Report on Europe for the World Assembly of the CADTM Dakar international network from 13 to 16 November 2021
Summary of responses received from 10 countries: Italy, Serbia, Bosnia and Herzegovina, Slovenia, Croatia, Montenegro, France, Spain, Belgium, Portugal
1. What is the current social, economic and political situation?
Overall the situation is bad and has worsened with the impact of CoVid-19:
- The political colors governments vary from country to country; they are led by social democracy in Portugal, Spain, Scandinavia and Croatia, by the extreme right in Serbia, by parties claiming to be of the center-right as in France, or by coalitions as in Germany until in the elections at the end of September 2021, Belgium or Italy,… As a general rule, a right-wing ideology prevails in the media and in governments. No government has yet initiated real social policies. All are more or less caught up in the neoliberal logic. Most governments include technocrats who implement a neoliberal if not nationalist ideology, especially in Bosnia and Herzegovina, Serbia, Hungary and Poland. Embezzlement and corruption are major problems in Serbia and Montenegro (although they are also present elsewhere).
- The economic situations vary depending on whether we consider peripheral countries such as Romania, Bulgaria, countries of the former Yugoslavia, euro zone countries such as (Croatia, Greece, Spain, Portugal, etc.) or dominant economies like Germany, France, the Netherlands, Belgium, Austria, or even those in an intermediate position like Italy. The general trend, however, is towards worsening difficulties due to the Covid pandemic which has hit economies hard and the economic crisis which had already started.
- Therefore, the social situation is not favorable to the popular classes. The majority of the population is hit hard by job losses (or lack of jobs), loss of income, more precarious contracts, attacks by governments on workers’ rights and social rights in general.
2. Is a public debt crisis looming?
All countries have experienced a significant increase in their public debt, but the consequences are not the same everywhere. Basically, we can distinguish between
- Country of dominant economies (Germany, France, Netherlands, Belgium, Austria): sharp increase in debt. European and national stimulus plans will often provoke further austerity measures thereafter. However, in the short term, there is no public debt crisis. Countries that are perceived to be economically (and politically) reliable will always be supported by financial markets and EU institutions.
- Country of periphery (Spain, Italy and Portugal): there is a significant increase in debt. European and national stimulus plans amount to new austerity measures. Deeply weakened by the financial crisis of 2008 and the interventions of the IMF
International Monetary Fund
With the World Bank, the IMF was founded on the day of the signing of the Bretton Woods agreements. Its first mission was to support the new standard exchange rate system.
When the Bretton Wood system of fixed rates ended in 1971, the main function of the IMF became that of being both the policeman and the firefighter of world capital: it acts as a policeman when it carries out its policies. structural adjustment and as a firefighter when intervening. to help governments in the event of debt default.
As for the World Bank, a weighted voting system works: according to the amount paid as a contribution by each member state. 85% of the vote is needed to change the IMF charter (meaning the United States with 17.68% of the vote has a de facto veto right over any change).
The institution is dominated by five countries: the United States (16.74%), Japan (6.23%), Germany (5.81%), France (4.29%) and the Kingdom -United (4.29%).
The other 183 member countries are divided into country-led groups. The largest (6.57% of the vote) is led by Belgium. The smallest group of countries (1.55% of the vote) is led by Gabon and includes African countries.
(Spain, Portugal, Greece, Cyprus, Ireland), these countries have not yet fully recovered and can count on less and less room for maneuver to revive their economies, with failing or nearly failing banks.
- Country of the former Yugoslavia in the EU (Croatia & Slovenia): sharp increase in debt. European and national stimulus plans amount to new austerity measures.
- Country of ex-Yugoslavia outside the EU (Bosnia, Montenegro, Serbia): these are developing countries. Sharp increase in debt, economies among the weakest on the European continent and still in reconstruction. Being outside the EU, they are not subject to constraints and cannot benefit from the same funding possibilities. Corruption and cronyism absorb a large part of the funding. They are closely watched by the IMF, and very dependent on foreign creditors like China, which uses them for its new Silk Roads. In Montenegro, an unfinished “highway” financed by China has resulted in abysmal debt and the abandonment to the private sector of a large part of the public wealth.
3. What are the major current struggles? Are there any important wins or losses?
Overall, protest movements have been hampered by restrictive “health” measures. While there have been a few demonstrations for climate justice – such as the mobilization at COP26 in November 2021 with some 100,000 demonstrators in the streets of Glasgow – and for social justice (in all its forms), as well as to defend labor rights are not massive radical movements that could force governments to yield
The return on income from an investment. This refers to the interest or dividends received from a security and is usually expressed annually as a percentage based on the cost of the investment, its current market value or face value.
. Let us recall, however, that in Western Europe in 2020 we had significant decolonial and anti-racist mobilizations (Black Lives Matter). In Poland, women mobilized against the anti-abortion law.
There is a significant drop in citizens’ trust in parties and unions, in favor of more self-organized “civic” movements. There has been a noticeable change in this regard over the past 5-10 years, but so far not translating into a real victory.
4. Are there struggles against illegitimate debt (whether public or private)?
Overall, in the EU countries, there is no significant questioning of the public debt, its payment, and even less of a real struggle to denounce illegitimate public debts. But NGOs from several countries are calling for the cancellation of the debt (and illegitimate debts) of the countries of the South.
On the other hand, we can note a questioning and mobilization against illegitimate private debts in the field of housing, health, education etc., with emphasis on the role played by vulture funds
Investment funds that buy, on secondary markets and at a significant discount, bonds formerly issued by countries with repayment difficulties, from investors who prefer to reduce their losses and take the price they can get for offload the risk of their books. The vulture funds then sue the issuing country for the full amount of the debt they have purchased, not hesitating to go to court, usually British or American, where the law is favorable to creditors.
The cross-cutting nature of debt has been highlighted by the current crisis, and the issue of debt is increasingly understood by citizens’ movements, including young people who are mobilizing on the ecological question.
5. What are the main initiatives launched by the various member organizations of the CADTM network?
- Political calls to cancel the debt of southern countries and fight against private creditors, in particular with a view to passing a law (Belgium / France)
- Debt Studies (Italy)
- Insist on the issue of public debt in political and anti-globalization contexts
6. Are there any continental initiatives or initiatives involving several organizations in the same region?
Debt situation in the EU
From March 2020 in connection with the multidimensional crisis that hit European countries, governments, the European Commission and the BCE
European Central Bank
The European Central Bank is a European institution based in Frankfurt, founded in 1998, to which the countries of the euro area have transferred their monetary powers. Its official role is to ensure price stability by fighting inflation within this zone. Its three decision-making bodies (the Executive Board, the Board of Governors and the General Council) are made up of governors from the central banks of the Member States and / or recognized specialists. According to its statutes, it is politically “independent” but it is directly influenced by the world of finance.
https://www.ecb.europa.eu/ecb/html/index.en.html has adopted a policy of “whatever the cost” to use an expression of French President Macron. Strict budget deficit rules have been temporarily dropped and governments have made massive public lending, which has resulted in debt increases of 15-20% in most countries.
Some people on the left applauded. Governments with socialist participation as in Spain and Portugal have welcomed the possibility of calling on new European funds either in the form of loans or in the form of grants. In reality, the subsidies are very limited and conditional on the implementation of new neoliberal structural measures. The CADTM denounces the illusions about the financial measures taken by the EU (see https://www.cadtm.org/La-centralite-du-capital-financier-dans-la-solution-europeenne-a-la-crise) . CADTM Europe had proposed another approach in April 2020: http://www.cadtm.org/We-Won-t-Pay-for-Their-Crises-Anymore.
EU external debt policies:
In the context of the health crisis, Europe has joined the call of the IMF and the Parisian club
This group of lending states was founded in 1956 and specializes in handling non-payments from developing countries.
to suspend the debt service
The sum of interest and amortization of borrowed capital.
of the most indebted countries for an initial period of 6 months, later extended to one year. This is insufficient for several reasons:
- At the end of this period, their debt service will still have to be paid, which means that this measure is only a temporary stopgap that does not solve any structural problem.
- – Much of the expenditure during the pandemic was exceptional expenditure of public resources to deal with the health crisis.
- Difficulty in accessing vaccines, largely due to pending patents, has also exacerbated North / South inequalities, especially in terms of trade asymmetry. EU policies induce future debts in the countries of the South since they do not increase their manufacturing capacities nor require the lifting of patents (on the contrary, they opposed the lifting proposed by 105 countries of the Global South) and maintain an aggressive foreign trade policy.