In the United States of America, an individual or family can make a declaration of bankrupcy. For these people, being bankrupt means they have reached the limit of their debts. They cannot be further indebted. A bottom line exists stopping these people from owing even more money. This line does not exist for entire nations. If a country is in debt, regardless of how much in debt it is, it can continue to plummet further into debt from additional loans and interest on these and previous loans.
An overwhelmingly large amount of third world countries, mostly located in Africa, South America and southern Asia are currently in crippling economic debt to the banks of the Western nations (the more powerful countries in North America and Europe). Everyday the people of these third world nations suffer greatly from the debts their governments are in. Unable to spend the money these governments earn on such basic needs for their people as healthcare, education, and food for the poor (of which most of these countries' citizens are) until their national debts are clear, the people of these countries either continue to live largely unemployed in sickness and starvation or die as a result of those living conditions.
So why don't these governments hold off on repaying their debts and save their people? Under international laws they cannot. Loans from the World Bank and International Monetary Fund, whose purpose is to help these countries pay off their previous national debts, came with strict regulations on how the money must be spent. In short, it must be spent paying off the countries' debts and nothing else.
An organisation known as Jubilee 2000 has committed itself to convincing the world's most powerful nations to cancel the debts of the world's poorest nations. These countries are in extreme debt and cannot support their own people as a result. Jubilee 2000 would not stop future debt for any country from occuring but simply provide a new economic start for those countries that need it most. While these countries remain in debt, their people will suffer greatly. Many of these countries, despite aid from some of these powerful nations that they owe money to, are not repaying their debts faster than the debts increase from the interest that has built up and still continues to build and from the additional loans made to help pay that interest. To add to that, the additional loans made to help pay off interest from prior loans build up interest themselves.
How could the people of these indebted nations and their governments allow themselves to fall into this hole? As cliché as it sounds, it began in the sixties. In the 1960s, interest rates in Western banks reached very low levels. Seizing the opportunity to borrow money without having to worry much about the interest, many third world countries were loaned money by these banks. In an attempt to further increase the money these countries had they began to produce only products that could be exported to the more powerful Western nations that were in high demand. Bad government policies and corrupt politicians in these countries are largely responsible for the mispending of the money the third world countries had gained. Over time, the money which was intended to be spent on improving these countries disappeared into national plans that ended in failure and the private funds of corrupt officials. To add to this, since so many countries were now producing the same products for the West, the value of those products dropped taking the national income of the countries producing them with it.
In the mid·1970s, interest rates began to rise again. The third world countries already economically weakened had to borrow even more money just to pay off the interest that their previous loans had produced. When Mexico told those nations and banks it owed money to that it was unable to pay off its debts in 1982, the World Bank and the International Monetary Fund (IMF) gave Mexico new loans to pay off its previous loans and the interest they carried. These new loans came with strict rules and conditions about their usage know as Structural Adjustment Programmes (SAPs). Following Mexico, most third world nations up to their ears in debt made similar statements and also received loans from the World Bank and IMF. These loans came with SAPs as well.
Very few countries were aided by the SAPs. Usually the SAPs would require that the third world governments spend the new loans only on repaying their debts. This meant that these already poverty·striken countries were required to further cut back on healthcare, education, government jobs and wages, and food for the poor. The value of each third world countries' currency dropped, lowering the earnings from exportation and increasing the cost of imports. Many public industries were converted to private industries and fell into the hands of foreign investors. The SAPs also required that the governments take over small farms to create a large farming system producing only what exports could bring the country income, leaving the previous farmers with no land to farm for their own food as well as no job.
The goal of SAPs was to concentrate on increasing product exportation and decreasing imports to increase the gross national income of each indebted nation, thereby gradually allowing the governments to finally repay their debts. In most countries however, the SAPs failed to achieve this goal. While the government was limited to spending its money in ways set by the SAPs, the people of these countries fell ill to unsanitary living environments (unable to be cleaned up by the government due to insufficient funds) and inadequate food supplies.
The sucessful music festival Live Aid produced two hundred million American dollars for indebted countries to use to help reduce their debts. When combined, the indebted countries in Africa spend that much on debt repayments in just one week. Every year millions die in these poverty·struck countries and still more live on in poverty with no greater a chance at survival. Jubilee 2000, which is backed by a plethora of celebrities ranging from musicians such as Bono of U2 to religious leaders such as the Pope and the Dalai Lama, has been striving to convince the world's most powerful nations (who control the World Bank and IMF) to cancel the debts that these countries owe, giving them a fresh beginning, by the end of the year 2000. It seems obvious that these countries will have learned from the mistakes of their past (and hopefully organisations such as the World Bank will as well) and not allow the same mistakes to happen again. Most importantly, with their debts cleared, the struggling third world countries will be able to save and improve the lives of their own people. There is no excuse for the death of millions.
Anyone can help. An online petition can be signed by sending an e·mail to G7leaders@dropthedebt.org with the subject of "Drop the Debt Now" (nothing else is required). Doing this will show your support for dropping these countries' debts to the leaders of the world's seven richest countries. As of the time of this writing (11 July, 2000), the petition has already received approximately seventeen million e·signatures of this sort. An additional four million is required to put these seven leaders into action. On 21 July, 2000, these leaders will meet in a summit meeting to discuss many issues facing them. Among those issues will be the cancellation of third world debt. The United Kingdom and United States have already cancelled the debts owed to them by many of these countries, but other rich nations haven't and some third world countries still owe money to the UK and US. US President Clinton has promised full debt cancellation on the part of the US by the end of year but without a show of support, who's to know if he'll really follow through on this promise?
For further information about this situation and what else you can do to help, check out the following websites: http://www.jubilee2000uk.org and http://www.dropthedebt.org. |
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