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With a view to strengthen the current debate on external debt and financial institutions from a Latin American perspective, we talked to Beverly Keene, of Jubilee South/Americas, who actively participated in the last World Social Forum. As pointed out by Beverly, "undoubtedly, the current Latin American context is outstandingly different from five years ago, on account of which social movements are called upon to act accordingly".

About the WSF in Kenya

We started our talk by asking Beverly her opinion regarding the activities on external debt and IFIs carried out within the Social Forum. We were particularly interested in having her comments on this regard, since there was a poor participation of Latin American organisations in Kenya, and debate on these issues is undoubtedly useful as input for the rest of organisations.

According to her, strategic meetings turned out to be very important for the communication, coordination and future activity of organisations. The two major antecedents dated back to the North-South Meeting, held in Havana, Cuba in January 2005 and the meeting on illegitimate debt that also took place in Kenya in June 2006. On account of this, a first meeting was necessary to share views about the current situation as regards the different issues; while later, on the Forum’s last day, the activities to be developed throughout this year were discussed and a consensus declaration on debt was drawn up.

Issues such as the debt situation in Africa and IFIs conditionalities were included in seminars and workshops, which had an important turnout. The issue of debt illegitimacy was also analysed by organisations, while the importance of an audit – of debt and IFIs – was reaffirmed as a tool in the struggle of civil society both in the North and South.

Another issue discussed by organisations was that of debt conversion or swaps for education, nature or any other resource, being different cases in Africa and Latin America presented. Different opinions were heard as regards the evaluation of this instrument, thus making it impossible to reach consensus on this issue to be expressed in the final statement.

It was considered essential to involve governments in this struggle, which will depend to a large extent on the work carried out by civil society. As highlighted by Beverly, "we are currently in a situation that demands action by civil society".

The fact that progressive governments have taken power in most Latin American countries as well as the current political and economic situation, are creating great expectation regarding the role to be played by Latin America in terms of IFIs and debt management. This was also experienced in the Forum, where the opinion of Latin American representatives on the situation of Venezuela, Cuba and Ecuador, among other cases, was particularly expected. The views expressed aimed at stressing the fact that reality is full of shades and it is necessary to keep on working, since governments not always address expectations.

Beverly’s optimism and expectations as regards the work of Latin American governments were put on the table. However, she underlined that it is necessary to wait and be on the alert, since not all things are immediate or absolute.

Debt auditing and the case of Ecuador

In Beverly’s opinion, some major events have taken place in Latin America. Rafael Correa took office as President of Ecuador in early 2007 and denounced the illegitimacy of debt. And he did so "using our own language, with the positive connotation it entails", she underscored. "In a certain way, the introduction of the issue of debt illegitimacy into the official discourse should be taken by social movements as an opportunity to demand other government authorities do the same, and support this request, since the situation is not really different in other countries of the continent".

Beverly defined debt auditing as "an instrument to the service of unmasking the illegitimacy of credits". In her opinion, "it still remains unclear what will happen in Ecuador with the Commission created to audit the public debt and the results of its first year of work. Ecuador recently made an early payment of part of its external debt, and continues its search for new resources, keeps getting into debt, resorts to Venezuela instead of going to the IMF, but what for? And what does that mean? These are the questions that should be posed by social movements", stated Beverly.

The reform of IFIs

Another challenge faced by social movements lies in the process of rearrangement of international financial institutions such as the World Bank, IDB, CAF and IMF. "In a situation in which the IMF is undoubtedly undergoing a process of change – which implies in a certain way its becoming weaker – as a result of its own mistakes but also of a US policy led by the Republicans, the weakening of the IMF vis-à-vis the strenghening of the World Bank – a US policy instrument – has a geopolitical significance we should not lose track of. Otherwise, we might fall into the belief that by paying the IMF a country becomes independent from the Fund, when in fact it is worth knowing that it was the IMF itself that had been demanding governments the repayment of their loans. Nowadays we are undoubtedly witnessing major changes at the IMF promoted by important right-wing Republican sectors, and it is essential that we, from a critical viewpoint, take advantage of the spaces thus opened up. But, to achieve what purpose? Is it possible for us to achieve the closing down of the IMF? Or else, that which appears as a symbolic rearrangement of member countries will finally take place, instead of a major change".

"For its part, the World Bank, which is also undergoing a rearrangement process, is strenghening its capacity to meddle in policies. The roles played by the IMF in the 1990s, under the guidelines of the Washington Consensus, are currently fulfilled by the World Bank, from a different position, through a process of policy institutionalisation".

With regards to the IDB, Beverly said, "if one looks at the discussion taking place nowadays about debt cancellation for the poorest Latin American countries, debate is by no means focused on how to achieve payment relief for these countries, but on what could be the best way to continue to meddle; those countries receiving IDB debt cancellation continue to be granted IDB loans and at even higher interest rates".

"This is a world in which everything changes and we need to consider if that which today appears as a solution (such as the IDB debt cancellation, or that which could also be applied to the IMF and World Bank debt cancellation approved by the G8 in 2005) is indeed so, if it really addresses the need of our countries, if it is going to have consequences for the well-being of our people or if it just represents a change in terms of power relationship".

In her words, Beverly calls for a comprehensive approach to the analysis of financial institutions and the international political situation. "It is very important for the region to have a more comprehensive approach to that which is taking place at financial institutions: where are investments being made, which are the portfolios being handled, which are the new forms of financial intervention? When one knows, for instance, that the World Bank is financing the exploration of the Guarani Aquifer, but no longer through loans that should be first approved by Congress, and would thus be subject to the administrative supervision of states, but through grants, a process that allows for intervention without being suject to any sort of control, one realises that debts are no longer playing the leading part within the financial system. Intervention often yields more revenue in those cases where cooperation is needed, and it becomes therefore necessary to evalute the conditions imposed in exchange for such cooperation. What does it mean that the IDB has just approved a special fund for research? What sort of research? What are the criteria involved? What kind of public policies are being addressed? The system is changing and policies included in the Washington Consensus are being now transformed so that the system gets rearranged and moves forward".

We asked for Beverly’s opinion with respect to the role to be supposedly played by Argentina and Brazil in the regional and international context following their IMF debt cancellation. According to her "until now both countries have failed to show a strong capacity to exert pressure. In the last annual meeting of the IMF-WB held in Singapore, Argentina and Brazil, together with the Group of 24, presented a reform proposal to the IMF. However, this proposal addresses the aim of ‘sitting at a table’, and it is therefore necessary to ask: what table?, what for?, what does it change? Will it not be just a redistribution of votes that finally changes nothing?".

"Anyway, it is necessary to acknowledge that we are facing a different political and financial situation, and it is already something to say that Argentina, Brazil, Uruguay and many countries in Latin America are facing a financially different situation compared to five years ago, and this has nothing to do with policies implemented by country governments but with international economic factors, changes within the system, the emergence of China. In this sense, it is worth asking, are the high levels of reserves – showed by most Latin American countries - the merit of national governments and their policies or the merit of IMF’s demands? On the other hand, in the political context, we are undoubtedly facing a different moment; people said ‘enough!’ and stood up against an economic and political model that had been ruling for decades. Now it is time to translate electoral promises into practice".

Argentina and debt payment

Finally, a reference to the situation of Argentina and its early payment of debt to the IMF, could not be missing in our talk with Beverly, who has been living in Buenos Aires for quite some time.

In her opinion, "the decision of the Argentine government has not had any effects on people’s lives, since policies remain the same. Notwithstanding the fact that such and such policies were previously implemented and it was said that they were mandated by the IMF, now that the debt has been paid off, they continue to be implemented anyway. But, how come this is so?, are these government policies or IMF policies?".

"It was a decision of high political content and huge impact on public opinion, with an important media effect. Now, when we talk about debt, people ask us, debt?, what debt?, is it not already paid off? It is necessary to raise awareness again among the population, to show the relationship between debt and daily life since people have fallen prey to a premeditated confusion on this subject. The decision did not imply a political change but rather reduced the reaction capacity of society".

Related Information:

* Jubilee South/Americas weblog

* World Social Forum 2007, Choike's coverage

* IDB now in on MDRI but once again the devil is in the detail, by Eurodad

* Rafael Correa’s rise to the presidency of Ecuador and his relationship with the IMF, by IFIs Latin American Monitor

* Argentina and Brazil: challenges of the cancellation of debt to the IMF, by IFIs Latin American Monitor

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