Foreign Debt Tribunal - Verdict

In a novel and innovative move designed to reinforce the case for the cancellation of the debts of the world's poorest countries, a number of Brazilian organisations involved in the Jubilee 2000 campaign convened a Foreign Debt Tribunal in April this year in Rio de Janeiro to hear the case of Brazil's foreign debt. We reproduce below the final verdict of the Tribunal.

THE Foreign Debt Tribunal met from 26 to 28 April 1999, at the Joo Caetano Theatre in Rio de Janeiro, Brazil, the site where the Independence hero and martyr, Tiradentes, was hanged. Some 1,200 people from various parts of Brazil and other countries around the world attended and participated in the event. Organised by the National Conference of Bishops of Brazil (CNBB) and Caritas, the National Council of Christian Churches (CONIC), the Ecumenical Service Coordination Bureau (CESE), the Popular Movements Centre (CMP) and the Movement of Landless Rural Workers (MST), and the Institute of Brazilian Lawyers (IAB), with the support of CORECON/RJ, SENGE/RJ, SINDECON/RJ, IERJ, Koinonia and PACS, the Tribunal convened to hear the case of Brazil's foreign debt and to reinforce the Jubilee 2000 Campaign to cancel the debt of the most heavily indebted, lowest-income countries.

Brazil, along with other Latin American and Caribbean countries, is considered an 'emerging' nation with a medium-income level. Its income distribution profile, however, is among the worst in the world, with one-quarter of its population - that is, 40 million people - below the poverty line. The Tribunal was thus called on to identify the relationship between Brazil's foreign debt and this situation of injustice and misery. In addition to pinpointing the factors that lead to and constitute the foreign debt, and then cause it to grow out of all proportion, and to identifying those responsible for it, the purpose of the Tribunal was to define alternative policies and strategies of action for sustainable means to surmount the crisis of foreign indebtedness and its social and environmental consequences.

After four sessions, in which an extensive and diverse body of documented material was submitted and testimony and declarations heard from Brazilians and specialists from other countries - on the international financial system, on Brazil's indebtedness, on illustrative cases of indebtedness in other countries, and on prospects for action to confront and overcome the Brazilian debt crisis - this People's Tribunal, constituted by representatives of various sectors of the Brazilian public, reached the following verdict:

WHEREAS

1. According to the studies and figures submitted to the Tribunal, the debt of the poorest, most heavily indebted countries has already been paid, and in current accounting terms, cannot be paid;

2. Since last rescheduled five years ago, Brazil's debt has increased from US$148 billion at year-end 1994 to US$270 billion in March 1999, while in the same period, around US$126 billion was paid to foreign creditors. This rate of borrowing is unsustainable to the point that almost all new contracts are tied to servicing the existing debt, thus closing a vicious circle of indebtedness;

3. The USA's unilateral decision at the end of the 1970s to raise interest rates from their historic levels of between 4% and 6% to more than 20%, in only a few months, constituted a betrayal of good faith in the contracts and, in addition to forcing debtor countries to take out new loans in order to pay interest, entailed additional payments which meant losses of US$106 billion for Latin America;

4. The fact that creditors impose a risk premium on debtors so as to cover themselves against possible inability to pay entitles the latter to declare themselves insolvent without onus;

5. Governments aligned with major corporations and banks with foreign debts have made a practice of nationalising private foreign debt and socialising the related costs, thus committing public funds still further to servicing the foreign debt;

6. Strategic public enterprises have been used as instruments for excessive borrowing, thus compromising their financial health and capacity for investment, which has served as a pretext for later privatisation;

7. There exists a clear connection among foreign debt, excessive internal public borrowing and efforts to attract short-term foreign capital, which is subjecting Brazil to a policy of extremely high interest rates;

8. As the Brazilian government regards the financial system as an absolute and an end in itself, it has sacrificed the part of the budget earmarked for social policy spending and for invigorating the domestic economy in order to keep financial debt payments up to date. As a result it has abandoned health, education, and policies for employment, for the demarcation of indigenous lands and to ensure conditions for the survival of indigenous peoples, to give due value to the elderly and children, to carry out agrarian reform, and to conserve and restore the environment;

9. The IMF's economic and adjustment policies have proven disastrous for countries subjected to them and serve to increase still further those countries' debt and other foreign liabilities, thus constituting a moratorium without end on the social and environmental debts, whose creditors are our children, working women and men of the cities and countryside, blacks, indigenous peoples and Nature;

US manipulation

10. The USA manipulates the UN, WTO, IMF, World Bank and NATO to suit its strategies to dominate and control the peoples of the world;

11. Brazilian public borrowing has always favoured the interests and privileges of the dominant elites;

12. Brazil's excessive indebtedness was generated particularly in the last three decades, which were marked by 21 years of dictatorship and by a transition to civil governments which completed and connived with the surrender of economic policy to financial capital;

13. This indebtedness was constituted by dictatorial - and thus illegitimate and anti-popular - governments, and their creditors, besides serving as their accomplices, were aware of the risks attendant on these loans;

14. The expansion of the debt is connected with these elites' connivance with foreign private, governmental and multilateral financial institutions;

15. The foreign debt constitutes an ongoing violation of the International Covenant on Economic, Social and Cultural Rights drawn up by the UN on 16 December 1966, which calls for recognition of each nation's right to self-determination, and to freely pursue its economic development and dispose freely of its natural wealth and resources, and also requires that in no case may a people be deprived of its own means of subsistence;

THE MEMBERS OF THE FOREIGN DEBT TRIBUNAL HEREBY FIND UNANIMOUSLY THAT:
Brazil's foreign debt was constituted in breach of Brazilian and international law, and without consulting the Brazilian public. It has favoured the elites almost exclusively to the detriment of the majority of the population and is prejudicial to national sovereignty. It is therefore ethically, legally and politically unjust and unsustainable. In real terms it has already been paid and persists only as a mechanism for subjecting and enslaving society to the financial power of usurers and globalised capital, and for transferring wealth to the creditors.

For these reasons, this Tribunal condemns the Brazilian debt process, which entails subordination to the interests of international financial capital and the wealthy countries, backed by the multilateral organisations, as grossly unjust and illegitimate. It holds the dominant elites responsible for the excessive borrowing and for having abdicated from any development plan of Brazil's own. It holds responsible the governments and politicians who support and further plans to assign Brazil a subordinate position in the globalised economy. It holds responsible those economists, jurists, artists and intellectuals who provide them with technical and ideological underpinning. It holds responsible the dictatorship of the major media that endeavour to legitimise the debt and stifle debate over alternatives.

Proposals

It also hereby resolves to communicate this decision to Brazil's legislative, executive and judiciary authorities at the federal, state and municipal levels, that they respect it for the legitimacy of this Tribunal's structure and social function.

Taking upon itself the hope embodied in peoples' struggles for alternatives in their livelihoods, social relations, and economic and social organisation, this Tribunal proposes to all the women and men of Brazil the following commitments and strategies for action:

* The union of all peoples in favour of a general and unrestricted cancelling of the foreign debts of the most heavily indebted poor countries, and the return of the wealth pillaged from them, with no conditions attached other than that the resources so saved be applied to paying off the social debts under the oversight of society itself, and that the human rights of all citizens be respected in full.

* An audit of the public foreign debt and of the whole process of Brazil's indebtedness, with the active participation of civil society, so as to ascertain in accounting and legal terms whether there is still debt to be paid and from whom it should be collected, and to establish democratic rules for overseeing borrowing.

* A sovereign moratorium, denunciation of the Agreement with the IMF and redefinition of the debts in line with the audit results and with strengthening of national sovereignty.

* A development policy centred on the rights of the person and society, built chiefly on Brazil's own material and human resources, and going beyond the current logic and practice of irresponsible borrowing.

* Firm exchange controls, which equip the government to restrain speculation and re-encourage investment in production, including effective mechanisms to control and inspect all the illegal forms in which Brazilian and foreign currencies, and goods in general, enter and leave the country.

* The re-nationalisation and democratisation of strategic enterprises. . The rescheduling of state and municipal debts, with the resources so saved tied to repayment of social and environmental debts, and the refounding of Brazil's federative pact on a democratic, participatory basis.

* Reinforcement of mobilisations and campaigns such as ATTAC (Association for a Taxation of Financial Transactions in Assistance to the Citizens), which demand that mechanisms be set up to regulate and tax the circulation of international speculative capital, with a view to creating a fund earmarked for restoring those most impoverished to a decent life.

* The union of Latin America and the Caribbean peoples in support of common alternative policies and strategies for the continent, in order to confront together the vicious circle of indebtedness and the other factors of impoverishment and subordination that afflict the whole continent.

* Participation of the Jubilee 2000 Campaign, the World Council of Churches and other Brazilian and international institutions, in a mobilisation that will lead democratic States to propose to the UN General Assembly a joint suit to be brought before the International Court of Justice at The Hague to judge both the processes that gave rise to and hypertrophied the foreign debt of the heavily indebted impoverished countries, and those responsible.

This Tribunal is a symbolic milestone on a long march. It therefore calls on all Brazilian men and women to join, in hope and without fear, in the initiatives that will grow out of this judgement and to continue to take their stand, in the streets and public places, until we manage to make Brazil truly a motherland for us all, one that offers to all the means to live a life of dignity and full citizenship.

This is our decision. Let it be published and proclaimed. Subscription is hereby authorised to none but all men and women of good faith. (Third World Resurgence No. 107, July 1999)