FacebookTwitterGoogle+RedditEmail

Floods and Debt

Because of torrential rains lasting several days Pakistan is facing one of the worst predicaments in human and material terms for the last 80 years. The damage inflicted is stunning. About 22 million people are affected by the floods. Many infrastructures have been unable to withstand the onslaught of rain. Roads and harbours can no longer be used. Millions of people have had to leave their houses, and the UN estimates that there are 5 million left homeless. Makeshift refugee camps have been set up, and some 1 million people already live there in disgraceful sanitary conditions. The south of the country, and more particularly the province of Snidh, has been badly shaken by this catastrophe. Economic losses amount to billions with the farming industry severely hit, large tracts of farmland having been destroyed.

Pakistan needs help. On 20 August 2010, UN member countries committed to giving USD 200 million, but this was a mere promise, and past experience has taught us that only a limited portion will actually reach the country. The Asian Development Bank, which was to manage the consequences of the December 2004 tsunami, declared that it would lead the reconstruction effort in Pakistan and already announced a USD 2 billion loan. The World Bank added a loan of USD 900 million. Deeply damaged by a natural catastrophe, Pakistan now has to face a significant increase in its debt.

While emergency aid is essential, we have to consider what is at stake in Pakistan. In August 2008 the country was close to defaulting. Compelled to accept the help of the IMF, it has received so far a total of 11.3 billion dollars in loans with particularly harsh conditionalities: the sale of a million hectares of farmland, an end to government subsidies on fuel, an increase in the price of electricity, drastic cuts in social expenditures, etc. Only the military budget has been spared. Finally this loan has made living conditions even more difficult while jeopardizing the country’s sovereignty.

Today Pakistan’s external debt amounts to 54 billion dollars with 3 billion paid back every year. This debt, which exploded after 2000, is largely odious. The former regime of General Pérez Musharraf was a strategic ally of the US in the region, particularly after 9/11. Major creditors never baulked at granting Musharraf the funds he needed to pursue his policies. In the fall of 2001 the US asked for Pakistan’s support in its war against Afghanistan. Musharraf had accepted that his country be used as a support base for US troops and those of its allies. Later the Musharraf regime contracted more debts, with the active help of the World Bank and major powers. The loans granted have no legitimacy: they were used to buttress Musharraf’s dictatorship and did not improve the living conditions of the Pakistani people. The debt contracted by this dictatorial regime is odious. Creditors were aware of the situation when they granted their loans, and given these facts it is outrageous that the Pakistani people be made to pay for the odious debt contracted by Musharraf.

In such circumstances outright cancellation of the debt is a minimum demand. As Ecuador did in 2007-2008, several countries have now carried out an audit of their debts in order to cancel their odious parts. Pakistan can and should follow such an example.

Another legal mechanism of non-payment should be taken into account in this country devastated by floods – namely the state of necessity. In this context it can claim that funds must be used to meet vital needs and not to repay its debt, without being sued for reneging on its commitments. The potential savings of three billions dollars could then be used for social expenditures to help the population.

It is therefore high time for the government of Pakistan to suspend payment of its external debt, to carry out an audit of the same, and to decide on a repudiation of the part of it that is odious. Far from being an end in itself, these measures should be a first step towards a radically different model of development based at long last on a guarantee of fundamental human rights.

Damien Millet is spokesperson for CADTM France (Committee for the Cancellation of the Third World Debt, Sophie Perchellet is vice-president of CADTM France, and Eric Toussaint is president of CADTM Belgique.

More articles by:

December 10, 2018
Jacques R. Pauwels
Foreign Interventions in Revolutionary Russia
Richard Klin
The Disasters of War
Katie Fite
Rebranding Bundy
Gary Olson
A Few Thoughts on Politics and Personal Identity
Patrick Cockburn
Brexit Britain’s Crisis of Self-Confidence Will Only End in Tears and Rising Nationalism
Andrew Moss
Undocumented Citizen
Dean Baker
Trump and China: Going With Patent Holders Against Workers
Lawrence Wittner
Reviving the Nuclear Disarmament Movement: a Practical Proposal
Dan Siegel
Thoughts on the 2018 Elections and Beyond
Thomas Knapp
Election 2020: I Can Smell the Dumpster Fires Already
Weekend Edition
December 07, 2018
Friday - Sunday
Steve Hendricks
What If We Just Buy Off Big Fossil Fuel? A Novel Plan to Mitigate the Climate Calamity
Jeffrey St. Clair
Cancer as Weapon: Poppy Bush’s Radioactive War on Iraq
Paul Street
The McCain and Bush Death Tours: Establishment Rituals in How to be a Proper Ruler
Jason Hirthler
Laws of the Jungle: The Free Market and the Continuity of Change
Ajamu Baraka
The Universal Declaration of Human Rights at 70: Time to De-Colonize Human Rights!
Andrew Levine
Thoughts on Strategy for a Left Opposition
Jennifer Matsui
Dead of Night Redux: A Zombie Rises, A Spook Falls
Rob Urie
Degrowth: Toward a Green Revolution
Binoy Kampmark
The Bomb that Did Not Detonate: Julian Assange, Manafort and The Guardian
Robert Hunziker
The Deathly Insect Dilemma
Robert Fisk
Spare Me the American Tears for the Murder of Jamal Khashoggi
Joseph Natoli
Tribal Justice
Ron Jacobs
Getting Pushed Off the Capitalist Cliff
Macdonald Stainsby
Unist’ot’en Camp is Under Threat in Northern Canada
Senator Tom Harkin
Questions for Vice-President Bush on Posada Carriles
W. T. Whitney
Two Years and Colombia’s Peace Agreement is in Shreds
Ron Jacobs
Getting Pushed Off the Capitalist Cliff
Ramzy Baroud
The Conspiracy Against Refugees
David Rosen
The Swamp Stinks: Trump & Washington’s Rot
Raouf Halaby
Wall-to-Wall Whitewashing
Daniel Falcone
Noam Chomsky Turns 90
Dean Baker
An Inverted Bond Yield Curve: Is a Recession Coming?
Nick Pemberton
The Case For Chuck Mertz (Not Noam Chomsky) as America’s Leading Intellectual
Ralph Nader
New Book about Ethics and Whistleblowing for Engineers Affects Us All!
Dan Kovalik
The Return of the Nicaraguan Contras, and the Rise of the Pro-Contra Left
Jeremy Kuzmarov
Exposing the Crimes of the CIAs Fair-Haired Boy, Paul Kagame, and the Rwandan Patriotic Front
Jasmine Aguilera
Lessons From South of the Border
Manuel García, Jr.
A Formula for U.S. Election Outcomes
Sam Pizzigati
Drug Company Execs Make Millions Misleading Cancer Patients. Here’s One Way to Stop Them
Kollibri terre Sonnenblume
Agriculture as Wrong Turn
James McEnteer
And That’s The Way It Is: Essential Journalism Books of 2018
Chris Gilbert
Biplav’s Communist Party of Nepal on the Move: Dispatch by a Far-Flung Bolivarian
Judith Deutsch
Siloed Thinking, Climate, and Disposable People: COP 24 and Our Discontent
Jill Richardson
Republicans Don’t Want Your Vote to Count
John Feffer
‘Get Me Outta Here’: Trump Turns the G20 into the G19
FacebookTwitterGoogle+RedditEmail