Third World Debt
I have felt an incredible amount of frustration with politics recently – the "war on terror" strikes me as a huge wasted opportunity. It is the most-used phrase of my day, and as many have pointed out – it is a war on an emotion! Instead of this Orwellian, fear-mongering, elusive fight against infinite enemies we could have had a war on something tangible like POVERTY! We could have used all the moral authority, ridiculous amounts of money and media focus to have combatted poverty. That would have been an almighty war. We could truly have changed the face of our planet, made a real difference and made the world better. We could have saved lives. Instead, we created more fear and hatred and misunderstanding than ever before.
But let us not believe that we can do nothing about poverty. It is the world's largest crisis, it's largest killer (as many bad things stem from poverty, like disease). We could start by cancelling third world debt, and giving real aid and advice to help countries improve themselves.
The Band Aid single, regardless of what you think of it musically, has brought this issue back into the mainstream. 2005 is a year of opportunity, and I will be wearing my 'Make Poverty History' band every day. That is my pledge. We can shake people out of apathy and regain some compassion for all those less fortunate that we share the world with. Below are some basic pieces of information about the debt problem that I have gathered from the following websites. Check them out for more info, or for any questions you have or to see what you can do-
World Development Movement
Jubilee Debt Campaign
Make Poverty History
A little background and the basics -
- 52 poor countries are in a debt crisis. Their combined total debt is $375 billion
- Every day Sub-Saharan Africa pays $27million to the rich world in debt service
- Many countries are forced to spend more on debt than on healthcare or education.
- Poverty kills 30,000 people every day
- Poor countries first got into debt in the 60s and 70s. They took out loans from banks, individual countries (including the UK) and groups of countries, through the International Monetary Fund (IMF) and the World Bank.
- The debt became unmanageable in the late 70s and early 80s when interest rates shot up, increasing the size of the debt. For many countries the interest was so great that they were left with more debt than they had started with, despite repayments.
- To make matters worse, the lenders attached demanding conditions to the indebted countries. For example, poor countries had to drastically reduce their spending on public services, including health and education. It is now widely accepted that many of these conditions were harmful to poor countries' economies and their people.
- The loans given by the IMF, World Bank and rich countries were often for goods, particularly arms, that benefitted the industries of rich nations
- As countries struggled to pay their debts the IMF and World Bank offered new loans to help pay back the old, this time with attatched conditions – for example, poor countries had to allow in foreign imports which wiped out many of their own young industries. Meanwhile rich countries put up devastating trade barriers that made it hard for poor countries to export their goods.
The Progress and Problems so far
The HIPC (Heavily Indebted Poor Countries) Initiative was set up in 1996 by the World Bank and the IMF, to reduce countries' debts.
In December 2000, the UK Government agreed to cancel the debt owed to the UK by 26 countries that have reached the first stage (known as decision-point) of the HIPC Initiative.
$36.3 billion (of $300 billion) of debt has been cancelled to date, through the Heavily Indebted Poor Countries (HIPC) Initiative. But 90% of the debt still remains.
The HIPC process does not get countries to a stable long-term position. It is not designed to cancel 100% of debts but to make debt repayments more manageable. Unfortunately even countries which have completed the HIPC process are still struggling to meet their debt repayments.
Demanding conditions, like cuts in health and education spending, are attached to the HIPC process. They are designed to protect the assets and interests of creditors rather than promote growth, poverty-reduction or stability.
The HIPC defines 'sustainable debt' as the level that allows a country to be milked for the maximum amount possible without it's economy collapsing. So poor countries could continue paying without seeing any reduction in poverty.
Poor countries are also indebted to banks, corporations and some individual countries, which are not being addressed because they are outside of the HIPC process.
The Vision and what should be done
If the debt is dropped, poor countries will have more money to spend on public services, including education and healthcare, as well as in infrastructure and equipment. Without this investment they will find it very hard to competitively trade in world markets. Debt cancellation and fairer trade go hand in hand.
100% of the unpayable debts of the world's poorest countries must be immediately written off, not least as an essential step towards eliminating poverty. However, rapid steps must also be taken to ensure that from now on a just and open procedure is in place, overseen by an impartial body, to resolve debt crises whilst preserving fundamental human rights.
Currently decision makers have vested financial, capitalist interests.
It would cost the UK only £1.3bn to unilaterally write off its share of the multilateral debt of the 42 HIPC countries. Spread over ten years, that is equivalent to less than £3 per person a year. Such a sum would scarcely affect the UK economy, yet would bring about immense benefits to people living in absolute poverty worldwide.
2005 is a big year. The UK is hosting the G8 summit in Scotland in July (the G8 being the world's 8 most economically powerful states – Canada, France, Germany, Italy, Japan, Russian Federation, UK and USA). Third World Debt is on the agenda. The UK is also holding presidency of the EU next year. The UK is leading an International Commission for Africa. The UK have made their committment clear to eliminate 100% of third world debt, but have not done enough in encouraging others to do the same or putting pressure on the IMF (International Monetary Fund) and World Bank. The UK can be a moral authority on this issue and lead by example. Lets make it happen!