Brazil says: take the creditors to court for causing the debt crisis

The International Court of Justice should be asked to rule on the processes by which creditors have imposed inflated debt service payments on the poorest countries, decided a Tribunal on Foreign Debt in Rio de Janeiro, Brazil, 26-28 April.

The debt taken during the 21 years of military dictatorship in Brazil is “illegitimate and against the people. The lenders to those military governments, as well as being accomplices to dictatorship, knew they were taking risks when they made the loans.”

The Tribunal put some of the blame for the debt crisis on “the unilateral decision of the United States at the end of the 1970s to raise the interest rate from 4% to 20% in a few months, which was a breach of good faith and of contract”.

The Tribunal also cited the way in which “governments identified with the big companies and indebted banks when they nationalised the private foreign debt, compromising public funds to pay private debt.” It added that “increasing public debt always favours the interests of the privilege, dominant elites.”

“The policies of the IMF have proved disastrous and have increased the foreign debt even more, while imposing an endless moratorium on social spending, which means those who must pay the debt are children, workers in rural areas and the countryside, black people, indigenous people, and the environment,” the Tribunal decided.

The Tribunal concluded that the debt is “unjust and unsustainable – ethically, juridically or politically. ... In real terms it has already been paid, and it continues only as a mechanism to repress and enslave societies to usurous financial power and the globalisation of capital. ... Thus this Tribunal condemns the process by which Brazil became indebted ... as iniquitous and illegitimate”

The tribunal was set up to judge and denounce foreign debt and to identify who is responsible. It took place in Rio de Janeiro on April 26-28 -- the same week as the World Bank and International Monetary Fund spring meetings in Washington also look at the debt issue.

Judges included Dr Luiz Vicente Cernichiaro, Minister of the Supreme Court, federal judge Dra Salete Maccalos, and other prominent lawyers. The jury was composed of prominent Brazilian figures, including Cardinal D. Paulo Evaristo Arns, pop star Mano Brown, and representatives of the unemployed, landless, retired, and trade union movements.

The tribunal was organised by Brazilian Jubilee 2000 and is backed by a wide range of organisations, including the Landless People's Movement, trade unions, social movements, cooperative movements, and religious groups.

Brazil's debt has grown from $ 3 billion in 1964 to $72 billion in 1980 to $115 bn in 1989 to $212 bn now. In the past ten years, Brazil has paid $216 in debt service, yet the debt has nearly doubled. Brazil's government now pays more servicing the foreign debt than it spends on health.

The organisers of the tribunal put the blame for the debt in two places. First, the military dictatorship of the 60s and 70s which wasted money building huge projects as if they were Egyptian pharaohs. Second, in recent years money has been borrowed abroad that does not even leave pyramids behind, but instead finances imports of cars, consumer electronics and even food by the better off -- which has increased the debt while destroying local industry and throwing people out of work.

"The government forgets it has another debt, also huge: the social debt to its people to pay for housing, educating, land, health, democracy, etc. There are more than 10 million unemployed in Brazil; 5 million families are landless. The creditors of the foreign debt are a handful of bankers and speculators; the creditors of the social debt are 90% of all Brazilians," the tribunal declares in its public invitation.

• For more information
• Tribunal da Divida Externa -- Veredicto