#third world debt

[indizombie]

In the 1960s, Fidel railed against imperialism and colonialism in the United Nations, supported revolutionary movements in Latin America, Africa and elsewhere, and hosted the Tricontinental Conference to coordinate anti-imperialist forces internationally. From the 1970s Fidel sent the first of some 400,000 Cubans to defend Angola from the colonial aspirations of apartheid South African. In the 1980s Fidel condemned third world debt as unpayable. In the 1990s he denounced the devastating human costs of neoliberalism and warned the world about the ecological crisis which threatened humanity and the planet. In the 2000s he opened the doors of the Latin American School of Medicine (set up in 1999) to poor students from Africa, Asia and elsewhere, so that they too could study for free and return to serve their poor communities, and the Battle of Ideas he led showed what could be achieved in the field of culture and education.

Dr. Helen Yaffe, 'Comandante Fidel: Combatant to the End', teleSUR

[anarkittyy]

“But what was your position?” the lawyer asked. “About the IMF? We wanted to abolish it.” “No, I mean, about the Third World debt.” “Oh, we wanted to abolish that too. ... The

more long-term aim was debt amnesty. Something along the lines of the biblical Jubilee. As far as we were concerned,” I told her, “thirty years of money flowing from the poorest coun- tries to the richest was quite enough.”

“But,” she objected, as if this were self-evident, “they’d borrowed the money! Surely one has to pay one’s debts.”

...

Where to start? I could have begun by explaining how these loans had originally been taken out by unelected dictators who placed most of it directly in their Swiss bank accounts, and ask her to con- template the justice of insisting that the lenders be repaid, not by the dictator, or even by his cronies, but by literally taking food from the mouths of hungry children. Or to think about how many of these poor countries had actually already paid back what they’d borrowed three or four times now, but that through the miracle of compound interest, it still hadn’t made a signifi- cant dent in the principal. I could also observe that there was a difference between refinancing loans, and demanding that in order to obtain refinancing, countries have to follow some ortho- dox free-market economic policy designed in Washington or Zurich that their citizens had never agreed to and never would, and that it was a bit dishonest to insist that countries adopt democratic constitutions and then also insist that, whoever gets elected, they have no control over their country’s policies anyway. Or that the economic policies imposed by the IMF didn’t even work. But there was a more basic problem: the very assumption that debts have to be repaid.Actually, the remarkable thing about the state- ment “one has to pay one’s debts” is that even according to standard economic theory, it isn’t true. A lender is supposed to accept a certain degree of risk.

Debt: The First 5,000 Years, David Graeber

[sighsquared]

Year in, year out, since 1997, debt servicing (private and public) paid by the Periphery (Third World and former Eastern Bloc) drains 300 to 400 billion dollars, of which 200 to 250 is repayment of capital, towards private banks, other institutional investors, the IMF, the WB, the industrialised States. Repayments made by the developing countries' governments oscillated between 180 and 200 billion dollars a year since 1997. The total share of Official Development Assistance (ODA) which actually reaches the developing countries is less than 40 billion dollars. For 2002, the debt servicing paid by the developing countries came to 343 billion dollars, whereas net ODA can be estimated at about 37 billion dollars... In any case, the imbalance is obvious: in 2002, the countries of the Periphery repaid almost 9 times what they received in ODA!

Transfers from the Periphery to the Centre, from Labour to Capital, by Eric Toussaint, with The Committee for the Abolition of Third World Debt

[sighsquared]

In 1980, according to the World Bank, the developing countries' total external debt came to about 580 billion dollars. Twenty years later, at the end of 2002, it came to about 2,400 billion dollars, a fourfold increase... Between 1980 and 2002, the developing countries repaid their creditors a little over 4,600 billion dollars. Thus the Periphery countries have repaid eight times what they owed only to find themselves four times more indebted.

Transfers from the Periphery to the Centre, from Labour to Capital, by Eric Toussaint, with The Committee for the Abolition of Third World Debt

[sighsquared]

i found this extremely enlightening report about global wealth transfers from the Third World to the First World by Eric Toussaint, a Belgian political scientist with The Committee for the Abolition of the Third World Debt (CADTM). it details various mechanisms by which capital is systematically moved from the "Periphery" to the "Center": Among these are debt repayment, control of global trade by multinational corporations, privatization of Third World industries, intellectual property rights law, and border controls. contrary to common belief, according to the report, developmental aid supplied to the Third World is dwarfed by these various wealth transfers in the opposite direction.

[antoine-roquentin]

At issue is a strategy adopted by a small number of hedge funds to purchase reduced-rate debt from poor countries with little hope of repayment. These firms then file lawsuits against those governments for failure to repay, looking to scoop up government revenues and international aid monies when they eventually start to flow.

Perniciously, these firms maintain the lawsuits even as other investors typically agree to reduce some debts, accepting lower-than-expected returns that nonetheless allow the indebted government to begin to recover. Even a single such “holdout creditor” (also known as a “vulture fund”, for having purposefully sought out governments in fiscal distress) can gum up the entire debt-restructuring process.

“One of the most obvious remedies being discussed is that of collective action clauses, which allow a super-majority of creditors to force holdouts to accept a restructuring,” Rep. Waters noted Wednesday.

“Yet it would be wrong to rely solely on such clauses … This is why I favour the establishment of a formal, institutionalised, and politically recognised mechanism for restructuring the debt of bankrupt sovereigns, which would address all forms of debt.”

Other countries, most notably the United Kingdom, have already put in place restrictions aimed at undercutting the motivation to engage in such “vulture” speculation. Yet the United States has yet to do so.

On Wednesday, Cephas Lumina, the United Nations independent expert on the effects of foreign debt, noted that the U.S. is today a “preferred jurisdiction” for holdout creditors. He called on Washington to take “robust legislative measures … to limit the ability of vulture funds to pursue immoral profits at the expense of the poor.”

[evokit-notes]

[T]he International Monetary Fund basically acted as the world's debt enforcers—"You might say, the high-finance equivalent of the guys who come to break your legs." .... during the '70s oil crisis, OPEC countries ended up pouring so much of their newfound riches into Western banks that the banks couldn't figure out where to invest the money; .... Citibank and Chase therefore began sending agents around the world trying to convince Third World dictators and politicians to take out loans (at the time, this was called "go-go banking"); .... they started out at extremely low rates of interest that almost immediately skyrocketed to 20 percent or so due to tight U.S. money policies in the early '80s; .... during the '80s and '90s, this lead to the Third World debt crisis; .... the IMF then stepped in to insist that, in order to obtain refinancing, poor countries would be obliged to abandon price supports on basic foodstuffs, or even policies of keeping strategic food reserves, and abandon free health care and free education; ..... all of this had lead to the collapse of all the most basic supports for some of the poorest and most vulnerable people on earth. [.....] A lender is supposed to accept a certain degree of risk. If all loans, no matter how idiotic, were still retrievable ...... the results would be disastrous. What reason would lenders have not to make a stupid loan? [.....] Basically, that's the situation [where debtors must repay their loans] the IMF created on a global level—which is how you could have all those banks willing to for over billions of dollars to a bunch of obvious crooks in the first place.

David Graeber | Debt: The first 5000 years | p2-3