“It’s not real transformation, just less inhumanity from the state“says the historian in an interview with The Day on some of the policies implemented by President AMLO and his government. Yet, from a financial point of view, “they remain in a neoliberal capitalist model with minor adaptations, but the logic is the same, and I find that worrying.”

Mexico could take steps to nationalize and socialize public services such as electricity, financial and production systems

The country misses the opportunity to use a historic possibility to act in a sovereign way, because with the high price of oil and the inter-imperialist contradiction – between Chinese, Russian and American capitalism – Mexico could take measures to nationalize and socialize public services such as electricity, its financing and production system.

Toussaint points out that despite threats from power companies, Mexico is in the best possible position to change its economic model and nationalize its resources”if he really wants to transform, otherwise he will continue as before”. This change involves putting a brake on the country’s development planning to meet the needs of its northern neighbor but also socializing the banks and the financial sector.

“Mexico has depended on the United States for two centuries. If there is no deeper transformation to achieve more independent, more sovereign and more autonomous growth, then there is no transformation», Specifies the CADTM spokesperson.

If there is no deeper transformation to achieve more independent, more sovereign and more autonomous growth, then there is no transformation

He adds that, in general, world economies are caught in a predicament that exposes the flaws of the neoliberal model imposed by the International Monetary Fund (IMF
IMF
International Monetary Fund
Together with the World Bank, the IMF was founded on the day the Bretton Woods agreements were signed. Its first mission was to support the new standard exchange rate system.

When the Bretton Woods system of fixed rates ended in 1971, the main function of the IMF became that of being both policeman and fireman of world capital: it acts as policeman when it applies its structural adjustment policies and as a firefighter when he intervenes. to help governments at risk of not repaying their debt.

As with the World Bank, a weighted voting system works: according to the amount paid as contribution by each member state. 85% of the votes are needed to modify the IMF Charter (meaning that the USA with 17.68% of the votes has a de facto right of veto on any change).

The institution is dominated by five countries: the United States (16.74%), Japan (6.23%), Germany (5.81%), France (4.29%) and the Kingdom United (4.29%) .
The other 183 member countries are divided into country-led groups. The most important (6.57% of the vote) is led by Belgium. The smallest group of countries (1.55% of the vote) is led by Gabon and includes African countries.

http://imf.org ) since in addition to more than twenty countries in partial default on the reimbursement of their debt, several others are close to default.

For example, Ukraine owes more than 15 billion dollars to the IMF, and since it cannot repay it because of the war, an agreement has been reached with the world Bank
world Bank
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The World Bank was founded within the framework of the new international monetary system set up in Bretton Woods in 1944. Its capital is made up of contributions from member states and loans on the international money markets. It has funded public and private projects in Third World and Eastern European countries.

It is made up of several closely associated institutions, including:

1. The International Bank for Reconstruction and Development (IBRD, 189 members in 2017), which grants loans in productive sectors such as agriculture or energy;

2. The International Development Association (IDA, 159 members in 1997), which grants long-term loans (35-40 years) to the least developed countries at very low interest rates (1%);

3. The International Finance Corporation (IFC), which provides both loan and equity financing to business enterprises in developing countries.

As Third World debt worsens, the World Bank (along with the IMF) tends to adopt a macroeconomic perspective. For example, it applies adjustment policies intended to balance the payments of heavily indebted countries. The World Bank advises countries that must undergo IMF therapy on issues such as reducing budget deficits, rounding up savings, bringing foreign investors within their borders or freedom of prices and exchange rates.

and the IMF for a new $8 billion loan so he can continue to repay.

“All the ingredients for a major crisis are in place, but a new debt crisis has yet to occur“, he warns. It depends on how the US and EU central banks react, and there will always be a risk of a massive flow of capital from the South to the North with several indebted economies being destabilized.

In this regard, it is necessary for countries to be less dependent on external and internal debt, which is possible thanks to fair tax policies that tax the richest and large transnational companies while ensuring that the financial sector is a public service and not a company. “It is essential to enable farmers to obtain loans at very low rates.interest rate
Interest rate
When A lends money to B, B repays the sum lent by A (the capital) together with an additional sum called interest, so that A has an interest in consenting to this financial transaction. Interest is determined by the interest rate, which can be high or low. To take a very simple example: if A borrows 100 million dollars for 10 years at a fixed interest rate of 5%, the first year he will repay one tenth of the capital initially borrowed (10 million dollars) plus 5% of the capital. owed, or $5 million, for a total of $15 million. In the second year, he will repay 10% of the principal borrowed again, but the 5% now only applies to the remaining $90 million still owed, or $4.5 million, for a total of $14.5 million. millions of dollars. And so on, until the tenth year when he will repay the last $10 million, plus 5% of the remaining $10 million, or $0.5 million, for a total of $10.5 million. Over 10 years, the total amount repaid will be $127.5 million. The repayment of the capital is generally not made in equal installments. In the first years, the repayment mainly concerns interest, and the proportion of capital repaid increases over the years. In this case, if the repayments are stopped, the outstanding capital is higher…

The nominal interest rate is the rate at which the loan is contracted. The real interest rate is the nominal rate less the rate of inflation. explains Toussaint.

Likewise, the energy must be socialized, “to make it work betternot only to give control to the state, butusers and society to supervise companies to avoid bureaucracy and projects that do not serve the population”. Even in the field of production, it is necessary to promote small units close to consumers to avoid waste.

Translated by CADTM