The Crisis of Poverty and Debt in the Third World

Martin Dent, Bill Peters

• Publisher: Routledge
• Year: 2019
• Print ISBN: 9781138393028
• eBook ISBN: 9780429687440
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

First published in 1999, this volume, the first to be published in on Jubilee 2000, describes the plight of 52 of the poorest nations in the world and puts in detail the case for radical cancellation of past inert debt. The cost and benefit of this remission and the groundbreaking concordat of peoples and governments that could accompany it are examined in detail.

It contains critiques of the economic bases of the World Bank and IMF approaches to debt management in developing economies, as manifested in structural adjustment programmes and their maintenance, misuse of excess reserves and the methods used to carry out restructuring and development projects.

The British anti-slavery campaign saw a mobilisation of public opinion for a great cause. Using this as a source of inspiration, public opinion must again be mobilised for what amounts to the greatest opportunity for justice, compassion and forgiveness facing us all at the beginning of a new millennium.

1 The Problem of Debt and Poverty and a Practical Answer

A) The Present Situation of Contrast Between Rich and Poor States

Martin Dent

There is an intimate connection between the presence of absolute poverty which is abundantly visible in many low-income countries and that of unpayable sovereign debt. Debt is not the sole cause nor its removal a sufficient cause for recovery, but it is a great contributory factor of lasting poverty of low-income countries. Removal of the debt burden is a necessary cause of escape from poverty. This book describes the origin and development of the campaign for Jubilee 2000, which has already attracted massive support in this country and has encouraged the formation of autonomous Jubilee 2000 committees in 40 other countries.

It is elementary knowledge that there is in the world an immense contrast between the conditions of the poorer nations and those of the richer. The statement of the arithmetical contrasts between standards and consumption in developed countries and that in the poorer developing countries points to a totally excessive ratio, the richest 20% of countries in the world enjoy 84% of the income. The bottom 80% are left with only 16%. This is a ratio of difference of 20 to 1. If we measure the difference at the extremes, say for the top 10% and the bottom 50%, the ratio is over 50 to 1, a grotesque and unjust contrast. These figures may, perhaps, fail to enable the reader to realise the extent to which monies that could be used to meet the bare essential requirements for a decent standard of living m poorer countries are wasted on excess luxuries for richer people in the developed world.

The mere existence of this huge disparity in access to goods and services is an offence against justice. In past centuries, we could say that suffering in a far-off country was none of our business. Only if the juxtaposition was immediate, like that between Dives and Lazarus in the Biblical story, could the richer person be condemned for his failure to help the poorer person living at his gate. Now, however, we live in a global world, and therefore nations with a very substantially higher standard of living have an imperative duty to help poorer nations.

This contrast in standards of living is grotesque, it applies not only to Gross Domestic Product (GDP) per head, but also to welfare. The UNDP has prepared a human development index, which encompasses many factors other than income, such as access to education and quality of education, access to health facilities and medicines (free or at a price that ordinary people can afford to pay), numbers of people per doctor, per nurse and per hospital bed, health expenditure per head, percentage of population with access to safe water, percentage of population with access to sanitation, cleanliness of the streets, sewage disposal, life expectancy at birth, percentage of the population in absolute poverty (which is usually defined as income below $1 per head per day), and a number of other factors, as measured by the most important indicators. There is a close correlation between the results of these measurements and the overarching pattern is one of the existence of a group of some 50 countries, who are at the bottom of the scale. This is not because of any congenital deficiencies in their population, but because of the self-perpetuating cycle of deprivation.¹ There is a recurring pattern of inequality in uncontrolled economic relations. It is rightly described in the Biblical verse 'To him that hath shall be given and from him that hath not shall be taken away even that which he hath.' The bare statistics may conceal the extent of the actual suffering involved in terms of unnecessary sickness and pain, hunger and malnutrition and loss of educational opportunity.

A few countries, such as South Korea and Taiwan have moved across the gulf separating the poorer countries from the richer developed world, but in the present crisis are in some danger of falling back again. Some other countries have moved from the category of low-income countries to that of middle-income. This should not, however, make us believe that all low income countries can follow the same route through their own efforts. Their cycle of deprivation is increased and made permanent by the burden of the backlog of unpayable debt, which is not balanced by productive capacity springing from the expenditure in the past of the sums received on loan. The effect of this backlog of unpayable debt is to produce a lock, fastening low income countries into continued poverty as the UNDP Report, 'Overcoming Human Poverty' expresses it:

Despite recent debt relief initiatives, many of the poorest countries are still forced to direct funds to the richest ones repaying debts that should long ago have been cancelled. Debt burdened governments continue to lose scarce resources that could instead be used to fund the basic services that can serve as a launching pad and for poverty eradication.²

The task of enabling these countries to break loose from their chains of poverty and to achieve a state of sustainable development producing a decent level of prosperity is a large one. It requires specific actions and a great deal of imaginative input from countries in the developed world. It requires a great effort from the people and government of the country itself. The obstacles to liberation are as much psychological as material, though the psychological hindrances may well be, at bottom, a product of the physical deprivation.

B) The Historical Context and the Root of the Problem

Bill Peters

The post-war world's most salient division, already present before 1939, was between governments which broadly favoured a liberal, laissez-faire economic system and those which adopted the Marxist-Leninist line and the type of command economy it fostered. Initially this division was not demarcated throughout the worlds; many countries now recognised as belonging to the Third World were in the mid-forties still colonies of the metropolitan powers, Britain, France, Belgium, Holland, Spain, Portugal and the United States. The last was untypical; indeed one of Roosevelt's principal aims in the postwar settlement, clearly visible in his remarkable correspondence with Churchill about India (edited by Nicholas Mansergh in the vast survey 'The Transfer of Power') was the dissolution of the British Empire, and its associated Sterling Area. The time was ripe. Soldiers in the colonial armies which contributed to the Allied Victory, having seen the condition of people like themselves in other countries, were in no mood meekly to accept a return to the status quo ante bellum. Crucial steps towards India's self-government had already been taken in the inter-war years; the question in 1945 was not 'how much?' but 'when?' As members of the 'Indian National Army' who had followed the Japanese flag returned home and the 'Quit India' Movement gathered momentum, doubts in Westminster and Whitehall about too rapid a transfer of p...

Table of contents

• Cover
• Half Title
• Title
• Copyright
• Contents
• List of Tables
• Foreword
• Authors' Introduction
• 1 The Problem of Debt and Poverty and a Practical Answer
• 2 Genesis of Jubilee 2000 - the Beginning of a Debt Campaign under the Name and Pattern of Jubilee
• 3 The History of the Growth of the Jubilee 2000 Campaign
• 4 The Debt Situation of the 51 Low-Income Countries Whom it is our Task to Liberate from the Chains of Debt
• 5 Efforts Made So Far by the World Bank and the Paris Club to Deal with the Problem of Debt
• 6 The Boundaries and Criteria of Jubilee Remission
• 7 Conditionalities for Remission
• 8 Benefits and Costs of the Remission
• 9 Some Individual Case Studies
• 10 Non-economic Benefits from Cancellation, for Creditor as well as for Debtor Countries (Bill Peters)
• 11 Parallel of the Anti-Slavery Movement in the 19th Century
• 12 Tactical Considerations and Means of Implementing the Jubilee
• 13 Beyond the Year 2000
• 14 The Origin and Development of the Campaign for Debt Relief/Cancellation and the Critique of the IFIs, 1983-93
• 15 The Approach to Debt in Other Faiths
• 16 The International Spread of the Jubilee 2000 Campaign
• 17 WB Philosophies and Policies: the Unsoundness of the Theoretical Economic Base
• 18 Other Areas of Activity and Management Where the IFIs Fall Short
• 19 Conditions for Remission: Is a Grand Concordat Possible?
• 20 Reform of UN, Including Bretton Woods, Structures
• List of Appendices
• Bibliography
• Index