ISL Declaration: Latin America, Against the Pandemic, Non Payment of the Debt

The Covid 19 pandemic has revealed the structural failures of health systems around the planet. Decades of cuts in public health care and policies aimed at privatization have resulted in an unequal system that is unable to respond to situations of this type. Health care workers and patients suffer the consequences of decades of cuts.

This reality in Latin America and the poorest countries is structurally linked to external debts. Through the payment of the debt, wealth is transferred, systematically, from the working class and the people to the most concentrated sectors of the bourgeoisie (be they “national” or foreign), and from each of our countries to the imperialist countries. It is a vacuum that maintains a flow of money upward and outward.

At the same time, the debt is a tool of political control. It is a structural mechanism of subjugation. Its un-payable nature implies that it is always subject to renegotiations and restructuring in exchange for concessions to creditors and large corporations, conditioning the political decisions of debtor countries.

To sustain payments on their external debts, governments have appealed to austerity and privatization policies. The imperative to achieve fiscal surpluses to pay debt has implied cutting health care, education and public services budgets, reducing wages, relaxing labor regulations and promoting pension reforms. The latter has increased the vulnerability of older people, who constitute the main risk group in the Covid 19 pandemic and survive on pensions that do not cover essential vital needs.

Health care has been one of the central variables of adjustment in austerity policies. In 2018, 46 countries allocated a greater proportion of their GDP in external debt payments than in health care funding. On average, these countries spent 7.8% of GDP on debt services and 1.8% on public health care.[1]

According to data from the World Bank itself, the public external debt of low and middle income countries has doubled between 2000 and 2018. The policies promoted after the 2008 crisis produced a qualitative leap in public and private indebtedness. Even before the pandemic, countries like Argentina faced structural economic crises, largely linked to their external debts. In October 2019 the IMF indicated that 34 countries were in default or at high risk of falling into default.

The pandemic unleashed an economic crisis that was already developing. An element of this crisis has been a sustained, and now accelerated, drop in commodity prices. According to measurements by the Bloomberg financial firm, the composite index of prices of the main export commodities has fallen by 27% so far in 2020. On the other hand, capital flight from the so-called “emerging markets” has also accelerated. In March alone, there has been a capital flight of 81 billion dollars. That is more than double of what was recorded during the crisis of 2008/2009 in just one month.

However, even in this scenario, governments´ policies maintain payments of their external debts. For example, Alberto Fernandez paid 250 million dollars on March 30, an amount higher than the extraordinary budget that he allocated to the health crisis.

There are sectors linked to the so-called “progressive” governments, grouped together in the Latin American Strategic Center for Geopolitics (CELAG), that promote a statement signed by Rafael Correa, Evo Morales, Dilma Rousseff and José Luis Zapatero, among others. In the statement, they request the “condoning” of Latin America´s external debt with multilateral credit organizations and a restructuring of its debt with private creditors. It is important to remember that these same sectors supported the payment of the debt when they were in government. In reality, what they are asking for are new conditions to continue paying.

In a similar vein, the G20 finance ministers agreed to support the suspension of debt payments by the poorest countries during 2020. This does not include the private creditors who are encouraged to adopt a similar position. Its scope is also limited, it is estimated that it would only reach the 76 lowest-income countries in the world and it is only a temporary suspension. In short, payment terms are stretched out in order to continue collecting.

Pope Francis, the IMF and others have expressed a similar position. Centrally, they promote symbolic reductions of owed capital, a removal of a percentage of the interests that are scheduled to be paid during the remainder of this year and the next, and new terms until the pandemic passes and countries are able to resume paying.

Have all these characters become benevolent? Of course not. The usurers know very well that they can squeeze hard but not suffocate debtors to death, because if they die, they obviously do not pay.

Our proposal is to unilaterally decide to not pay the external debts. This sovereign decision would allow us to count with all our countries´ resources to redirect them to the health care and social measures that are needed to fight the pandemic. The urgency of the current situation requires substantive measures. There are conditions to promote a unilateral declaration of non-payment of the debt, breaking with organizations like the IMF and the World Bank. Our peoples need to become economically and politically independent from all these international financial organizations and count with the funds that go to the debt and those that would come from nationalizing banks and foreign trade under social control, and heavy progressive taxes on large fortunes, to guarantee health care and living wages for the vast majority.

In the International Socialist League, we promote the broadest unity of workers and other exploited sectors of the entire continent behind an emancipating and anti-capitalist project. We call on the left and revolutionary socialists to build a great international campaign for the investigation and non-payment of Latin American external debts. Let us promote this political campaign in unions and the labor movement from a class perspective. Our youth groups in the student movement, and in every place that we intervene, pose this demand alongside other concrete demands against lay-offs, for wages and safe working conditions. It must be combined with the fight for all the necessary emergency measures to fight the pandemic, the demands of health care workers and for an increase in the health care budget and the nationalization of the private health care system. Let us promote statements, meetings and unitary actions in each of our countries. In the United States and Europe, let us develop a campaign demanding the total and unconditional cancellation of debts, in support of and coordinating with the sectors that are developing a campaign for non-payment in Latin America.

[1] Source: IMF and World Bank data.