Back on the Agenda Ten Years After the Debt Crisis
Rosen, Fred
This summer, over 2000 activist, politicians and policymakers gathered in Caracas with the aim of reinserting the debt back in the debate if Latin American development. Back in the 1980s, in the...
...The public debt has become the most powerful mechanism of sustaining the growth of speculative finance capital," reads the event's (presumably consensual) final document...
...The attempts of individual countries to address this problem by themselves has weakened them in the face of the united creditors...
...What, then, is the real value of the debt...
...The debt, proposes the Mexican deputy, should be adjusted precisely to that real value...
...Medina, whose leftist opposition party, La Causa R (Radical Cause) had fragmented beyond repair over the preceding months, was in an awkward position at home, but he used his membership in PARLATINO to put together a broad-based continental alliance to stage the conference...
...More often, it is argued that "models of development" are at issue...
...Indeed, while PARLATINO sponsored the event, and Pope John Paul II endorsed and prayed for it, the procedings took place in a decidedly left-of-center atmosphere...
...ament, and tells reporters that "the situation is different in every country, and therefore our approaches here have necessarily been pluralistic...
...b) creates the beginnings of a movement around the issue...
...After these and other measures-like bestowing pariah status on Alan Garcia's Peru, offical logo of the which tried unilaterally to reduce its foreign Debt and the debt-service payments-got the " held in Caracas creditors off the hook, the "crisis" was downgraded to a "problem" and quickly disappeared from view...
...What's most important is that we begin discussion," he sidesteps...
...Alternatives to capitalism, if this endof-millenium conference is an indication, are simply not on the secular agenda of the 1990s...
...children increasingly recruited into the drug trade and prostitution...
...The combined foreign debt owed by Latin American nations now stands somewhere above $600 billion, up from $425 billion at the height of the "crisis" in 1987...
...To say that a debt is unpayable, proposes Martinez, is to say that one cannot pay and continue to generate the income necessary to make further payments...
...Many governments sent some sort of communications," responds the patient congressman, "and that is an important first step...
...The gathering, billed as "The Foreign Debt and the End of the Millenium," was co-sponsored by the Latin American Parliament (PARLATINO) and the Congress of Venezuela, and held this past July 10-12 in the very trans-national Caracas Hilton-a hotel in which every directional sign, room-service instruction and four-star restaurant menu is trilingual: Spanish, English and Japanese (with supplemental help available in German and French...
...At its best, the event was a mix of lively debate, careful analysis and a sharing of situations and data...
...Regardless of how the court might rule, the parliamentarians felt that the ability to argue the case before public opinion would have a powerful political effect...
...This debt, Klinsman details, is very large: poverty 50% and growing...
...This exclusion can only be overcome by an alternative model: a consistent policy of development based on social investment...
...One can, after all, propose alternatives to "models of development," and then mobilize constituencies behind those proposals...
...Just what that system is, is a subject of center-left debate throughout the event, though given the tenor of the times, the system is seldom labeled "capitalist" (except by church people quoting the Pope's reference to "savage capitalism"), much less "imperialist...
...Once the debt became serviceable again, it was no longer a "crisis" for the world-only for the debtors who could not pay and develop at the same time...
...A Uruguayan paper has editorialized that not all points of view have been respected here," calls out a Uruguayan...
...Neoliberal ideology has nothing to say here, argues Dos Santos...
...Indeed, the word "plural" is used quite a bit...
...Broad participation, that is, precluded a radical agenda...
...Like the debt peonage in the countryside and mines of Bolivia, he says, the problem lies in the system itself...
...Which of the recommendations are most likely to be adopted...
...The conference had financial support from the Venezuelan Congress, the formal participation of several prominent mainstream Venezuelan politicians-mainly from the country's strongest party, Democratic Action (AD)-and the legitimating leadership of the official grouping of the region's elected parliaments...
...While the ecclesiastics pose the Church and new "moral" systems as alternatives, it is pragmatism that reigns at the Caracas Hilton...
...Putting the debt on the agenda, of course, would have meant calling the very relationship between North and South into question-especially the relationship between Northern finance and Southern investment opportunities...
...Back in the 1980s, in the wake of Mexico's six-month debt moratorium of 1982-1983 and the subsequent rescheduling of most of the region's foreign debt, all discussions of Latin American The Diabolical Debt, development required some consid- conference on "The eration of the "debt crisis...
...The plurality of ideas, he says, does not prevent a unanimity of purpose, which is to raise the profile of the debt...
...malnutrition 40% and growing...
...The reporter is not impressed...
...From event had resolved an Adolfo Singer of Uruguay and that the debt's legality under international law should be challenged by a unified alliance of debtors before the International Court of Justice at the Hague...
...long-term unemployment and its corrosive social effects...
...d) inserts the question of the debt into the larger debates around development and underdevelopment...
...and e) creates a public awareness of the "social" and "ecological" debts owed by governments to their people and natural surroundings...
...she probes...
...The character of most of our economies," they judiciously declared, "is today determined by debts incurred through the errors and economic misjudgements of [our] governments, as well as through creditor countries' abuse of the conditions of negotiation...
...Nonetheless, gatherings like these may be slowly laying the groundwork for a pan-American anti-neoliberal movement, as well as building the ideas and alliances that might begin to effectively challenge the romance of the region's elites, with Washington's current "consensus...
...It was left to the host Venezuelans, under the leadership of Federal Deputy Pablo Medina, to actually organize the event...
...The region pays just under 30% of its export earnings to service those debts and owes about 45% of its combined gross domestic product (GDP) to foreign creditors...
...Not all participants agree that coherent models or ideologies are at play...
...It is not, of course, only the absolute size that hurts, but the size relative to the ability to pay...
...For developedcountry creditor institutions-those who counted on timely debt-service payments for at least a part of their livelihood-a massive Third World default, or even a significant interruption of payments, would have c 9 nstituted a major hardship, and perhaps even called the viability of the international financial system into question...
...It has therefore been pressuring Latin American countries to import U.S...
...It is perhaps the current lack of such alternatives among secular leftists that makes the pragmatic responses-which do, however, stay well to the left of the technical fixes of the 1980s and the structural adjustments of the 1990s-attractive...
...the growth of crime and an epidemic of homicide...
...If the guilty party, on the other hand, is "savage capitalism" (allowing that individual investors are always "pragmatic"), then a more systemic, far-reaching and ideological response is in order...
...This is an idea that takes hold...
...It is owed principally to institutions in countries in which people speak the languages of the Hilton-hence the intercultural courtesy...
...For the last few years, argues Brazilian social scientist Theotonio Dos Santos, the United States has been under pressure to reduce its own trade deficit...
...PARLATINO organizers at one of t In this free-trading left, Pablo Medina of Venezuela, J Rolando Gonzilez of Costa Rica...
...Latin American countries might soon be unable to service their foreign debts exposed the extreme fragility of international debt structures and hung a dark cloud over the futures of North and South alike...
...From everyone's point of view, the unsustainability of the debt constituted a "crisis...
...Choosing his words carefully, Singer makes it clear that he is not speaking as a colorado, but as president of the Latin American Parli:hurch people 'moral" systems ves to "savage ;m," it was that reigned at Hilton...
...For the debtors, servicing the debt had become an insurmountable obstacle to growth and development...
...Through PARLATINO, which is composed of representatives of the parliaments of all the Spanishspeaking countries of the Americas, along with Brazil and some of the small former Dutch colonies of the Caribbean, the organizers were attempting to bring those individual countries together to create a united bloc of debtors that might confront the united creditors on a more equal footing...
...The notion of "social debt"-what a society owes to its members-is introduced to the gathering by Bernardo Klinsman, Director of the Institute for Social Development of the Inter-American Development Bank (IDB...
...This is now the case in Latin America, she asserts to no one's disagreement, where in 1982, the chief goal of economic policy ceased to be long-term growth and instead became payment of the debt...
...The debt is discussed again and again as a human rights issue, a human development issue, a question of class, an entree into an understanding of the genesis of the informal economy, a barrier preventing the full flowering of civil society...
...This summer, in a sign that this reluctance may have been just a temporary quiescence, a group of Latin This summer, over 2000 activists, politicians and policymakers gathered in Caracas with the aim of reinserting the dept back in the debate on Latin American development 21 Fred Rosen is NACLA's editor He is co-editor, with Deidre McFadyen, of Free Trade and Economic Restructuring in Latin America (Monthly Review Press, 1995).REPORT ON THE DEBT American parliamentarians gathered some 2,000 people together in Caracas, Venezuela with the aim of reinserting the debt in the debate about Latin American development...
...If not, the North will continue collecting tribute from the South rather than earning a return on its investment...
...There are some political stakes in the workshops' analytical disagreements...
...On transferring to the population the burden of the debt," said the organizers in one of their public docuhe ul ments, "internal demand has been contracted and poverty and unemployment have grown...
...Portfolio investors, the document continues, reap rewards throughout the Americas "while providing no support for indebted economies and without, we must add, running any risk whatsoever...
...the primacy of financial over real investment...
...The debt, in this view, is the mechanism that guarantees the dependence of the South upon the North...
...The idea of "coresponsibility" for the debt is raised from the floor more than once, as is the idea that the problem goes beyond a North-South or Rich-Poor conflict to the lack of effective democracy and participation in the South itself...
...Public investment in health, education and nutrition, he says, must accompany private economic growth to make that growth sustainable...
...c) stimulates creative debate of the questions raised by the issue (the global role of finance capital, the neoliberal vision, etc...
...If the Latin American poor are the victims of a "brutal pragmatism" from the North, then the political response called for is an effective counterpragmatism...
...atmosphere, activist priests and nuns, trade unionists, leftist politicians, parliamentarians of a variety of political colors, European development activists, a few sympathetic developmentbank functionaries and local students and activists attended five concurrent workshops and three plenary sessions over three days...
...the Caracas Paricipants also endorsed the cre- alternatives ation of a Forum of Debtors as proposed by an Italian group called the this confer National Council of Economy and Labor, many of whose members indication, ar were in attendance...
...The seri- End of the Milleniun ous possibilities that several major this summer...
...It is that value, she says, that permits a country to grow and continue paying...
...The major local participation and support, however, came from Medina's rump faction of La Causa R, now called Patria Para Todos, Homeland For All...
...On the other hand, they knew that participation could only be obtained on the basis of an explicit agreement not to raise fundamental disagreements...
...Indeed, it is this great social debt, the consequent weakening of legitimate social and political structures and the inability of national governments to deal with it all that has brought such a broad spectrum of politicians to the conference...
...The Pope's call for a jubilee forgiveness of debt in the year 2000 is widely applauded, as are calls for a continentwide response to the debt burden...
...goods and to pay for their own trade deficits by bringing in "hot money" with the high interest rates that strangle their own producers...
...The Vatican proposal for an end-of-millenium, worldwide forgiveness of debt-Jubilee 2000-is a topic of discussion at each workshop and generally welcomed for the legitimacy it seems to bring to the goals of the conference...
...Moreover, those gathered consistently use the issue to deal with much broader concerns, leaving behind the debt as an issue of technical macroeconomics...
...Curiously, when the debt disappeared from the political agenda of creditor countries, it disappeared from the debtors' agenda as well, illustrating the degree to which the creditors came to define and thus dominate the terms of discussion...
...One of the interesting "pragmatic" proposals comes from Congresswoman Ifigenia Martinez of Mexico...
...the agenda But radicals like Medina were in a bind...
...It is this drain on resources that feeds the growing social dislocation of so much of the continent and eats away at the ability of "sovereign" countries-without presupposing any uniform, benevolent set of national priorities-"to make their own decisions" at home...
...A PARLATINO commission meeting a year before the eir periodic press conferences...
...But Father Gregorio Iriarte, a missionary-economist working in Bolivia, points out that even if the debt were to be forgiven tomorrow, it would reappear the following day if its causes were not addressed...
...The possibility of an effective legal challenge was a major motivating factor behind the event...
...And it has the power to do so...
...That dilemma pervaded the conference...
...The official participants adopted 13 resolutions, all of which urged While the member states to unify to confront the problem through their own posed new political mechanisms as well as through PARLATINO, the Ibero- as alternati' American Summit (in which Spain capitalii and Portugal, but not the United States participate) and alliances pragmatism with parliamentary groups from other countries and regions...
...The reluctance to do so may very well reflect the disappearance-for the time being--of an effective radical opposition within Latin America...
...the weakening of local communities and networks of mutual support...
...This debt-driven model, it is reiterated by one leftist or another in all the workshops, is linked to the world view extolling the rationality of markets and the global system dominated by finance capital...
...Despite the lack of ideological cohesion, there is general agreement among activists in the halls and nearby areperias that the event will be looked back upon as a success if it a) creates a reawakening of the debt as a political issue...
...This is a pluralistic gathering," ripostes Medina, "and I respect that point of view...
...On the one hand, they clearly realized that the debt could not be confronted without the active participation of virtually the entire region...
...Juan Adolfo Singer, the president of PARLATINO and a member of Uruguay's centrist Colorado Party, calls the conference "an important effort to deal with a very complex, delicate and complicated issue...
...There is a rather "brutal pragmatism" at work...
...As the subsequent articles in this report illustrate, the continuing debt obligations of Latin American countries have come to be regarded simply as data-necessary facts of life for debt-driven, transnational, (neo)liberalized economies...
...The press, which is tired of the debt, treated the conference and its pronouncements rather skeptically...
...a Venezuelan reporter asks Medina at one of the gathering's intermittent press conferences...
...The question of legality hinged on two arguments: first, that many debts were illegally contracted, sometimes by illegally constituted regimes and in some cases "in violation of the laws of the lending countries," and second, that the variable and compounded interest rates have been exhorbitant and constitute "usury interest...
...Founded in 1964 in Lima, PARLATINO's "permanent and inalterable principles" include Latin American integration, opposition to various types of intervention and "political and ideological pluralism as the basis of a democratically organized Latin American community...
...The debt-driven model has forced a framework of social exclusion, argues the IDB's Klinsman...
...With the resolve and celerity that fears of financial collapse can generate, creditor governments and multilateral institutions offered loan guarantees, debt-equity swaps and debt reschedulings to countries willing to rapidly privatize, deregulate and open their economies to First World trade and investment...
...Secular to capitalism, if 3rence is any e simply not on of the 1990s...
...The political problem, they added, is that the debt "limits the ability of the indebted governments to make their own decisions...
...The coverage was sparse and the attitude decidedly non-reverential: "What force will the conclusions have if none of the governments are paying attention...
Vol. 31 • November 1997 • No. 3
