Last Updated: Friday - 09/24/2010

Unjust debt burden is unsustainable

We're waiting with bated breath. The Jubilee 2000 campaign has been called the largest world-wide petition ever.

Millions of ordinary people around the globe are demanding a new relationship between rich and poor, beginning with a cancellation of the external debt of countries burdened with high levels of poverty and environmental destruction.

Three billion of the world's poorest people live in countries which have gone bankrupt because of unpayable debts to foreign governments, banks and international financial institutions. By 1997 the odious debt exceeded $2 trillion. Since then the economic crisis in Russia, Asia and Brazil has added several hundred billions to the bill.

About $500 billion, almost a quarter of all Third World debt, according to the jubilee organizers, is from loans given to prop up dictators in 25 countries. Banks such as Citicorp authorized bad loans in order to "access the marketplace."

Loan officers, barely out of college, roamed the globe to peddle a glut of dollars accumulated after OPEC countries increased their price for a barrel of oil.

Unsound loans to private corporations required the perfunctory guarantee of some corrupt government department. The theory was that governments don't default, and dictatorial governments can pass on the debt to the general population without the formality of democratic consensus.

Creditors liked it that way, because it gave them enormous control over indebted countries. The institutions that in fact dictated the domestic and foreign policies in a growing number of countries in the last 20 years, were the International Monetary Fund, World Bank and other international lending institutions founded in the mid-1940s to stabilize the global economy and prevent the rebirth of fascism.

Ironically, the opposite of these noble objectives has occurred. "The control on the individual by the money system has become the worst tyranny," say the Latin American bishops.

The aim of the lenders is not to help the poor get back on their feet but to ensure that the loans are repaid with interest.

The way this is done is to lend more money to pay off old debts, to impose structural adjustment programs which demand that the poorest sectors tighten their belts even more, to increase exports at the expense of production for local consumption, to downsize health and education budgets, to devaluate the currency and to basically keep the country beholden forever.

The pope has called the current debt structure a form of "macro-usury." Meanwhile the banks, including the IMF, have raked in record profits.

This gross injustice, argue the jubilee organizers, cannot go on indefinitely. It is unsustainable. The people who are expected to pay through severe austerity programs never benefitted from the loans in the first place.

A new covenant has to be drawn up which includes the full participation of the civil sector, the poor themselves. Banks have to accept responsibility for the bad loans they wittingly undersign.

Risk-taking investors should live up to their name and not expect handsome returns guaranteed by starving populations. Currency speculation needs to be taxed. New loans should only be made on the condition that the lending country improve the living conditions of the poor.

A sound economy should provide a fair share of the wealth to every member of the "household." The opposite is now taking place and it should not continue.

This week leaders of the G7 meet in Cologne, Germany. Will they hear the cries of the people and set them free? Add your voice and write your MP.

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