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For a European Anti-Crisis Front

by Eric Toussaint Wednesday, Jul. 18, 2012 at 3:02 AM

Lowering the public debt burden is not an end-in-itself. Debts could serve to stimulate the economy and improve the living conditions of the victims of the crisis. Debt reduction must occur mainly by increasing the tax revenues (higher tax rates and combating tax evasion), not only by cuts.


By Eric Toussaint

[This article on the foundations for a European anti-crisis front published in SoZ – Sozialistische Zeitung, July 2, 2012 is translated from the German on the Internet,]

In agreement with the demands of the IMF, the governments of European countries resolved to prescribe a rigid austerity policy to their populations – with drastic cuts in public spending: terminations in public service, freezing or lowering salaries of public servants, reducing access to basic services and protective social measures and raising the retirement age.

However the populations are less and less ready to endure the injustices and enormous social regression that come with these programs. Creditors are fattened while wage-earners and the jobless and their families are presented with the bill.

Lowering the public debt burden is not an end-in-itself. Under certain circumstances, debts could serve to stimulate the economy and improve the living conditions of the victims of the crisis. Debt reduction must occur mainly by increasing the (tax) revenues (through higher tax rates and combating tax evasion), not only by reducing spending. On the expenditure side, the debts must be put to the test. Illegitimate debts should be cancelled along with socially absurd and harmful spending on armaments or environmentally-damaging projects. On the other hand, spending on socially and environmentally-friendly projects must increase.

Eric Toussaint, the president of the “Committee for Cancellation of the Debts of the Third World” (CADTM, names 11 points that could offer a basis for a common European anti-crisis front.

On the European and the local planes, a broad anti-crisis front must be built so solutions based on social and climate justice can be carried out. The front should carry out these 11 points:

1. The austerity plans must be stopped.

They are unjust and intensify the crisis. Stopping the austerity measures has absolute priority – with mass mobilizations on the street, strikes and civil disobedience.

2. The illegitimate public debts should be cancelled.

A public hearing (audit) on state debts under the control of citizens is necessary. In some cases, a one-sided and sovereign suspension of debt repayment is sensible. State debts can be drastically reduced this way.

3. Redistribute wealth justly.

Since 1980, the direct taxes on the highest incomes and on big businesses have continuously fallen. These tax gifts of several hundred billion Euros flowed mainly into speculation and accumulation of riches.

A radical tax reform is needed to restore social justice and harmonization on the European plane and prevent tax dumping. Public revenue should increase by means of a progressive income tax for the richest persons (the top tax rate could be effectively raised to 90%) and reintroduction of the property tax and the corporation tax. At the same time the prices for elementary goods and services must be reduced. Of the taxes, the surplus value/ profits tax must be lowered. Several countries could join forces to introduce a financial transactions tax, particularly on the currency markets that would limit speculation and make the exchange rates more stable.

4. Fighting tax havens

Despite all the declarations of intent, all the G20 summits have long refused to take action against justice- and tax-havens. Prohibiting all persons and corporations from any transactions in tax havens with the penalty of a fine would be a simple measure. The criminal transactions and corruption in the world of finance must be ended. The financial authorities must have the funds to efficiently fight the organized fraud of big business and the richest families. The results must be made public and the culprits punished severely.

5. Shrivel the financial markets

Worldwide speculation is many times greater than all the wealth produced on earth. Speculation cannot be controlled because of its complex architecture. Its mechanisms destroy the real economy. As a rule, financial transactions are impenetrable and obscure. The creditors must be first identified to be taxed at the source. Speculation on public debt titles, currencies and food should be prohibited like short-selling and the business with credit-securities. The off-exchange markets for derivatives, black holes that evade all regulation and oversight, should be closed. The rating agencies must be reformed and regulated. They are closely connected with the world of finance and are not objective actors.

Capital transaction controls must be re-introduced.

6. Banks and insurances must be under public authority and public control.

Most banks are insolvent and are not in a temporary liquidity crisis. The decision of central banks to grant them unlimited access to credit without changing the rules of the game intensifies the malaise.

Back to the basics: banks should be seen as public service providers because of their importance and the disastrous consequences of bad management for the economy. Awarding credits is too serious to be left to the bankers. Banks must become public institutions since they deal with public money, enjoy state guarantees and provide a fundamental service to society.

The states must recover their capacity to make investments and finance public expenditures. Borrowing from private institutes must be reduced to a minimum. Therefore it is necessary to expropriate banks (credit institutes and commercial banks) without compensation and subject them to the control of citizens. In our option, the private capitalist banking sector would be abolished with only the public and cooperative sector remaining. This is similarly true for the insurance sector.

7. Cancelling the privatizations since 1980

With the privatizations of the last 30 years, governments lost the ability to regulate the economy. New public enterprises must be created and their production adjusted to the needs of the population.

8. Radical reduction of working hours to ensure full employment and a more socially just income policy

Redistribution of wealth is the best answer to the crisis. The share of wages in produced wealth has fallen for decades; on the other hand the share of profits and assets constantly increases and disappears in speculation. By raising wages, many people will have a dignified life. More funds will flow into the treasuries of social security and pensions. Reduced working hours with full wage and pension compensation improves the quality of life of the working population and creates jobs for those needing employment. It also offers the possibility of introducing another rhythm of work and life that leads away from consumerism pressure. The time gained must make possible greater participation in political life, more solidarian, voluntary and cultural activities.

The legal minimum wage and – derived from that – average wages and social transfer payments must be drastically increased. In a countermove, a rigorous upper limit for manager salaries must be fixed since they have reached an absolutely unacceptable peak (this is directed against stock-options, bonuses and other income components).

9. State borrowing – for what?

Public borrowing must serve the 1) improvement of living and environmental conditions and 2) include a redistribution component to reduce the social inequality. Therefore we propose that the financial institutes, big businesses and rich families be legally compelled to buy government bonds at 0% interest in a certain relation to their assets and income, while the rest of the population can freely buy these bonds – at a guaranteed interest rate (for example 3%) including an inflation-compensation. That would be a measure of positive discrimination that also helps redistribute wealth.

10. Discussing the euro

For a series of countries, a debate about withdrawing from the euro is absolutely necessary. For Greece, Portugal and Spain, the euro is a strait-jacket. If this debate is not in the center like the other proposals, this is because they divide the social movements and the parties of the left. Still our central desire is to join forces in relation to the crucial theme of debts in an anti-crisis front and temporarily put aside what separates us.

11. Another solidarian European Union

Different parts of the agreements about the EU, eurozone and the European Central Bank must be rescinded. This includes for example Articles 63 and 125 of the Lisbon treaty that prohibits all control of capital movements and all assistance for states in difficulties, the Stability- and Growth pact and the European Stability Mechanism (ESM). The current agreements must be replaced by new agreements. A real democratic constitutional process must be initiated that results in a “Solidarity pact for Employment and the Environment” of the populations. Monetary policy and the statute and praxis of the European Central Bank must be completely revised. The European Central Bank cannot stand above the governments and the populations. The dictation of the financial markets must be broken.

Financing a hospital must be possible at more favorable conditions than financing a purely speculative project.

A Europe built on solidarity and cooperation must turn its back on competition and rivalry that force life “downward.” The neoliberal logic has long repressed the social indicators and caused the crisis. The pre-eminent goal must be a Europe grounded on cooperation between the states and solidarity among the peoples.

In this democratic Europe, there are several non-negotiable principles: social justice and tax justice, targeted measures for raising the living standard and quality of life, disarmament and radical reduction of military spending, permanent turn to renewable energy, without nuclear power, rejection of genetically-modified organisms, repeal of Fortress Europe, equal and solidarian partnership with the peoples of the South and unconditional cancellation of the debts of the third world.

The cancellation of debts is a common denominator for all struggles in the North and South.



“Nature is not a commodity”

Bolivia’s negotiator Rene Orellana in Rio wants to orient the world economy in development instead of profits

[This interview published in the Swiss WoZ Nr. 24/2012, 6/14/2012 is translated from the German on the Internet, Rene Orellana Halkyer (43) received a degree as an anthropologist in Amsterdam and was a water activist and water- and environmental minister under President Evo Morales. Since 2011, Orellana, a professor, has been Bolivia’s delegation leader at the UN climate negotiations and will represent the country at the Rio + 20 conference.]

WoZ: Mr. Orellana, what does the Bolivian government expect from the Rio + 20 Summit?

Rene Orellano: We hope for answers to the urgent problems of humanity: poverty and the envi9ronmental-, economic- and food crises. The principle of differentiated responsibility must be in effect in the future. The developed countries must solve the crises that they caused. That is the position of Latin America’s leftist-governed countries, the group of countries of the South and China.

What does the concept of the “Green Economy” mean to you?

In December 2009, the UN General Assembly resolved to define the term “Green Economy.” The EU and the UN Environmental Program did that very skillfully in the sense of business. The group of countries of the South and China see this differently. We want the right to sovereign development to be respected, that there may be different models. For us, the Green Economy is nothing but a tool that countries can use voluntarily. The world economy must be oriented to development, not to profit. Small farmers must be strengthened, their seed protected and food prices controlled. We want just trade, reducing the gulf between poor and rich. Nature is not a commodity. We champion the concept of “rights of Mother Earth.”

Do you think agreeing on new quantitative goals for sustainable development is meaningful?

No, we must first agree on the principles. It is senseless to speak about goals as long as the conversion is unclear. Technology-transfer and spending money are imperative – and no one may be discriminated.

Do you expect concessions of the North in the present situation?

Before the economic crisis in Europe, the position of developed countries was rather restrictive. For us, that is not a reason to give in.

At the 2010 Climate conference in Cancun, Bolivia was the only country that refused approval of the windy final declaration. Could this be repeated in Rio?

We will negotiate to the last minute. Still a disapproval is obviously possible. We will act together with the other left-governed countries of Latin America with whom we share basic political and idealistic conditions and convictions.

Even in Bolivia, there is passionate argument around the “rights of Mother Earth.” Come hell or high water, the government may build a controversial road through the Tipnis Indigena – and nature-reserve…

Development is a table with four legs, so to speak. Despite the rights of nature and the indigenous, the five-and-a-half million poor Bolivians have a right to overcome poverty. The state is committed to accomplishing this by building the infrastructure and promoting gas and oil. Bolivia depends on raw materials. We must promote them – even more as long as the technology- and money-transfers falter. This is also earmarked according to UN guidelines.

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