Bad debt

Thursday, June 16th, 2005

When the loan sharks decide to forgive a debt, you have to wonder, what’s the catch? Maybe there is none. This is what I hope, of course: that the recent deal announced last weekend in London, in which the world’s richest nations forgive $40 billion in debt owed by 18 of the poorest, with further debt cancellations likely, is an enlightened first step toward “making poverty history.”

Ring the church bells. Pass the smelling salts. Are the rich and powerful capable of acting so fairly — so rationally? In my lifetime, big government initiative has lacked, shall we say, far-sightedness. It has mostly amounted to cynical intervention on behalf of special interests under heavy spin cover (we’re, uh, spreading democracy, yeah, that’s it, democracy), while, behind the scenes, the rich grow more bloated and the poor more desperate.

And colonialism, in my lifetime, has just continued by other means — with the former colonies in ever deeper economic thrall to the very nations that once “owned” them and plundered their resources.

While I want to believe that this game is over and some national leaders, at least, now have the interests of the whole human race at heart — that debt cancellation is all about allowing the G8 industrialized nations to “forge a new and better relationship, a new deal between rich and poor countries of the world,” as Gordon Brown, Britain’s chancellor of the exchequer, put it — I think the news at least has to be placed in a little more context than the mainstream media have packaged it. With context comes sobriety.

The billions that the United States, Britain, et al have agreed to write off are what Salih Booker, director of Africa Action, has called “odious debt.”

“These loans,” he told Amy Goodman of Democracy Now “were made to unrepresentative governments, in many cases military dictators” — billionaire Joseph Mobutu of the former Zaire, for instance, whose brutal, corrupt regime spawned the term “kleptocracy.” “The money . . . was not used for the benefit of the citizens of these countries, and it continued to accumulate because of compounded interest over the years, even though African governments have continued to service this debt. In fact, they’ve paid it off several times over, but it keeps growing because of the interest.”

That’s the global economy I’m aware of, which John Perkins, former chief economist for a major corporate player in the field of international development and author of “Confessions of an Economic Hit Man,” described even more rawly and bluntly (also during an interview with Goodman):

“But my real job was deal-making,” he said. “It was giving loans to other countries, huge loans, much bigger than they could possibly repay. One of the conditions of the loan — let’s say $1 billion to a country like Indonesia or Ecuador — (was that) this country would then have to give 90 percent of that loan back to a U.S. company, or U.S. companies, to build the infrastructure, a Halliburton or a Bechtel. . . .

“Those companies would then go in and build an electrical system or ports or highways, and these would basically serve just a few of the very wealthiest families in those countries. The poor people in those countries would be stuck ultimately with this amazing debt that they couldn’t possibly repay.”

Third World debt is, in other words, a grotesque sham, the result of a series of unequal, amoral deals — betrayals — between powerful Western governments and corrupt Third World leaders who, for their personal enrichment, were willing to put their countries’ futures in permanent hock. The point was not development but the re-establishment of colonial dependency.

Naomi Klein, writing on this issue in the current Nation, recalls Nigerian martyr Ken Saro-Wiwa, who was executed — hanged — a decade ago, along with eight other anti-poverty activists, by the Nigerian government.

“Their crime,” she writes, “was daring to insist that Nigeria was not poor at all but rich, and that it was political decisions made in the interests of Western multinational corporations that kept its people in desperate poverty. Saro-Wiwa gave his life to the idea that the vast oil wealth of the Niger Delta must leave behind more than polluted rivers, charred farmland, rancid air and crumbling schools. He asked not for charity, pity or ‘relief’ but for justice.”

Are we hearing the death knell of this system of ruthless exploitation of the poor by the rich, or is there some angle to the debt “forgiveness” that will perpetuate, in the words of Salih Booker, “this tragic irony” in which the poorest peoples of the earth subsidize the wealthiest?