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Al-Ahram Weekly 11 - 17 March 1999 Issue No. 420 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 11 - 17 March 1999 Issue No. 420
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Focus Special Features Travel Sports People Time Out Chronicles Cartoons Letters Cancelling the
By Mohamed Sid-Ahmed
Third World debt
Tomorrow, a committee calling itself the Committee for the Cancellation of the Third World Debt will meet in Brussels to prepare for an international meeting on the issue, to be held in Paris on 24-26 June. The initiative aims at proposing a set of drastic measures, the cancelling of the Third World debt being the central element, with the objective of salvaging the world economy from its present acute crisis. This crisis first appeared in the ranks of the Asian tigers in 1997, then spread to East Europe and Latin America in 1998 and is now threatening to take still more critical dimensions in 1999 which many, only a few years ago, hoped would help prepare humankind's transition into the new century and the new millennium.
Public opinion began to shift in 1997 and 1998, in response to the failure of policies imposed by a combination of neo-liberal governments, domestic and foreign holders of capital and multilateral financial institutions. The facts gathered by the committee are horrifying. The third World's debt reached the staggering figure of two trillion dollars in 1997; more accurately, 1,950 billion. This figure does not include the debts of Eastern Europe. Because only $200 billion are repaid every year, the debt is increasing exponentially, with no hope that it can ever be settled.
The immediate causes for the present critical situation are: an increase in Third World countries' interest rates (which, incidentally, are now falling in the countries of the North); a fall in all types of foreign capital inflows; and a huge drop in export earnings, caused by the fall in the prices of most exports from the South and the East. There has been a rapid increase in the total debt owed by Asia, Eastern Europe (especially Russia) and Latin America. Short-term debt has increased, while new loans are harder to obtain and export earnings continue to fall. In relative terms, Africa has not been as hard hit by changes in the world situation: since 1980, loans and investments by private financial institutions in the North have been so dismally low that, with the exception of South Africa, the situation can hardly get any worse.
The chasm between the rising incomes of domestic holders of capital and those of working class households, which have seen a disastrous fall, is wider than at any time in the twentieth century. So skewed is the system that Brazilian capitalists and multinational corporations based in Brazil borrow dollars at 6 per cent interest in Wall Street and loan them to the Brazilian government at between 20 and 50 per cent!
Successful resistance to the neo-liberal offensive is no easy mater; but those engaged in the struggle have a number of points in their favour, including partial victories. The October 1998 decision of the French Socialist government of Lionel Jospin to withdraw from negotiations on the Multilateral Accord on Investments (MAI) came about in response to a broad campaign of opposition organised by an array of movements, trade unions and parties in France, the US, Canada and across Europe. To be sure, multinational corporations and the US government will again attempt to push through the MAI's objectives of total freedom of holders of capital. For the moment, though, they have suffered a significant reversal, proving that it is possible to roll back such government and corporate initiatives through campaigns and mobilisation.
Another sign of the changing times was the statement issued by the United Nations Conference on Trade and Development (UNCTAD) in September 1998 in favour of the right of countries to declare a moratorium on foreign-debt payments. In a press release on 28 August 1998, UNCTAD declared: "A country which is attacked can decide to declare a moratorium on debt-servicing payments in order to dissuade 'predators' and have some 'breathing room' within which to set out a debt restructuring plan... The decision to declare such a moratorium can be taken unilaterally by a country in the face of an attack on its currency." Of course, UNCTAD is a small player in comparison to the G7, the IMF, the World Bank and the World Trade Organisation (WTO). But this forthright defiance of the so-called inalienable rights of moneylenders reveals that governments in the South are finding it increasingly difficult to justify their support for globalisation based on a neo-liberal project.
According to the UNDP's 1998 report, a 4 per cent tax on the assets of the world's 225 wealthiest people would bring in 40 billion dollars. This is the modest sum that would have to be invested annually in 'social spending' worldwide over a period of ten years in order to provide: universal access to clean water, basic education, basic health, basic nutrition, proper sewage, universal access by women to basic gyneocological and obstetric care. The UNCTAD report compares this figure to some other types of spending which humankind could easily do without: in 1997, $17 billion were spent on pet food in the US and Europe; $50 billion on cigarettes in Europe; $105 billion on alcoholic drinks in Europe; $400 billion on drugs worldwide; $780 billion in military spending worldwide; one trillion dollars on advertising.
Other measures could be implemented such as: a tax on international financial transactions; an enquiry into the overseas holdings of wealthy citizens of the south, leading to the restitution of these holdings to the peoples of the countries to which they belong whenever they prove to be the result of theft and embezzlement; land reform providing universal access to land for small farmers and peasants; measures favouring equality between men and women. Such measures could be insufficient, but they can be a first step towards satisfying basic human needs in the right direction.
What is astonishing is that demonstrations in defense of such measures are widespread in the developed world and not in the Third World. In the Arab world, despite the unprecedented drop in oil prices since the oil boom in the seventies, encouragement of such movements and participation in them remain minimal. Has the time not come for massive action in this direction?
