Workers' Liberty #58


Writing off Third World debt

Bob Geldof, Bono, the Pope, Bill Clinton, Gordon Brown, some bishops and Oxfam are going to save the Third World. Right?

By Cath Fletcher

To read the newspaper reports on the latest successes of the Jubilee 2000 campaign, which is calling on Western governments to cancel Third World debt for the millennium, you'd think so.

Even better, they're not just going to write off the debt. They're going to insist that the interest saved is invested in health and education, and under no circumstances spent on anything unpleasant - for example, Hawk jets or superguns.

Clinton has announced that he intends to waive the $5.7 billion debt owed to the US by 36 poor countries (provided Congress agrees; a neat political manoeuvre against the Republicans) under such conditions. The British Government, has pretty much agreed to follow the US. Although they are not (yet) writing off the full $354 billion which Jubilee 2000 estimates is owed to governments, private banks and the IMF/World Bank, they are heading in the right direction. It's a good thing.

Why are the IMF's capitalist bankers and a variety of bourgeois governments going along with this?

First, it must, to them, be good business sense. From their perspective, it's largely a paper accounting exercise. Far better to write off these debts, gain some public approval, then start again making money by investing in solid multinational businesses which can efficiently exploit workers in the countries in question.

Second, poverty and debt are a barrier to political stability. While, during the Cold War, countries in massive debt to the West provided a useful bulwark against the Stalinist empire, now that need has gone. Less debt means consumers with more money, expanding markets; buoyant economies help guard against political troubles.

But it would be a mistake to think that the Western governments are playing fair with the Third World. Take, for example, Africa's HIV/AIDS epidemic. The most effective anti-HIV drugs are hugely expensive. Cheap versions could be made locally, but the multinational drug companies own the patents. The great debt-relieving US government is backing the drug companies' legal moves to maintain their monopolies. A large amount of money saved by debt relief will flow straight back to the US into the pockets of the (legal) drug barons. And the same for agriculture, and civil engineering contracts, and the rest.

The governments have a way of making a big deal out of debt relief. Figures like $354 billion sound staggering. But let's put that figure in perspective: the three richest people in the USA are worth $130 billion. To the bankers this money isn't a big deal. To the people whose countries have been in hock to the international loan-sharks for years it is the difference between life and death.

So, one cheer for Bob, Bill, Gordon and the bishops, but let's not be taken in. Capitalism hasn't suddenly developed a conscience: it's just changing tactics.

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