NEW YORK, March 29 (IPS) – Nobel laureates Joseph Stiglitz, Juan Somavia, Geoffrey Sachs, Jose Antonio Ocampo and more than 100 high-profile development experts have issued a statement protesting insurers suing Argentina and Bolivia over their failed pension cancellations. Privatization in closed sessions of the World Bank’s International Center for Settlement of Investment Disputes (ICSID). If Argentina and Bolivia lose the quarrels, it means that poor citizens and elderly retirees will have to compensate the wealthy financial firms. Read their message:
We, the undersigned – economists, social security and development experts – strongly condemn and oppose the cases:
Private insurers are suing Argentina and Bolivia for potential loss of profits from reversing the privatization of pension programs.
Financial firms began administering pensions for Argentines in 1993 and Bolivians in 1996. Argentina and Bolivia are among only 30 countries (out of 192 countries in the world) that have experimented with privatizing their pension systems. Today, the majority of these countries are Reverse the path of pension privatization. Accordingly, the Argentine government reverted to the public pension system in 2008 and Bolivia in 2009.
The pension policy is not about profit insurance for private insurers. Pensions systems are in place to provide income insurance in old age – to ensure that older people retire with appropriate pensions.
It is the duty of the governments of Argentina and Bolivia to ensure the best welfare for their citizens. In 2008-2009, this included the reinstatement of the public pension system. They did not act alone. Other governments It also reversed the privatization of pensions due to deficiencies / failures demonstrated in the private pension system:
- Coverage rates have decreased or remained stagnant under private pension systems.1
- The pension benefits have deteriorated, making private pensions very unpopular.2
- Poverty of the elderly is exacerbated by lower pensions.
- Increasing gender and income inequality.3
- Private regulations were expensive: the high costs of moving to privatization created significant financial pressures.4
- Private pension managers incurred huge administrative costs and made huge profits through these extraordinary management fees.5
- Financial and demographic risks have been transferred to individuals; Retirees have had to suffer lost benefits when these risks arise, as they did during the global financial crisis.
- Social dialogue has seriously deteriorated.
The governments of Argentina and Bolivia have made legitimate decisions in the interest of their citizens that must be respected as part of any country’s sovereignty. It is reprehensible that investment treaty arbitration allows companies to begin settling disputes against governments – and ultimately people – in order to continue making profits.
We also oppose the lack of transparency of the process at the International Center for Settlement of Investment Disputes (ICSID) of the World Bank. While companies may argue that procedural protections are necessary, these issues affect the lives of millions of Argentines and Bolivians. It should be open and transparent.
If Argentina and Bolivia lose the disputes, it means that their citizens – ordinary people who have suffered from low pensions due to privatization – will now have to pay millions of dollars to the wealthy financial firms.
These legal issues should be a warning to the majority of countries in the world that have not privatized mandatory pensions but may have pressure to do so: On top of your suffering from lower pensions, increasing old age poverty, and rising financial costs, they are being sued by private insurance officials. We hope that other countries will be discouraged from privatizing pensions through a corporate attack on the government’s right to establish a policy to promote the welfare of its citizens, an attack carried out for the sake of profit and at the expense of poor citizens and elderly retirees.
1 In Argentina, coverage rates for men decreased from 46% (in 1993, before the reform) to 35% (in 2002) and for women to only 31%; In Bolivia, they were in recession.
2 In Bolivia, after privatization, the replacement rate has decreased to 20% of the average salary on the job; This is well below the international standards of the International Labor Organization.
3 In Bolivia, the proportion of elderly women receiving a contributory pension decreased from 23.7 per cent in 1995 to 12.8 per cent in 2007 as a result of privatization.
4 In Argentina, initial estimates put the cost at 0.2% of GDP; Later, the World Bank raised its cost estimate to 3.6% of GDP, 18 times the original estimate; In Bolivia, the actual transition costs of the reform were 2.5 times the initial projection.
5 In Argentina, management costs jumped from 6.6% of contributions in 1990 before privatization to 50.8% in 2002; In Bolivia, from 8.6% in 1992 to 18.1% in 2002 after privatization.
This letter was signed by over 100 high-ranking economists and social security / development experts. See the full list of the two sites Here.
© Inter Press Service (2021) – All rights reservedOriginal source: Inter Press Service