- Why is debt considered illegitimate?
Christine: This book is based on the premise that we are talking about illegitimate and odious debt
Odious Debt
According to the doctrine, for a debt to be odious it must meet two conditions:
1) It must have been contracted against the interests of the Nation, or against the interests of the People, or against the interests of the State.
2) Creditors cannot prove they they were unaware of how the borrowed money would be used.
We must underline that according to the doctrine of odious debt, the nature of the borrowing regime or government does not signify, since what matters is what the debt is used for. If a democratic government gets into debt against the interests of its population, the contracted debt can be called odious if it also meets the second condition. Consequently, contrary to a misleading version of the doctrine, odious debt is not only about dictatorial regimes.
(See Éric Toussaint, The Doctrine of Odious Debt : from Alexander Sack to the CADTM).
The father of the odious debt doctrine, Alexander Nahum Sack, clearly says that odious debts can be contracted by any regular government. Sack considers that a debt that is regularly incurred by a regular government can be branded as odious if the two above-mentioned conditions are met.
He adds, “once these two points are established, the burden of proof that the funds were used for the general or special needs of the State and were not of an odious character, would be upon the creditors.”
Sack defines a regular government as follows: “By a regular government is to be understood the supreme power that effectively exists within the limits of a given territory. Whether that government be monarchical (absolute or limited) or republican; whether it functions by “the grace of God” or “the will of the people”; whether it express “the will of the people” or not, of all the people or only of some; whether it be legally established or not, etc., none of that is relevant to the problem we are concerned with.”
So clearly for Sack, all regular governments, whether despotic or democratic, in one guise or another, can incur odious debts.
. Overall, what does illegitimate debt mean? It means debt that is not used to fund or meet the needs of the populations. On the contrary, it directly feeds the profits and interests of lenders.
Unfortunately, the vast majority of debt is illegitimate, both in the South and the North. These illegitimate debts feed off each other, in the sense that, in the name of the debt, austerity and structural adjustment
Structural Adjustment
Economic policies imposed by the IMF in exchange of new loans or the rescheduling of old loans.
Structural Adjustments policies were enforced in the early 1980 to qualify countries for new loans or for debt rescheduling by the IMF and the World Bank. The requested kind of adjustment aims at ensuring that the country can again service its external debt. Structural adjustment usually combines the following elements : devaluation of the national currency (in order to bring down the prices of exported goods and attract strong currencies), rise in interest rates (in order to attract international capital), reduction of public expenditure (’streamlining’ of public services staff, reduction of budgets devoted to education and the health sector, etc.), massive privatisations, reduction of public subsidies to some companies or products, freezing of salaries (to avoid inflation as a consequence of deflation). These SAPs have not only substantially contributed to higher and higher levels of indebtedness in the affected countries ; they have simultaneously led to higher prices (because of a high VAT rate and of the free market prices) and to a dramatic fall in the income of local populations (as a consequence of rising unemployment and of the dismantling of public services, among other factors).
IMF : http://www.worldbank.org/
policies are imposed, generating a recession that forces states to resort to incurring more and more debt. Illegitimate debt thus creates a vicious circle and if it is not stopped, it will only produce social devastation, overwhelming austerity, and destruction of all collective well-being.
Camille: Not only that, there is also the notion of odious debt—that is, debt that does not serve the interests of the population, and of which both lenders and borrowers are aware. It is not just about admitting that “we made a mistake.” If that happens repeatedly, it’s because it has become structural, feeding capitalism and strengthening inequalities. This is why we argue that it is criminal. There are several legal norms and arguments explaining why these debts should not be repaid. These arguments have been used in public debt audits, such as the case of Ecuador, for example. There are other arguments in international law, like fundamental changes of circumstances and force majeure, for example. This is why it is necessary to show that these debts can go unpaid, and this is what we are trying to point out in the book.
It is an invitation to overcome that feeling of a nearly “moral” obligation, where we tell ourselves “we are in debt, we must repay it,” and remember that we can legally demand the cancellation of illegitimate debt.
How do different elements of colonialist and heteropatriarchal capitalism—that is, natural resource extraction and exploitation of waged and free labor—fit together in the systemic logic of debt?
Camille: Debt is really a tool to strengthen the hoarding and extraction that capitalism establishes to create accumulation. Whether by saving money through unpaid labor or increasingly undervalued labor, whether by exploiting natural resources or workers at an increasingly fast and devastating manner, debt is the instrument that will allow speeding up this necessary process for capitalist accumulation. This is the result of having eliminated the value of these processes: the regenerative capacity of nature and social reproduction that is primarily carried out by women, but also in general by peasants, by all people who care
Care
Le concept de « care work » (travail de soin) fait référence à un ensemble de pratiques matérielles et psychologiques destinées à apporter une réponse concrète aux besoins des autres et d’une communauté (dont des écosystèmes). On préfère le concept de care à celui de travail « domestique » ou de « reproduction » car il intègre les dimensions émotionnelles et psychologiques (charge mentale, affection, soutien), et il ne se limite pas aux aspects « privés » et gratuit en englobant également les activités rémunérées nécessaires à la reproduction de la vie humaine.
for the world and others, and by all essential workers. The ruling—and therefore heteropatriarchal and capitalist—culture downgrades these processes and activities so it can exploit them more and more. And debt will justify the fact that wealth should be extracted from all these things that are considered infinite, worthless, and extensible, at a faster and faster pace, to finally create the necessary monetary value to repay it.
We see debt as a continuation of colonization, as a tool for continuous colonization, not only from North to South, but also affecting all these marginalized bodies and all these processes. What we effectively propose is to read all these things in conjunction.
Christine: Debt colonizes women’s innermost lives, as Verónica Gago, Luci Cavallero, and Silvia Federici point out in the preface of the book. It is important to understand to what extent debt penetrates homes and communities where their well-being and often their own survival is a responsibility patriarchy assigns to women.
As the social state and public services are destroyed in the name of repaying public debt, any increase in public debt means increasing private debt for women. To offset the lack of public support to social reproduction and continue to secure the survival of their loved ones at all cost, more and more women are falling into the hellish downward spiral of over indebtedness.
This way, debt colonizes women’s private and everyday lives. As they incur more debt, they become more and more insolvent, therefore experiencing a specific kind of violence: we are talking about debt slavery and debt-bonded prostitution. We can see to what extent, beyond concepts, in women’s private lives, debt has criminal, violent, and sexist consequences.
The examples of concrete cases in different countries is a very interesting aspect of the book. What is your take on the role of anti-debt struggles in different anti-capitalist strategies in countries in the North and South?
Camille: Debt has such concrete consequences in people’s lives that all struggles can usually have something to say about debt and austerity, in a way that is coherent with their contexts and experiences. I have been to Senegal at the seminar on microcredit, and although each testimonial referred to individual cases in specific places, we could almost always establish a relationship with the fact that public debt has increased and this has been taking women to experience very concrete situations.
In my opinion, what can really be reinforced is this relationship with public debt, which allows us to internationally have common demands regarding debt cancellation. Ultimately, what the women from Senegal experience in terms of microcredit is not only connected to microfinance institutions, but it is also closely connected to what we, as Belgian or French women, could have demanded to our own governments. We can and must demand the end of austerity in our countries, but also demand the cancellation of debt in Senegal, for example. So the demands for cancellation in other countries can also be translated as demands for cancellation in our own countries.
Christine: I was lucky to have had contact, in the past 20 years, with feminist movements at an international and European level, but also in Belgium. I could see to what extent feminist movements have taken on the issue of debt and how they have managed to personalize debt-related matters. How it affects women for all the reasons that we go through in the book, in their daily lives in a very concrete way—feminisms have taken into account the experiences of the people who have been the most affected by debt and experiences that are often rendered invisible or are not listened to, because we are in a patriarchal system. Over time, the feminist movements came up with answers that are sometimes much more innovative, especially in terms of struggles against debt, than the anti-debt movements themselves.
- Can you give us some examples of this kind of feminist response?
Christine: For example, the feminist strikes that highlighted all the invisible labor. If we ask why this work is invisible, we ask what the systems of domination that turn this work invisible are, and then we get to the capitalism that is fed
FED
Federal Reserve
Officially, Federal Reserve System, is the United States’ central bank created in 1913 by the ’Federal Reserve Act’, also called the ’Owen-Glass Act’, after a series of banking crises, particularly the ’Bank Panic’ of 1907.
FED – decentralized central bank : http://www.federalreserve.gov/
by debt. The fact that I was working on the topic of feminisms when I was doing militant work for debt cancellation allowed me to go from concerns related to “macroeconomics” to areas that are more connected to what is experienced, what is living, the personal, and women.
Camille: Regarding debt, feminisms continue to do what they have always done—that is, they lay bare and turn into collective what was considered private and intimate. They conduct a structural, collective, and political reading on debt, as does the CADTM. Feminisms allow us to argue that debt is not an individual problem to be resolved individually, that it is not a matter of shame or bad luck or some failure resulting from poor budget management or miscalculation that we should resolve on our own. Feminisms were able to show that debt is the result of structural political decisions and logics from a deeply capitalist and heteropatriarchal culture of domination.
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