“The debt crises that are happening now in Europe and the U.K. come on the heels of a crisis that, for decades in the global South, has been eating people’s lives and dignity,” Njoki Njoroge Njehû said in the opening discussion of Life Before Debt, a conference recently held in London focused on “Why debt rules our lives and how to resist it.”
Njehû co-coordinates Jubilee South, a campaign calling for the cancellation of the majority of countries’ debt around the world. She is also executive director of the Daughters of Mumbi, which works in Kenya to empower women and enhance food sovereignty. Referencing the morality – or rather, immorality – of debt, Njehû recalled an anecdote from her time campaigning for 50 Years Is Enough, a debt cancellation campaign in Washington, D.C.
“I was in the belly of the beast,” she said, and at one World Bank event she and a colleague attended focusing on Third World debt, Njehû said she felt embarrassed by the lavish food surrounding them. A senior World Bank official at one point told the audience that all of their development loans were well-directed – and failure was solely the recipient countries’ fault.
Njehû’s colleague publicly challenged the assertion. The official responded: “All the loans were legal.”
“But were they moral and were they just?” her colleague replied.
“You could have heard a pin drop,” Njehû recounts, and “the question was never answered.”
Over many decades since World War II, the World Bank, International Monetary Fund (IMF) and other global financial institutions forced countries to impose severe privatizations, cuts in public services, deregulation and other pro-business changes that hurt human rights and the environment in their communities. In short, the process is known as neoliberalism. And the structural adjustment programs of that era share many similarities to the modern-day austerity programs European countries are now pushing on themselves.
In 2001, former World Bank economist Joseph Stiglitz described how these and related neoliberal polices led to IMF Riots, shifting finance to international capitalists while undermining democracy and exacerbating poverty.
Njehû said that there were some cancellations for the most heavily indebted countries, but these had further structural adjustment stipulations. With the rationale that the debts were illegitimate in the first place, Njehû said: “Jubilee’s position is the 100% cancellation of debt.”
As an example she highlighted Iceland – the small Nordic European island that refused to bail out its collapsing banks, unlike most nations on the continent.
Additionally, Njehû suggested there needs to be a process in place to enact reparations to the majority of the world for the extraction of wealth and natural resources, and years of tax avoidance, achieved by multinational corporations. She concluded that over the balance sheet in social, historic or ecological terms, the rich North owes the poor South more than anyone dares publicly to admit.
Illegitimate debt relates to odious debt
According to the IMF: “Odious debt makes an analogous argument that sovereign debt incurred without the consent of the people and not benefiting the people is odious and should not be transferable to a successor government, especially if creditors are aware of these facts in advance.”
It is a surprising statement coming from the international debt collector-in-chief. To attack illegitimate debt, the tool of debt audits was presented throughout the conference. In part, debt audits are technical and political process to calculate and define what debt can be considered legitimate. In tandem with this, the process requires popular support in order to demand debt cancellation.
But the calculations involved in debt audits are complex, not least of all due to the difficulty of uncovering corrupt deals. Equally, creating the political will for change is an extensive process, said speakers at the conference.
Yet, there is hope. “When people have a mind revolution, we can have change,” said Jihen Chandoul in the closing plenary of Life Before Debt, speaking about the need to create political support for such a measure.
Chandoul is from Let’s Audit Tunisia’s Debt Network, a campaign that started after the country’s 2011 revolution in order to account for the debts caused by decades of dictatorship. Initially, the campaign was pushed by a parliamentarian, but suddenly as the process was gaining momentum, it stalled. Chandoul attributes this to the pressure it received from national and international powers that did not want to reverse or reveal the degrees of corruption that had fueled the nation’s debt. (More details are described in this article from Jubilee South.
Now, the campaign has become a citizens’ debt audit, organized and with input by society – and pushed onto the national agenda by petitioning parliament. Chandoul told how a video had been crucial in building momentum for the Tunisia debt audit campaign – by showing a course for rebuilding from the decay and devastation of dictatorship.
It depicts how Burkina Faso and Ecuador gained enormously through debt cancellation, and the latter by an audit. Both were governed by new leaders at the time – Thomas Sankara of Burkina Faso, and Rafael Correa of Ecuador – who had popular support for rejecting Western neoliberal policies that led to debt slavery.
Joining the Jubilee South campaign, since the 2008 financial crisis there has been an escalation of campaigns against debt in the European countries where debt has hit hardest. Nineteen separate panel discussions at Life After Debt explored ways that the creation and maintenance of debt favors capital over people.
“The Eurozone debt crisis is due to the financial crisis that was caused by the banks,” asserted Professor Costas Lapavitsas, an economics professor from University of London and author of Crisis in the Eurozone, speaking in a panel on Eurozone debts.
The bank bailouts are a key focus of the various European Citizens’ Debt Audits – campaigns that link through the International Citizens’ Audit Network, or ICAN. While citizen debt audit campaigns are just beginning in countries like Germany and Britain, efforts have been underway since 2011 in places like Greece and Spain – southern European countries whose austerity debt programs are governed by the IMF, European Central Bank and European Union, known as the Troika.
The Greek model of citizen debt audits is focusing largely on household debt, to support eviction resistance campaigns. And speaking on behalf of the Spanish Citizens Debt Audit platform, Iolanda Fresnillo emphasised the need to link Spain’s debt struggle with other popular public movements – from 15M/Indignados all the way through the recent March for Dignity, which saw hundreds of thousands rally in Madrid and elsewhere, calling on Spain to cancel its illegitimate debts.
Living in Debtocracy, an exhibit produced by the Spanish network, was also exhibited at the conference revealing ways that creativity can push forward ideas and understanding about illegitimate debt in the public sphere.
Similarly, Debt Justice Action in Ireland has used creative means to mobilize the public. Speaking in the final plenary of the conference, Vicky Donnelly from Debt Justice Action told how the group applied to the Guinness Book of Records for achieving the most expensive bank bailout per person. She said DJA is organizing a people’s tribunal in October around the theme of illegitimate debt.
The Life Before Debt conference showed not only how the rule of debt can be, and is being, contested around the world – but the economic and real-life necessity for doing so. This was explained by Professor Lapavitsas, who assured audience members that in an economic climate where growth is not resuming, options to get out of debt are either inflation, which is painful and slow, or total debt cancellation.
His preference, clearly, was for the latter.
“The only way is cancelling the debts, which will need a public takeover of banks and regulating capital movements,” Lapavitsas concluded, adding that such a move would profoundly change the balance of class forces in Europe.