Page 5, 26th February 1993

26th February 1993
Page 5
Page 5, 26th February 1993 — A boomerang made of the debt owed by the world's poor

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Locations: Oxford


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A boomerang made of the debt owed by the world's poor

Paul Donovan asks whether the Third World debt crisis could rebound on the richer nations of the West

S MANY as 220 people gathered at the House of Commons last week for the launch of the Debt Boomerang Campaign. The subject was serious but the event gave cause for hope.

As Susan George, author of Debt Boomerang (the book on which the campaign is based), said the debt crisis is usually viewed "as a stuffy subject restricted to the financial pages of the newspapers". However, the Debt Boomerang Conference last October was three times oversubscribed and Monday's meeting was packed to overflowing. Most surprising is that so much of the support seems to be coming from youth: over 80 per cent of those at the House of Commons launch were under 25.

"Debt is not a crisis but a cancer, an infection growing on the body politic," was the opening remark of Susan George of the Transnational Institute of Amsterdam, 500,000 children die each year due to Third World Debt according to UNICEF. In the 108 months between 1982 (the hiatus of the debt crisis) and 1990 £8,000,million flowed from South to North. Yet despite these repayments, by 1992 the South was 66 per cent more indebted than in 1982.

This apparent injustice and suffering has stirred many groups and organisations in both North and South to appeal on humanitarian grounds for cancellation of debt. Some progress has been made. Britain initiated the Trinidad Terms involving the cancellation of two thirds of the debts of the 20 poorest countries, over three years,. However, the basic criteria and structures for financial management remain unchanged. The unique feature of the Debt Boomerang campaign is that it is based on enlightened self interest.

One boomerang of particular relevance to Britain, with unemployment at the three million mark, is that of jobs and markets lost in the North due to the South's debt crisis. Susan George refers in The Debt Boomerang to the transformation in Britain in the 19th and 20th centuries from agricultural to industrial capital: the 1980s saw industrial capital being displaced worldwide by finance capital.

When Ronald Reagan took office in 1980, the USA was the largest creditor nation, with a trade account surplus of £110 billion, by the time he left office in 1988 there was a deficit of £350 billion. The deficit was not purely due to the debt crisis but it did contribute. As a member of a US Congress Joint Economic Committee stated the Administration' s policies amounted to "telling the debtor nations that they must promise to continue paying interest and stop pturhasing US products." Foreign exchange earning from the 15 most indebted countries were almost $20 billion higher in 1990 than in the we debt crisis peak of 1981. Imports in 1990 amounted to $20 billion less than in 1981.

It was Adam Smith who said: if creditor countries (ie UK and US) do not export then "a part of the productive labour of the country must cease." So whilst debtor countries in the South follow IMF directives, to increase exports and reduce their imports, workers in Northern factories join the ranks of the unemployed. In a 1990 submission to the Senate Finance Committee. Stuart Tucker of the Washington DC Overseas Development Council, testified that US exports to developing countries "were £60 billion less than they would have been in the absence of debt and recession in the developing countries in the 1980s... due to these lost exports, we lost 1.8 million jobs well over one fifth of our current level of unemployment." The approximate cost in job terms is 30.000 jobs for every £1 billion of lost exports.

There is a correlation between the largest debtors which are also the world's major deforesters. As well as release of carbon dioxide due to deforestation, Susan George spoke of the rapid loss of biodiversity from the South. Referring to the North as "genetic pygmies" (in comparison to its Southern neighbours), Ms George related how the present rate of extinction of species was greater than at any time during or since the disappearance of the dinosaurs some 65 million years ago.

The strength of the Debt Boomerang Campaign is in the broad scope of interests, from both sides of the political spectrum, that can be united under the one umbrella of self interest. These groups include environmentalists, industrialists, people working on dnig related issues, refugee groups, Church groups, and the largest group of all, tax payers. The campaign aims to move towards development based on three criteria: popular participation in decisionmaking at every level, social equity and ecological prudence.

The challenge for Third World First, the campaign co-ordinators is to network support worldwide and so exert maximum pressure to achieve justice for the majority in both North and South.

For details of the Debt Boomerang Campaign contact: Third World First, Anti Poverty Action, Freepost, Oxford 0X4 DM Tel: 0865 245678.

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