Political, legal, economic, moral, environmental and religious justifications and arguments have been provided for canceling all debt by the internationally renowned economists like Toussaint and Millet in their book, “Debt, the IMF, and the World Bank: Sixty Questions, Sixty Answers.”
Eric Toussaint is rather leading a worldwide movement for Abolition of Third World Debt. He is also president of the Committee for the Abolition of Third World Debt (CADTM), and author of numerous books on economic policy.
One good example they have given is that of President Bush. When American forces got complete control over Iraq, he was asked to pay all loans of Saddam regime. He totally rejected the idea. He called those loans as “Odious.” Such loans don’t deserve any payment. He refused to pay a single penny. The whole world accepted his logic. No one criticized him for default of all debt.
Is there not a similar case with Imran Khan? Why should he be reluctant to make such default of all previous International Monetary Fund (IMF) loans given to previous corrupt regimes? Are the loans inherited by Imran regime not as odious and illegitimate as those of the Saddam regime?
Was IMF blind to the fact that Zardari and Nawaz’s regimes were lining their own pockets much more than using this huge money entirely for the development of the country and to reduce poverty? Now they are facing National Accountability Bureau (NAB) and Court investigations for the crime of their assets being beyond means. Have the IMF loans not contributed for the enormous increase in their assets beyond means and even for a similar increase in the assets beyond means of some of their Ministers like Ishaq Dar, who is also now under investigation for the same crime? Was the IMF so gullible that it was not aware of all such crimes? In that case, it rightfully deserves such consequences for its ignorance and blindness to the glaring facts and realities of these corrupt regimes.
There is no logic in the argument that our countrymen who have not benefited from IMF loans should be responsible to pay them back to cover up the corruption of their past political leaders.
Not only these authors but other renowned Economists like the former Chief Economist and Vice President of World Bank, Noble Laureate, Chairman of President Clinton’s Council of Economic Advisors, Joseph Stiglitz has vehemently criticized and pinpointed hypocrisy, which he has observed closely and at first-hand, of the West and of its financial institutions like, IMF, World Bank and others, in his various books, articles and video talks. He has directly accused IMF of deliberately offering such ‘Odious’ and illegitimate loans with sinister designs. It will be clear from his following passage:
“The issue of the moral responsibility of the creditors was particularly apparent in the case of cold war loans. When the IMF and World Bank lent money to the Democratic Republic of Congo’s notorious ruler Mobutu, they knew (or should have known) that most of the money would not go to help that country’s poor people, but rather would be used to enrich Mobutu. It was money paid to ensure that this corrupt leader would keep his country aligned with the West. To many, it doesn’t seem fair for ordinary taxpayers in countries with corrupt governments to have to repay loans that were made to leaders who did not represent them.”
— Stiglitz in his book, “Globalization and its Discontents”
In the above passage, Stiglitz has revealed the sinister design of IMF that such ‘Odious’ loans were deliberately given by IMF to corrupt regimes to keep these countries aligned with the West.
IMF has deliberately given such loans to corrupt Zardari and Nawaz regimes to keep Pakistan aligned with the West. History shows that both these regimes were puppets of the West. These regimes have done their duty faithfully and have even hired lobbying firms in Washington to let them be counted in good books of all American governments.
IMF should go to them and ask for repayment. Why Imran Khan regime should be held responsible to pay what IMF has loaned to these corrupt regimes for its own selfish ends?
Stiglitz further advocates that any country which is heavily laden with debt should not be forced to pay it. The reasons may be corrupt governments or anything else. Such loans should be written off. Or such countries should default and declare bankruptcy without any scruples.
Economically, Stiglitz argues, such IMF loans with its accompanying policies make it impossible for them to pay back. As a matter of fact, a vicious circle takes place. He has given many examples of how IMF policies are responsible for making them unable to pay back loans. IMF policies push for Austerity measures. It compels loan-receiving countries to increase interest rates and taxes resulting in further increase in joblessness, devaluation of local currency and inflation. In Greece and many other countries, people demonstrated against IMF policies and revolted against them in Iceland. These enforced IMF policies further shrink economies of the loan-receiving countries. It thus creates an Economic Model, in which countries have to take new loans to pay back mainly the increasing Interest charges on previous loans. Loans go on multiplying themselves and the payback becomes more and more difficult, rather impossible. It also shows the wisdom of Quranic verses which bans all Interest on loans given to needy individuals or countries.
If they could not increase their own exports over their imports to generate sufficient foreign currency reserves to pay back loans after the 1st or 2nd loan from IMF, the increasing burden of new loans with more and more to pay mainly Interest charges, they will never be able to pay back these loans forever. Thus under this Economic Model, such countries can never stand on their own legs to be really able to pay back loans at any time in the future. There is no way to break such a vicious circle except to write off all such debts or such countries default on loans and declare bankruptcy.
Japan soon after its defeat in WWII had to declare bankruptcy. Argentine. Russia and several other countries had to do the same. Thereafter all of them revived their economies and some of them paid back their loans in small installments of their choice. Lynn Parramore indicates in her article that:
“Stiglitz warned that Germany, a major beneficiary of debt write-offs following WWII, had not learned the lesson of its own history. Officials are blind to the reality that debt forgiveness is necessary for Greece at a time when nearly everyone, including the International Monetary Fund (IMF), recognizes that the country simply can’t pay back what it owes. Instead of remembering the terrible consequences of mass unemployment following WWI, many Germans insist that it was hyperinflation that led to Hitler, and so they tend to support central bank policies that guard against that problem rather than the far more worrisome specter of joblessness.
As Stiglitz describes, the result of all this historical amnesia and economic blindness is a “Dickensian” nightmare that recalls 19th-century debtor’s prisons where people were punished for the inability to pay debts and locked (literally) into a situation in which paying them was, of course, impossible. Only now, the prisoner is an entire country.”
— “Joseph Stiglitz: “Deep-seatedly wrong” economic thinking is killing Greece” – by Lynn Parramore (The Institute for New Economic Thinking)