BILL OF INDICTMENT

Distinguished members of the Jury, distinguished members of the Tribunal,

I.    The total amount of the external debt of the countries of the Third World can be estimated presently at something more than two trillion US dollars (US$2,000,000,000,000). But more importantly, the payment of interest and amortizations consumes a large share of the hard currencies they obtain through export earnings, as well as an important portion of their national product. That is to say the product of the labor of the people of the indebted countries, shutting them off in this way from any prospect of progress and well-being.

The payment of services on the external debt  results in a net transfer of resources from the South to the North. For example, in 1998, the 41 highly indebted poor countries (HIPC) transferred to the North US$1.68 billon more than they received. In the same year, from the countries of the Third World all together, US$114.6 billion went to fatten the public and private coffers of the rich countries.

What really counts is not merely a quantitative problem however, but rather the qualitative effects of this indebtedness which results in the worsening conditions of human and environmental livelihood and the loss of sovereignty on the part of the indebted countries.

The tremendous bloodletting provoked by the external debt of the Third World countries is the result of a plot  contrived against the peoples of these countries by the big powers, headed by the United States, the International Monetary Fund and the World Bank as instruments of those big powers, international finance capital, and by almost all of the governments and economic elites of the poor countries.  The latter have chosen not to offer any resistance to international economic and financial power, backing down before the same and participating in the plunder of their own peoples.

II.  The external debt is part of a parasitic mechanism for seizing the patrimony, wealth, and natural resources of third world countries. 

The debt began to grow sharply towards the middle of the seventies, the result of a convergence of policies designed and put into practice by the owners and administrators of world economic power. We have qualified this convergence of policies as a kind of plot against peoples.

The transnational banks and governments of the rich countries offered credits to the countries of the Third World indiscriminately and in high-risk conditions, in order to put to work their petrodollars as well as the dollars with which the US flooded the whole world in order to subsidize its own economy, and also to invest idle capital which - due to the economic crisis - was no longer being used in productive investments in the First World.

It is necessary to explain, if only briefly, the role that the United States plays as a parasite on the rest of the world; a role that means that it has been and is now the principal cause of the financial, economic, and social misfortune that lies at the heart of this accusation.  In this regard, it is useful to cite an unquestionable source, such as the article by Ronald Mc Kinnon, head of the  Department of Economic Sciences at Stanford University, published in the International Monetary Fund's quarterly bulletin Finances and Development, in June, 2001.

According to Profesor Mc Kinnon, for more than twenty years, the United States has resorted amply to the limited reserves of world savings in order to sustain its high level of consumption.  So is it that the United States, which was the world's creditor at the beginning of the 1980's, has become the world's greatest debtor nation, owing some 2 trillion 300 billion dollars in the year 2000.  Nonetheless, the dollar continues to be strong and the US finds itself in the unique situation of having at its disposal a practically unlimited line of credit, largely in dollars, in relation to the rest of the world.  As a consequence, the banks and other financial institutions of the US are relatively sheltered from currency exchange risks. In contrast, other debtor countries must accommodate themselves to currency disparities: the international liabilities of their banks and other businesses are in dollars and their assets in national currencies. In his article, Professor Mc Kinnon goes on to explain briefly the financial mechanisms, created through the Bretton Woods agreements, that led the dollar to become the international currency, a kind of worldwide "dollar-standard".

III. The collection of usurious interest payments, much higher than rates in the international financial markets, also had an impact, provoking a continuous increase, rather than a decrease, in the external debt.  The impact of the excessive and disproportionate commissions and costs charged to the debtors for the negotiation and renegotiation of the loans also must be added in, as well as the collection of interest on interest, something which in many countries is illegal.

We do not refer to the interest rates charges as usurious in a merely rhetorical sense, but rather on the basis of real and concrete figures: while the real long term interest rate in six industrialized countries was, on the average, 4.35% between 1985 and 1989, the average real rate of interest paid on the external debt by six indebted countries for the period 1980-1985, was 16.8% (UNDP, 1992).

IV.  The protectionist policies of the rich countries have contributed to the rise in external debt. By keeping their borders closed to many products coming from Third World countries, they have provoked an unfavorable balance of trade for the latter and a consequent increase in their debt.

The deterioration of the terms of trade also contributed to the exponential increase in the external debt. On the international market, the prices of many industrial products and above all, of primary commodities exported from Third World countries, such as cocoa, coffee, cotton, bananas, sugar, copper, and others, have not ceased to fall while the  industrial and technological products of the rich countries are increasingly expensive for Third World countries.

V.    PART OF THE DEBT CLAIMED BY THE CREDITORS IS THE RESULT OF FRAUDULENT OPERATIONS CARRIED OUT THROUGH COMMON ACCORD BETWEEN THE LARGE TRANSNATIONAL BANKS AND BUSINESS PEOPLE IN SOME THIRD WORLD COUNTRIES.  When these entrepreneurs decided to invest in their own countries, some of the capital which they were holding in external banks, with the complicity of the banks they repatriated those capitals in such a way as to make it appear as a loan.  Similarly, some entrepreneurs or speculators contracted loans outside the country and deposited the money they received in external banks rather than investing it productively in their own countries. These private debts, fictitious or real, then wound up being nationalized through diverse mechanisms. In addition, the flight of private capitals, carried out on an enormous scale with the complicity of the debtor country governments and the transnational banks contributed, and continues to contribute, to the increase in the debt.

That is to say that different fraudulent maneuvers which permitted the enrichment of a few, wound up converted into public debt that now must be repaid by the people as a whole, on the basis of their labor and the privation of their fundamental human rights.

VI.  THE POLICIES OF THE INTERNATIONAL MONETARY FUND AS MANDATORY OF THE MAJOR POWERS AND BIG CAPITAL

The International Monetary Fund, in addition to intervening actively in this plot against the peoples of the South, also incurred responsibility by omission. In effect, in the period of accelerating debt accumulation, many debtor country governments (in no few cases direct or indirect dictatorships), acting irresponsibly and for the sole benefit of corrupt minorities, indebted their respective countries far beyond their real possibilities of repayment. 

The International Monetary Fund, according to article 1 of its Statutes, should: …"facilitate the balanced growth of international trade, contributing in this manner to promote and maintain high levels of unemployment and real incomes and the development of productive capacity". Furthermore, according to the April 29, 1977, decision of its Administrative Council, the IMF should take care that States carry out healthy financial policies  which permit them a sustained and socially equitable development, at the same time fulfilling their international obligations. Nonetheless, it abstained at that time from warning those governments that they were indebting themselves unproductively and excessively. The reason why is that the International Monetary Fund responded then, as always, to the strategies of the major powers and of big capital, whose interest was to invest the surplus of dollars, even if in risky conditions.

In order to determine responsibilities for the sharp increase in debt which counted on the complicity by omission of the International Monetary Fund, a complaint was filed in Argentine courts in 1982.

In July 2000, the Sentence was handed down in that case and in his conclusions the Judge states, and I quote:

In the course of the case the manifest arbitrariness with which the highest political and economic authorities of the nation acted has been made evident… Directors and administrators of certain business and public and private organisms acted in the same way… Very important businesses and private banks acquired external debt, socializing the costs, committing even further public resources in the service of the debt through the instrument of the regime of exchange guarantees... the existence of  an explicit link between the external debt, the entry of short-term foreign capital and high interest rates in the domestic market and the corresponding sacrifice of the national budget from 1976 onward could not have gone unnoticed by the International Monetary Fund which supervised the economic negotiations… (Causa Nº 14467, "Olmos, Alejandro, s/denuncia, Juzgado Federal Nº 2 de Buenos Aires).

VII.  A GOOD PART OF THE LOANS WERE EMBEZZLED AND/OR USED TO FINANCE CRIMINAL REGIMES.

Part of the loans were used to line the pockets of dictators and other corrupt government leaders and officials, as well as local economic elites, who deposited them in foreign banks or used them for sumptuous or useless works, to purchase arms and to finance repression and, of course, in the payment of usurious interests, commissions, and amortizations on the same debt.

Together with the banks, transnational corporations also participated actively in the policies of debt accumulation. There are paradigmatic cases of enterprises which, in order to sell their products, pushed projects which turned out to be unproductive or whose final cost was far superior to that originally budgeted, despite the advice of foreign consulting firms and the supervision of the multilateral organisms. Nonetheless, those credits came to form part of the debt of impoverished countries.  For example, the case of a US$2,500 million thermonuclear plant in the Philippines, which was built on an earthquake fault line and never became operational.

That is to say that the governments of the rich countries, private banks, the World Bank, and the International Monetary Fund, not only managed international credit in an irresponsible and fraudulent manner but also that they financed dictatorial regimes and facilitated and consented with full knowledge, the unlimited personal enrichment and the megalomania of individuals such as Mobutu, Duvalier, Marcos and others of similar ilk.

In this sense, perhaps the worst and most flagrant case was the financing of the apartheid regime in South Africa. In effect, despite the existence of an International Convention on the Repression and Punishment of the Crime of Apartheid, and the sanctions adopted by the United Nations General Assembly against the criminal regime of South Africa, several big powers and numerous transnational banks and companies continued to collaborate with the apartheid regime.

In 1986 and 1987, a group of three members of the Human Rights Commission, named at the instance of the General Assembly, considered that the transnational companies that continued to collaborate with the South African regime should be considered accomplices of apartheid, in conformity with article III, clause b) of the Convention. The Human Rights Commission, in its resolution 1987/11, decided to bring to the attention of states the opinion expressed by the "Group of Three" and mandated it to study the legal actions that could be initiated against the transnationals in the framework of the Convention against Apartheid. The UN General Assembly, in its resolution 42/56 of November 30, 1987, adopted a similar resolution to that of the Human Rights Commission.

The World Bank was one of the institutions which continued to finance the apartheid regime despite the decisions of the General Assembly. As the World Bank continued its operations with the South African government, arguing that its Statutes prevented it from intervening in politics,  the juridical service of the United Nations was consulted. It ruled that, as a specialized organ of the United Nations' system, the World Bank was obliged to respect the sanctions against South Africa decided by the General Assembly.

VIII.  THE CREDITORS ARE CLAIMING A NONEXISTENT DEBT, GIVEN THAT IT HAS ALREADY BEEN PAID MANY TIMES OVER.

From an economic and financial point of view, if an actuarial study were made, discounting the fictitious debts, amortizations, usurious interests, the interest on interest already paid, the disproportionate costs and commissions paid in the negotiations on the contracts, the debts contracted by private individuals, the loans which had no public end and only served to enrich corrupt leaders who used the ill-gotten money to acquire sumptuous foreign properties or to fatten their accounts in transnational banks, the conclusion would be reached that the debt has been totally repaid. Furthermore, it would probably be seen that the supposed debtors are in fact, creditors.

A Jubilee South document dated June 25, 2001, states that in 1980 the countries of the South owed US$567 billion, that since then US$3,450 billion have been paid - that is to say six times the amount of the debt in 1980 - and that nonetheless, the creditors claim that they are still owed more than US$2,000 billion, three and half times more than in 1980.

In addition, from a juridical point of view, the debt is nonexistent for having been contracted in violation of the legal orders of the supposed debtor countries, including flagrant violation of constitutional norms which require explicit Parliamentary approval before commiting the credit of the State.

Finally, from an ethical point of view, the purported debt would have to be weighed against the social, ecological, and historical debt that the creditors owe to the supposed debtors. That is to say, on the other side of the scale would have to be weighed the enormous social damage caused by the policies of structural adjustment, the ecological damage provoked by contaminating industries, the toxic wastes transported to the countries of the Third World, the devastation of forests, and the historical debt contracted with the presumed debtors through centuries of plunder of their riches and human resources.

IX.  ADJUSTMENT POLICIES AND THE PLUNDER OF THE PATRIMONY OF THE POOR COUNTRIES

Under the pretext of a juridically and financially nonexistent debt, the International Monetary Fund imposes on debtor countries, under different names, the so-called adjustment policies which are economically recessive and socially regressive, given that the only real objective of the Fund is to ensure that the debtors pay service on the debt to the creditors indefinitely.  Through such policies the spiral of debt continues to grow because the economies of the debtor countries remain stagnant or grow slowly, making it even more difficult to fulfill the demands of the creditors which in themselves are illegitimate, as has already been demonstrated in this accusation. The purported debtors must contract new loans to pay the service on the previous loans. In this way the External Debt never ceases to grow and it becomes an Eternal Debt, which is to say an income in perpetuity for the supposed creditors.

Structural adjustment policies are designed, furthermore, to impose on debtor countries their integration into the dominant world economic and financial system, characterized by the concentration in a few hands of the wealth produced on a planetary scale. In this way, the natural resources, essential services and many industries of Third World countries were privatized in ruinous conditions, ending up in the hands of the large transnational corporations.

The World Bank, for its part, participates in the imposition of adjustment policies by conditioning access to its lines of credit to the application of said policies as dictated by the International Monetary Fund.  The private transnational banks operate in much the same way, closing the extorsive circle of international financial power that asphyxiates those countries which need credits.

Thus, the State which wants to have access to international credit must adjust itself to the "directives" of the International Monetary Fund, which promote, as we have said, a recessive political economy, the freezing and, indeed, reduction of salaries and other antisocial measures that affect the fundamental rights of the population in general, with regard to income distribution and fiscal policies and their rights to food, healthcare, education, housing, labor and social security rights, and a healthy environment.

As of December 1999, the interventionist policies of the International Monetary Fund in the Third World have a new name: "Growth and poverty reduction facilities". These "facilities" consist in the most indebted poor countries being able to join the list of countries which might benefit from a reduction in their debt, provided their respective governments adopt measures to fight against poverty.  In other words, the International Monetary Fund, which through its adjustment policies contributed widely to the plummeting into poverty of a majority of the population of the highly indebted poor countries, now asks the governments of said countries to fight against poverty in order to benefit eventually from a reduction in their debt. Elementary logic would indicate that as a minimum, the order should be reversed:  first reduce or cancel the debt and then (or in any case, simultaneously) demand that beneficiary governments  adopt measures to fight poverty.

What is the balance, as of May 2001, of the Highly Indebted Poor Countries Initiative launched in Halifax in 1995? In 1996, the total debt of the 41 countries which figured in the list was US$205 billion and in 2001, it was US$215 billion. That is to say, the debt rose instead of falling. (International Monetary Fund, World Economic Outlook, www.International Monetary Fund.org).

X.  Distinguished members of the Jury, distinguished members of the Tribunal:

On the basis of what we have expressed thus far, it can be affirmed that the external debt of Third World countries is juridically illegitimate, economically and financially nonexistent, politically destabilizing, and ethically unsustainable, and that its subsistence is part of a global system of domination characterized by the hegemony of parasitic finance capital which functions like a vacuum that sucks up the labor and the savings of the peoples of the entire world, the most affected of which are the peoples of the poor countries and within them, the most disenfranchised sectors of the population.

We thus conclude here our accusation against the States, government leaders, public and private institutions and persons, authors, coauthors, and accomplices of a series of civil and criminal offenses and international crimes committed in the creation and development of this monstrous economic, financial, and social cancer known as the "External Debt", whose victims are the peoples of South countries in general and in particular, the most vulnerable and disenfranchised sectors among them.

The written and visual documentary proof, testimonies, and expert opinions that will be presented in the course of this public hearing, will no doubt strengthen the conviction of the Jury and the Tribunal with respect to the grounding of this accusation and permit the Prosecution to seek, in its final plea, the punishment and  sanctions  which correspond to the seriousness of the crimes committed.

Thank you.