Greetings from Daisuke Kotegawa

Tatiana Seliverstova

Head of the department of the international cooperation and innovative activities of the Russian Union of Youth.

Jacques Cheminade

President of Solidarité & Progrès, Paris.

“God laughs at those who deplore the effects of which causes they cherish.”

This stark denunciation by Bossuet in the XVIIth century can be used today against the countries of Western Europe and North America where people claim to be moved by statistics and the appearance of forms – increase of unemployment, social inequality, drug consumption and money and weapon traffics – without uprooting what would allow them to bring all this to an end. Oligarchies keep in effect peoples in a state of voluntary submission and rig the environment in which they operate : to increase the Gross Domestic Product of the EU member states, the European accountants demand now that countries include in their statistics the revenue generated by all sorts of traffics. By the magic of the markets, for example, prostitution is no longer a human tragedy or a burden for society, but a profit appearing on the balance sheets. Mandeville’s precept, according to which the sum of private vices is a public virtue, dominates the entire scope of western behavior, to the point of making of human labor an “adjustment variable”, and a profit generated to the detriment of human labor exploitation, the supreme reference for the markets.

Our transatlantic region is thus dominated by an incestuous relationship between the banks from Wall Street and the City and the large cartels of the cyberindustry, nicknamed the “seventh continent” of GAFA, meaning Google (G) for cartography and databases, Apple (A) the internet provider, Facebook (F) the social networker and Amazon (A) the bartender of culture.

That system gambles without producing, and does so at the speed of light; it is High Frequency Trading (HFT) without any judicial control; operating on “alternative platforms” of the global shadow banking, after having reduced the institutions of the Nation-States to the servitude of debt and enslaving individuals to their desire to possess by finding out not merely what we do, but attempting to predict what we will do, and even to know it before ourselves, thanks to a multitude of data about us accumulated in the web without our consent.

This predatory society is a modern version of the British Empire, with the same destructive impulses as those resulting from the fusion of the British monarchy and the East India Company. It carries within itself war as the rain clouds carry the tempest, because its predatory character makes it unable to produce the resources required for future generations. Hence, for one euro or dollar produced, it creates at least four Euros of debt and an accumulation of debt titles without historical precedent.

We know the official figure of financial derivatives which are gambling claims on future prices which are traded independently from the possession of the underlying material goods: 800,000 billion dollars, or more than ten times the entire yearly world production. The real figure of all these accumulated money claims which nobody knows with certainty since the cross-engagements among financial institutions are managed by computers operating at speeds counted in billions of seconds, is undoubtedly far superior to 2 million of billions of dollars !

We are really up to “mad finance” in the real sense of that term, the madness of a pathological murderer. It destroys human capital on which the entire society is based. Countries who like the United Kingdom, the United States or Germany report less unemployed have in reality suppressed them by statistical manipulation and organized hardship.

In these conditions, a “climate of war” has been created in the world, which Pope Francis rightly denounced in Sarajevo. We are living in an “Empire that kills”, he said already some months ago. The folly of finance is murderous. More and more officials, from China to the United States and especially Russia, compare the current situation with the 1962 Cuban missile crisis, the only difference being that this time, it is the USA, the UK and NATO that have deployed their forces and nuclear missiles to the borders of Russia, violating everything they promised at the time of German reunification.

Two factors make the situation in which we are today infinitely more dangerous than that of 1962. The first factor is the fact that the majority of citizens no longer mobilizes against the war which comes or against the looting of their existence. And there where they do mobilize, they do it because they have their backs against the wall of their exploitation and exclusion, as in Greece or in Spain. They reject what should be rejected but have no project to achieve what is necessary.

Yet, if we want to reestablish a world of real growth and mutual development, we must contribute to the impetus of the BRICS countries and their associates, a surplus of power and a larger horizon. We cannot simply say we’re going ride on the train of the BRICS and wait till they take us the terminus ! That’s already better than remaining on the platform or to gight them as the oligarchs desire us to do, but that isn’t at the level of the challenge, our challenge and theirs.

We must contribute the best of ourselves, since it is the economic orientation of the entire world which we have to change. It is not such or such element of the current system which leads us to disaster, but the entire “logic” of the system itself. We must change the system. That change is the precondition of a future peace, a capacity to create the conditions of a harmonious mutual development based on the win-win principle, as underlined repeatedly by the Chinese President Xi Jinping.

Therefore, we must understand what an economy really is. It is in reality the conception of a true human being which we have to rediscover in ourselves. Human beings are not geopolitical animals trying to occupy territories or control resources to the detriment of other human beings; human beings define themselves by their capacity to discover the principles of the universe they inhabit and modify the environment through the application of discoveries which allow his fellow humans to grow and multiply towards a better existence.

An economy is not buying cheap and selling dear in order to make a financial profit, but to build platforms of mutual development to produce more and better with less, thanks to technological applications derived from discoveries. It means increasing one’s productivity per capita, per surface area and per unit of matter employed in these processes. These platforms incorporate the means to guarantee this dynamic : human infrastructure, education, health and R&D and physical infrastructure, transportation and production units. US political statesman and economist Lyndon LaRouche, called this capacity of the human individual, the potential of relative population density, relative to the level of technological and human platform which has been set up.

This notion of potential, of capacity per human being, has been taken up by the Russian friends of LaRouche. The Russian scientist Pobitch Kouznetsov proposed to call it the “L”, an economic unit measuring the applied and verified impact of human creation. You now understand why I called my intervention “Human creation, source and measure of the real economy”.

It is crucial to underline that with their conception of “One belt, one road”of the land and maritime New silk road, the Chinese experts and leaders express the same conception of the human being. As far as my understanding is right, the concept of the “shi” evaluates the potential to be developed. We no longer require a pre-established detailed plan, but are considering situations such as a mines, whose veins we will exploit through a transformative idea ,operating in a way that at the point I engage my action and my combat, I’ve already won, since I’ve prepared the conditions to win over my enemy, by transforming him into my partner. The Indian Prime Minister Narendra Modi has fully understood this principle when he declared at the conclusion of the BRICS summit in Fortaleza last July:

“The uniqueness of BRICS as an international institution [is that] for the first time, it brings together a group of nations on the parameter of a “future potential,” rather than existing prosperity or shared identities. The very idea of BRICS is thus forward-looking. I believe they can offer in this way new perspectives and ways to function for the existing international institutions”.

This conception of the economy is radically opposed to Aristotle’s formal logic, based on the “principle of non contradiction” according to which an enemy is an adversary to be destroyed. While for us, an adversary is somebody to win for your cause, on condition that the debate is elevated. As Nicolas of Cusa underlined the matter, creation supposes the “coincidence of the opposites”, which, at a higher level of conjecture, makes knowable and controllable, what on a relatively lower level appeared as unknowable and uncontrollable.

Confucius, with his conception of the “ren”, i.e. the advantage given to the other, which allows to acquire the mandate of heaven by instructing the other, develops an approach of a similar nature. Contrary to current Malthusian nonsense which pretends that “the history of the finite world has begun”, Jean Bodin, in his Six books on the Republic, in the footsteps of Cusa, states that “There is no wealth nor strength but man” provided that a leader makes “accords from discords”, an aspiration for unity in diversity whose principle runs as a red line through Chinese civilization.

Hence it is clear that we Europeans and Americans have a lot to share with the BRICS and even to contribute to them. In France, the reign of King Henri IV, with Sully, Laffemas and Olivier de Serres, in Germany with the Enlightment of Lessing and Mendelssohn and the concept of National Economy of Friedrich List, and in the United States, the Hamiltonian conception of political economy. It is there that appeared most clearly a sense of economy and of a society driven by a vector of scientific progress and not by obedience to a tradition.

In two of the four founding reports of the “American System of Political Economy”, Hamilton shows that public credit, organized by a National Bank, is the foundation of an economy, since it represents a “bet on the future”, on the capacity of future investments to produce the means to reimburse the debt incurred. The future of the United States, he understood, was in “manufacturing”, i.e. industry supported by public credit, and not in agriculture as wanted by Jefferson, since it is industry which can increase the quality and the quantity of human labor. It is the increase of the energy flux density and technology which provides this “physical surplus” allowing us to reinvestt in still a higher level of future human creation.

In his report on a National Bank, Hamilton demonstrates in particular, to the great astonishment of the other founding fathers, how debt can be transformed into money allowing the emission of public credit. The National Bank was conceived of as a receptacle for deposits coming from income of all origins, including titles of the federal debt which, which could be capitalized and lent to investors.

Debt served thus as a guarantee to circulate money credit and avoid the control over the American economy by foreign interests, emphatically British. Needless to say, these deposits could not be seized and the debts could not transformed into shares of the bank as many would like to do today in Europe, in order to bail out speculative bankers. This was all about the real economy, dealing with projects that produced productivity, and not financial gambling to expand private banks to the point they become systemic, which means that their size allows them to blackmail the government to prevent their bankruptcy and to demand help from the state in case of difficulties, to the detriment of peoples.

This reference is essential today in dealing with the issue of current Greek public debt. In respect to the criteria defined by Hamilton and to the debt cancellations granted to the German Federal Republic in 1953, we have to add the separation of reimbursable and legitimate debts from those that are not. Scarcely 10% of the debt incurred by Greece was in the interest of the people and the economy; the rest only benefitted the internal compradores and even more so, the external financial speculators, who are unduly demanding their « pound of flesh » today. If there is any negotiation at all, it should involve this point and not the tourniquet imposed on the Greek population and its economy by the “institutions” in the form of an austerity that amounts to bleeding a body that was made sick.

A platform for taking off and development, great infrastructure projects, public credit, energy and technology flux density, inspiration and support. Charles de Gaulle, in a speech given in Lille on 1 October 1944, said, when speaking at the end of the war: « We want to pool everything we possess on this Earth and to succeed in doing so, there is no other way than what we call the directed economy. We want the state to lead the economic effort of the entire nation for the benefit of all, and to ensure that the life of every French man and woman becomes better.”

Earlier, in Algiers on 1 May 1944, he said: “Great human affairs can not only be settled by logic. One needs the atmosphere that can only be created by the agreement of sentiments.”

You also need a lot of courage, which, fortunately, is contagious. This is what Franklin Delano Roosevelt had to say in Madison Square Garden of New York on 31 October 1936, about his enemies, who were the same as ours are today: “They are unanimous in their hatred of me – et I am happy with their hatred.”

A direction, an inspiration and the conviction of the sentiment : that was the “detente, entente and cooperation” among peoples of General de Gaulle. This is what Valentina Matviyenko, president of the Russian Federation Council calls today “a certain format of cooperation between the five BRICS countries that have a common agenda”, including “defense of their national sovereignty, the protection and promotion of their national interests on the basis of the principles of equality, non interference into their respective internal affairs and the refusal of a unipolar world”.

That is what is prompting China to find an agreement with India and Russia, to open access to its Asian infrastructures and investment bank (AIIB) to Japan and to the United States, despite historical litigation and inimical actions of both of them. That is also what has prompted Chinese interests to open an trans-oceanic canal in Nicaragua, to invest 50 billion dollars in Brazil and to finance a railroad, also trans-oceanic, between Brazil and Peru. And this is what has inspired the Russian central bank to propose a new bank clearing system similar to the Western Swift system.

Let us consider for a moment the economic changes for the past 100 years. China was the only country which did not sign the Versailles Treaty in 1919, because it had been stripped of its territory. China had not even been invited to the San Francisco Conference after WWII, , although it had fought with great courage against Japan. Once we are aware of what China had to suffer worldwide, we can better understand the sympathy it has for Greece today, and for Russia.

Because what we are inflicting upon Greece today, we of the European Union, is what we inflicted yesterday on China. Are we capable of changing? Are we capable of understanding that what is happening to Greece today can happen to each of us if we do not change policy? Voices are being heard in Germany, as we heard, to ask for Russia to be invited back to the G8. That is more in our interest than in Russia’s interest, because the latter is linked to the BRICS, that is to say, to more than half of mankind. Are we able, as Europeans, to avoid a new war? The test will be what we can do for Greece, and de facto for ourselves.

Economics means to recreate the conditions of a “will to live together”, by bringing together our our creative competences and making the whole greater than each of its parts. Today, in the skies of Eastern Europe and even closer to us, above the Sea of China, if two planes come close to each other, everything can degenerate. Today, the depopulation policies have started. And when facing the the waves of migration, the only idea with which our countries came up was bombing the ships transporting the refugees and starting a new colonial expedition. Are we that stupid as to accept going down into deadly barbarism for the others and suicidal for ourselves? Economics, means finding back the creative goodness of Aeschylus Prometheus, offering to all the possibility to grow and multiply thanks to a greater mastery of science beyond everything known and find new vigor by reminding ourselves our best accomplishments.

 Economics means doing for peace through mutual development in the XXIst Century what we did for war in the XXth Century, i.e. radically changing, overnight and from top to bottom, our way of thinking and conceiving the world.

 A new economy will be the smart cities of the future, the digital technology freed from financial domination and not a fatal destruction of jobs as anticipated by the experts, but the foundation of a new economy associated with new forms of more forms of energy density, as controlled thermonuclear fusion power. No solution can lead us back to the past. It is only by reestablishing confidence in their own creative powers and rejecting their state of exploitation by their oligarchic masters of the transatlantic zone, that our fellow human beings will rise to the level of the challenge of our epoch. Space exploration and domestication will play necessarily a fundamental role as a common objective for mankind, to escape from our earthly cradle.

However, all of this will not arrive fatally of mechanically. The reality is subjective. We have to find back the courage of Victor Hugo, who, in 1961, denounced the saccage of the Summer Palace, the garden of vortexes of clear water and the gardens of perfect clarity, constructed by Emperor Qiang Lon and the Jesuits:

“One day two bandits entered the Summer Palace. One plundered, the other burned… Before history, one of the two bandits will be called France; the other will be called England… Mixed up in all this is the name of Elgin, which inevitably calls to mind the Parthenon. What was done to the Parthenon was done to the Summer Palace, more thoroughly and better, so that nothing of it should be left.”

For having done that, we owe China to enter with her in the future, not to destroy but to construct the world in the BRICS era. Let me nevertheless tell you that I’m proud by the fact that Hugo’s letter is on the official Chinese websites and on internet translated into mandarin. I want now to speak myself about what we are doing to Greece and the refugees coming from Africa with the same anger inspired by that of Victor Hugo.

However, there remain reasons to be optimist and reasons to hope. First because it are the BRICS which from now on define the tuning of the world orchestra and a new drive towards a political mutation is manifest in Europe, including in those countries where the physical economy remains relatively robust, such as in Germany as we have seen yesterday and also in the United States with our own political movement and the candidacy of the O’Malley which took a stand against the bandits of Wall Street and is calling for a new Roosevelt style Glass-Steagall.

Looking into this room, I see we have friends and fighters for this idea from the entire world. So we can hope that the Silk Road will arrive among us and that we can make it a common objective for mankind in its way of thinking the world by walking the unknown path, in the heart of ourselves as well as in the growing mastery of what is taking place inside the solar system and our galaxy, because it is there, yes clearly there, as the next speakers will demonstrate, that lies the economy, the real one, that of our future.

 Since I convoked Victor Hugo, let’s ask him for more. Confucius teaches us one has to tease and challenge our friends to force them to rise above the contradictions of a given situation. It was also a June, 130 years ago, that he entered our Pantheon. Let’s listen to what he wrote in “Lux”:

 O vision of the coming time!

When man has ‘scaped the trackless slime

(…)

Upon the sky-line glows i’ the dark

The Sun that now is but a spark;

But soon will be unfurled—

The glorious banner of us all,

The flag that rises ne’er to fall,

Universal Republic of the World!

Simone Weil, our great platonic philosopher, said one day that in all labor resides a part of poetry, since real human labor is always creative. Here’s the labor before us. To someone who asked me why Helga Zepp-LaRouche and the Chinese leader had found this what he thought being a strange name of the “new silk road”, I answered: it was nothing but natural to them, since the economy is based on creative human labor and that work is pregnant of poetry. And that is what we will don with the world who gives its verdict.

Karel Vereycken

Journalist, Paris.

The subject of this panel is productive credit and non productive monetary scam, called debt. Of course there was no better introduction than what Jacques already brought up on the history of Hamiltonian credit.

We will see successively the situation in Greece, we have here Dean Andromidas, then we have the friends of the UMOJA who have been working long time on this

As far of what I saw yesterday, over the last weeks every day an imminent compromise between Greece and the Troika – is announced. In fact there is no agreement and there was no agreement yesterday even if the Greek negotiators were on Saturday in Brussels.

We are probably in front of the coming four days which will determine a shift one way or the other. Because on Thursday there will be a Euro group meeting which in principle should adopt a compromise solution. Greece is supposed to pay 1.6 billion euros before June 30. But Greece is also demanding to be paid the 7.2 billion which is the last tranche of the IMF rescue plan, but in exchange the Institutions say we are ready to do this if you cut your pensions, if you increase the vat, and if you create a surplus of your primary budget of more than 1%.

Now, 80 % of this primary budget today is used today to pay the pensions. So the IMF says we want our computers to say that all the 6 000 billion dollars in financial derivatives – based on the 320 billion Greek debt – we want to prove that this is all very good paper, and has full value, so we want Greece to impose policies that will prove our computer models are right, and it’s like the Climate change computers, you first make the model and then you invent the data to make reality correspond to your model.

And this is what’s going on now in Greece. They want to kill people by cutting down the health and the pensions, only to preserve a mathematical equation which the rating agencies are using to sell money that is worthless.

So, Greece correctly is saying that this is unacceptable because there is something called reality, and reality means that even if we want Greece to pay back its debts, you have to first turn Greece into a productive nation, in order to get an income so that it can pay anything.

Since 2012, maybe somebody bought Le Monde of today; they have a big title “Default of Greece is now on the agenda”. It’s being discussed; it’s now authorized to use the word. In reality, since 2012 the banks running the Greek debt are bankrupt, they are defaulting, not Greece. But we have now to act the bankruptcy and transform it into a financial reorganization and, since 2012, the Greek government has been very clear that the only way to solve the problem is to have a debt cancellation, a moratorium, a debt reorganization to allow economic life to return.

There are only four ways to reduce debts: 1) a moratorium for a couple of years, 2) reschedule debts on the long term, 3) cancel partially or entirely the debts and 4) reduce the interest rates.

Are there precedents? Of course. Since the 2^nd World war, since 1946, there have been 169 cases of debt cancellations and moratoria, but generally they don’t talk too much about it because it gives bad ideas of things to do.

Four cases in point: one was Argentina in 2001 where the private debt got a 65% haircut, an amount close to 100 billion dollars, the largest haircut ever done. Second was Iraq, because the debt of Saddam Hussein, was called on “odious debt” since it was the legacy of a dictatorship. The US cut out the debt of Iraq, but then added so much austerity that they destroyed the country. Getting rid of the debt alone is not enough; it can be a good step in a whole process but it’s not sufficient.

A more notable case was 2006 Equator where an audit established that 85 % of the debt was illegitimate and illegal. This was an amount of 3.2 billion and then the Equator state bought their own debt and threw it in the garbage can. And the banks agreed because everybody knew this debt was worthless.

The other well known case was Iceland in 2008, where the banks of Iceland were ten times bigger than Iceland’s GDP. And they went bankrupt and they asked the citizens of Iceland to pay for the banks, which was in reality to pay back the people of the Netherlands and of Great Britain who used Iceland to speculate on hedge funds. And the people rose, there was a lot of protest and finally the whole thing was scrapped.

The most notorious case which I want to take up today and which Syriza and Tsipras have been promoting as an example is the 1953 debt conference in London. This was about the German debt, the debt from before the Second World War, the remaining debt of the Versailles Treaty which Germany never succeeded paying because it was completely overblown and which was preventing the reconstruction of Western Europe after Second World War.

Eisenhower was elected in November 1952. Then on February 27, 1953 there was a conference in London organized by the allies which called on Herman Abs, a prominent German banker of Deutsche bank. The German debt was 30 billion marks and 66 % of it was scrapped.

And the principle was very simple, exactly what I said before. There were actually four main principles. The first one was that the reimbursement of the debt should never be more than 5 % of revenues from exports. This meant that the entire world had to help Germany to build up productive capacity and then be able to export goods so they would raise their income and pay their debts. So, it was an international plan, not some sort of punishment on Germany as it is being done to Greece today.

So the countries that gave up their debts to Germany were: the US, England, France, Greece, Spain and Pakistan. Later there were agreements between Germany and other countries like Egypt, Argentina, the Belgian Congo, Cambodia, Cameroun, etc.

The second principle adopted at this conference was the fact that both the private and the public debt had to be reorganized in the same time. Because in 2011 there was a haircut on the private debt of Greece by 50 % for 90 % of the creditors, but 10 % of the Greek private debt is now in the hands also of vulture funds which we know from Argentina and elsewhere, which are going to use the debt to make enormous amounts of profits.

So the conference in 1953 settled both the private and public debt. And this is what we should do. The people in Greece thought that after having elected Tsipras, countries as Italy, France and Portugal would somehow shift the whole European orientation. They had big illusions about François Hollande, that France would even organize a conference in Paris to reorganize the debt situation of the entire euro zone, based on these sound principles which had been proven to be the basis for the German economic miracle of the post war period.

To conclude, Varoufakis, the Greek finance minister, in one of his latest statements of June 5th said what we need is a “speech of hope” and he reminds the world that in September 1944 initially, there was the Morgenthau plan which had decided to take out all the industry of Germany, to make it into a pastoral country, only based on a green economy; no more industry.

For two years this was the original plan of the US and the UK. But in 1946, the secretary of state of the US, James Byrnes, in Stuttgart, made the famous speech called the “Speech of hope”, where he said : we should not do this, we cannot punish entire generations for what happened, we should completely change, rebuild Germany because it is good for the Germans and for the world. And Varoufakis brings this up, and says that’s the model and even invited Angela Merkel to come to Athens, to propose a complete shift of the current European situation.

Dean Andromidas

Executive Intelligence Review, Wiesbaden.

Diogène Senny

Secrétaire général de la Ligue panafricaine-UMOJA, Toulouse.

Here we are, assembled once again, as in October 2014 in Frankfurt, Germany, thanks to the comrades of the Schiller Institute, whom we wish to thank and congratulate for their constant engagement. We want to thank all of you for your tireless efforts in maintaining the link between us.

And finally, I greet our friends from the CADTM (Committee for the Abolition of Third World Debt), including Eric Toussaint and Damien Millet, who have been fighting for many years to denounce the huge scandal of odious and illegitimate debts.

I. Introduction

To understand the fatal debt that besets Africa, we have to look back at how it began and why it developed. Once we have shown that the African debt is a cleverly orchestrated policy of new conquest by neo-colonial forces, we will easily characterize it as being odious and illegitimate.

Consequently, to cancel it is not a request for generosity from the creditors, but a reparation and an act of justice for the people betrayed.

II. Background and causes of African debt

When African nations gained their independence in the 1960s, the former colonial powers were first with two challenges: to prevent by all means the coming to power in the former colonies of any nationalist-pan-africanist regime, and to prevent the Soviet Union, in the context of the Cold War and with the help of the United States, from finding allies in Africa, and thus gaining access to the mineral resources, which were the exclusive privilege of the Western powers until then.

Globally, the West did manage to remove the nationalists, either through assassination (the case of Lumumba in the Congo in 1961), or through wars and massacres on a grand scale (the case of the leaders of the Union of the Peoples of Cameroun), or through various tricks such as condemning opponents to prison or to exile (the case of Abel Goumba in the Central African Republic in 1964, after the mysterious accident in March 1959 of Barthélémy Boganda).

In the few countries where the regimes were allied with the Soviet Union, the West nonetheless maintained a presence, and used every chance to topple the powers in place and replace them with regimes which were more favorable to their interests and more servile. The overthrow and assassination of Thomas Sankara, for example, is a perfect illustration of this.

The West did everything it could to keep a stranglehold on the former colonies. One of the weapons was the debt, under the official pretext of reproducing the success of the Marshall Plan in Africa, while in fact, the main reason was to maintain strategic geopolitical control and to gain access to the mineral resources, as in the former colonial times. Hence, the following adage is perfectly applied: Whoever controls the finances of a nation, does not need to have total control over internal policies to be the real boss; he pulls the strings from behind the scenes.

At least three historical phenomena have provided the West with huge financial means to keep a stranglehold on Africa. First, at the time of accession to independence, in the 1960s, the western private banks had huge amounts of euro-dollars at their disposal, as a result of the U.S. loans granted to the Europeans in the 1950s under the Marshall Plan for post-war reconstruction.

To avoid the massive return of these euro-dollars to the United States, not only because of the inflation that would produce in the US economy, but also because of the risk of draining the gold held by the US, since the agreements provided for the exchange of the reimbursements in dollars against gold, the western governments encouraged their banks to lend massively, at very advantageous rates, to the new and nominally independent African countries.

Naturally, the African regimes, whose allegiance the western powers were sure of, were very interested in such loans, in such a strong inflow of money, particularly for their own use.

The second historical phenomenon which can explain the explosion of the debt, is the oil shock of 1973 due to the sudden quadrupling of the oil price. The emirs of the Gulf countries deposited those vast quantities of dollars from the oil sales in western banks. This is the phenomenon known as the petro-dollars.

These petrodollars, on top of the eurodollars linked to financing the reconstruction of a war-torn European continent, again flocked to Africa. Hence, within a period of 20 years, from 1960 to 1980, the private part of the Third World debt exploded. From almost 0 at the beginning of the 1960s, it reached $2.5 billion in 1970, and $38 billion in 1980.

Finally, the third phenomenon related to the explosion of the debt, is what we call the “bound aid”, which is bilateral aid, meaning from state to state. This “bound aid” is a kind of indirect subsidy for western companies, whose interests are paid by the African peoples. This practice goes back to the crisis that hit Europe in 1973-1975, and which is known as the end of the “thirty glorious years”, that is, the 30 years of strong growth mainly due to the capital invested under the Marshall Plan.

In fact, to find market openings for products which could not be sold in the western world due to a drop in purchasing power, the idea was to grant loans to be used exclusively for the purchase of goods produced within the creditor country, even if they were more expensive or ill-adapted to the development plan of the purchasing country. From $6 billion in 1970, bilateral aid exploded to reach $36 billion in 1980.

So, dear friends, anyone who has closely followed this narrative and the reasons for the explosion of the African debt, which has proved to be fatal and deadly for the African people, will come to the conclusion that all these initiatives have nothing to do with generosity or the wish to ensure for development, especially since the African regimes aligned with the West and other beneficiaries of these huge transfers of wealth were ostensibly despotic, corrupt and venal.

The Cold War, the looting of raw materials and the “bound aid” were used to justify financial and even military support for heinous dictators, who where a danger for their peoples. From Idi Amin Dada in Uganda, Mobutu in Zaire, Mengistu in Ethiopia, Samuel Doe in Liberia, to Bokassa in the Central African Republic, they rivaled with each other in terms of their brutality, their lavish spending, and their total indifference towards the most elementary and fundamental needs of the population.

We still remember the coronation, with the approval of the Vatican, of Bokassa in 1977, a great admirer of Napoleon the First and a great friend of Giscard d’Estaing, which cost one-fifth of the annual budget of the Central African Republic, that is, 22 million euros. The gigantic embezzlements operated by Mobutu and deposited in western banking accounts amounted to nearly $8 billion, while the debt of Zaire at the time of his fall in 1996 amounted to $12 billion.

In addition to the two debt methods mentioned above, the western banks for the private part and the western states for bilateral bound aid, we should mention the IMF – World Bank duo, for the multilateral part of the debt. At zero in the early 1960s, the multilateral part of African debt amounted to $1.2 billion in 1970, and $15.5 billion in 1980.

Private debt, bilateral debt, multilateral debt: all together in 1980, Africa was staggering under the weight of $89 billion of debt. The continent had no viable health system, no decent infrastructure, no educational system, and the misery was still increasing. What had happened with the $89 billion borrowed by our governments? Where was the human development?

Let us recall that in 1980, the African debt was denominated in dollars, in French francs, in deutsche marks, in pounds sterling and in Japanese yen, which forced the Africans countries to secure strong currencies to reimburse the loans contracted.

Year in and year out, Africa was still paying its debt. However, under the combined effect of the drop in raw material prices and the steep increase in interest rates on the dollar or the pound at the beginning of the 80s, the African countries, as well as the rest of the indebted Third World, were unable to reimburse their debt. Thus was born the debt crisis, with the emergence of the shock therapy and harsh medicine ordered by the IMF-World Bank duo, the Paris Club, the London Club and consorts.

III. The shock therapy of the IMF-WB

Like Mexico, which had announced publicly in August 1982 that it unable to pay the debt, due to the drop in raw materials prices and the explosion of interest rates, most African countries also announced they could not pay.

This crisis led to the strangulation of those countries, all the more so as the western banks refused to grant new loans while the old debts were outstanding. The world was headed towards a series of debt defaults of historic dimensions.

To prevent the bank failures that were in the making, the IMF and the industrialized countries granted new loans to keep the private banks afloat. This “snowball effect” amounted to contracting new loans to be allow a “roll-over” of the old ones.

But the new loans were made conditional on imposing structural adjustment plans (SAP), leading to the outright loss of sovereignty on economic matters.

Since the 1980s, including after the return of the multiparty system in the early 1990s, the structural adjustment plans, revamped into today’s Highly Indebted Poor Countries Initiative (HIPC), were brutally applied to the populations, leading to massive losses in income, the drastic freeze of new jobs, the cut-off of subsidies to basic services (health, electricity, running water, education…), the privatization of state enterprises and massive lay-offs.

It is as if the African people are forced to suffer a double punishment. Besides enduring the horrors of dictatorial regimes, they are regularly sacrificed to repay odious and illegitimate debts, contracted by those same unjust regimes, with the complicity of dishonest creditors. And the cynicism reaches new heights when the population is forced to reimburse debts contracted for the purchase of military equipment, which have caused thousands of deaths among them.

According to UNCTAD, between 1970 and 2002, Africa received $540 billion in loans. $550 billion were repaid, but the outstanding debt today is $295 billion. According to the work of the CADTM, for Sub-Saharan Africa, the outflow of money through debt service and the repatriation of profits from transnational companies, is almost equivalent to the inflow of money related to development assistance and to the money sent home by workers abroad. The outflow is even $1 billion greater than the inflow. In 2012, the profits repatriated from Africa, the poorest region in the world, amounted to 5% of its GDP, while development assistance amounted to only 1% of its GDP.

We have to ask: who is helping whom?

That is why an audit of the African debt must be done.

IV. Demand for a civic audit of the African debt

A civic audit, as an instrument of sovereignty, involves a critical analysis of the loan practices of those in power, as well as finding answers to many questions.

For example: why has the government contracted a debt which continues to increase? For what political choices and what social interests has the debt been contracted? Who has benefited from it? Would it have been possible to make a different choice? How much interest was paid, at what rate, which portion of the capital has already been repaid? How did private debts become “public” ones?

The threat of ostracizing states from the international community is only one way to discourage such practices. Contrary to popular belief, the recent work by two economists, Carmen Reinhart and Kenneth Rogoff, found there had been 169 defaults between 1946 and 2008, which lasted an average of three years.

But as a political organization, our movement, the Pan-African League – UMOJA, is aware that the issue of the African debt is eminently political. It is not enough to wish for or to call for an audit of the debt, we need to create the right balance of power to put the African States on this path.

That is why, faced with the creditors assembled under the IMF-World Bank banner, a united front against the debt is also a Pan-African goal.

Raghda Ibrahim

Daughter of Prof. Mohamed Ali Ibrahim, Dean of the Transport and Logistics Institute, Arab League