Resisting Repayment

RIO DE JANEIRO, Brazil - In the last five years there has been remarkably little organized popular opposition to repaying the debt. Now the economic hardships that the debt creates may be unifying Latin American labor unions that contend that their countries' debt burden is too heavy for their workers to bear.

In May of 1987, representatives of 56 labor unions from 25 Latin American countries met for three days in Campinas, Brazil to discuss the debt crisis. Sponsored by CUT, one of Brazil's largest workers' congresses, the conference was the first of its kind. While it is still too early to tell what the ramifications of this conference will be, this much is clear: if the unions can mobilize additional support for their position that servicing the debt shouldn't come at the cost of peoples' economic well-being, the politics of debt renegotiation in Latin America could become considerably more difficult and complex.

Union opposition to the government's handling of the debt crisis, which now stands at about $110 billion, began to grow in the fall of 1986 after suspension of the Cruzado plan, which temporarily halted high levels of inflation by freezing prices and wages. "The Cruzado plan glossed over the debt problem through the elections of November 1986," says Sergio Ferreira, an analyst for the Rio-based Brazilian Institute of Social and Economic Studies (IBASE), an information clearinghouse and research center. "It soon became clear to the workers that the Cruzado plan was suspended because of debt renegotiation talks."

Ferreira says the CUT talk provided a timely opportunity to protest the policies of the IMF. "The IMF fostered a sense of nationalism among the workers," said Ferreira. "The labor unions decided that if there were an international banking system, then there should also be an international labor system. The issues are the same for both."

The cover of the conference report sums up the unions' conclusion about the debt. It depicts three workers painting a large "X" over the words "External Debt." One worker says, "We didn't make the debt." Another adds, "We can't pay the debt." The third says, "We don't want to pay the debt!"

At the close of the conference, the unions published a list of 19 resolutions and conclusions, which included declaring 1988 the "International Year of the Fight Against Repayment of the External Debt." The union members also resolved: to return to their home countries and organize workers against automatic debt repayment; to sustain debate about repayment of the debt; to heighten public awareness of the debt; and to work to "censure governments that persist in a policy of submission toward the IMF and other international creditors who violate the sovereignty of our countries." The unions agreed to support candidates opposed to repaying the debt, but CUT's more radical proposal, a one-day strike throughout Latin America and the Caribbean, was not adopted by the delegates.

Experts are divided about the significance of the CUT conference. One ex-government official downplayed the conference's importance: "It's a political move by CUT, which is a radical branch of the labor unions. It's true that there are mixed feelings among the public about the debt, but most people believe that our commitments should be honored."

Dionisio Carneiro, an economist at the Catholic University of Rio and an expert on Brazil's external debt, is not as quick to dismiss the gathering. He says that CUT's conference may not be a sign of increased "popular sentiment against repaying the debt. But it is a fact," he says, "that the debt is becoming more political. It certainly is an issue that is going to be up for grabs for a political party."

It is still too soon to predict the unions' role in the increasingly popular political debate about debt repayment. But the recent success in Argentina's September elections of the Peronists, who draw much of their support from labor unions and who oppose repaying all of Argentina's $51 billion debt, indicates that time may be running out for governments that are trying to repay their debts in full. The harsh austerity measures required for repayment may mobilize so much popular opposition, especially among unions, that Latin American governments may begin to seek forgiveness for a portion of their debts or to default on a portion of their loans.

-J.C.