about economics. As Sakorafa put it, an audit is the start of regaining values and vision to show ‘beyond speculating market games, there are more valuable concepts; there are people, there is history, there is culture, there is decency’.
Such a rejuvenation of political vision is vital if the crisis is not to cause impoverishment and spur inter-European hostility. On Sunday Irish economist Morgan Kelly said his country was heading for bankruptcy. A secret meeting of European leaders on Friday night came to the same conclusion about Greece, a country we are told is losing 1,000 jobs a day and where the suicide rate has doubled. Portugal’s €78 billion ‘bailout’ package, which is dependent on a freeze in civil service pay and pensions and reduced compensation to laid off workers, and cuts unemployment benefits at exactly the time unemployment figures are reaching record levels, will have a similar impact. Everywhere emigrants are streaming out of these countries in search of better prospects.
No amount of compensation will repair the damage these policies will wreak on society - as delegates across the developing world testified too. There is no reason for Europe to wait 30 years to learn this lesson. A European and international movement must make up for the poverty of our leader’s vision. Such a movement feels like it may have been born in Athens.
This article appeared in Red Pepper.
Free trade is not what Africa needs, Mr Cameron
African prosperity relies on a wholesale rejection of the western free trade model, which is unlikely to be the view of David Cameron or the delegates he's travelling with in Africa
On his trip to South Africa yesterday, David Cameron talked of the need to go beyond debt cancellation and aid "to make African free trade the common purpose of the continent". He lamented there has never once been "a march or a concert to call for … an African free trade area". He pointed to the need for more inter-African trade to facilitate the growth that would mean "businesses growing, new jobs on offer, families on the up, living standards transformed".
Cameron's vision is far from "fresh", and is certainly not a radical extension of the anti-poverty agenda that led to a movement of millions of people calling for debt justice and the meeting of long overdue aid commitments. He repeats an orthodoxy that says the interests of the corporate delegates accompanying Cameron are the same as the interests of ordinary people across the African continent. Nearly three years into a global crisis caused by unbridled financial freedom, this orthodoxy should be consigned to the dustbin of history.
In 2003, Cameron would have been one of the MPs lobbied by 10,000 trade justice campaigners, while in 2005 he can hardly fail to remember the 250,000 people gathered in Edinburgh making the same demand. The debt and trade justice movements have never been simply arguments for more aid, but for a radical restructuring of the global economy and financial sector. They are all about enabling Africa to use its own resources for its own benefit – to genuinely enable countries to outgrow aid dependence.
The problem is that this agenda doesn't fit with Cameron's "free trade" ideology, or the interests of his delegation, which includes companies such as Barclays, G4S, Vodafone, Diageo and PricewaterhouseCoopers. So the premise of Cameron's article is to make it appear that there is only one possible way forward – free trade – and all right-thinking people who care about poverty and inequality must support this agenda.
But trade on the wrong terms has been of no benefit to Africa – rather it has ripped open markets, destroyed infant industries, undermined control of food production, and exploited resources. It is the opposite of what Africa needs.
Multinational companies operating in Africa are nothing new. According to Global Financial Integrity, between 1970 and 2008, Africa lost $850bn to $1.8tn in "illicit financial outflows", most importantly forgone tax paid by corporations. Such a loss of capital led to the need for countries to borrow, in turn leading to a debt crisis during which capital poured out of the continent and into the coffers of rich countries.
Today, the debt of sub-Saharan Africa still stands at nearly $200bn. Aid now accounts for $47bn, though debt repayments still cost $18bn every year, while much of the aid itself comes in the form of new loans or is simply handed to western corporations working in the country concerned.
Cameron says economic growth "will lift tens of millions out of poverty in the long run" but, again, it depends what sort of growth. Growth in recent years, in an environment where corporations are increasingly free to go where they like when they like, has become ever less effective at fighting poverty, and has made the world much less equal. The New Economics Foundation has shown that in the 1990s, for every $100 worth of growth in the world's income per person, just $0.60 contributed to reducing poverty for those living on less than a dollar a day.
Cameron is right that the idea of more inter-African trade is vitally important. But for years, inter-African trade has been discouraged by rich countries and a global trading system that uses Africa as a source of primary commodities for growth elsewhere. For example, European Union attempts to foist Economic Partnership Agreements on African countries give preferential access to European companies, thereby thwarting African attempts at integration. There are clear reasons why "for much of the continent it is easier to trade with Europe or America than it is to trade with a neighbour", and it has little to do with "red tape".
Africa has much to learn from South Korea, the model Cameron rather surprisingly raises. South Korea used a range of government interventions that are heretical in the free trade religion.
African prosperity relies on a wholesale rejection of the western "free trade" model. It means protecting industries, developing alternative and complementary means of trading, control of food production and banking, progressive tax structures, controlled use of savings, and strong regulation to ensure trade and investment really benefits people. This is unlikely to be the view of most of Cameron's corporate partners – if it was we would never have needed to march for justice in the first place.
This article appeared on the Guardian.
On his trip to South Africa yesterday, David Cameron talked of the need to go beyond debt cancellation and aid "to make African free trade the common purpose of the continent". He lamented there has never once been "a march or a concert to call for … an African free trade area". He pointed to the need for more inter-African trade to facilitate the growth that would mean "businesses growing, new jobs on offer, families on the up, living standards transformed".
Cameron's vision is far from "fresh", and is certainly not a radical extension of the anti-poverty agenda that led to a movement of millions of people calling for debt justice and the meeting of long overdue aid commitments. He repeats an orthodoxy that says the interests of the corporate delegates accompanying Cameron are the same as the interests of ordinary people across the African continent. Nearly three years into a global crisis caused by unbridled financial freedom, this orthodoxy should be consigned to the dustbin of history.
In 2003, Cameron would have been one of the MPs lobbied by 10,000 trade justice campaigners, while in 2005 he can hardly fail to remember the 250,000 people gathered in Edinburgh making the same demand. The debt and trade justice movements have never been simply arguments for more aid, but for a radical restructuring of the global economy and financial sector. They are all about enabling Africa to use its own resources for its own benefit – to genuinely enable countries to outgrow aid dependence.
The problem is that this agenda doesn't fit with Cameron's "free trade" ideology, or the interests of his delegation, which includes companies such as Barclays, G4S, Vodafone, Diageo and PricewaterhouseCoopers. So the premise of Cameron's article is to make it appear that there is only one possible way forward – free trade – and all right-thinking people who care about poverty and inequality must support this agenda.
But trade on the wrong terms has been of no benefit to Africa – rather it has ripped open markets, destroyed infant industries, undermined control of food production, and exploited resources. It is the opposite of what Africa needs.
Multinational companies operating in Africa are nothing new. According to Global Financial Integrity, between 1970 and 2008, Africa lost $850bn to $1.8tn in "illicit financial outflows", most importantly forgone tax paid by corporations. Such a loss of capital led to the need for countries to borrow, in turn leading to a debt crisis during which capital poured out of the continent and into the coffers of rich countries.
Today, the debt of sub-Saharan Africa still stands at nearly $200bn. Aid now accounts for $47bn, though debt repayments still cost $18bn every year, while much of the aid itself comes in the form of new loans or is simply handed to western corporations working in the country concerned.
Cameron says economic growth "will lift tens of millions out of poverty in the long run" but, again, it depends what sort of growth. Growth in recent years, in an environment where corporations are increasingly free to go where they like when they like, has become ever less effective at fighting poverty, and has made the world much less equal. The New Economics Foundation has shown that in the 1990s, for every $100 worth of growth in the world's income per person, just $0.60 contributed to reducing poverty for those living on less than a dollar a day.
Cameron is right that the idea of more inter-African trade is vitally important. But for years, inter-African trade has been discouraged by rich countries and a global trading system that uses Africa as a source of primary commodities for growth elsewhere. For example, European Union attempts to foist Economic Partnership Agreements on African countries give preferential access to European companies, thereby thwarting African attempts at integration. There are clear reasons why "for much of the continent it is easier to trade with Europe or America than it is to trade with a neighbour", and it has little to do with "red tape".
Africa has much to learn from South Korea, the model Cameron rather surprisingly raises. South Korea used a range of government interventions that are heretical in the free trade religion.
African prosperity relies on a wholesale rejection of the western "free trade" model. It means protecting industries, developing alternative and complementary means of trading, control of food production and banking, progressive tax structures, controlled use of savings, and strong regulation to ensure trade and investment really benefits people. This is unlikely to be the view of most of Cameron's corporate partners – if it was we would never have needed to march for justice in the first place.
This article appeared on the Guardian.
Thursday 14 April 2011
Iceland’s message to Portugal
This week has witnessed two very different reactions to European debt. At one end of Europe, Iceland’s voters decided once again not to accept the payment terms of their ‘creditors’, the British and Dutch governments, following the collapse of Icelandic banks in 2008. At the other, Portugal is being pushed down the path of shock therapy by the European Union, with the people of that country cut out of a process which will change their lives dramatically.
Neither Iceland not Portugal will have it easy in the years ahead. But there is a world of difference between the refusal of the people of Iceland ‘to pay for failed banks’ in the words of their President, and the pain being imposed on Portugal from the outside. The European Central Bank’s head Jean-Claude Trichet has made it perfectly clear that the negotiations on Portugal’s future are ‘certainly not for public’ debate.
Iceland’s people have not made a knee-jerk reaction. They are well aware that refusal to pay is the less easy short-term route to take. An impending court case by the UK and the Netherlands, the negative reaction of credit markets and the threatened block to their EU membership will all take a toll.
But for the people of Iceland the orthodoxy as to how countries are supposed to deal with debt is not simply economically flawed, it is deeply unjust, unfairly distributing power and wealth within and between societies. 28-year-old voter Thorgerdun Ásgeirsdóttir said: ‘I know this will probably hurt us internationally, but it is worth taking a stance.’
If the people of a country which truly bought into free market ideology, deregulated capital markets and cheap lending can refuse to pay for the crimes of the banks, then those that did less well from the decades of financial boom can be expected to feel even more impassioned.
In Greece such anger is starting to turn into a constructive challenge to the power of finance. A debt audit commission has been called for by hundreds of academics, politicians and activists. Such a commission would throw open Greece’s debts for public examination – directly confronting the way that the IMF and European Union work behind closed doors to force their often disastrous medicine on member countries.
As Greek activists have said, ‘the people who are called upon to bear the costs of EU programmes have a democratic right to receive full information on public debt. An Audit Commission can begin to redress this deficiency.’
Their resolve is currently being bolstered by a website phenomena – a short viral film called debtocracy (government by debt) – sweeping Greece’s online population and convincing them they have been taken for a ride. Early next month activists from across Europe and the developing world will gather in Athens to put together a programme which will challenge the IMF’s policies in Greece.
Portugal’s deal is just beginning to be hammered out. As in Greece and Ireland, a ‘bail-out’ package will primarily benefit Western European banks, with €216 billion of outstanding loans to Portugal, while ordinary people endure a programme of deep spending cuts, reduced workers’ rights and widespread privatisation. The head of Portugal’s Banco Carregosa told the FT: ‘It’s not an exaggeration to call it shock therapy.’
The comparisons with developing world countries are obvious and the mistakes there are already being repeated. Time and again banks were bailed out and the poorest people in the world were pushed even deeper into poverty. Today countries from Sierra Leone to Jamaica are racking up ever more debts, once again, to weather the banker’s storm.
This is why a line must be drawn in Europe. Pouring more debt on top of Portugal’s woes will do nothing to resuscitate the economy. Portugal’s debt is totally unsustainable – largely the result of reckless private lending over the last decade. Those responsible are being bailed out, those that aren’t are suffering the pain. This is what Iceland has refused to do.
The people of Iceland have stood up for their sovereignty. Their future looks considerably brighter than those of Ireland or Portugal. The people of Greece are just beginning their struggle. The outcomes will have a monumental impact on the fight against poverty and inequality across the world.
Neither Iceland not Portugal will have it easy in the years ahead. But there is a world of difference between the refusal of the people of Iceland ‘to pay for failed banks’ in the words of their President, and the pain being imposed on Portugal from the outside. The European Central Bank’s head Jean-Claude Trichet has made it perfectly clear that the negotiations on Portugal’s future are ‘certainly not for public’ debate.
Iceland’s people have not made a knee-jerk reaction. They are well aware that refusal to pay is the less easy short-term route to take. An impending court case by the UK and the Netherlands, the negative reaction of credit markets and the threatened block to their EU membership will all take a toll.
But for the people of Iceland the orthodoxy as to how countries are supposed to deal with debt is not simply economically flawed, it is deeply unjust, unfairly distributing power and wealth within and between societies. 28-year-old voter Thorgerdun Ásgeirsdóttir said: ‘I know this will probably hurt us internationally, but it is worth taking a stance.’
If the people of a country which truly bought into free market ideology, deregulated capital markets and cheap lending can refuse to pay for the crimes of the banks, then those that did less well from the decades of financial boom can be expected to feel even more impassioned.
In Greece such anger is starting to turn into a constructive challenge to the power of finance. A debt audit commission has been called for by hundreds of academics, politicians and activists. Such a commission would throw open Greece’s debts for public examination – directly confronting the way that the IMF and European Union work behind closed doors to force their often disastrous medicine on member countries.
As Greek activists have said, ‘the people who are called upon to bear the costs of EU programmes have a democratic right to receive full information on public debt. An Audit Commission can begin to redress this deficiency.’
Their resolve is currently being bolstered by a website phenomena – a short viral film called debtocracy (government by debt) – sweeping Greece’s online population and convincing them they have been taken for a ride. Early next month activists from across Europe and the developing world will gather in Athens to put together a programme which will challenge the IMF’s policies in Greece.
Portugal’s deal is just beginning to be hammered out. As in Greece and Ireland, a ‘bail-out’ package will primarily benefit Western European banks, with €216 billion of outstanding loans to Portugal, while ordinary people endure a programme of deep spending cuts, reduced workers’ rights and widespread privatisation. The head of Portugal’s Banco Carregosa told the FT: ‘It’s not an exaggeration to call it shock therapy.’
The comparisons with developing world countries are obvious and the mistakes there are already being repeated. Time and again banks were bailed out and the poorest people in the world were pushed even deeper into poverty. Today countries from Sierra Leone to Jamaica are racking up ever more debts, once again, to weather the banker’s storm.
This is why a line must be drawn in Europe. Pouring more debt on top of Portugal’s woes will do nothing to resuscitate the economy. Portugal’s debt is totally unsustainable – largely the result of reckless private lending over the last decade. Those responsible are being bailed out, those that aren’t are suffering the pain. This is what Iceland has refused to do.
The people of Iceland have stood up for their sovereignty. Their future looks considerably brighter than those of Ireland or Portugal. The people of Greece are just beginning their struggle. The outcomes will have a monumental impact on the fight against poverty and inequality across the world.
The revolution will not be organised
Nick Dearden writes from the World Social Forum in Dakar, Senegal.
There is one word that I've heard to sum up this year's Word Social Forum again and again: chaos. Just days before the WSF started the University which is hosting the event got a new director, who decided that classes would not be postponed for the Forum, leaving it over 400 rooms down.
The daily programmes were therefore pretty meaningless, even when they did eventually go online a couple of hours after the first session had started, because no-one knew which of the hastily constructed tents the session they were looking for might be in. Participants were rather like a very multicultural group of squatters on the dusty, windswept wasteland of Dakar University grounds.
All too often this meant that participants stuck together with their own group of friends or colleagues, unable to branch out into anything else for fear of another wasted two hours. For the truly new activists, unconnected to an organisation, the experience was intensely frustrating.
Not that the event wasn't enjoyable, as activists were forced to use their self-organising skills simply to make sure their sessions happened at all. Palestinian activists had commissioned their own tent to be built right outside the main library which became a very visible hub for their activities, attracting large groups of students from the University to come and learn the basics of a struggle they knew little about. The forum had something of a festival feel from the fantastic food tents to the street sellers to the grotty toilets.
The location was also appropriate. My hotel window overlooked Goree Island, the point of departure for tens of thousands of Africans shipped into slavery in the New World. This slavery was the basis for the industrial revolution and the economic rise of the global North, as well as being at the heart of the serious under-development which is still so sharply felt across Africa today.
Despite this, and while the fault for the chaos of the forum can clearly not all be laid at the feet of the organisers, the experience has forced a more urgent questioning as to whether the WSF is still worthwhile. Set up as an expression of the rapidly burgeoning 'anti-globalisation' movement in 2001, the WSF faces a very different world, and caters to a different movement.
It seems there will be changes to the Forum next year. Some on the unwieldy International Council which organises the Forum are arguing for it to be less frequent, others that the WSF should cease to exist altogether and more focus be given to the regional and issue-based social forums.
But we need to be careful not to throw out what is truly amazing about the WSF. Struggles against tyranny in Egypt and Tunisia have formed a backdrop to this Forum, showing us what is possible, the vital role of solidarity that the WSF can play a role in creating. The thousands of people marching in Dakar as the Forum opened reminds us that the purpose of holding such an event here is the injection of energy it can give to struggles in the regions in which the WSF is held. One activist told us that the point is not how many meetings we go to, but the effect of the preparation of the WSF on the size and unity of the movement in its host country. It didn't ease our frustration at the time, but is clearly an important consideration.
I leave the WSF convinced of why I work on debt. Seeing 2,000 activists dancing to a famous Senegalese hip-hop band singing about debt in an assembly festooned with the banners of the Committee for the Abolition of Third World Debt, is a pretty powerful reminder of just how central this struggle remains in Africa, even if it doesn't always feel that important in London.
None of this can be compromised, even if reform is necessary. The World Social Forum is an intensely frustrating, unwieldy and chaotic process. But perhaps that's the nature of our movement.
You can find the full blog at the JDC website.
There is one word that I've heard to sum up this year's Word Social Forum again and again: chaos. Just days before the WSF started the University which is hosting the event got a new director, who decided that classes would not be postponed for the Forum, leaving it over 400 rooms down.
The daily programmes were therefore pretty meaningless, even when they did eventually go online a couple of hours after the first session had started, because no-one knew which of the hastily constructed tents the session they were looking for might be in. Participants were rather like a very multicultural group of squatters on the dusty, windswept wasteland of Dakar University grounds.
All too often this meant that participants stuck together with their own group of friends or colleagues, unable to branch out into anything else for fear of another wasted two hours. For the truly new activists, unconnected to an organisation, the experience was intensely frustrating.
Not that the event wasn't enjoyable, as activists were forced to use their self-organising skills simply to make sure their sessions happened at all. Palestinian activists had commissioned their own tent to be built right outside the main library which became a very visible hub for their activities, attracting large groups of students from the University to come and learn the basics of a struggle they knew little about. The forum had something of a festival feel from the fantastic food tents to the street sellers to the grotty toilets.
The location was also appropriate. My hotel window overlooked Goree Island, the point of departure for tens of thousands of Africans shipped into slavery in the New World. This slavery was the basis for the industrial revolution and the economic rise of the global North, as well as being at the heart of the serious under-development which is still so sharply felt across Africa today.
Despite this, and while the fault for the chaos of the forum can clearly not all be laid at the feet of the organisers, the experience has forced a more urgent questioning as to whether the WSF is still worthwhile. Set up as an expression of the rapidly burgeoning 'anti-globalisation' movement in 2001, the WSF faces a very different world, and caters to a different movement.
It seems there will be changes to the Forum next year. Some on the unwieldy International Council which organises the Forum are arguing for it to be less frequent, others that the WSF should cease to exist altogether and more focus be given to the regional and issue-based social forums.
But we need to be careful not to throw out what is truly amazing about the WSF. Struggles against tyranny in Egypt and Tunisia have formed a backdrop to this Forum, showing us what is possible, the vital role of solidarity that the WSF can play a role in creating. The thousands of people marching in Dakar as the Forum opened reminds us that the purpose of holding such an event here is the injection of energy it can give to struggles in the regions in which the WSF is held. One activist told us that the point is not how many meetings we go to, but the effect of the preparation of the WSF on the size and unity of the movement in its host country. It didn't ease our frustration at the time, but is clearly an important consideration.
I leave the WSF convinced of why I work on debt. Seeing 2,000 activists dancing to a famous Senegalese hip-hop band singing about debt in an assembly festooned with the banners of the Committee for the Abolition of Third World Debt, is a pretty powerful reminder of just how central this struggle remains in Africa, even if it doesn't always feel that important in London.
None of this can be compromised, even if reform is necessary. The World Social Forum is an intensely frustrating, unwieldy and chaotic process. But perhaps that's the nature of our movement.
You can find the full blog at the JDC website.
Born into debt?
For south Sudan, sovereignty must mean more than having your own border
The nearly unanimous south Sudanese referendum result announced over the weekend is likely to lead to independence for a southern state by July. But it only marks one step along the road to true sovereignty for this oppressed and impoverished people. As south Sudan's oil wealth has been used to enrich elites in the North for decades, so it is now being viewed with hungry eyes by the US and its allies.
The debt which is inherited by this new state is likely to play a key role in attempts to assert control on south Sudan from the outside. The Sudanese government in Khartoum currently has a debt of $35 billion, large parts of which stretch back to the 1970s and 1980s when the regime of General Nimeiry was propped up by the US. Of this debt, $20 billion represents interest, following years of default by the Bashir regime.
The UK claims Sudan owes £650 million ($1 billion) to the government's Export Credit Guarantees Department – the department which insures some British exports, usually arms, aerospace and big fossil fuel projects. The department refuses to say what projects the debt is based on. What we do know is that since 1984 an interest rate of between 10 and 12 per cent has been charged on this debt, wildly inflating it – in fact new figures reveal that up-to 90 per cent of Sudanese debt owed to the UK is interest.
Justice demands that south Sudan is not handed a portion of Khartoum’s debt, but the International Monetary Fund probably has other ideas. One suggestion is that Sudan will be allocated debt on its inception that will then be cancelled. No-one should fall into the trap of believing this to be just – in reality it would mean the southern state would be forced to go through a lengthy cancellation process, during which it would probably have to take out new loans to pay interest on its unjust debts, as well as whatever reforms the IMF felt like pushing on the country. It would ensure south Sudan could not escape from the grips of international institutions and their neoliberal ideology.
Meanwhile, popular protests have spread to Khartoum in north Sudan. Here too, most of the accumulated debts undoubtedly arose more through international power play than genuine attempts to improve the lives of Sudan’s people. The people of Sudan might want to take a look at the calls of people as far apart as Greece and Bolivia, and call for an audit of Sudan’s debts so they can find out just what the debts paid for and how legitimate they are.
Sovereignty for south Sudan means much more than a declaration of independence from the north. It means the people of that country controlling their own economic development. But with a large debt hanging over their heads, and reserves of oil ready to plunder, the people of south Sudan will need to be prepared to continue to struggle for real freedom.
The nearly unanimous south Sudanese referendum result announced over the weekend is likely to lead to independence for a southern state by July. But it only marks one step along the road to true sovereignty for this oppressed and impoverished people. As south Sudan's oil wealth has been used to enrich elites in the North for decades, so it is now being viewed with hungry eyes by the US and its allies.
The debt which is inherited by this new state is likely to play a key role in attempts to assert control on south Sudan from the outside. The Sudanese government in Khartoum currently has a debt of $35 billion, large parts of which stretch back to the 1970s and 1980s when the regime of General Nimeiry was propped up by the US. Of this debt, $20 billion represents interest, following years of default by the Bashir regime.
The UK claims Sudan owes £650 million ($1 billion) to the government's Export Credit Guarantees Department – the department which insures some British exports, usually arms, aerospace and big fossil fuel projects. The department refuses to say what projects the debt is based on. What we do know is that since 1984 an interest rate of between 10 and 12 per cent has been charged on this debt, wildly inflating it – in fact new figures reveal that up-to 90 per cent of Sudanese debt owed to the UK is interest.
Justice demands that south Sudan is not handed a portion of Khartoum’s debt, but the International Monetary Fund probably has other ideas. One suggestion is that Sudan will be allocated debt on its inception that will then be cancelled. No-one should fall into the trap of believing this to be just – in reality it would mean the southern state would be forced to go through a lengthy cancellation process, during which it would probably have to take out new loans to pay interest on its unjust debts, as well as whatever reforms the IMF felt like pushing on the country. It would ensure south Sudan could not escape from the grips of international institutions and their neoliberal ideology.
Meanwhile, popular protests have spread to Khartoum in north Sudan. Here too, most of the accumulated debts undoubtedly arose more through international power play than genuine attempts to improve the lives of Sudan’s people. The people of Sudan might want to take a look at the calls of people as far apart as Greece and Bolivia, and call for an audit of Sudan’s debts so they can find out just what the debts paid for and how legitimate they are.
Sovereignty for south Sudan means much more than a declaration of independence from the north. It means the people of that country controlling their own economic development. But with a large debt hanging over their heads, and reserves of oil ready to plunder, the people of south Sudan will need to be prepared to continue to struggle for real freedom.
Optimism of the will
Noam Chomsky's Hopes and Prospects (Hamish Hamilton), reviewed by Nick Dearden
The great genius of Noam Chomsky is his way of presenting supposedly radical politics as so reasonable as to be obvious, showing with great clarity how the 'mainstream' political establishment is truly extremist.
Hopes and Prospects lacks the painstaking detail of earlier works, based as it is on a series of lectures. To readers of Red Pepper, the book's topics will also be nothing new - from Latin America to Palestine, the election of Obama to the 10th anniversary of the fall of Soviet communism.
But even if the information is not completely new, the clarity with which Chomsky exposes the hypocrisy, illogic and lack of democracy inherent in the current political and economic system makes you feel like you're hearing the arguments for the first time.
Famously, Chomsky calls the current economic system 'socialism for the rich', and in this book he elaborates how this form of 'state capitalism' has created the wealth that our development is based on. 'In the phrase "North American free trade agreement" the only accurate words are "North American",' says Chomsky, characterising the current trading system as constituting a series of top-down charters for investor rights.
In fact, US power has been constructed on heavy state intervention in, and protection of, the economy. Cotton production, a key element of the industrial revolution, more or less occupying the role of oil today, was facilitated through slavery and the elimination of native Americans - 'rather extreme forms of market interference'. Even sectors of the economy regarded as textbook examples of entrepreneurialism today, like IT and communications, developed through massive military spending and state development. Paid for by taxpayers, the rewards are handed to the richest.
Chomsky considers the crucial role of the media in 'manufacturing consent' in modern capitalism by looking at Israel and Palestine. The consistent failure of western media to report fairly on the occupation is highlighted by its emphasis on the kidnap of Corporal Shalit in justifying Israeli aggression, while totally ignoring the capture of two Gazan civilians by Israeli forces just one day before. In reporting on Iran, the media ignores repeated attempts by Arab states, Iran and most countries in the world, excepting successive US administrations, to seek a Middle East free from all weapons of mass destruction.
In fact, increasing global militarisation is consistently supported by the US, with allies like Britain, in the teeth of opposition from most countries and people. Through their military strategy, their contribution towards climate change and their support of increasingly dangerous forms of capitalism, it is indeed these western countries that threaten the extinction of civilisation.
Chomsky will disillusion anyone who places hopes in the election of Obama. Obama's first appointments included Rahm Emanuel, pro-war and pro-Wall Street; Robert Rubin and Lawrence Summers, major de-regulators of the financial sector; James Jones, fierce advocate of the expansion of Nato; and Dennis Blair, formerly a strong supporter of US ties with the barbaric President Suharto of Indonesia.
Obama's view of the world is nothing new, excepting some rhetoric: the policy of arming and training Palestinian security forces on the West Bank to maintain tight control of society; the vilification of Iran; the support of friendly thugs such as Hosni Mubarak in Egypt; the use of terror centres (just not in Guantanamo); and support (albeit indirect) of the violent coup in Honduras.
This should come as no surprise, according to Chomsky, as Obama's campaign was above all a public relations triumph (and named so by that industry - he beat Apple as 'marketer of the year' in Advertising Age): 'Obama's message of "hope" and "change" offered a virtual blank slate on which supporters could write their wishes.' Chomsky contrasts Obama's election with the 2005 election in Bolivia, where the campaign 'was focused on crucial issues, very well known to voters: control of resources, cultural rights, questions of justice'.
Such a critique might be expected to depress, but the anger Chomsky's writing provokes is complemented by an incredible hope. In particular, Chomsky never blames ordinary people, highlighting opinion poll after poll pointing out the deep desire for a more peaceful, equal and generous world.
Ultimately, however, this might be Chomsky's biggest flaw. It is difficult to square the existence of an all-seeing, all-controlling, death-driven capitalist system with a real opening for the kind of radical change that is so necessary. The system makes no mistakes in Chomsky's analysis - from Vietnam to Iraq, ultimately the Empire gets what it wants.
In societies where people's emotions and drives are so expertly manipulated, it takes a real leap of faith to see these same people as agents of change - almost a belief that some innate goodness will overpower the social conditioning that keeps us passive and ineffective.
Indeed, Chomsky seems to have the same concerns, as when he invokes biologist Ernst Mayr, who speculated that higher intelligence might be an evolutionary error, incapable of survival. Perhaps ultimately he is expressing no more than the necessary optimism of the will that governs most activists' work. With these concerns in front of us, Chomsky nonetheless remains the sharpest, clearest and most inspirational thinker the movement has. Hopes and Prospects will keep you going through a good few dark hours.
This review first appeared in Red Pepper.
The great genius of Noam Chomsky is his way of presenting supposedly radical politics as so reasonable as to be obvious, showing with great clarity how the 'mainstream' political establishment is truly extremist.
Hopes and Prospects lacks the painstaking detail of earlier works, based as it is on a series of lectures. To readers of Red Pepper, the book's topics will also be nothing new - from Latin America to Palestine, the election of Obama to the 10th anniversary of the fall of Soviet communism.
But even if the information is not completely new, the clarity with which Chomsky exposes the hypocrisy, illogic and lack of democracy inherent in the current political and economic system makes you feel like you're hearing the arguments for the first time.
Famously, Chomsky calls the current economic system 'socialism for the rich', and in this book he elaborates how this form of 'state capitalism' has created the wealth that our development is based on. 'In the phrase "North American free trade agreement" the only accurate words are "North American",' says Chomsky, characterising the current trading system as constituting a series of top-down charters for investor rights.
In fact, US power has been constructed on heavy state intervention in, and protection of, the economy. Cotton production, a key element of the industrial revolution, more or less occupying the role of oil today, was facilitated through slavery and the elimination of native Americans - 'rather extreme forms of market interference'. Even sectors of the economy regarded as textbook examples of entrepreneurialism today, like IT and communications, developed through massive military spending and state development. Paid for by taxpayers, the rewards are handed to the richest.
Chomsky considers the crucial role of the media in 'manufacturing consent' in modern capitalism by looking at Israel and Palestine. The consistent failure of western media to report fairly on the occupation is highlighted by its emphasis on the kidnap of Corporal Shalit in justifying Israeli aggression, while totally ignoring the capture of two Gazan civilians by Israeli forces just one day before. In reporting on Iran, the media ignores repeated attempts by Arab states, Iran and most countries in the world, excepting successive US administrations, to seek a Middle East free from all weapons of mass destruction.
In fact, increasing global militarisation is consistently supported by the US, with allies like Britain, in the teeth of opposition from most countries and people. Through their military strategy, their contribution towards climate change and their support of increasingly dangerous forms of capitalism, it is indeed these western countries that threaten the extinction of civilisation.
Chomsky will disillusion anyone who places hopes in the election of Obama. Obama's first appointments included Rahm Emanuel, pro-war and pro-Wall Street; Robert Rubin and Lawrence Summers, major de-regulators of the financial sector; James Jones, fierce advocate of the expansion of Nato; and Dennis Blair, formerly a strong supporter of US ties with the barbaric President Suharto of Indonesia.
Obama's view of the world is nothing new, excepting some rhetoric: the policy of arming and training Palestinian security forces on the West Bank to maintain tight control of society; the vilification of Iran; the support of friendly thugs such as Hosni Mubarak in Egypt; the use of terror centres (just not in Guantanamo); and support (albeit indirect) of the violent coup in Honduras.
This should come as no surprise, according to Chomsky, as Obama's campaign was above all a public relations triumph (and named so by that industry - he beat Apple as 'marketer of the year' in Advertising Age): 'Obama's message of "hope" and "change" offered a virtual blank slate on which supporters could write their wishes.' Chomsky contrasts Obama's election with the 2005 election in Bolivia, where the campaign 'was focused on crucial issues, very well known to voters: control of resources, cultural rights, questions of justice'.
Such a critique might be expected to depress, but the anger Chomsky's writing provokes is complemented by an incredible hope. In particular, Chomsky never blames ordinary people, highlighting opinion poll after poll pointing out the deep desire for a more peaceful, equal and generous world.
Ultimately, however, this might be Chomsky's biggest flaw. It is difficult to square the existence of an all-seeing, all-controlling, death-driven capitalist system with a real opening for the kind of radical change that is so necessary. The system makes no mistakes in Chomsky's analysis - from Vietnam to Iraq, ultimately the Empire gets what it wants.
In societies where people's emotions and drives are so expertly manipulated, it takes a real leap of faith to see these same people as agents of change - almost a belief that some innate goodness will overpower the social conditioning that keeps us passive and ineffective.
Indeed, Chomsky seems to have the same concerns, as when he invokes biologist Ernst Mayr, who speculated that higher intelligence might be an evolutionary error, incapable of survival. Perhaps ultimately he is expressing no more than the necessary optimism of the will that governs most activists' work. With these concerns in front of us, Chomsky nonetheless remains the sharpest, clearest and most inspirational thinker the movement has. Hopes and Prospects will keep you going through a good few dark hours.
This review first appeared in Red Pepper.
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