Verena Graf

in Peuples/Popoli/Peoples/Pueblos N. 7 (november1985)

The main factors behind the growth of public debt in developing countries have been the rise in oil prices and interest rates, factors that are therefore independent of the debtor countries. After all, poor countries in the South give up their resources to rich countries in the North to pay interest. For a Third World country lacking the capital necessary for its development, borrowing money is a necessity. The situation becomes intolerable when the amounts to be repaid exceed the value of exports; however, the debt problem hides other aspects of international finance. According to the annual report (1984) of the Bank for International Settlements, capital flight from Latin American countries alone is estimated at $50 billion for the period 1978-83, one third of the external debt. This flight is particularly encouraged by Swiss banks, which thus render a valuable service to dictators, corrupt generals, tycoons of high finance and Third World industry, for whom the best insurance is the untouchable Swiss secret.
To arrive at a solution to the debt problem, responsibility should first be determined. Indeed, one has to ask why international high finance has done so little to concern itself with the conditions under which loans were granted to a regime of murderers and speculators like that of the Argentine military junta. But another no less important question must be asked: what can we do in our Western countries to ensure that debt does not mean a halt to development for the people of the Third World?
It must first be said that it is necessary for the debtor countries to organise and concert themselves in order to confront the creditor countries and international institutions. The Cartagena group could mean a first step for Latin American countries. The problem is political and the answer must be given on this level, and it is within this level that the ‘technical’ solutions must be found. As for Western countries, non-governmental organisations (NGOs) have a great responsibility in them to conduct grassroots work, to raise awareness, to make public opinion aware of the real mechanisms of Third World debt. In concrete terms, this means informing, relentlessly denouncing the injustices that the international financial system produces in the countries of the South.
In a country like Switzerland, for example, NGOs could provide information, which is after all the main activity of an NGO whatever its field of activity, on the consequences that populations suffer in their daily lives as a result of debt, but they could also lobby for banks to adopt a different policy towards debt, and not to become accomplices of the regimes for which they collect funds.
Awareness-raising work should be promoted within the developing countries themselves so that the ruling classes do not adopt models that lead to false needs and imports of luxury goods. Here again, Western NGOs must lend their support to such initiatives by seeking to enlarge the space of autonomy and self-determination of the developing countries, to inform public opinion about responsibilities and solutions, and in this way to influence national and international political powers to favour a true new economic order.