THIRD WORLD DEBT AND THE CATHOLIC RESPONSE
S. CLENCY MARIAPA
Origin of the debt
Facts and figures
Source: Global Development Finance 2000, World Bank
The chart below shows the amount of money that some of the HIPC countries channel towards debt servicing as opposed to what they spend on education and health. Notice that the total amount of debt servicing in 1998 was in excess of the total amount spent on health. In the case of Mauritania, one of the poorest countries in the world, debt servicing exceeded the amount spent on education and health combined. In fact it spends nearly seven times more on debt repayment each year ($116m) than it spends on health ($17m), despite having only one doctor for every 17,000 people.
Source: Jubilee 2000 (19.5.2000)
This debt burden is a serious threat to the development of many Third World countries and consequently to the quality of life of their people. Here are some further facts from various organisations concerned with the debt problem:
In looking for solutions to the debt crisis these four guiding principles would help provide for a structure that upholds human dignity and rights as well as the human welfare of some of the most vulnerable members of society.
of Creditors and Debtors
The Commission points out that as a result of constant improvements in the field of information and communication technology there is an increased interdependence between countries. For that interdependence to lead to just relationships it is necessary that it gives rise to a new and broader expression of solidarity which respects the equal dignity of all peoples, rather than lead to domination by the strongest, to egoism, inequalities and injustices. This broader expression of solidarity among nations recognises the co-responsibility for the causes and the solutions relative to international debt. The causes emanate by and large from development in the international environment, and of actions and decisions taken by the developed countries. The causes are also the product of certain actions taken internally by Third World countries regarding the spending of loans. Accepting shared responsibility for the causes will facilitate dialogue and the emergence of solutions. Acknowledging co-responsibility will also underpin the emergence of a framework for international peace based on justice. Co-responsibility in the search for solutions to the problems of international debt is necessary to restore trust relationships between creditor and debtor countries and the other agents involved. Mutual trust and respect among all the parties is indispensable for the success of the problem-solving process. It is equally important that the various partners in the problem-solving process share equitably the adjustment efforts and the necessary sacrifices that need to be made in order that the priorities of the most deprived people are met. The Pontifical Commission states unequivocally that in the international context within which the debt crisis exists, the Church has a duty to specify the requirements of social justice and of solidarity.
The Commission explains how the high rate of interest and principal payments each year, coupled with lower export revenues due to the falling prices of raw materials, limited access to protected foreign markets and unpredictable fluctuations in exchange rates, has pushed many of the very poor countries to the brink of bankruptcy. In such a situation an "ethics of survival" dictates that international solidarity needs to prevail and that emergency measures be taken to ensure that so many of the poorest countries do not face economic collapse. Making demands on poor debtor countries in such situations may be legal, but they can become an abuse. Instead, the Commission suggests that with the Gospel as the source of inspiration, other types of action can be contemplated "such as granting extensions, partial or even total remission of debts, or helping the debtor to regain solvency". However it is also the moral responsibility of the leadership of a country to see to it that their debt level does not reach crisis proportions through short-sightedness or careless management.
Certain recommendations are made regarding responsibilities of both the industrialised and the developing countries. The Commission states that due to their greater economic power, the industrialised countries bear a heavier responsibility, which they must acknowledge and accept. They must assess the positive and negative effects of their policies on other members of the international community and introduce changes if the consequences of their policies constitute too much of a burden for other countries, especially the poorest ones. The application of economic policies that will lead to growth for all members of the international community is a difficult, but challenging, task. The current rules of international trade, comprising of protectionist measures to hinder exports from the developing countries, high interest rates, which hinder reimbursement, and the unstable prices of raw materials are obstacles to the achievement of a more just distribution of the fruits of economic growth and need to be revised. The adoption of policies to re-launch economic growth, reduce protectionism, lower interest rates and ensure a just value for raw materials fall under the responsibility of the industrialised countries if they wish to contribute to a development in solidarity with the whole of mankind.
Developing countries need to look at the domestic causes behind their high level of indebtedness and accept that they are also to blame for the crisis and therefore also responsible for adopting measures to alleviate their debt burden. In particular, the actions and responsibilities of Third World leaders must be examined in order to expose their wide-ranging malpractices, which include negligence in setting up proper structures and abuse of existing ones, tax fraud, corruption, currency speculation, national capital reserve drain, foreign bank accounts, private jets and shopping sprees in Western capitals for the spouses of the ruling elite, prestige construction projects which turn out to be white elephants, to name but a few.
The Pontifical Commission calls for the "duty of transparency and truthfulness" to prevail, so as to establish individual responsibilities and to engage in suitable and necessary reform of institutions and personal behaviour. This will be possible only if the leadership and state bureaucracy are infused with a strong dose of moral integrity.
It will be recalled that after World War II great efforts went into programmes of reconstruction and the economic recovery of countries that were seriously damaged in that conflict. The industrialised countries of the world must now work on a new system of aid for the less prosperous countries of the Southern Hemisphere in order to bring hope to their suffering populations. It is now clear that for some of the poorest countries, the cancellation of a substantial part, if not all, of their external debt is a necessary step to enable them to get out of this vicious circle of poverty and to achieve their social development aims. It is also equally clear, and must be reiterated ad nauseam, that debtor countries have responsibilities which they must take on, in order to guarantee the setting up of systems of government and economic administration that would make diligent and proper use of scarce resources for the genuine economic enhancement of their long suffering people. In other words, it must be a sine qua non that remission of debts be accompanied by well thought out and well-structured programmes for educational, social and healthcare development and such programmes must be constantly monitored and evaluated. There must be an undertaking from debtor countries that money which becomes available through debt remission will be used solely for poverty alleviation and development programmes. Such a course of action will require the collaboration of both debtor and donor countries, and must include a mutually agreed monitoring mechanism for various development programmes. Debt remission must not lead to the further strengthening and/or enriching of dictators and embezzlers.
It must be emphasised at this point that debt relief packages for poor countries are required now and must be put into operation urgently. Too often in the past debt relief packages have been followed by procrastination or delays in the application of terms on which agreement has been reached, thus prolonging the very misery which the debt relief packages were supposed to alleviate. Chancellor Gordon Brown's December 1999 decision to cancel the debt of 25 of the world’s poorest countries was good news, but it must not be interfered with by conditions and bureaucratic red tape that would delay its execution. The British initiative must be used as a spur to put pressure on other industrialised countries such as France, Italy, Germany and Japan to do likewise.
Underlying all economic, technical and historical analyses of the debt problem are a number of ethical issues. The various proposed solutions, such as The Brady Plan and the HIPC Initiative, in some way are recognition of the ethical dimension of the debt problem. But the debt problem will linger on unless there is a full remission of the debt of the poorest countries accompanied by policies that would redress the imbalance in the world economic order and avoid a repetition of the situation. The Catholic Church’s response is to tackle the debt problem by addressing the ethical issues involved as enumerated in the foregoing paragraphs and to use the Gospel as a source of inspiration to arrive at fair and equitable solutions.
During the year of Jubilee, which in the old days was characterised by forgiveness and debt remission, many reflected on these words of Pope John Paul II in his address to the 50th General Assembly of the United Nations on 5 October 1995:
"The international economic scene needs an ethic of solidarity, if participation, economic growth and a just distribution of goods are to characterise the future of humanity … when millions of people are suffering from poverty which means hunger, malnutrition, sickness, illiteracy and degradation, we must not only remind ourselves that no one has a right to exploit another for his own advantage but also and above all we must recommit ourselves to that solidarity which enables others to live out, in the actual circumstances of their economic and political lives, the creativity which is a distinguishing mark of the human person and the true source of the wealth of nations in today’s world."
While the Jubilee is over, the debt still remains. And so - the Social Gospel proclivities commonly associated with ecclesiastical bureaucracies notwithstanding - individual Catholics who wish to act on the papal call for total or partial debt remission on a more practical level can get in touch with the Southwark Diocese Peace and Justice Office, Cathedral Clergy House, Westminster Bridge Rd., London SE1 7HY, or the Jubilee 2000 Coalition at 1, Rivington St., London EC2A 3DT. The Jubilee 2000 Coalition is a worldwide campaigning organisation set up in 1996 and operating in 60 countries, and has as one of its sponsors, Pope John Paul II.