Last Updated: Friday - 09/24/2010

More than slogans needed to reform world's economy

The English Churches Together have come up with a snappy slogan that has become the theme chant for 1999: "Let there be respect for the earth, peace for its people, love in our lives, delight in the good, forgiveness for past wrongs and from now on a new start."

It all sounds very good, and I am hopeful, but not optimistic. The message has been out there for a long time, but it has been by and large ignored.

There have been riots in Indonesia, demonstrations in Brazil, armed resistance in Mexico and explosions in Africa, louder than any chant, and still the financial institutions don't believe it is their responsibility to worry about the details how the debt is paid, as long as it is paid.

The figures don't lie. Fifteen years ago already, Brazil, Mexico, Argentina, Venezuela, Chile, Peru and Colombia had a combined debt of $300 billion. They paid 40 per cent of their export income on the interest alone. Since then the situation has worsened.

The recipe the International Monetary Fund has given these countries is to increase their exports and decrease their imports. This has resulted in a policy to use the best land for mono-culture cash crops for export to the North.

The consequence has been a massive exodus of displaced small farmers and peasants to the city and rising prices for basic foodstuff. Many Third World countries can no longer feed their own people, because they are feeding us.

They have also been told to become more competitive on the global market, with the drastic result that poor nations are engaged in a race to the bottom to offer lower prices for minerals and other raw commodities, cheaper wages and less environmental restrictions or government interference of any type.

That means cutbacks on health, education and social services and still there is no prospect that the debt will be paid.

None of the countries in question can finance economic development and pay off the debt at the same time. To avoid bankruptcy they turn in desperation to the very institution which is the cause of their problem to begin with and borrow more money to pay off the loans of yesteryear.

So now we have reached the historical and politically unjustifiable situation that more money flows from the poor South to the rich North in ever-increasing amounts. The total outstanding debt of developing countries stood at $62 billion US in 1970. It increased seven times in the next decade to $481 billion.

Since 1980 the debt to multinational institutions like the World Bank increased five times. In 1994, Nicaragua's debt repayment burden was 800 per cent of its gross domestic product.

In 1995 alone, severely indebted low-income countries paid $1 billion more to the IMF than they received. In 1996 the total debt of developing countries had mushroomed to $2 trillion, a 32 times increase since 1970.

You can see then that the looming economic crisis is hardly news and that the Asian meltdown should not have come as a surprise. As early as 1983, a man as hardnosed as Henry Kissinger, known for his unwavering defence of U.S. interests, admitted: "The industrial democracies have to face the truth. There is no possibility that the debt can be paid. Even interest payments have become politically unbearable."

He suggested therefore that we search for a political solution, rather than treating the crisis as merely a technical economic problem.

"A persistent refusal to accept these facts," he warned, "will result in a political confrontation between the main Latin American debtor countries and the U.S."

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