3rd World Debt

Who owes whom??

Based on an article by Fatima Meer:

Sunday Times, 26 June 2005
 “For centuries, the 3rd World has
subsidised,
supported,
industrialised
& developed the 1st World
at the expense of its own solvency.”

Based on an article by Fatima Meer:

Sunday Times, 26 June 2005
Afro-Asian colonies were cheap sources of raw
materials and it was against the interests of
the industrialised north for these countries to
be developed.

Based on an article by Fatima Meer:

Sunday Times, 26 June 2005
 The World Economy

• is controlled by the finance institutions of the north.

• Prices of world commodities are set and established

in the north, thus controlling the “free market.”

Based on an article by Fatima Meer:

Sunday Times, 26 June 2005
 Loans
• are necessary in all economies.

• 1st World countries consume by far the greater part of

the world’s capital loans.

• 1st World borrowings are used productively to develop

that world and accumulate profits.

• 3rd World loans arrest development and shackle its

economies to the 1st (because of stringent conditions
attached to these loans).
Based on an article by Fatima Meer:
Sunday Times, 26 June 2005
 South Africa is spending 12% of its national
budget on servicing debt.

It costs the country more than R50-billion each

year to service debt.

More than R500-billion has thus been paid since

1994 to service debt incurred by the apartheid
regime.

Based on an article by Fatima Meer:

Sunday Times, 26 June 2005
Many African countries are expected to
pay more than 20% of their national
budget on servicing debt!

Based on an article by Fatima Meer:

Sunday Times, 26 June 2005
 In 1972 the Organisation of Petroleum Exporting
Countries (OPEC) raised the price of crude oil by
400% and banked most of their profits in northern
banks.

They in turn seduced the leaders of the 3rd World to

borrow money at 6.1% interest.
This increased to 16% by 1981!

Based on an article by Fatima Meer:

Sunday Times, 26 June 2005
 1980 - 2001

In 1980 3rd World debt stood at

$600-billion.

By 2001, repayments of $4.5-trillion had been made

(i.e. 6½ times the capital borrowed),

but the outstanding debt still stood at $2.45-trillion!

(i.e. more than 4 times the original debt).

Based on an article by Fatima Meer:

Sunday Times, 26 June 2005
When 1st World financiers are asked to
wipe out 3rd World debt, they are losing
nothing, because the original loans have
been repaid many times over.

Based on an article by Fatima Meer:

Sunday Times, 26 June 2005
 Bankruptcy!

By the 1980’s many 3rd World countries were bankrupt.

World Bank and IMF rules say countries cannot file for
bankruptcy – so they have to keep paying.

How?

With more loans from the World Bank & IMF!

(Provided they submit to the agencies’ structural adjustment
programmes).

Based on an article by Fatima Meer:

Sunday Times, 26 June 2005
 As a result,
In these countries. . . . .

Currency is devalued,
Interest-rates rise,
Social-Service spending is reduced or discontinued,
Subsidies are withdrawn,
Workers are retrenched and
Trade & Industry are exposed to foreign competition
(where there are subsidies).

Based on an article by Fatima Meer:

Sunday Times, 26 June 2005
 The Consequences are:

• Massive unemployment.

• Massive poverty.

• Massive damage to domestic production and

trade.

Based on an article by Fatima Meer:

Sunday Times, 26 June 2005
3.5 billion people (of a total population of 5.7
billion), share 5.6% of the global income.

The richest 10% of the world’s population

consume 60% of the earth’s resources.

Based on an article by Fatima Meer:

Sunday Times, 26 June 2005
 Quo Vadis?

The wiping out of 3rd World debt is the first step towards
the elimination of poverty.

The second step is the injection of a moral ethos into our

national and international economic arrangements.

The international playing-fields must be levelled and

national fiscal responsibility must become the highest
priority.
Based on an article by Fatima Meer:
Sunday Times, 26 June 2005