Tobin tax & indebtedness: a view from Brazil


Jan Slakov

Date: Wed, 30 Sep 1998 01:44:53 -0300
From: •••@••.••• (R.Magellan)
Subject: Tobin tax and indebtedness

   Dear members of the RN list:

I am writing a book whose title is "Economic Globalization and Law".  One of 
its chapters will deal with the Tobin Tax proposal.   I have been amassing  
research material on this issue and I could send a copy at the request of 
anyone.  It is bulky and a good part of it is written in English.  A good 
source of reasearch on both the Tobin tax and MAI is found in the Attac 
site, but it is written mainly in French.

I won't bother you with some of the legal technicalities about Tobin tax. 
Nevertheless, IMHO they are enough to wipe out this fair idea, unless the 
countries involved either build an effective supranational tax authority or 
frame it in the United Nations structure.  In this latter case the UN should 
be empowered with the effective enforceability that it has lacked since its 
very inception.   

Do these alternatives seem rather utopian?  Yes, they are, since both of 
them will necessarily require a very efficient inspection power that even 
the most advanced countries lack today.  In either case, these alternatives 
would pave the way for a formal world government.  I am for it, I think it 
is an historical imperative and an urgent rational necessity, but in the 
present perspective anything like it would rather be a reconstruction of the 
former colonial empires.  A democratic and progressive globalization must be 
structured by the roots, i.e., by internationally organized people, neither 
by TNCs nor crony  (or even crooky !) professional politicians and state 

There are enormous practical difficulties to implement the Tobin tax.   In 
order to evade current taxes and to overcome exchange controls, the 
financial system, both at international and national levels, is able to 
develop very complicated and fraudulent operations which spread throughout 
many countries with the help of  custom-built  unfriendly softwares  (better 
saying: very amicable ones to the rich....). These operations are seldom 
traceable in their whole extensions and consequences by the authorities even 
when there is an international joint coöperation.  Auditors know them better 
but they also often get lost in the maze.  

Furthermore, experience shows that tax loopholes (or lax rules), both 
explicit and implicit, are always present in the making of a set of rules. 
Tax planning  (or legal tax avoidance) would certainly be widely used as it 
is used nowadays to cope with domestic legislations.

So, Richard Moore has a good reason to say about the Tobin tax proposal:  
"But if the US supports it, then you know it's a trap."  The present French 
government supports it   (or is it just paying lip service?)   Anyhow, it 
will be a trap up to the day that the people of US  realize that TNC 
capitalism  (transnational corporations) is doomed to collapse someday with 
the general expropriation of every worker on this small and ravaged planet 
and with the unavoidable technological unemployment.  Maybe Mother Nature 
will shut it off before the world economic disorder does, and in this case 
menacing the very survival of humankind.

Richard is also right when he says about debt forgiviness, a theme akin to 
the Tobin tax proposal:  "it is a sham.  Instead of forgiveness, what is 
being proposed is the rewriting of short-term debt into long-term debt, so 
that more short-term loans can be made.  And to secure the long-term debt, 
it is proposed that national oil fields and other assets be signed over to 
IMF lenders."   An exception among the promoters of this proposal may be 
found in the Roman Catholic Church:  it has been campaigning for the 
complete write off of the debts of the poorer nations, what bears the same 
effects of an outright revolutionary confiscation.  Another utopian 
alternative?   Yes, it will remain so until the day that  Shylock   --the 
financial capital international network---   is smashed all over the world.  
 It may happen when humankind becomes conscious that financial capital has 
definitely become a socially useless and dangerous parasite.

Even so, what is meant by the expression  "poorer nations"?   It is always 
referred to as a reduced group of small nations so poor and backward that no 
one can expect them to pay their debts in any circumstances.  Would this 
"generous" forgiviness be extended to big borrowers with large industrial 
infrastructures as Brazil, Korea, Mexico or Russia?  Of course not, although 
the people of these countries suffer a lot from the very harsh terms of the 
SAPs  (structural adjustement programs) imposed by IMF and G7 governments in 
order to service their debts.

I would like to draw attention to an important feature of international 
indebtedness that is seldom disclosed by the media. A good part of the 
debts, even the most part of them, are juridically not public debts but 
rather private ones, including debts of the local TNC affiliated companies 
and debts arising out from pure international financial speculation!   So, 
to say that nation A or Z owes US$ X billion is not correct.  It must be 
said, for instance, that local banks  (both national and foreign ones) owe 
35%, local corporations owe 15%, TNC branches and subsidiaries 30% and the 
national government the remaining 20%.   National governments, however, are 
generally held liable for the whole amount, either politically or 
juridically, as a guarantee of repayment.    

As a last observation, it is not the ability to repay debts that is at stake 
in all these never ending crises, but the ability to pay increased interest 
on them.  To the lender, the best loan is that which is never paid but that 
which bears an ever-increasing flow of continuous payments.

Best regards,  C. Roberto.


PS from Jan: We of CDR first "met" César Roberto when he enthusiastically
translated the manifesto we were sending out into both Spanish and
Portugese, the first translations we had! As you will see from the above
message, this guy not only masters several languages handily, he also knows
a lot (and not just about the Tobin tax, incidentally). Unfortunately, now
and then we lose contact with him, most recently for over a month when his
computer crashed (with a loss of several messages destined for us as well).
Brazil has been hit hard with financial turmoil; like many people, César
Roberto can barely make ends meet. So getting his computer fixed, was, I am
sure, no easy task.

I just couldn't send this message out without sending César Roberto a warm
"welcome back" from all of us! 

another PS: 
Besides sending us translations and so on, now and then César Roberto urges
us to write letters on behalf of political prisoners. As a long-time Amnesty
International member, I know these appeals make a difference.

Here's one for some students in Nigeria (whose govt. is notorious for
executing Ken Saro-Wiwa and othes on trumped up charges):

Date: Tue, 29 Sep 1998 14:03:15 -0300
From: •••@••.••• (R.Magellan)
Nigerian Defence Committee, 
PO Box 6977, London N1 3 JN

25th September 1998


On Saturday, 12th September 1998, at the opening ceremony of the NUGA games 
(University games) students from various campuses converged peacefully on 
the University of Lagos to protest against the continuing victimisation of 
student activists (expulsions and suspensions from courses). They were also 
protesting against the imposition of fees.

Present at the games was the Chief of General Staff, Rear Admiral Mike 
Akhigbe. He is the second in command to Abubakar himself. He personally 
ordered the arrest of three students, Yemisi Ilesanmi (Obafemi Awolowo 
University, OAU), Ponle Oloyede (president UNILAG students' union), and 
Sowore Omoyele (former president UNILAG students' union). While trying to 
seek their release two others were arrested the second day, Saint Omotaje 
Jericho the NANS zone D co-ordinator and Kehinde the Vice President of the 
UNILAG students' union.

Ponle Oloyede and Kehinde were later released. But the others are still in 
custody (that is the latest news we have today, 25th September) at the 
notorious State Investigation and intelligence Bureau, SIIB, headquarters at 
Panti. When they were arrested on Saturday they were first taken to the 
Special Anti-Robbery Squad headquarters where they were harassed and beaten 
and kept with criminals who further dealt with them. 

The regime is already getting embarrassed with the case and the Chief of 
General Staff, Rear Admiral Mike Akhigbe, announced on television that the 
students had been released. This is not true, but it shows that the regime 
is embarrassed. It is trying to portray a ³liberal² image, hoping to get 
more aid from the West.

Only by giving this question the biggest amount of publicity possible will 
it be possible to pressurise the regime into releasing these students.

The studentes were taken to court on Friday 18th September and the hearing 
of the case comes up again this Friday (25.9.98). Taking them to court is 
actually an attempt by the state to save their face and to hold them for a 
longer time, as they will always adjourn the case.The regime is starting a 
staged trial. The reason they want to delay their release is because they 
played leading roles in the protest.


As many letters from organisations and individuals are essential. We are 
listing below the e-mail addresses and fax numbers of some Nigerian 
newspapers you can write to and direct letters to:

See below for addresses of embassies/high commissions.

THE GUARDIAN   •••@••.•••    and fax: ++ 234 1 4528522
VANGUARD   •••@••.•••  or  •••@••.••• 
THE PUNCH   •••@••.•••    and fax: ++ 234 1 4920205, 4972816
CONCORD   fax: ++ 234 1 4960095
THIS DAY   •••@••.•••    and fax:  ++ 234 1 4937779   
THE POST EXPRESS   •••@••.•••    and fax: ++ 234 1 5453436

The press in Nigeria is giving the regime support now, at least some of  
them, but they are all trying to flash their new acquired Internet 
facilities, so they may print Letters to the Editor coming from outside the 
country to boost their ego.

Copies of the messages should be sent to: •••@••.•••


In Britain we are launching a ŒNigerian Legal Defence Fund¹ to help the 
legal costs, etc., of those detained. They will be incurring legal costs 
when put on trial, and while they are in prison they also need some money. 
The campaign in Nigeria itself also needs financial help badly. These people 
are in dire straits as far as money is concerned and they need every penny 
we can raise in Britain.

We are appealing for donations from individuals and labour movement bodies. 
Cheques should be made payable to the ŒNigerian Legal Defence Fund¹ and sent 
to PO Box 6977, London N1 3JN.
The following is a note smuggled out of the detention centre:

³Cell 2,

I appreciate the efforts you are making outside. This regime must be put to 
shame, people must be made to understand that a military regime will always 
be a military regime, an aberration, whether it be an Abacha or an Abubakar 
regime. It must not be trusted. The DPP (department of public prosecution) 
and some commissioners that the students went to see on our behalf asked 
them if I am mad or smoke Igbo (Indian hemp), they feel that is the thing 
that could have given me the audacity to challenge Akhigbe and his cohorts 
to their faces. They have forgotten that I have Justice by my side and I 
shall not be cowed, broken, or intimidated, they can arrest and imprison the 
physical body but they cannot do the same to the spirit.

The stupid goats have already started the Omole'(OAU Vice chancellor)  
trend, saying we should write a letter of apology to them before we are 
released. Well I have told them that I'd rather die in detention than 
apologise to the bastards, I wish I was there to tell them to their faces.

This regime has already laid the foundation for its defeat and we use their 
disadvantage to our advantage. Agitation must continue and it must be 
intensified. I intend to sue the CGS, CP and others for assault and battery, 
attempted murder, defamation of character, sexual harassment, public 
disgrace and embarrassment. Their brutality on me was filmed by some media 
houses, Channels, AIT, DBN, TNT had a good picture of it on the front page 
of one of its editions. Please try to get those things, they are vital 
evidence against this regime. And try to put things in motion through a 
lawyer. I promised Akhigbe to his face that I will fine him and I intend to 
carry out that promise. We will discuss better when we meet. We shall 
overcome. Yours truly.

Yemisi Ilesanmi²

Here follow the addresses of some of the Nigerian embassies:

Nigerian High Commission
27 State Circle , Box 241, Civic Square
ACT 2208, Canberra

Embassy of Nigeria
Rennweg 25, A-1030
P.O. Box 262, 1031
Telex: 047-11583

Embassy of Nigeria
Avenue de Tervuren 3B, 1040 Brussels
Tel: 735.40.71, 735.40.72

Nigerian High Commission
295 Metcalfe St.
Ottawa, ON
K2P 1R9
Tel: (613) 236-0521, -0522, -0523 

DENMARK (This Embassy also serves the following countries SWEDEN, Finland & 
Embassy of Nigeria
Box 628, 11427 Stockholm, Sweden
Tel: 08/246390 (6 lines) 

Embassy of Nigeria
173 Avenue Victor Hugo, Paris 16E
Tel: 704-68-65, 704-68-66, 704-68-68 

Embassy of Nigeria
53 Boom-Bad
Godesberg, Goldbergwang 13, Bonn
Tel: 322071, 322075 

Embassy of Nigeria
Via Orazio 14 00193, Rome
Tel: 380341-44 
Telex: 610666

Embassy of Nigeria
Box 22465, 22466

Embassy of Nigeria
Avenue Frei Miguel
Contreiras 54A 10, Lisbon

Embassy of Nigeria
UL. Kachalovia 13, Moscow
Tel: 290-37 85

Embassy of Nigeria
Terra de Madrid Pits, 16 Apto
1 Plaza de Ispana 18, Madrid

Nigerian High Commission
9 Northumberland Avenue
London WC2N 5BX
Tel: 01-839 1244 

Embassy of Nigeria
1333 16th Street, NW
Washington, DC 20003
Consulate-General of Nigeria
575 Lexington Ave., New York, NY 10022
Consulate-General Of Nigeria
828 Second Ave, New York, N.Y. 10017
Tel: 212-808-0301