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Product Details
| ISBN-13: | 9781848138025 |
|---|---|
| Publisher: | Bloomsbury Publishing |
| Publication date: | 04/04/2013 |
| Series: | Global Issues |
| Sold by: | Barnes & Noble |
| Format: | eBook |
| Pages: | 214 |
| File size: | 2 MB |
About the Author
Eric Toussaint is a historian and political scientist, president of CADTM, member of the International Council of the World Social Forum, and of the scientific committee of ATTAC in France.
Read an Excerpt
Who Owes Who?
50 Questions About World Debt
By Damien Millet, Eric Toussaint, Vicki Briault Manus, Gabrielle Roche
Zed Books Ltd
Copyright © 2004 CADTMAll rights reserved.
ISBN: 978-1-84813-802-5
CHAPTER 1
The Third World in the context of globalization
Q1 What is meant by the Third World?
First of all, the vocabulary used needs to be defined. The terms 'North', 'rich countries', 'industrialized countries' or 'Triad' all refer to the group formed by the countries of Western Europe, North America, Japan, Australia and New Zealand (See Appendix).
However debatable it may seem to group together such diverse countries as South Korea, Haiti, Brazil, Niger, Russia or Bangladesh in one category, we have adopted the terminology used in statistics provided by the international institutions. Thus we refer to all the countries outside the Triad as the Developing Countries (DCs). In 2001 there were 165 of these according to our figures. Within this category we distinguish, for historical reasons, between the countries of the former Soviet Bloc and the rest, classed as the Third World or the South.
The Third World is divided into five regions: East Asia and the Pacific; South Asia; the Middle East and North Africa; Sub-Saharan Africa; Latin America and the Caribbean (see Appendix).
Out of a world population of approximately 6 billion people, the International Monetary Fund (IMF) (see Q12) estimates that about 86 per cent live in the Developing Countries.
The Gross Domestic Product (GDP; see Glossary) is the conventionally accepted indicator used to evaluate the production of wealth in the world. However, the indication it provides is approximate and incomplete, with at least three major inadequacies:
• it does not take into account unpaid work, mainly provided by women
• the production of pollution is recorded as a positive and not a negative value
• the unit upon which the calculation is based is the price of a commodity or a service, and not the amount of work it requires
Despite these drawbacks, GDP is used as an indicator of economic imbalance between the North and the South. The GDP and all other monetary figures used in this book are expressed in US dollars, as more than 60 per cent of international loans and exchanges are transacted in this currency.
The production of wealth is largely concentrated in the North, and is in inverse proportion to the distribution of population. Present-day liberal globalization has been deliberately set up by the rich countries, which receive most of the profits, even though this can only be to the detriment of the 5 billion inhabitants of the DCs as well as large numbers of people in the industrialized countries.
The GDP per inhabitant reveals the economic gulf that separates the North and the South. However, this provides only a very incomplete overview of the world economic situation, as it ignores the often flagrant income disparities within a given category of country. The annual income of the richest 1 per cent of the world's population is equivalent to that of the poorest 57 per cent of the planet. Furthermore, the income of the richest 5 per cent of people in the world is 114 times higher than that of the poorest 5 per cent. Consequently, it is never useful to oppose North and South in overall terms.
The words are used only to express a geographical state of affairs; most of the decisions are made in the North and have heavy consequences for the DCs. However, within each region, the same mechanism of domination is reproduced. In the final analysis, and this is fundamental, the main problem is the oppression of one part of humankind (not exclusively located in the South) by another, much smaller in number but much more powerful. In other words, different interests (capital-holders) oppose the great majority of the population (wage-earners, small producers and their families) in both the North and the South – all those of us who are subjected to the present system. It is therefore crucial to make the correct analysis here in order to avoid misunderstanding some of the underlying issues and missing interesting alternatives.
Of course these extremely disparate economic situations tend to trigger off correspondingly dramatic human situations.
Q2 Are the living conditions of the poorest populations improving?
No, far from it. The living conditions of the most deprived have deteriorated almost everywhere over the last twenty years, though at different times, to different degrees and at different rates from one country to another. Some DCs were hit very early in the 1980s (Latin America, Africa, some countries of the former Soviet Union) while others were hit later, in the second half of the 1990s (East Asia). By the beginning of 2000, all the DCs were in a serious state of decline.
In 2000, at the United Nations' (UN) Millennium Summit, world leaders committed themselves to several calculated objectives – in reality far too modest – destined to reduce poverty by 2015. In its Global Human Development Report, 2002, the United Nations Development Programme (UNDP) (see Glossary) shows how far there is still to go. It reckons that, 'For much of the world, the prospects are bleak', with at least a quarter of the world's population living in countries which will not manage to fulfil even half of the fixed objectives. Let us examine these in detail.
The millennium objectives
• To reduce by half the proportion of the population living on less than a dollar a day 2.8 billion people are estimated to be living on less than $2 a day; of these, 1.2 billion survive on less than $1 a day. Yet even these figures, given by the World Bank (see Q13) and the IMF (see Q12) are unreliable. A study by the United Nations Conference for Trade and Development (UNCTAD; see Glossary) of Sub-Saharan African countries showed that the figures provided by those two institutions considerably underestimated the true numbers of the poor. For example, whereas the World Bank estimated that the percentage of the population of Niger living on less than a dollar a day was 41.7 per cent, based on a survey of a sample of individuals, UNCTAD found more than 75 per cent, using the country's national accounts as their source.
Again according to UNCTAD, in the thirty-four Least Developed Countries (LDCs; see Glossary) in Africa, 65 per cent of the inhabitants live on less than $1 a day, and as many as 87 per cent on less than $2 a day. Often this amount of $1 is not nearly reached: many people in Niger, in the Democratic Republic of Congo, in Bangladesh, India or other DCs have to make do with less than $0.30 a day.
Furthermore, fixing the threshold of absolute poverty at $1 a day for Sub-Saharan Africa and $2 a day for Latin America is highly arguable. To give a more faithful picture of poverty, one would have to double, or even triple, current thresholds, which would give far higher results, more in keeping with the everyday reality of the great majority of the world's population. Finally, one would need to integrate non-monetary indicators such as the rates of access to education and healthcare, or life expectancy. This is what the UNDP is trying to do with the Human Development Rating (HDR; see Glossary) and the Human Poverty Index (HPI; see Glossary).
The fact remains that the World Bank estimates that a growth rate of 3.7 per cent per year per inhabitant is needed if the objective of reducing poverty by half by 2015 is to be reached. Yet more than 130 countries cannot possibly meet this. Indeed, fifty-two of them had negative growth rates during the 1990s, and poverty increased. In Sub-Saharan Africa, half of the inhabitants are poorer than in 1990 and the number of people living in extreme poverty has grown from 242 to 300 million over the past decade. It is expected to reach 345 million by 2015. It should here be emphasized that these figures are those provided by the World Bank which, as has been shown, underestimates the extent of poverty.
Even the growth rate of 3.7 per cent required to reduce poverty is valid only if the growth benefits everyone. Yet the inequalities in the world have reached a level described by the UNDP as 'grotesque'. According to statistics provided by seventy-three countries inhabited by 80 per cent of the world's population, forty-eight countries have seen the gap between rich and poor widen since the 1950s. Even in places where growth is considered satisfactory, it is the wealthy classes who get the most benefit, to the detriment of the poorest. The UNDP concludes: 'In view of current disparities, most countries are not recording a high enough growth rate to reach the objective fixed in terms of poverty.'
• To reduce by half the proportion of the world's population suffering from hunger In 2002, about 815 million people were suffering from hunger. Progress recorded in combating famine is far too slow. At this rate, it would take 130 years to eliminate hunger from the world, which is intolerable. The famines which appeared in the summer of 2002 in six Southern African countries were seized upon by the United States as a means of getting rid of 500,000 metric tonnes of genetically modified cereals. For the sake of the 13 million people threatened by starvation, the states of the region, especially Malawi, Lesotho, Swaziland, Mozambique and Zimbabwe, despite their early recalcitrance, decided to accept these genetically modified organisms (GMOs; see Glossary). Zambia alone refused. The occurrence of famine has thus become the opportunity for the United States and the agribusiness multinationals to impose their GMOs despite the risks to health and the environment, with no respect for the safety principle. In such a case, the South falls an easy prey to experimentation. The exports are in no way a structural solution to the famine problem since, at the same time, the DCs are reducing the production of staples (see Glossary) necessary for the survival of the local inhabitants in favour of cash crops for export to the North.
• Provide all children with the means to have a complete primary education Registration rates are slowly climbing but, in 2002, 133 million school-age children in the world did not go to primary school. As for reading and writing, the figures are very disappointing. Almost one adult in two in the LDCs is illiterate. Yet a good-quality educational system is essential if a country is to shed poverty in the long term.
• To obtain educational equality between girls and boys and equality between the sexes, generally Situations differ greatly, but out of the 854 million illiterate adults in the world in 2000, 544 million are women, and 60 per cent of children deprived of primary schooling are girls. Yet educating girls would have a positive impact on many aspects of daily life. Furthermore, flagrant inequalities exist between men and women at different levels of human development. The struggle for equality between the sexes must be a priority, first as a matter of principle and, even more so, because women play a dominant role in the improvement of family welfare.
• To reduce child mortality by two-thirds Each day, 30,000 children die of easily treatable diseases. For the UNDP, these children are 'the invisible victims of poverty'. Indeed, 'often, simple and easy-to-manage improvements in nutrition, health and hygiene infrastructures and education for mothers' would be enough to prevent these deaths.
In the Third World, an average of one child in four does not receive basic vaccines. In Sub-Saharan Africa, the rate rises to more than one child in two. This is why one child in six dies before the age of five. The UNDP reckons that eighty-one countries, inhabited by 60 per cent of the world's population, will not reach the objective fixed for 2015.
• To reduce perinatal maternal mortality by three-quarters Each year, over 500,000 women die of complications related to pregnancy and childbirth
• To eradicate the spread of AIDS By the end of 2000, 22 million people had died of AIDS worldwide, and over 40 million individuals were infected by the virus, 75 per cent of whom were in Sub-Saharan Africa. In that part of the world, the epidemic causes 2.5 million deaths per year and infects one adult in twelve. In Botswana, one adult in three is infected, and the average life expectancy there will have dropped from sixty-five years in 2000 to thirty-one years in 2005. In Zimbabwe, it will have dropped from fifty-three in 2000 to twenty-seven in 2005. The other Southern African countries are similarly affected. In the case of seven of them, life expectancy has fallen below the forty-year mark. UNAIDS (the UN programme against AIDS) estimates that 10 billion dollars a year would be required to combat the disease efficiently, but in 2002 the DCs can only invest $2.8 billion. Meanwhile, the World Fund Against AIDS, Tuberculosis and Malaria, founded at the G8 (see Glossary) summit in Genoa in July 2001, is having trouble in raising funds. They received $750 million in 2002, and less than $500 million in 2003.
Although the human and social consequences are obviously a priority for us, the economic consequences are also disastrous. In Ivory Coast, AIDS medication for a sick person costs $300 a year, i.e. somewhere between a quarter and a half of the annual revenue of an agricultural smallholding.
Pharmaceutical laboratories, backed by the states of the North, attempted to enforce patents, for their greater profit, by a scandalous law suit against South Africa in 2001. However, the Conference of Ministers of the World Trade Organization (WTO; see Glossary) in Qatar in November 2001, responded to public opinion by authorizing the production of more affordable treatments (generic drugs) using copies of original molecules. But as yet only a few countries (India, Brazil and Thailand) have a pharmaceutical industry capable of manufacturing them. What are the other countries to do if they cannot import anti-retroviral drugs?
• Eradicate the spread of malaria and other widespread diseases The ravages of malaria, especially in Africa, provide a significant example. The sums invested in research against malaria are feeble (less than $8 million a year) because the potential clients are often destitute and investors foresee only mediocre profits. Consequently, although promising solutions exist, malaria is again on the increase in Africa. In thirty years, the number of deaths has almost doubled. In 2000, malaria was the cause of a million deaths, 900,000 of which were in Africa; 700,000 of those were of children under five (one every forty-five seconds). The economic consequences are also extremely serious. According to the World Health Organization (WHO): 'Africa's GDP would be a 100 billion dollars more than it is today if malaria had been eradicated 35 years ago', and 'in Africa, malaria systematically hinders growth by more than 1% a year'. Furthermore, the report adds, a family with malaria 'spends on average more than a quarter of its income on anti-malarial treatments'.
Similarly, tuberculosis is the cause of 2 million deaths a year, mainly affecting the most poverty-stricken individuals, due to lack of access to treatment. By 2020, a billion people could be infected, meaning 35 million deaths.
In short, AIDS, malaria and tuberculosis are consuming the Third World, and most especially Sub-Saharan Africa.
• To ensure the sustainability of environmental resources Carbon dioxide is the principal danger. Emissions have climbed from 5.3 billion tonnes in 1980 to 6.6 billion tonnes in 1998, mainly due to the rich countries. The Kyoto Agreement of 1997, aimed at reducing the emission of greenhouse gases, still has not been ratified by enough countries to become effective. The USA, which produces a quarter of the world's total emissions, even went so far as to withdraw its initial signature after the election of President George W. Bush. Indeed, his spokesman commented: 'A high consumption of energy is part of our way of life, and the American way of life is sacred.' The only signs of hope that this agreement, modest as it is, may one day become effective are the signatures of Russia, China and Canada, pledged at the Johannesburg World Summit on Sustainable Development in September 2002.
As far as deforestation is concerned, 250 million people living from agriculture are directly affected, and the survival of a billion human beings is at stake. Here again, it is the poorest who are the most at risk.
• To reduce by half the percentage of people who do not have regular access to clean drinking water In 2000, 1.1 billion individuals, i.e. nearly a fifth of the world's population, did not have access to a proper water supply.
• To improve significantly the living conditions of at least 100 million slum-dwellers In 2000, 2.4 billion people, i.e. two individuals out of five, had no proper sanitation. The consequences on health are serious. Every year, 4 billion people get diarrhoea and 2.2 million die from it.
• To set up a global partnership for development Official Development Assistance (ODA; see Glossary) provided by the North totalled about $51 billion in 2001, i.e. 0.22 per cent of the GDP of the rich countries (0.34 per cent for France; 0.37 per cent for Belgium; 0.34 per cent for Switzerland; and 0.11 per cent for the USA). In real terms, ODA decreased by more than 30 per cent between 1992 and 2002. Yet as long ago as 1970, the rich countries committed themselves to paying out 0.7 per cent of their GDP. Only five countries fulfil this objective today: Denmark, Luxembourg, the Netherlands, Norway and Sweden.
According to the UNDP, present ODA sums need to be doubled if the Millennium Objectives are to be met. This would still be less than what was promised in 1970. Despite all, the European Union does not plan to go beyond 0.39 per cent of its GDP by 2006. If this minimal commitment is all there is to be, there will be an inevitable lack of financial resources. Clearly, the fine speeches of the leaders of the North are failing to materialize into concrete acts.
(Continues...)
Excerpted from Who Owes Who? by Damien Millet, Eric Toussaint, Vicki Briault Manus, Gabrielle Roche. Copyright © 2004 CADTM. Excerpted by permission of Zed Books Ltd.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.
Table of Contents
Q1. What is meant by the Third World?Q2. Are the living conditions of the poorest populations improving?
Q3. What are the different kinds of debt?
Q4. What impact does the external debt have on human development?
Q5. What were the main factors leading to the indebtedness of the DCs?
Q6. What is the geopolitical context of the over-indebtedness of the DCs?
Q7. Who were the leading actors in the indebtedness of the countries of the South, and how have the loans been used?
Q8. How can the debt crisis be explained?
Q9. How has the external debt of the DCs evolved over the last 30 years?
Q10. How have the creditors responded to the debt crisis?
Q11. Who is the main actor in the management of the debt crisis?
Q12. What does the IMF do?
Q13. How does the World Bank operate?
Q14. What is the logic behind the IMF's and the World Bank's economic policy?
Q15. What are the short-term shock measures imposed by structural adjustment, and what are their consequences?
Q16. What are the long-term shock measures imposed by structural adjustment, and what are their consequences?
Q17. What is the role of the Paris Club?
Q18. Are all the DCs in the same boat?
Q19. What does the external debt of the DCs consist of?
Q20. Who are the main creditors of the different DCs?
Q21. How have the roles of the different creditors evolved over the last 30 years?
Q22. Do the DCs repay their debts?
Q23. How are the debt-related financial flows managed?
Q24. How did the debt-reduction initiative come about?
Q25. What is the Heavily Indebted Poor Countries (HPIC) initiative?
Q26. What are the results of the HIPC initiative?
Q27. What are the limitations of the HIPC initiative?
Q28. What is the New Partnership for African Development (NEPAD)?
Q29. What are vulture-funds?
Q30. Have there ever been debt cancellations in the past?
Q31. Why do the governments of the South continue to repay the debt?
Q32. Will debt cancellation be enough to ensure the development of the DCs?
Q33. What are the moral arguments in favour of cancelling the DCs' debts?
Q34. What are the political arguments in favour of cancelling the DCs' debts?
Q35. What are the economic arguments in favour of cancelling the DCs' debts?
Q36. What are the legal arguments in favour of cancelling the DCs' debts?
Q37. What are the environmental arguments in favour of cancelling the DCs' debts?
Q38. What are the religious arguments in favour of cancelling the DCs' debts?
Q39. Who owes what to whom?
Q40. Should there be conditions attached to debt cancellation?
Q41. If the creditors decided to cancel the debt, would it cause a global financial crisis?
Q42. Could cancelling the debt cause an impoverishment of the North, particularly for tax payers?
Q43. How can alternative funding be found for the development of the DCs?
Q44. Won't the dictatorial regimes currently in office benefit most from debt cancellation?
Q45. If and when the debt is cancelled, how can a new round of indebtedness be avoided?
Q46. Should recourse to borrowing be avoided at all costs?
Q47. Can the DCs' external debt be compared to the public debt of the North?
Q48. How can we achieve cancellation of the DCs' debt and a general improvement of the human condition?
Q49. How did the international campaign for the cancellation of the debt start?
Q50. How was the CADTM founded?