Third World Debt
Discussion
I have to admit to being somewhat of an economic ignoramus and so was hoping that somebody can enlighten to me as to why so many people feel that it's only fair to remove the 3rd world debt.
I ask this because to me I can only see the fact that we lent the money to them, therefore they should have to repay it. However - I haven't researched this and so wondered if there was some kind of element of "forcing" the money onto these countries?
If anyone can increase my understanding that'd be great.
Cheers
Phil
I ask this because to me I can only see the fact that we lent the money to them, therefore they should have to repay it. However - I haven't researched this and so wondered if there was some kind of element of "forcing" the money onto these countries?
If anyone can increase my understanding that'd be great.
Cheers
Phil
Imagine you're skint and the only way to pay for food for your kids is by borrowing the money against yor house. You've got no option, otherwise the kids die. You borrow money from a bank and now you've got a mortgage to pay on top of your existing costs. The only way out of this spiral is some sort of 'step-change'. Clearly the banks aren't going to take a hit on a commercial agreement, so the pressure is then applied to Governments to settle the debt.
I think, & I am happy to be corrected, that the countries concerned are barely making the interest repayments, let alone the debt itself, therefore are caught in a vicious circle. The idea behind wiping the slate clean is that by using the money they're currently repaying to sort out their infrastructure/economy etc etc, they should be able to get back on their feet so to speak. The benefits of that being 1. they hopefully end up as part of the first world as opposed to the third they're currently in & 2. if that ever happened, they'd be in a better position to possibly repay some of the loans that we've wiped out.
Or alternatively, and this is a slightly radical idea, they could have democratic elections across the third world. Stop spending a fortune on weapons, warfare and corruption and actually join the rest of the developed world.
Lets give a great example, the money spent by ethoipia over the last 20 years on its military, even through the famine they were buying migs.
Think of the sheer amount of money diverted by corrupt regimes and dictatorships...
How much money does the west GIVE these countries every year in aid (give you a clue, its in the billions).
Yes, there could be an element of debt restructuring where its appropriate, but if you lend people money, they should reasonably be expected to repay it.
IIRC we've just made, (or are about to make) the final payment on loans made by the US during WWII... If we are expected to honour the debts of previous generations, then why shouldnt we hold others to the same standard?
Lets give a great example, the money spent by ethoipia over the last 20 years on its military, even through the famine they were buying migs.
Think of the sheer amount of money diverted by corrupt regimes and dictatorships...
How much money does the west GIVE these countries every year in aid (give you a clue, its in the billions).
Yes, there could be an element of debt restructuring where its appropriate, but if you lend people money, they should reasonably be expected to repay it.
IIRC we've just made, (or are about to make) the final payment on loans made by the US during WWII... If we are expected to honour the debts of previous generations, then why shouldnt we hold others to the same standard?
Fair or not, who cares, third world debt should be erased simply because of the money and time that it would save US.
Why? Because if these countries were able to put what money they generate into developing themselves they would be in a better position to support themselves.
This in turn brings stability, peace which in turn foster further growth and development.
At some point the so called third world element would no longer exist.
Why? Because if these countries were able to put what money they generate into developing themselves they would be in a better position to support themselves.
This in turn brings stability, peace which in turn foster further growth and development.
At some point the so called third world element would no longer exist.
The argument goes that they gave the loans at such rates knowing that the countries would be crippled by the repayments.
And as for how they are spending their money, the majority are spending it on modern factories which allow them to compete, and indeed trounce the equivalents over here. Hence jobs disappearing overseas.
Dont forget who the country in the most debt is either..
And as for how they are spending their money, the majority are spending it on modern factories which allow them to compete, and indeed trounce the equivalents over here. Hence jobs disappearing overseas.
Dont forget who the country in the most debt is either..
lanciachris said:
The argument goes that they gave the loans at such rates knowing that the countries would be crippled by the repayments.
And as for how they are spending their money, the majority are spending it on modern factories which allow them to compete, and indeed trounce the equivalents over here. Hence jobs disappearing overseas.
Don't you mean "hence jobs disappearing here"?
TheLemming said:
Or alternatively, and this is a slightly radical idea, they could have democratic elections across the third world. Stop spending a fortune on weapons, warfare and corruption and actually join the rest of the developed world.
The same could be said of America...
Regards
Iain
Reading about this in the font of all knowledge (Metro)... apparently there's an agreement in place to bring air in line with GDP. Something all developed nations signed up to (including us and the US).
This level is 0.7% of GDP. We're currently at 0.34% and are projected to reach the targe in 2020. The US has REDUCED money to 0.14% and are looking at reducing it further. Germany, for example are less than us and will take even longer to reach the target level.
Cancelling the debt is a tricky issue - much of the money put into the countries is mis-spent but on the other hand the countries will never become strong if we keep draining them as we are. They made loan agreements without being forced and the terms were clearly stated.
Personally I think that financially they should repay the debts but as they can't maybe they need 'restructuring' i.e. suspension of interest. From a social perspective, in some cases the interest paid so far is greater than the original loan so maybe enough's enough?
Apparently this year, we will have made the final repayments to our debt to the USA from WW2!
Iain
This level is 0.7% of GDP. We're currently at 0.34% and are projected to reach the targe in 2020. The US has REDUCED money to 0.14% and are looking at reducing it further. Germany, for example are less than us and will take even longer to reach the target level.
Cancelling the debt is a tricky issue - much of the money put into the countries is mis-spent but on the other hand the countries will never become strong if we keep draining them as we are. They made loan agreements without being forced and the terms were clearly stated.
Personally I think that financially they should repay the debts but as they can't maybe they need 'restructuring' i.e. suspension of interest. From a social perspective, in some cases the interest paid so far is greater than the original loan so maybe enough's enough?
Apparently this year, we will have made the final repayments to our debt to the USA from WW2!
Iain
james_j said:
The argument goes that they gave the loans at such rates knowing that the countries would be crippled by the repayments.
And as for how they are spending their money, the majority are spending it on modern factories which allow them to compete, and indeed trounce the equivalents over here. Hence jobs disappearing overseas.
Don't you mean "hence jobs disappearing here"?
Oops, re-reading this, I see what you meant - the same as me.
iainjones said:
Or alternatively, and this is a slightly radical idea, they could have democratic elections across the third world. Stop spending a fortune on weapons, warfare and corruption and actually join the rest of the developed world.
The same could be said of America...
Regards
Iain
I dont think a serious parrallel can be drawn between the US and say.. Zimbabwe? Or the Congo? Or the choices are endless.
BTW I dont recall the US being a de-facto dictatorship, or its leaders squirrelling away billions in looted cash?
TheLemming said:
Or alternatively, and this is a slightly radical idea, they could have democratic elections across the third world. Stop spending a fortune on weapons, warfare and corruption and actually join the rest of the developed world.
Good idea. Perhaps we could get the US military to invade all the third world countries and enforce a democratic regime with weapons.
Forgiving debt needs to be considered country by country. Writing off debt can be used as a carrot, and requiring repayment can be used as a stick. It isn't just the borrowers whose behaviour can be modified by debt forgiveness. If a lender has extended loans to corrupt and despotic regimes that subsequently get overthrown, they deserve no repayment. It is not reasonable to require a post-revolutionary country to finance the debt run up by their own oppression.
TheLemming said:
Or alternatively, and this is a slightly radical idea, they could have democratic elections across the third world. Stop spending a fortune on weapons, warfare and corruption and actually join the rest of the developed world.
Lets give a great example, the money spent by ethoipia over the last 20 years on its military, even through the famine they were buying migs.
Think of the sheer amount of money diverted by corrupt regimes and dictatorships...
How much money does the west GIVE these countries every year in aid (give you a clue, its in the billions).
Yes, there could be an element of debt restructuring where its appropriate, but if you lend people money, they should reasonably be expected to repay it.
IIRC we've just made, (or are about to make) the final payment on loans made by the US during WWII... If we are expected to honour the debts of previous generations, then why shouldnt we hold others to the same standard?
Yes, it's as simple as that, isn't it?
Of course let's just forget the external interference in the affairs of each country, which has prevented many of them from ever prospering, the history of these nations who have had their natural assets stripped by colonial powers over many years, who then left, leaving their corrupt flunkies in charge, which then has led to a spiralling cycle of debt and crippling interest repayments.
968 said:
Or alternatively, and this is a slightly radical idea, they could have democratic elections across the third world. Stop spending a fortune on weapons, warfare and corruption and actually join the rest of the developed world.
Lets give a great example, the money spent by ethoipia over the last 20 years on its military, even through the famine they were buying migs.
Think of the sheer amount of money diverted by corrupt regimes and dictatorships...
How much money does the west GIVE these countries every year in aid (give you a clue, its in the billions).
Yes, there could be an element of debt restructuring where its appropriate, but if you lend people money, they should reasonably be expected to repay it.
IIRC we've just made, (or are about to make) the final payment on loans made by the US during WWII... If we are expected to honour the debts of previous generations, then why shouldnt we hold others to the same standard?
Yes, it's as simple as that, isn't it?
Of course let's just forget the external interference in the affairs of each country, which has prevented many of them from ever prospering, the history of these nations who have had their natural assets stripped by colonial powers over many years, who then left, leaving their corrupt flunkies in charge, which then has led to a spiralling cycle of debt and crippling interest repayments.
No it isn't that simple - but African countries are in some ways to blame for their situation ....... corruption, tribalism, lack of democracy ,medieval religious dogma preventing contraception , indifference to AIDS and womens rights..... the West is also partly to blame, particularly for free trade ( or lack of )....
One thing we could do to really help would be to stop the stupid import tariffs on food coming into the EC - it outrages me that we subsidise sugar and rice production in Europe when we should be importing it from the 3rd world - and at the very least not destroying 3rd World countries' opportunities to trade their way out of poverty.
TheLemming said:
I dont think a serious parrallel can be drawn between the US and say.. Zimbabwe? Or the Congo? Or the choices are endless.
BTW I dont recall the US being a de-facto dictatorship, or its leaders squirrelling away billions in looted cash?
No, but their "democratic" elections are a farce, spend billions a year on arms, (getting themselves into stagering national debt, the DoD are almost broke, which is why several contract awards have been delayed recently), when many live in poverty (granted not necessarily at the level on Mid Africa),have a history of leaders using international power games to further their own interests, remember most of these dictators were put into power by the US end subsequently funded by the US etc etc
Regards
Iain
alfaman said:
No it isn't that simple - but African countries are in some ways to blame for their situation ....... corruption, tribalism, lack of democracy ,medieval religious dogma preventing contraception , indifference to AIDS and womens rights..... the West is also partly to blame, particularly for free trade ( or lack of )....
One thing we could do to really help would be to stop the stupid import tariffs on food coming into the EC - it outrages me that we subsidise sugar and rice production in Europe when we should be importing it from the 3rd world - and at the very least not destroying 3rd World countries' opportunities to trade their way out of poverty.
Good points, but then again, the people in these countries are often the subject of brutal rule, and it's so easy for us to say "it's their fault, they shouldn't allow themselves to be ruled by such tyrants" but then again, when one is dealing with regimes with such a small regard for human life, merely protesting is not going to achieve anything. It's upto us in countries who deal with these tyrants to impose ourselves on them.
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