There are many compelling arguments for canceling third world debt. However, regardless of how morally wrong, third world debt relief will not go very far in solving the myriad of causes underlying the poverty crippling these countries in the first place. Canceling the debt is just one step in the process. Industrialized countries must also be willing to reform world trade laws, drop subsidies that insulate the world markets, fight graft, and help poor countries eliminate the corruption that permeates their systems.
Examples of this systemic corruption can be seen in the countries of Kenya, Zimbabwe, DRC, Nigeria or Tanzania. These so called indebted and poor countries are some of the richest in the world in natural resources who at the same time, have a well educated work force. Yet the people are poor because their government abuses them and their resources, keeping the wealth for a few rather than for all. Canceling the world debt will not trickle down to the people as long as corrupt government officials stand in the way.
Canceling the debt may encourage more bad economic policy choices, while at the same time allowing irresponsible lender governments off the hook, free to form new alliances with criminal regimes. Much of this so called debt was merely a way for developed nations to carve out a stake in the natural resources of the poor country, in order to protect their personal interests. By canceling the debt corrupt lending countries can hide their complicity in the denigration of the poor country and its people. Hanging a blanket cancellation onto a country also means that it is not a creditworthy nation in the eyes of other world governments, making things worse.
The Essay on Third World Debt
The overwhelming debt burdens of poor countries are a major contributor to the crisis that grips the economies of most developing countries today. For the 41 most heavily indebted poor countries, total external debt rose from $55 billion in 1980 to $215 billion by 1995. (Rich, p. 189) Debt has continued to climb in most countries. African governments alone now have $350 billion of foreign debt and ...
Nor does it stop the cycle of criminality, because the countries must still borrow in order to survive and meet their other debts in the future. One way third world countries can get out of the financial and poverty inducing rut is to stay away from the patronage of rich nations who put them in trouble in the first place. Another way is to demand respect and proper treatment from creditors while eliminating the corruption endemic in their governments. It has been proven over and over again that the criminality and graft is a two way street. International law already allows countries to repudiate debt contracted without the consent of, nor spent in the interests of the people.
Under international law citizens of a country do not have to repay those financed their oppression such as America propping up tin hat dictators like Mbutu, to name one. What seems to be lacking is a will to eliminate the underlying root causes of third world problems. The tools for doing such are already there waiting to be used. Third world debt cancellation is merely addressing a symptom that will only give very short term relief while allowing the problem to recycle and become entrenched again. Breaking the cycle is the only way to alleviate the problem on a more permanent level.
