Drop the Debt, Dublin Style

Campaigners from the Anglo: Not Our Debt camapaign were busy in Dublin this week, investigating a crime scene. They cordoned off the Central Bank in Dame Street and subjected it to forensic analysis on the CSI model. The white-collar criminals were not in evidence, but in the case of Ireland the fury at politicians is at least as fierce as the fury at banksters themselves. The Irish campaign is part of an international network of groups campaigning to challenge the imposition of austerity in response to illegitimate debts that were not entered into by democratic agreement. Such debts should be labelled as 'odious' and should not be allowed to destroy social bonds or public services.

The anger of the Irish campaigners relates to the failure of the government to use the criminal law to bring to justice those who have destroyed the Irish economy. They are encouraging the Irish people  'to submit complaints of suspicion of financial crimes in Anglo to the Gardaí, for example under Section 6(1) of the Criminal Justice (Theft and Fraud Offences) Act 2001.' Hence the creation of a crime scene in central Dublin yesterday.

Although the Anglo-Irish Bank no longer exists the Irish people are still paying for its reckless lending: repayments will amount to more than €47.9 billion by 2031, a full 30% of Ireland’s GDP. The campaigners are calling for the debts to be frozen. Their fury has been increased by the release last month of the so-called 'Anglo tapes', in which John Bowe, ex-head of capital markets at Anglo, can be heard laughing about the bailout that the bank has managed to extort from Irish taxpayers.

In a tape that would shame anybody outside the financial 'community' Bowe discusses his negotiations with Ireland's financial regulator as 'fun and games'. He asked for €7bn. in return for which they offered only paper guarantees and which he refers to as a bridging loan 'until we can pay you back. . . which is never', this last joke being a cause of considerable mirth on both sides. The phone call took place in October 2008, two days after Ireland pushed through a €440bn (£373bn) bank guarantee scheme that has nearly bankrupted the state. What the tapes make entirely clear is who is holding the power: the politicians have clearly capitulated to the interests of the bank's boldholders, explicitly so according to Bowe.

But these tapes underline the illegitimate nature of the debts and increase the potential for arguing a legal basis for them to be declared odious.Vicky Donnelly, of the Not Our Debt campaign said, 'The Anglo tapes show that the Anglo debts originated on the basis of deliberately misleading information. We question the timing of the release of the tapes and request that the full content of the tapes be publicly disclosed. We want to know who knew of the content of the tapes which, had they been made public earlier, would have led to massive public pressure to write off the Anglo promissory notes last February. This debt is illegitimate and should be written off now, once and for all.'
.


Tweet

The Iceman Cometh

It is good to know that the personal is still political, because a major international finance story has linked very closely with my own local politics this week.

In the midst of the excitement over David Cameron opening his mouth and saying something you might have missed the news that European Free Trade Court delivered an important ruling on 28th of this month in the case between those huge bastions of the global economy the EFTA Surveillance Authority and the European Commission.

According to the website of the Committee to Oppose Third World Debt,

'The judgement clearly states that it is not the responsibility of the parent nation of a banking company to cover the costs of the guarantees to their banking system, and the safety net structure must be financed by the banks themselves. This implicitly confirms that the normal liquidation process, as applied to Landsbanki (Iceland mother company) is quite correct when a bank, even too big to fail, has greater liabilities than assets. Which would be the case for most of the big European banks if the toxic assets on their balance sheets were counted at their real value.'

The case was brought on behalf of the UK and Netherlands, whose citizens has been the target of aggressive selling by the Icelandic bank as it began to fail. These loans were not covered by national guarantees, meaning that savers were set to lose all their money. You may recall Gordon Brown's use of terrorist legislation to seek to freeze Iceland's assets to force the country to pay debts its banks had incurred that had already bankrupted it ten times over.

This ruling cuts right to the heart of the decisions of governments in all the world's leading capitalist countries to provide massive bailouts to support their banks, arguing that they had a legal responsibility to do so. Surely this strengthens the case for arguing that debts incurred to fund such bailouts are odious.

And the personal aspect? Well before I became elected to Stroud District Council a very unwise investment of £2.5m was made in Icelandic bank Glitnir. That money was recently returned and has been a windfall in the recent budget-setting period. As Green members of the administration we have been managed to argue for half a million to be invested in a hydro generation scheme at our district council offices.
.


Tweet

US Set to Buy up the Pyramids

When Keynes wanted to come up with an example of activity that enables an economy to flourish by requiring the investment of huge amounts of physical labour but without causing the failure of aggregate demand he suggested the Egyptian pyramids. Today, however, Egypt is providing a different kind of lesson that I hope the Egyptian people learn in time: that democracy and indebtedness are not compatible.

Egypt is in the midst of negotiations with the US over the debt of its former regime. Such debt, which enriched Mubarak and his cronies, was one of the causes of the revolution and should now be reupdiated as odious and no longer the responsiblity of the citizens of the newly democratic Egypt. The presence of Christine Lagarde in Cairo offering 'loans' and 'partnership' suggest that this is unlikely to happen, and that Egypt will, like so many countries before it, lose its freedom to an entanglement of foreign debt. The process was begun as soon as Mubarak fell, as reported by Egyptian economist Noha el Shoki in March.

As Nick Dearden of the Jubilee Debt Campaign notes in a recent Guardian blog, the media reports of 'turmoil' in the Middle East are being used to cover the next round of resource theft that will follow the negotiation of dollar loans:

'This allows the US and European governments to portray the $4.8bn IMF loan under negotiation, the "assistance" funds that will shortly start flowing into public-private "partnerships" and free trade zones being planned by the EU, as "gifts" to the Egyptian people. . . . However, many people remain sceptical about the IMF's agenda – privatisation, indirect taxation, removal of subsidies (many of which are corrupt, but some of which do genuinely support the poor) and an economy based around exports. As one government insider said last week: "In Egypt, we call privatisation what it is – stealing." A propaganda campaign aims to convince Egyptians that "there is no alternative".'

The brave Egyptians who spent night after night in Tahrir Square demonstrating for their independence should realise that the battle was only half won. Physical freedom and political freedom mean nothing without financial freedom. Just as we are being subjected to the decimation of our public services to pay off banks and investors whose money was created from thin air, so all the wealth of Egypt will be lost to its people unless they resist the attempt by the IMF and the US to 'lend' it money to finance its development. Tweet

Time for a Real Jubilee

I am not sure whether the coincidence of the next critical phase in the global credit crisis with the celebration of the Queen's jubilee is ironic or tragic, but it certainly gives me an opportunity to explore the real roots of the concept of jubilee, a concept whose real meaning could not be further from the spectacle of disempowered British citizens, burdened with the debts of their unaccountable elite, paying homage to the figurehead of the system of unequal power and property relations that oppresses them.

A jubilee is not an arbitrary celebration of any feature of civil society that has simply lasted a certain number of years, rather it is a distinct legal requirement introduced by the ancient Jewish community to ensure that the ownership of land and property did not become too concentrated. In the ancient world, as in ours, bad luck or bad character could mean that some fell into debt slavery, but the inherent spiritual offensiveness of such a status required the possibility of release, and this was realised in the jubilee that occurred every 7 x 7 years.

I am not an aficionado of the Jewish bible so I am relying on the interpretation of the German theologian Ulrich Duchrow whose book Property for People not Profit explores these writings as a prescription for a world of economic justice. His interpretation of the writings of prophets such as Isaiah and Micah was that they were critical of the devastating consequences for the Jewish people of social and economic injustice. The jubilee - the freeing of slaves, the returning of land to its original owners, and the cancellation of debts - was proposed to ensure the stable functioning of Jewish society:

'To sum up, according to the Book of the Covenant, in view of God's solidarity with all his creatures, the needs of real life, including freedom from oppression, write the economic rules.' (p. 18)

I had always assumed that Jesus, who was clearly either a communist or a hippy or some combination of the two, could be called in to support my opinions regarding economic emancipation, but now it seems that he was merely reviving ancient wisdom that had been lost in the decadence of the Roman world.

I have been posting for some time about the contemporary proposal for a debt jubilee, a process that begins with a campaign for a Citizens' Audit. I have now finished a full paper on this proposal, including detail about its origins in international law. You can find the paper on the Social Science Research Network, and I would be grateful if you could use the opportunity of the jubilee to share it with your friends.

So, enjoy your bank holiday. Although many radicals criticise the Windsors for being out of touch, I credit them with enough understanding of working people to know that giving us holidays from labour is a useful way to reach our hearts. It seems unlikely that the members of the elite we have bizarrely elected to run our country would have increased the number of days when we are allowed the freedom to do what we really enjoy: chatting, resting, and drinking. But wherever you are, please use the opportunity of the unusual occurrence of the word 'jubilee' in everyday speech to remind people of what it was really for. If we could resuscitate the concept of jubilee in everyday understanding we would no longer need to rely on the magnanimity of an unelected elite to enjoy a well earned rest from work.
. Tweet