External Debt Brazil and the International Financial Crisis Marcos Arruda Translated by Peter Lenny Pluto Press LONDON • STERLING, VIRGINIA in association with and Transnational Institute (TNI) Chapters 1–3 first published in Portuguese by Editora Vozes/PACS, Brazil First English-language edition published 2000 by Pluto Press 345 Archway Road, London N6 5AA and 22883 Quicksilver Drive, Sterling, VA 20166–2012, USA www.plutobooks.com Copyright © Marcos Arruda 1999, 2000 The right of Marcos Arruda to be identified as the author of this work has been asserted by him in accordance with the Copyright, Designs and Patents Act 1988 British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data Arruda, Marcos External debt : Brazil and the international financial crisis / Marcos Arruda ; translated by Peter Lenny p cm Includes bibliographical references and index Debts, External—Brazil International Monetary Fund—Brazil Brazil—Economic conditions—1945- Debts, External—Developing countries I Title HJ8579 A77 2000 336.3’435—dc21 00-008581 ISBN ISBN 7453 1682 hardback 7453 1681 paperback Designed and produced for Pluto Press by Chase Production Services, Chadlington, OX7 3LN Typeset from disk by Marina Typesetting, Minsk, Belarus Printed in the European Union by T J International, Padstow Dedication Catherine and Pablo, my wife and nine-year-old son, who supported me all along, and bore with me while I rushed to meet the deadlines Pablo’s Grandmothers: my Mother, Lina, whose book on my time in jail as a prisoner of conscience is still looking for a publisher, and Catherine’s Mother, Mica, who has been a wonderful Grandma to Pablo My second Mother, Pauline McCartin, who received me as a son in her family when I was a high-school student, and to Bart and Marilyn, my brother and sister from Chicago About Christian Aid Christian Aid is the official relief and development agency of 40 British and Irish Churches and works wherever the need is greatest in around 60 countries worldwide, regardless of people’s race or religion Christian Aid links directly with the poorest communities through local organisations whose programmes aim to strengthen poor people so that they become self-sufficient It also seeks to address the root causes of poverty and spends up to 10 per cent of its income on development education and related campaigning at home Contents About the Author Abbreviations x xi Introduction Chapter E(x)ternal Debt: Understanding Brazil’s Debt Crisis What is External Debt? Is External Debt a Motherless Child? How Do You Pay External Debt? Who Do You Pay External Debt To? Who Pays External Debt? How did External Debt Begin? ‘We did not Get into Debt, They Got Us into Debt!’ ‘We did not Develop, We Under-Developed!’ Capital Takes All, Social Spending Gets the Crumbs A Good Budget Makes for Good Planning The FHC-IMF Agreement: And the Government Promised not to Govern with Packages Cancel Unpayable Debts Chapter Trojan Horse: Brazil and the International Financial Crisis 8 10 11 12 16 17 20 22 30 The Real’s Three-Legged Prop Starts to Fall Apart Brazil and the IMF (International Misery and Famine) Are There Ways Out? 33 38 56 Chapter Neo-liberal Adjustment and Globalization: A Southern Perspective 61 The Historical Roots of the Adjustment Project The International Monetary Fund (IMF) Recipe Adjusting to Competitive Globalization Economic and Social Impacts Opportunities and Challenges vii 61 62 64 66 68 viii Contents Chapter For a Debt-Free Millennium The Burden of Unpayable and Unsustainable Debt The Movements Partial Successes: Official Relief Alternatives, from Society’s Point of View Brazil Jubilee 2000 Campaign – Proposals being Discussed 77 78 89 99 116 127 Appendix 1: Debt Glossary 137 Appendix 2: Alternative Debt Policies being Discussed by Jubilee 2000 – Japan 151 Appendix 3: The Jubilee South Summit in Johannesburg 154 Bibliography and Further Reading 159 Index 164 List of Tables Chapter One: 1.1 1.2 1.3 1.4 1.5 1.6 External Debt of Latin American Countries at the Close of the Dictatorship Period (%) 13 Poverty in Latin America 14 Concentration of Income in Latin America 14 Brazil’s External Debt in the FHC Administration 16 Federal Government Budget – 1998 Forecast of Spending on the Federal Public Debt 17 Most Impoverished, Heavily Indebted Countries that need the Total Cancellation of their Debts 24 Chapter Two: 2.1 2.2 2.3 Evolution of Interest Rates in Brazil (SELIC rate) Evolution of the Internal Public Debt Foreign Debt Service (US$ million) 34 35 47 Chapter Four: 4.1 4.2 4.3 4.4 4.5 4.6 4.7 Foreign Debt – Evolution, 1970–98 (US$ billion) Brazilian External Debt Service, 1993–99 (US$ million) Brazilian External Debt – Public vs Private, 1989–98 (US$ million) Trade Balance vs Debt Service, 1993–99 (US$ million) Brazilian External Debt as a Proportion of GDP, 1992–98 (US$ million) Owed by 41 HIPCs (US$ billion) UK Debt Relief ix 78 84 85 85 85 109 110 Abbreviations ATTAC – Action for a Tax on financial Transactions to Aid Citizens CEPAL – Comissão Econômica para a América Latina (UN) CPMF – Transient Contribution on Financial Transactions CRIES – Regional Coordination of Economic and Social Research ECLAC – Economic Commission for Latin America and the Caribbean FACS – Fundación Augusto Cesar Sandino FHC – Fernando Henrique Cardoso (president of Brazil 1994–2002) GATT – General Agreement on Tariffs and Trade GDP – Gross Domestic Product HDI – Human Development Index HFI – Human Freedom Index HIPC – Heavily Indebted Poor Countries IBRD – International Bank for Reconstruction and Development ICCAF – Inter-Church Center for Africa IDB – Inter-American Development Bank IMF – International Monetary Fund IPS – Institute for Policy Studies LTCM – Long-Term Capital Management MAI – Multilateral Agreement on Investment NGOs – Non-Governmental Organisations OECD – Organisation for Economic Co-operation and Development PACS – Alternative Policies for the Southern Cone of Latin America PFL – Liberal Front Party PMDB – Brazilian Democratic Movement Party PPB – Brazilian Progressive Party PRI – Institutional Revolutionary Party PSDB – Brazilian Social-Democratic Party SAP – Structural Adjustment Programme SES – Socioeconomy of solidarity TNCs – Transnational Corporations TNI – Transnational Institute TWN – Third World Network UN – United Nations UNCTAD – United Nations Conference on Trade and Development UNDP – United Nations Development Programme UNICEF – United Nations Children’s Fund UNRISD – United Nations Research Institute for Social Development US – United States WTO – World Trade Organisation xi Bibliography and Further Reading Acosta, Alberto, 1999, ‘Editorial’, in Diario HOY, Quito, Ecuador, December —, 2000, ‘La Trampa de la Dolarización – Mitos y Realidades para la Reflexión’, mimeo (preliminary), Quito, Ecuador, 14 January Alberto Acosta Adams, Patricia, 1991, Odious Debts – Loose Lending, Corruption and the Third World’s Environmental Legacy, Probe International/Earthscan, London/Toronto Arruda, Marcos, 1988, Prometeu Acorrentado: Os Grandes Grupos Econômicos, o Endividamento Externo e o Empobrecimento Brasil, Working Document, PACS, Rio de Janeiro —, 1991, O Governo Collor e a Dívida Externa, PACS/FASE, Rio de Janeiro —, 1994, ‘A creative approach to structural adjustment’, in Cavanagh, John, Wysham, Daphne, and Arruda, Marcos, Beyond Bretton Woods: Alternatives to the Global Economic Order (TNI/Pluto Press, London) —, 1995a, NGOs and the World Bank: Is it possible to collaborate critically? Booklet, PACS, Rio de Janeiro , 1995b, Globalizaỗóo e Ajuste Neoliberal: Riscos e Oportunidades, in Tempo & Presenỗa, Koinonia, Rio de Janeiro, December —, 1997, Globalization and Civil Society: Rethinking Cooperativism in the Context of Active Citizenship, PACS, Rio de Janeiro —, 1998, Cancelar é Possível Mas Muito Mais é Necessário – Jubileu 2000 e Dívida Brasileira, PACS, Rio de Janeiro —, 2000, On Behalf of an International Insolvency Law for Debtor Nations, PACS, Rio de Janeiro Barnet, Richard L and Cavanagh, John, 1994, Global Dreams: The New World of the Great Corporations (IPS/Simon & Schuster, Washington, DC) Barratt-Brown, Michael and Tiffen, Pauline, 1992, Short Changed: Africa and World Trade (TNI/Pluto Press) BCB Banco Central Brasil, Informaỗừes Econơmicas’, Brasília, DF, December Internet site Bello, Walden, 1999, Dark Victory – The United States and Global Poverty (TNI/Food First/Pluto Press, London) Biondi, Aloisio, 1999, O Brasil Privatizado, Editora Fundaỗóo Perseu Abramo, Sóo Paulo Bono, 2000, article published in The Times, London, and distributed by Nick Buxton/International Jubilee 2000, Broad, Robin, 1983, Behind Philippine Policy Making: The Role of the World Bank and International Monetary Fund (Woodrow Wilson School of Public and International Affairs, Princeton University) Bryden, David, 1999, ‘Briefing and discussion on latest developments in US Congress’, electronic report, Jubilee 2000 USA, 19 November, David Bryden, Bunding, Madeleine, 1999, ‘Donde la desigualdad ahoga a Jesús y Ericsson’, in the Guardian, London, 31 December (translation by Liana Cisneros) 159 160 External Debt Buxton, Nick, 1999, ‘Gordon Brown’s Promise to Cancel 100% of Bilateral Debts Owed to Britain by Some of the Poorest Countries: Behind the Headlines’, Electronic Briefing Note, 21 December —, 2000, ‘Japanese Embassy Actions’, Jubilee 2000 Coalition, London, 14 January, or Calcagno, Eric, 1986, La Perversa Deuda Argentina, Editorial Legasa, Buenos Aires Câmara dos Deputados, 1998, Audiờncia Pỳblica: Os Financiamentos das Instituiỗừes Financeiras Multilaterais e o Orỗamento da Unióo, and O Papel Congresso Nacional na Fiscalizaỗóo e Controle de Acordos Internacionais e de Financiamentos Externos, Comissóo de Fiscalizaỗóo Financeira e Controle, Brasớlia, DF Campodonico, Humberto, in Pretextos nos 3–4, December, Desco, Lima Cedergren, Jan, et al., 1991, The Way Out of the Debt Trap: Proposals to Relieve the Debt of the Poorest and Most Indebted Countries (SIDA, Stockholm) CEDI (Centro Ecumênico de Documentaỗóo e Informaỗóo), 1989, Dớvida Externa e Igrejas, Rio de Janeiro CEJI (Canadian Ecumenical Jubilee Initiative), 1999a, ‘Church Activists Welcome Cancellation of Bangladesh’s Debt’, Electronic Press Release, Toronto, 10 December, Sara Stratton , website —, 1999b, ‘Debt Cancellation and Conditionality’, Canadian Ecumenical Jubilee Initiative Policy Forum, Toronto, September Center of Concern, 1993, ‘Development: From exclusion to inclusion: The 1993 Human Development Report’, Jo Marie Griesgraber, Center Focus, no 113, September, Washington, DC —, 1991, ‘Structural adjustment, US style’, Center Focus no l04, December, Washington, DC Central Bank of Brazil, Bulletins and Statistics CEPAL, 1995, ‘Notas sobre la Economia y el Desarrollo’, Diciembre, Santiago, Chile Christian Aid, Banking on the Poor: The Ethics of Third World Debt, London, 1989 CIDSE/Caritas Internacionalis, 1998, La Vida Antes que la Deuda (Brussels) CNBB, 1998, ‘Dívida Externa, Dimensão Ética e Teológica e Iniciativas Internacionais’, of the series 3a Semana Social, 1997–99 – Resgatando Dívidas, No 2, Brasília, March CNBB, CONIC, CESE, 1998, ‘A Dependência Externa Brasil’, Documentos Simpósio sobre Dívida Externa, Brasília, 21–23 July Dandavate, Madhu, 1993, Distorted Economic Liberalisation – SAPs in India, monograph Debt Crisis Network, 1986, From Debt to Development – Alternatives to the International Debt Crisis, Institute for Policy Studies, Washington, DC Demery, Lionel and Addison, Tony, 1987, The Alleviation of Poverty under Structural Adjustment (The World Bank, Washington, DC) DESCO, 1992, ‘Elementos para el Analisis del Programa de Ajuste Estructural en el Peru’ Dietrich, Gabrielle, 1997, ‘Effects of IMF and World Bank Policies on Women in India’, in Globalisation and SAPs – Trends & Impact, an Overview, ed Ajit Muricken, Vikas Adhyayan Kendra, Mumbai (India) Dillon, John, 1998, ‘The Global Financial Crisis, the IMF & Strategies Towards Resolving the Crisis’, in Vikas Adhyayan Kendra, Quarterly, Vol VI, No 4, Mumbai, India Bibliography and Further Reading 161 Edwards, S., 1999, ‘Latin America at the end of the Century: More of the Same?’, in Revista Gestión, No 66, UCLA, December Elliott, Larry, 1999, ‘Third World Debt Relief Gets Worlds Attention’, in the Guardian, London, 30 April Espinosa, Roque, 1999, ‘La Crisis Económica Financiera Ecuatoriana de Finales de Siglo y la Dolarización’, mimeo, Universidad Andina Simón Bolívar and PUCEcuador L’Express, 1992, ‘L’Afrique Martyre’, October, Paris FACS, 1993, ‘Ajuste Estructural y Fondos de Inversion Social en Nicaragua’, monograph, April, Managua Furtado, Celso, 1987, Transformaỗóo e Crise na Economia Nacional’, Paz e Terra, Rio de Janeiro (especially chapters IV to VIII) Garrett, John, 2000, Briefing: Japan and the Debts of the Poorest Countries, Jubilee 2000 Coalition, London, George, Susan, 1988, A Fate Worse Than Debt (Pelican, London) —, 1992, The Debt Boomerang – How Third World Debt Harms Us All (TNI/Pluto Press, London) Gonỗalves, Reinaldo, 1997, Latin America: External Debt, Poverty And Vulnerability, PACS, Rio de Janeiro —, 1998, A Dívida Externa Brasil e da América Latina, PACS, Rio de Janeiro Heller, Peter S., Povenberg, A Lans, Catsambas, Thanos, Chu, Ke-Young and Shome, Parthasarathi, 1988, The Implications of Fund-supported Adjustment Programs for Poverty: Experiences in Selected Countries, IMF, Washington, DC, May ICCAF, 1993, ‘Structural adjustment and health in Africa: World Bank’s Development Report offers no cure’, Economic Justice Update, No 7, August, Ottawa Institute of Latin American Studies, 1986, ‘The Debt Crisis in Latin America’, Monographs No 13, Stockholm Interamerican Development Bank, 1985, ‘Economic and Social Progress in Latin America: External Debt: Crisis and Adjustment’, report, Washington, DC Jubilee 2000 Afrika, ‘The Gauteng Declaration’, 21 March 1999, South Africa —, ‘The Lusaka Declaration’, 19–21 May 1999, Zambia Jubilee 2000 Brazil, ‘Verdict of the Tribunal on the Foreign Debt’, 26–28 April 1999, Rio de Janeiro Jubilee 2000 Latin America, ‘The Tegucigalpa Declaration’, 27 January 1999, Honduras Kennedy, Margrit, 1995, Interest and Inflation Free Money – Creating an Exchange Medium that Works for Everybody and Protects the Earth (New Society Publishers, Philadelphia) Kitazawa, Yoko, 2000, ‘Letter’ No 4, of 27 January, Jubilee 2000 Coalition Japan, Tokyo, Yoko Kitazawa, Kraychete, Gabriel, 1997, Desenvolvimento Institucional (EAP-CESE, Salvador) Kucinski, Bernardo and Branford, Sue, 1987, A Ditadura da Dívida: Causas e Conseqüências da Dívida Latino-Americana (Editora Brasiliense, São Paulo) LWF (Lutheran World Federation), 1999, ‘Editorial – Life After Debt? Jubilee 2000’, Development Education Forum, No 8, Geneva, December Marin, Gustavo, 1988, An Approach to an Alternative Policy to Deal with the Debt Crisis (Pries/Cono Sur, Santiago) —, 1989, Impactos de la Deuda Externa en el Tercer Mundo (Pries/Cono Sur, Santiago) 162 External Debt Martin, Brendan, 1993, In the Public Interest: Privatisation and Public Sector Reform (Zed/PSI, London) Mazerolle, Jean-Michel, 1999a, ‘Dette et Etats’, in Solidaires pour l’évangélisation des peuples, No 411, Paris —, 1999b, ‘Tout est question d’amour’, in Solidaires pour l’évangélisation des peuples, No 411, Paris Medellin, Rodrigo, 1993, Que Pasa en Mexico a Finales de Sexenio? Un Ensayo – Ilustrado – de Entender el Liberalismo Salinista (Mexico, DF) NGOWG (NGO Working Group on the World Bank), 1994a, ‘Structural adjustment in Sri Lanka: A grassroots perspective’, Executive Summary, Geneva —, 1994b, ‘The Challenge of Poverty Eradication’, Working Document, Geneva ‘O Esquema Tỏtico de FHC, 1998, Revista Caros Amigos/Oficina de Informaỗừes (São Paulo) OECD, 1991, Financing and External Debt of Developing Countries, Paris Olmos, Alejandro, 1995, Todo lo que usted quiso saber sobre La Deuda Externa y siempre lo ocultaron – quienes y como la contrajeron, Editorial Los Argentinos, Buenos Aires PACS (Institute of Alternative Politicies for the Southern Cone), 1999, ‘G7, Aquém da Necessidade dos Povos’, in Informe PACS J2000, No 7, June, Rio de Janeiro Pereira, Luiz Bresser (org.), 1989, Dớvida Externa Crise e Soluỗừes, Editora Brasiliense, Sóo Paulo Philippine-Asia Jubilee Campaign Against the Debt, 1999, ‘The Cebu Declaration’, 18 May, Philippines Phillips, Michael M., 1999, ‘IMF, World Bank Face Mounting Attacks – House Presents Bills to Alter Debt Plan to Poor Nations’, in Wall Street Journal, New York, 26 October Pinaud, Jỗo Luiz Duboc, 1998, Princípios de Bretton Woods Versus Endividamento Externo, PACS, Rio de Janeiro —, 1992, Dívida Contra o Direito, CEDI, Rio de Janeiro Public Services International, 1992, ‘The Impact of Adjustment Programmes on the Public Sector in Central America and the Caribbean’, Trevor Evans, CRIES, Managua-Ferney/France —, 1993, ‘Structural Adjustment Programmes (SAPs): The Effects on Labour and the Public Sector in Africa’, Ekei U Etim, Ferney/France Raffer, Kunibert, 1993 ‘What’s Good for the United States must be Good for the World: Advocating an International insolvency’, Chapter in Bruno Kreisky forum for International Dialogue (ed.), From Cancún to Vienna: International Development in a New World (Vienna), pp 64–74 Reynolds, Norman, 1999, ‘Turning International Debt Relief into The Right To Work – A Citizen to Citizen Contract’, November, Roddick, Jackie, 1988, The Dance of Millions: Latin America and the Debt Crisis (Latin America Bureau, London) Sandroni, Paulo (coordinator), 1985, ‘Dicionário de Economia’, Abril Cultural, São Paulo Sanger, David, 1999, ‘Clinton is to Offer Some Nations a Chance to Avoid Paying Debt’, in the New York Times, 16 March Schilling, Paulo, 1989, Dívida Externa: Quem São os Devedores? em Dívida Externa e Igrejas: Uma Visão Ecumênica, CEDI, Rio de Janeiro Bibliography and Further Reading 163 Schuldt, Jürgen, 1999, Dolarización oficial de la economía: un debate en once actos (Universidad del Pacífico, Lima) SONED – Southern Network for Development – Africa Region, 1990, ‘The Root Causes of Debt Crisis in Africa’, SONED, Development Education Series, Nairobi Swiss Coalition of Development Agencies, 1999, Le désendettement doit explorer de nouvelles pistes (Bern) Timossi, Gerardo, 1989, ‘Centroamérica, Deuda Externa y Ajuste Estructural’, DEI/ CRIES, San José, Costa Rica Toussaint, Eric, 1999a, Your Money or Your Life! The Tyranny of Global Finance (Pluto Press, London/Mkuki na Nyota, Dar es Salaam) —, 1999b, in La Jornada, October, Mexico DF, p 14 —, 1999c, ‘L’Annulation de la Dette’, in L’Autre Davos: Mondialisation des rộsistances et des luttes, ed Houtart Franỗois and Polet Franỗois (LHarmattan, Paris, Montreal) , 2000, Interview in El Comercio, Quito, Ecuador, February, and Transnational Institute, Philippine Center for Policy Studies and Freedom from Debt Coalition, 1992, Of Bonds & Bondage – A Reader on Philippine Debt, ed de Dios Emmanuel S and Rocamora Joel (Amsterdam/Manila) TWN (Third World Network), 1993, ‘Economic adjustment can also violate human rights’, Third World Economics, no 68, Penang/Malaysia, 15 July —, 1996, ‘Clash of views on effects of investment liberalisation’, Third World Economics, no 138, 1–15 June UNCTAD, 1992, ‘Latin American Adjustment and Economic Reforms: Issues and Recent Experience’, by Patricio Meller, Discussion Papers no 53, December, Geneva UNDP, 1993, ‘With a soul and a vision: A new approach to development and a new UNDP’, address by James Gustave Speth, Administrator to the UNDP Staff, New York —, various years, Human Development Report, New York UNRISD, 1995, Estados de Desorden: Los Efectos Sociales de la Globalización (Geneva) Weissman, Robert, 2000, ‘Stand Up and Be Counted! We need you to come to Washington and join the Jubilee 2000 National Mobilization’, Electronic Report, February, World Bank, 1988, Adjustment lending: An Evaluation of Ten Years of Experience, (Washington, DC) —, 1990a, ‘How Adjustment Programs can Help the Poor – The World Bank’s Experience, Discussion Paper’, no 71 Washington, DC —, 1990b, ‘Structural Adjustment and Poverty: A Conceptual, Empirical and Policy Framework’, Washington, DC —, 1992a, ‘Operational Directive 8.60: Adjustment Lending Policy’, The World Bank Operational Manual, Memorandum of 21 December —, 1992b, ‘World Bank Adjustment Lending and Economic Performance in Sub-Saharan Africa in the 1980s: A Comparison with Other Low-income Countries’, Ibrahim A Elbadawi et al., Policy Research Working Papers, Washington, DC —, 1992/3, and 1995/6, World Debt Tables, Washington, DC —, 1993, Implementing the World Bank’s Strategy to Reduce Poverty: Progress and Challenges, Washington, DC World Bank, 1998 and 1999, Global Development Finance – Analysis and Summary Tables, Washington, DC Index Acosta, Alberto 87–8 adjustment 61–7, 74n and cycle of indebtedness 63 exports 62–3 and globalisation 64–5 new approach 64–5 price stabilisation 62 social costs of 51–4, 63, 66–7, 80–1, 82–3, 86, 132 spending cuts 62 ‘structural’ adjustment 64–5 see also IMF (International Monetary Fund); SAPs Africa 79, 100, 106, 120 see also Jubilee South Alliance for a Responsible and United World 118 Amerindians 10 amortisation 6, 15, 17, 28, 40, 41, 46, 49 see also debt service; interest AMRO Andean Central America 100 Angola 103 Aranha, Oswaldo 11 arbitration tribunal 27, 120 Argentina 9, 12, 13, 65 dependence on Brazil 15 moratorium law 88–9 unpayable debt 2, 38, 57 Asian crisis 21, 36–7, 42, 44, 55, 111 Asian Tigers (Asian Dragons) 21, 29n, 36 ‘asset stripping’ 111 Assoziazzione Beati i Costruttori di Pace 97 ATTAC (Association for the taxation of financial transactions for citizen’s support) 117, 126 Azeredo, Governor Eduardo 52 ‘bailing in’ 86–7 Banca Etica 97 Banco Brazil 51 Bangladesh 82–3, 104, 112 Bangkok 123–4 banks, rescue of 42–3, 55 Basque country 97 Basualdo, Eduardo 91 Benin 108 Berlin Tribunal 89, 134n Blair, Tony 151 BNDES 37 Bolivia 23, 108 Brady bonuses 86 Brady Plan 87 Brazil 5, 104 audit of foreign debt 129–30 corruption 18 cost of living and debt service 47, 49, 84–5 decapitalisation of 48, 52, 84 and democracy 18–19 deregulation 33, 49 devaluation 15, 35–9, 44–5, 50, 53, 129 elections 19, 32, 65 environmental debt 1–2, 5, 133 and exchange rate controls 50, 126, 130 exports and imports 7, 9, 11, 53, 83–4, 133n and external debt 1, 6, 7, 11, 16– 17, 46–7, 83–5 External Debt Symposium proposals 28–9 external investment 7–8, 20–1, 30, 33, 46, 130–1 FHC-IMF adjustment programme 1, 20–2 financial crisis 2, 21, 30, 32, 37, 38, 45, 48, 55 fiscal adjustment 51–4, 56 fiscal deficit 46–9 and IMF 20–2, 38–43, 49–50, 52, 55, 128 164 Index 165 importance of rescuing 48–9, 55 inflation 35, 36 insolvency 1, 39, 40–1, 47–8, 54 interest payment 6, 16–17, 21, 38, 40, 46–7, 62, 84 and interest rates 16–17, 20–2, 33– 6, 40–1, 52, 54 internal public debt 1, 16, 17, 35, 47 and international speculation 16, 19, 30, 37, 41, 53, 130 Jubilee 2000 Campaign 92, 124, 127–33 land reform 54, 58 Letter of Intentions 40, 49 liberalisation 32, 33, 45, 46 and loan conditions 50–1, 128–9 and military dictatorship 11, 12, 131–2 monetarism 33–6 moratorium 11, 39–40, 47–8, 55– 7, 92, 126, 129 over-indebtedness 84, 92, 104, 131, 132 overvaluation of Real 36–8, 44, 45, 53 pension system 53–4 political debt 1, and privatisation 19, 22, 33, 37, 48, 52, 131 and IMF conditions 45, 129 of public assets 9, 29, 44, 49, 51, 129 protest demonstrations 39 public deficit 38 renegotiation of debt 6, 39–40, 56, 57, 131–2 social conditions social crisis 51–4 social debt 1, 5, 38, 133 social needs 22, 56 and social spending cuts 17, 22, 38, 45, 49, 54 taxation 45, 47, 54, 56, 58 trade balance 85 trade liberalisation 36, 45, 56 Trojan Horse policy 30, 41 unemployment 9, 46, 52, 60n unpayable debt 2, 11, 21, 22, 38, 40 unsustainable debt 125, 129 vulnerability to world financial imbalances 33–8 see also Foreign Debt Tribunal Brazil Network on Multilateral Institutions 56, 134n Brazilian Central Bank 34, 35, 41, 47, 52 Bretton Woods institutions 72, 117 Britain and debt cancellation 107–11 Jubilee 2000 External Debt Campaign 107, 109, 123 Brown, Gordon 107–8 Bryden, David 113 Buenos Aires Declaration 122–3 Bunding, Madeleine 93, 94 Burkina Faso 23, 108 Burundi 23 Buxton, Nick 107–9, 115–16 Cafod 23 Caixa Econômica Federal 51 Calcagno, Alberto Eric 88, 91 Camdessus, Michel 41, 45 Cameroon 23, 82 Canada 8, 112, 151, 152 Canadian Ecumenical Jubilee Initiative 112 capital flight 1, 13, 34, 38, 48, 106, 121 capitalism 2, 31–2, 37, 42 Cardoso, Fernando Henrique 19, 32, 38, 44, 65 dependence on foreign capital 9, 30, 41 and external debt 16, 17, 19–20, 34, 84 as Finance Minister 40 and fiscal deficit 46 and IMF adjustment programme 1, 20–2 impeachment 39 and internal debt 36 irresponsibility 47, 48, 51, 54, 132 social spending 54 Caribbean 66, 79 Castro, Fidel 91 Catholic Church 94, 101 166 External Debt CCFD (Catholic Committee Against Hunger and for Development) France 107 CEBU Declaration 97 Centrais Elétricas de Minas Gerais 37 Central Bank of the United States 15 Centri Missionari Diocesani del NordEst 97 Cepaline 87 Chagas, Carlos 51 Chile 12, 13, 15 China 8, 55 Christian Aid 23, 90, 124 Christianity, and usury churches and external debt 29, 57, 89–90, 91, 93 and Jubilee 2000 Campaign 101 CIDSE (International Co-operation for Development and Solidarity) proposals 23, 27 Citibank Citizen’s Collective against the WTO 117 civil society influence of 3, 18, 51, 107 and mass education 119 organisations (CSOs) 99, 113, 120, 121, 127–8, 132 participation in debt cancellation 27–8, 65, 105, 109, 120–1, 126, 157 protest movements 51, 58, 81, 112 Clinton, President Bill 41, 112–14, 151 Club of Paris 27, 114, 124 co-operation 32, 67, 72, 74n, 117 Cologne, Jubilee 2000 Campaign 94, 96–7 Cologne Debt Initiative 101–5, 116 achievements of 102–3, 152 insufficiencies of 103–5, 122 Colombia 13, 15 Columbus, Christopher 10 Commonwealth, and overindebtedness 111 communications, democratisation of 71 compensation, for war crimes 10 complementarity 32, 67, 72, 74n, 117 compound interest 81, 129 Conable, Barber 73n Conceiỗóo Tavares, Maria da 91 Congo 23, 103, 113 Continental Social Alliance 117–18 Coordinamento Caritas Diocesane del Nord-Est 97 Correio Braziliense 51 corruption 18 Costa Rica 89 Côte d’Ivoire (Ivory Coast) 23, 108 CPMF (Provisional Tax on Bank Transactions) 35, 54, 131 Crédit Agricole creditors 1, 2, 5, 8, 42, 130 encouraged by IMF rescue packages 44 pressure to cancel debt 109, 151 private 100, 104 responsibility for debt 12, 27, 56, 106, 121 Cruzado Plan 39 ‘Cry of the Excluded’ 92, 99, 134n Cuba Davos International Economic Forum, Switzerland 111 debt cancellation 48, 77, 90, 93, 95 conditions for 103, 108, 122, 128 ‘Debt Free Millennium’ 4, 77, 94, 116–18, 123 ethical 127, 133 European initiatives 105–12 and human development programmes 23, 56–8, 102–3, 107–8, 119, 126, 128, 132 Japan 151–3 mass mobilisations for 98–9 North American initiatives 112–14 principle accepted 116 social movements 117–27 success of movements 99–103 transparent decision-making 22, 27, 108, 109, 120, 157 unconditional 155, 158 see also Cologne Debt Initiative; Foreign Debt Tribunal; Jubilee 2000 Campaign Index 167 debt service 15, 16, 17, 47, 82–6, 103 ceiling on 28, 57, 128, 142, 155 policies regarding 155 postponing 52–3 ‘debtors’’ alliance 158 Debtors’ Cartel 120 default/insolvency, international system of 27, 28, 39, 45, 48, 58, 88, 106, 130 democratisation 117, 126, 156 denationalisation 131 see also Brazil, privatisation; privatisation deregulation 28, 30, 33, 49, 64, 75n, 80 Deutsche Bank dictators see military dictators dollar abandoned gold standard 3, 43 dollarization 86, 87–8 as international currency 43–4 Dominican Republic Duboc Pinaud, João Luis 91 ‘Dwarfs on the Budget’ 18, 29n and cycle of indebtedness 63, 78, 80, 81–2 definition of 5–6 effect on people’s lives 8–9, 80–1 evolution of 78–80 government backing for private debt 130 and human rights 121–2 illegitimate 28, 91, 118, 120, 122, 125, 154, 155, 158 and illegitimate regimes 12–13, 106, 132 “odious debts’’ 106, 122, 132, 154, 155, 158 permanence of reasons for borrowing 81 repayment 7–9 responsibility for 106, 125–6, 154–5 risk tax 130 and social development 91, 93 vicious circle 6, 7, 17, 39, 63, 129, 132–3 External Debt Symposium (1998), proposals 28–9 East Asia 15–16 ECLAC (UN) 13 economic development, and foreign investment 61–2 economic liberalism 68 Ecuador 86–8, 92, 109, 123 moratorium 86, 87, 123 education 23, 82–3, 102, 108, 122 Egypt 107 El Agustino 93, 94 El Universo 123 empowerment 69, 117 England Enhanced Structural Adjustment Facility (ESAF) 113 Ethiopia 23, 106 European Union, debt cancellation 127 external debt cancellation 2, 5, 22–9 compared to war creating dependence 6, 16, 91–2, 119, 132–3 FFTA (Free Trade Area of the Americas) 118 50 years is enough 118 Financial Stability Forum 43 ‘fiscal effort’ 21 Folha de São Paulo 54 foreign aid 152, 153 Foreign Debt Tribunal, Rio da Janeiro (1999) 29, 57, 60n, 92, 104, 124–7 Fraga, Armínio 35, 54 France 8, 19, 106–7, 127 Franco, Gustavo 40 Franco, Itamar 40, 52 free market economics 63, 68 Fujimori, Alberto 94 Funaro, Dilson 39 Furnas 22, 29n, 51 Futenma US Marine Helicopter Base 96 G7 81, 94, 100, 101, 109, 152 G8 95, 115, 151 Gates, Bill 104 168 External Debt Gauteng Declaration 158 Geisel, Ernesto, General and Dictator (1974-1978) 11 Germany 8, 19, 123, 152 compensation to Israel 10 debt service ceiling 128 Nazi debt 23, 27, 57 Ghana 113, 115 global capitalism 68 global economic crisis 30–1, 44, 55 Global North/Global South division 99 globalization 2, 3, 35, 64 alternative 61 challenges of 68–73 co-responsible form of 117 and codes of conduct 72 ‘competitive’ 64–5, 68, 74n and democratisation 69–70, 72–3 and diversity 69 of finance 70 and flexible labour force 69–70 and global power 71–2 and income concentration 66 and Latin Americanisation of North 99 and local development 68–9 myths of 19 and telecommunications 71 and trade liberalisation 67 and worker exploitation 69 Gonỗalves, Reinaldo 91 Gorostiaga, Xabier 91 government policies and accountability 154, 155 on borrowing 155–6 on debt servicing 155 Grant Assistance for Debt Relief Scheme (Japan) 151, 153 Guardian 101–2 Guayaquil 123 Guinea 114 Guinea Bissau 23 Guyana 23, 83, 108, 151 The Hague 127 Hatoyama, Yukio 96 health 23, 82–3, 86, 93, 102, 108 HICHIP (highly indebted countries with high incidence of poverty) 116, 127 Hinkelammert, Franz 91 HIPC debt reduction 23, 82, 106–7, 122 financial aid to 102 most impoverished 24–6 unsustainable debt 77, 83 HIPC initiative 90, 100–3, 109, 114, 124, 151, 158 HIV/AIDS 103 Hobbes, Thomas (1588-1679) 31 Holland Honduras 2, 56, 106, 113 human rights 10, 96, 122, 126, 132, 137 Hurricane Mitch 2, 56, 106 IFIs (International Financial Institutions) 158 IMF (International Monetary Fund) 1, 2, 8, 43–5, 72 and adjustment policies 62–3, 86–7 and Asian crisis 111 and debt cancellation 27 demands to 157 disastrous effect of 42, 63, 128, 135n, 151 discredited 55–6, 151 exchange policy 37 failure of 43, 44, 50, 87, 104 and human rights 89 and loan conditions 2, 9, 12, 35, 62–3, 80–1 opposition to 122, 124 packages 16, 20–2, 37, 42, 44, 49, 52 Poverty Reduction and Growth Facility 157 pressing for higher taxes 47–8 protests against 9, 39, 63, 74n selling gold reserves 102, 114 and structural reforms 13, 15, 43 see also Brazil, and IMF; SAPs; World Bank ‘IMF survival crimes’ 44 India 104 Index 169 Indonesia 9, 44, 104 infant mortality 82–3, 86 inflation 35, 62, 66 global 44 infrastructure 80 Inter-American Development Bank (IDB) 1, 8, 40, 45 interest 6–8, 39, 78–80 compound 81, 129 Ecuador 86 and fairness and insolvency 39, 84, 106, 114 nature of 81 Peru 93, 94 see also Brazil, interest payment; debt service interest rates 75n, 156 flexible 50, 62 high 16, 33–6, 44, 46–7, 47, 49, 52 increasing 11, 12, 62, 81, 89, 104, 121–2, 130 and insolvency 111, 114 restoration 57 see also Brazil, interest rates International Court of Justice, The Hague 127 International Speculative Capital Flows 158 Israel 107 Itaipu 22, 29n, 51 Italy 19, 97, 152 Jamaica Japan 8, 19, 42–3, 55 and debt cancellation 114–16, 151–3 Jubilee 2000 External Debt Campaign 95–6, 114–15, 152–3 and public opinion 115 Japan Bank for International Cooperation 153 Johannesburg, Jubilee South Summit 154–8 John Paul II, Pope 2, 97 Jubilee 2000 External Debt Campaign 2, 5, 22–3, 38, 56–7, 77–8, 89–99 achievements 101–2 extent of 94–5, 96–7 human chain 95, 96, 97, 98 Japan 95–6, 114–15 in Latin America 90–5 and loan conditions 108, 109 petitions 94, 96, 97, 98, 101, 112, 124 some objectives 98 see also Cologne Debt Initiative Jubilee South Coalition 116, 118–19 changing government policies 154–8 developing international platform 157–8 Kadena Military Airbase 96 Kasumigaseki, Tokyo 96 Kenya 82, 114 Kitazawa, Yoko 134n, 153 La Oroya Valley 94 Landless Rural Workers Movement 47 Laos 113 Latin America and Caribbean 66, 122, 126–7 de-capitalisation 12 debt owed by colonisers 10 exploitation 5, 91 external debt 5–6, 13–15, 79, 91–2 financial crisis 12, 13 income concentration 14 interest on debt 7, 15 Jubilee 2000 Campaign 90–5 and military dictatorships 12–13, 62 poverty 14 structural reforms 13, 15, 66 unemployment 67 unpayable debts 12 Latin American and Caribbean Coalition of the Global Jubilee 2000 Initiative 94 Latin Americanisation of North 99 Lenten Campaign 107 Leviticus, Book of 23, 94 Liberia 103 LTCM (Long-Term Capital Management) 42 Lusaka Declaration 119–20 170 External Debt McKinnon, Donald 111 Madagascar 23 Mahuad, Jorge 86 MAI (Multilateral Agreement on Investments) 28, 49–50, 58n, 67, 98, 121 Malan, Pedro 22, 36, 37, 40, 41, 49 Mali 108, 114 Marcos, Ferdinand 106 Márin, Gustavo 91 market liberalisation 64, 67, 75n Mathau, Argentina 122 Mauritania 108 Mazerolle, Jean-Michel 106 Medici, Emilio Garrastazú, General and Dictator (1969-1973) 106 Mello, President Fernando Collor de, (1990-1992) 65 Menem, Carlos, President of Argentina 65 Mercosul 38 Mexico 10, 13, 50, 65 and debt cancellation 104, 127 dependence on United States 15 financial crisis 15, 21, 42 interest on debt unpayable debt 2, 38, 57 Mihevc, John 112 military dictatorships 11, 12, 81, 132, 157 loans for arms 106 Millennium Fund 102 Minaram 23 Minas Gerais 52 Miyazawa Initiative 152 Mobutu, Sese Seko 106 monetarism 33–6, 62 moratorium 155 Argentina 88–9 Brazil 11, 39–40, 47–8, 55–7, 92, 126, 129 Costa Rica 89 Ecuador 86, 87, 123 Russia 20, 44 moratorium law 88–9 Mozambique 23, 82, 103, 108, 119, 151 Mujica, Javier 91 multilateral institutions 72, 88, 93, 100 political intervention 65 pressure on 97, 99 reform of 118 Myanmar 114 Naha City 95 nature, destruction of neo-liberalism 15, 30, 61, 64, 99–100, 158 Neves, Tancredo 46 New Zealand 111 Nicaragua 1–6, 2, 13, 23, 56, 127 Niger 23 Nigeria 109, 151 Nixon, President Richard 43 Nogueira Batista Jr, Paulo 91 O Globo 45, 54, 101 Obasanjo, Olusegun 111 Obuchi, Keizo 95, 115 ODA (Official Development Assistance) 100, 104, 106, 113, 114, 151, 157 “odious debts’’ 106, 122, 132, 154, 155, 158 Okinawa 95, 96, 152 Olmos, Alejandro 91 Operazione Bilanci di Giustizia 37 over-indebtedness 49, 77–8, 80, 92, 105, 111, 113, 133 alternatives to 3–4, 91, 123–4, 125 Brazil 84, 92, 104, 131, 132 of ‘emerging’ countries 127 ethical problem 89 see also unpayable debt; unsustainable debt Oxfam International 103 PACS (Alternative Policies for the Southern Cone of Latin America) 97 Pakistan 87, 104 Panama 87, 134n Paraguay 13 PEMEX 50–1 Pérez Esquivel, Adolfo 123 Peru 13, 92, 109, 120, 151 Index 171 environmental controls 67 Jubilee 2000 External Debt Campaign 92–4, 121–2 Petrobras 51 PFL (Liberal Front Party) 19 Philippine Freedom from Debt Campaign 97 Philippine-Asia Jubilee Campaign against Debt (PAJCAD) 97 Philippine-Thai Focus on Global South 97 Philippines 151 ‘Pink File’ 18, 29n PMDB (Brazilian Democratic Movement Party) 19 poverty 2, 63, 64–5, 67 alleviation 108, 109 and classification of countries 88, 93, 116 eradication of 75n, 77, 104, 117, 135–6n PPB (Brazilian Progressive Party) 19 PRI (Institutional Revolutionary Party) 65 privatisation 64, 80, 111 see also Brazil, privatisation PROER programme 41, 42, 59n protectionism 67 PSDB (Brazilian Social-Democratic Party) 19 Raffer, Kunibert 88 Real collapse of 55 devaluation 15, 35–9, 44–5, 50, 53, 129 overvaluation of 36–8, 44, 45, 53 Real Plan 16, 29n, 46 redistribution 45, 98 renationalisation 126, 131 reparations 119, 122, 156–7 Right of Insolvency 120 Rio de Janeiro 91 Rio Grande Sul 52 RIO-92 conference 45, 59n Rodriguez, Monsignor 97 Romania 87 Rosas, Patricio 91 Rueff, Jacques 41 Russia 15–16, 87 devaluation 20 financial crisis 21, 34, 38, 42, 44 and IMF package 20 privatisation 111 Rwanda 23 Sachs, Jeffrey 113 Sack, Alexander 135n St Thomas and Principe 23 Salinas, President Carlos, Mexico 65 Sanchez, Alberto 91 Sanger, David 113 sanitation 80, 82–3, 108 ‘sappers and jackals’ 41–2 SAPs (structural adjustment programmes) 64, 65, 66, 119, 124 aggravating problems 15, 101, 103, 104, 105–6, 122, 135n creating dependence 92 and cycle of indebtedness 82 and political power 100 replacement of 112, 157 Sarney, José 11, 39 Schilling, Paulo 10, 91 Schroeder, Chancellor 151 Sdebitarsi 97 Selic rate 34 Senegal 108, 114 severely indebted countries 79–80 Shirayanagi, Cardinal Seiichi 153 Short, Clare 107 Sierra Leone 103 Siguas, César 94 Simonsen, Mário Henrique 11 Sindipetro oil workers’ union 51 SIPRI 73n slave trade 10 slavery 1, 18, 91 social exclusion 2, 6, 57, 134 social movements 117–27 solidarity 32, 99–100, 117, 123 Somoza Debayle, Anastasio 13 Soros, George 31 South Africa 106 South Korea 9, 44 sovereignty 6, 28, 67, 88, 89, 132 Brazil 20, 30, 50, 92, 124–6, 128–9 172 External Debt Spanish Citizen’s Network for Cancellation of Foreign Debt 97 species consciousness 71, 75–6n Speth, Gus 75n ‘stagflation’ 35 Stasi, Bernard 89 Stiglitz, Joseph 111–12 Stroessner, General and Dictator Alfredo, Paraguay 13 structural adjustment 64–5 and social concern 104 see also adjustment; SAPs Sudan 23, 103 Summers, Larry 86 sustainable development 68, 98 Swiss Coalition of Development Organisations 105–6 Switzerland 8, 105–6, 127 Tanzania 23, 82, 108 Tanzi, Vito 45 Tavola della Pace 97 Tban (bank assistance rate) 34 Tegucigalpa, Declaration of 91, 120–1 Thailand 44 Thatcher, Margaret 19, 31, 59n Third World and capitalism export-oriented growth 66 and globalization 65, 66 income redistribution 45 Timossi, Gerardo 91 TNCs (transnational corporations) 55, 61, 64, 67, 68, 70, 71–2, 76n, 98 Tobin, James 75n Tobin Tax 27, 75n Toffler, Alvin 44 Toussaint, Eric 86, 100, 113, 114, 118 trade liberalisation 33, 67, 111 Treviso 97 trickle-down ideology 61 Uganda 23, 82, 108, 119 Ugarteche, Oscar 91 UN Charter of Human Rights 89 UNCTAD (UN Conference on Trade and Development) NGO Forum 123–4 UNDP (UN Development Programme) 66, 75n unemployment 6, 9, 12, 15, 86 UNICEF 63 Union of Swiss Banks UNIRISD (UN Research Institute for Social Development) 74n, 76n United Nations, demands to 157–8 United States creditor currency 12 debt cancellation 107, 112–14 interest rates rise 12 Jubilee 2000 Campaign 95 and loans to Latin America 15 and public deficit 21 structural adjustment policy 113 unpayable debt 6, 11, 61, 78–89, 91, 118 cancellation of 5, 22–3, 38, 93, 124, 130, 152, 165 ethically unpayable 39, 57 unsustainable debt 77, 78, 81, 83, 125, 129 US Federal Reserve Bank 62 usury Vale Rio Doce 37 Venezuela 2, 13, 15, 38, 56 Vietnam 114, 115 Virgin Islands 87 Washington Consensus 87, 119, 151 Washio, Etsuya 153 water 80, 82, 86 wealth stolen 157 transfer from South to North 104 Weissman, Robert 95 Wionczek, Miguel 91 Wolfensohn, James 65 workers’ unions 18 World Bank 1, 8, 40, 42, 45, 61, 72, 87 and debt cancellation 27 demands to 157 and human rights 89 and loan conditions 12, 80–1 and poverty alleviation 64–5 Index 173 structural reforms 15, 124 World Council of Churches 101 World Trade Organisation (WTO) 67, 117, 118 Year of Grace Zaire 106 Zambia 23 5, 23 ... for surmounting the crisis The second chapter, ‘Trojan Horse: Brazil and the International Financial Crisis , builds on the central argument that the Brazilian crisis is not the result of some... and others These are the private creditors And then there are creditors such as the World Bank, the IMF (International Monetary Fund) and the IDB (Inter-American Development Bank) These are the. .. Income in the hands of the 10% richest Income in the hands of the 40% poorest 34.6% 14.4% Concentration of income in Mexico Income in the hands of the 10% richest Income in the hands of the 40%