Drop
the Debt
Produced
by Kirsten Garrett
Sunday 9/09/01
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Kirsten Garrett:
In early November, the World Trade Organisation will meet again to
discuss the
state of the world. This time the meeting is to be held in Qatar, a small
country, difficult
to get to, and with no freedom of the press. So sensitive are these
WTO meetings
now, it is difficult to hold them in a major centre, where protestors
and critics
have easy access. Needless to say, the issues of free trade, privatisation
and the power
of multinationals is a concern in communities across the world. And
so is the
growing Third World debt, which is entrenching grinding poverty.
Sub-Saharan
Africa, for example, has to pay $250-million each week to the West to
service its
debt.
Two speakers
recently toured Australia to speak on the subject. Activist, Columbian
priest and
social justice campaigner, Father Brian Gore, and UK economist, Michael
Rowbotham.
I'm Kirsten
Garrett and today on Radio National's Background Briefing, you'll hear
some of what
they said about the effects of World Bank and IMF policies on the
developing
world.
The urgency
of the need for the debt to be forgiven was stressed, because it is
leading directly
to the deaths of thousands of young children each day. First to speak
was Father
Brian Gore.
Brian Gore: What could be more urgent than the fact
that every day 19,000 children under the age of five will
die because the debts have to be paid? Now that's only
children under the age of five, and we're not talking
about the 30-million slaves around the world, different
kinds and forms of slavery which are basically to do
with the whole issue of poverty in their countries. So I
suppose my conclusion is they don't care, that's just it.
And I don't care what Mr Wolfenston and the
protestations he and people like him make about their
concern for the poor (with their $250 a day dinner plate
while the poor are starving) and I think this is where we
have to be
people of indignation. Strong, calling a spade a spade and not letting
them
get away with
their spins about their concern for the poor.
And after I
called for a new class of crimes against humanity to be drawn up for those
people who
force the poor of the world to pay their debts and in doing so, killing
the
people. This
is a new form of crime against the human family, and I think that's the
language we
need to be using. Mr Blair and Mr Bush and all the other people who
proclaim to
be people of compassion, they just don't care. What did they come up
with? They
were going to give $100-billion in debt relief. We know that less than
$3-billion
has actually been given in the last two years. $100-billion was only a
quarter of
what was needed for the most highly indebted poor countries, and yet
they've only
come up with less than $3-billion.
Then when Africa
asked for AIDS help and they asked for $10-billion a year to do
something
about it, they were promised something like $2.6-billion. It's tokenism.
It's
crumbs from
the rich man's table, that's what it is, crumbs from the rich man's table.
A few years
ago, or many years ago, after I had come back to Australia from the
Philippines
and I was going back to visit the Philippines; Marcos was gone, it was
my first trip
back to the Philippines, and I visited my old parish. The picture they
showed me
was that of a head of a person who had been killed by the vigilantes,
under Cory
Aquino, to fight Communism. This was one of our parish leaders.
I was on my
way to America and I brought that picture with me and I was invited to
New York and
the Philippine Ambassador under Cory was there, and a whole group
of experts,
and Jonathan Quickney was very good to me. He said, 'Well you know
Father, what
would you like to say?' So I produced this picture, which was just
startling,
and the Ambassador started to make this plea, 'You know Father, change
takes time.'
And I looked at him and I said, 'Sir, the poor don't have time to wait.
Their
timetable
is their next meal. So don't talk to me about Rome wasn't built in a day,
the
fact is that
these people need debt relief, they need help now, not in three years'
time.' Meanwhile
(and this is why I get particularly angry) a lot of the Christian
churches,
a lot of the churches are not really pushing. I mean if there's any
justification
for calling yourself a Christian, it's because you have care and
compassion
for the poorest of the poor. And yet somehow it's not even impinging on
us.
Let's get back
to an economics which considers people and the poor at the centre of
the community.
We've heard it so often that a government can be judged by its
policies and
the way it treats the most vulnerable of its citizens. Now I've heard the
Governor-General
say that on a number of occasions. A lot of people will say that
you can judge
a government by how it responds to the most vulnerable of its citizens,
and that's
what the poor are, the 7-million children a year who die; the slaves. Those
chocolate
slaves in Africa. I mean this is all part of the policy of the IMF. The
price of
cocoa went
through the floor when they had to go on to the world market and now
they justify
slavery by saying 'Well we must have slave labour because without it we
can't continue.'
Which is not a great argument either. But I don't know whether you
saw that but
it really wrenched at my guts when they were interviewing on the BBC
one of the
young slaves who had been rescued. He was 15 years old, he had been
working for
five years on a cocoa plantation on the Ivory Coast with a whole group
of
other kids.
He didn't even know where his home was. He was illiterate. He had been
sold. Well,
he would have been told that he would be given work, and was taken and
put somewhere
where he didn't even know where he was. And they said to him,
'What would
you like to say to the people in the rich world who eat chocolate?' and
the kid said,
he was 15 years old, illiterate, and he said, 'I would like them to know
how much I
am suffering, and have suffered.' And then as a little addenda he said
'They are
eating my flesh'. And that sent real shivers up my spine. 'They are eating
my flesh',
and I love chocolate. So every time I eat a bar of chocolate now I really
have a pang
of conscience, especially if it's Nestle. But even now Cadbury's, I can't
eat with a
clear conscience. Those little jockeys from Bangladesh who are sold into
slavery into
the Middle East. Sixty percent of them end up crippled or dead, five year
old kids are
made to become jockeys, because that's the only thing their family can
do to survive,
they think they're going to get, you know, if you say your kid's going
to
be a jockey
here, 'Oh great, he might run on Melbourne Cup. Terrific. Opportunities.'
But a five-year-old
kid from Bangladesh ending up in the Middle East, either dead,
crippled or
disappeared. Probably also becoming spare parts for this industry of
organ donations.
So I feel like
taking people sometimes when I'm in church and I'm preaching and I
can see the
resistance; I'd like to shake them and say, 'What if that was your child?
What if you
had to sell your child into slavery just to exist?' Because it's not going
on
here because
it's far from us, we don't want to know about it, and even when we do
know about
it, we don't want to do anything about it.
Kirsten Garrett:
Father Brian Gore speaking in Australia in August about the
urgency of
the need to drop the Third World debt.
Brian Gore:
People are dying. People are being sold into all forms of slavery, sex
slavery, carpets,
you name it. They estimate 30-million slaves, most of
them women
and children around the world, working in inhuman conditions, and many
of them in
some of the big factories of multinationals. Now to me, that is something
that cries
to heaven for vengeance. The plight of these people and yet we, in our
world, are
not prepared to say, 'Hey, maybe we've got to do something about this.'
And what really
makes me angry is when I hear George Bush get up and say to
the poor of the
world, 'Sorry, we will not compromise on our standard of living, we
will not give in
one iota if it is going to affect us in any way.' But to say that, demands
moral condemnation.
That you are not
prepared to compromise or to accept a lower standard, or even to
forego something.
All they've got to do is put down their temperature about a couple
of
degrees in their
homes in winter and they can save billions of dollars. They want
to get
around in singlets
inside the house, so they won't even wear a jumper. I mean I've lived
in the States, it's
the most profligate way of life, and we are following that line.
But it's
not sustainable.
So that urgency
of realising that our standard of living has a direct relationship to their
lack of any
basic necessities of life, and the fact that we belong to the rich 20%.
And
that's why
I say my job as a priest, as a missionary, when I come back here, is to
not comfort
the afflicted, but the afflict the comfortable.
Now that's
not very popular. It wasn't popular in the Philippines I can tell you,
and it's
equally unpopular
here, because don't want to be moved out of their space very often.
And suppose
I'm trying to say to people, touch their conscience, touch their hearts
and say, 'This
is just not acceptable, that we, the 20% have for our disposal more
than 86% of
the world's goods, the world's wealth.' The bottom 20% have something
like 1.4%,
so that divide has to be breached. And we can't say, 'Well you have to
wait until
we get our act together' because we'll never get our act together. How
much
more do we
want, how much is enough? And as Rockefeller said, 'Always a little
more', when
he was asked how much is enough for a millionaire, he said, 'A little
more is always
a bit better than having what you've got.'
I was in Manila
recently, I went to the local hospital down on the island where I was,
I
saw the face
of debt was there. Children were dying right before your eyes. The
hospital had
no money. Why? Because there's no budget. Why? Because the
Philippines
pays up to 40% of its budget on servicing its debts. Yes, there's
corruption
in the Philippines. Yes, there's corruption in the hospital system, but
you
know, there's
also corruption at the other level, where the people who stand by and
do nothing
in terms of the international community. We say we don't interfere in other
people's businesses,
but we've been doing it since way back in colonial times. We've
interfered
in their lives, their economies and everything, and now because it suits,
we
say that we
cannot interfere in their internal affairs. We're interfering the whole
time.
One of the
great things that's happening in the Philippines is, I suppose, that the
people are
standing up, but they can't do it on their own, they need our support.
There needs
to be that solidarity. The farmers in the old town where I was, they're
having marches
against bio-piracy, for God's sake, the stealing of life forms, and
they're calling
it bio-piracy. You've got these companies coming in such as Yves St
Laurent. They've
bought one of the most aromatic flowers in Negros, they have the
patent for
it. Now they're going to put up farms growing this flower. Meanwhile we're
not growing
food for the people. And this is also where I think the people are saying
'This is not
the kind of world that we want. We want to grow food for our people first,
we don't want
to be growing sugar and coffee for export'. This is IMF and World Bank
policy, and
therefore they must take responsibility for creating those economies and
the cheap
prices that they get for for their exports.
Kirsten Garrett:
The basic thrust of World Bank and IMF policies, the audience was
to hear later,
are that these countries should borrow money, invest it in developing
their agriculture
and industry, export the products of those investments, and then
repay the
debt. This framework has not succeeded. Low prices, capital flight, and
currency fluctuations
have meant that the debts have increased over the last 50
years, and
some countries now pay 40% of their earnings in servicing their debts and
they owe more
than ever. The economic chaos fuels corruption, civil wars and
exploitation.
Father Brian Gore.
Brian Gore:
You almost feel that they want Africa to die out. I've got that sort of
nasty suspicion
that they don't care, because 'Well, if they all die off, then we can
have it to
ourselves.' I mean that's an awful thought for a priest, but I do have
those
terrible thoughts.
My conclusion
is that they don't care. There's a moral dimension which I think is
destroying
our world. If there is a lack of compassion (I don't care what religious
tradition
you come from, or no religious tradition) if there is not a basic compassion
there for
people, concern and care for people who are vulnerable, people who are
starving,
people who are just surviving, then it's not really a world worth having.
If we,
the dominant
20% only take for ourselves the vast majority of the goodness of the
earth, and
at the same time pollute at a level of 40 times more than what anyone else
does in the
Third World, then what sort of a society do we have? What's it saying
about us,
as I think Salman Rushdie said, 'Let this be humanity's gift to itself,
the
forgiveness
of debt.' And I think Tim Winton said, 'We have to be capable of that
wonderful
act of getting off those people's back by actually, as a first step only,
the
cancellation,
the wiping out of that immoral debt that is a burden around their necks.'
So I suppose
that's my role in this debate, is to stir, to make people uncomfortable,
to make them
feel that it is not morally acceptable for Christians especially, to claim
to be people
who love one another, the basic commandment of the Christian Gospel,
that somehow
to make them feel so uncomfortable that they'll have to do something
about it.
And for other people too I suppose, to prick their conscience and say 'By
an
act of history
you are born here. What if you had have been born in Africa on the Ivory
Coast, or
in Ghana? What if you had have been born in some of these other
countries?'
What gives us the right, because of historical accident, to take for
ourselves
all the wealth of the earth and pollute it and destroy it at a level which
is not
sustainable?
We have no right to do that. So I think we need to keep pushing that the
G8, the people
who have it within their power, to actually do something about it. Not
next year,
not when all these conditions are fulfilled, but now.
We need to
keep the pressure on them, the moral pressure, that this is
unacceptable,
that every day all these children are dying unnecessarily. It's not
acceptable
that that can happen, and I just think the more we are outrageous in our
condemnation
of what they are doing may be the better that they will listen. I don't
know. They're
not listening when we speak with the nice pious terms like 'For the love
of God will
you do this?' And they say, 'Oh yes, we'll do it one day.' I think we have
to
make them
feel like lepers, that they are a blotch on the escutcheon of the human
family, that
these leaders who have it within their power to do something, and won't
do it. They
keep postponing it, and even their promises are not being fulfilled.
I don't know
what it is. It belies your sense of basic
fairness,
that they can continue to do that. Partly I
suppose because
they believe that the vast majority
of people
feel just as apathetic. I think that's our job,
to make the
ordinary person so outraged that this
becomes not
only a voting issue, but it becomes an
issue for
which we are willing to sort of maybe put our
life on the
line, somehow. So let's call for (they
mightn't heed
it, but we can at least say it anyway)
let's call
for a new class of crimes against humanity,
let's keep
pressuring them and saying, 'Hey, what you
are doing
is worse than Slobodan Milosovech, it's worse than what happened in the
Holocaust,
because you're killing these people as surely as you're taking a gun and
pushing it
to the head. In fact using a gun might be more humane. Quicker and
humane, to
put people out of their suffering.' I'm not advocating that of course,
but
this idea
that it's not violence, the violence of inaction, the violence of saying
'Oh, we
can't do anything
about it'. That is violence, and therefore we have to make that
language very,
very clear. So let's stand together and let's make our fellow
Australians
and ourselves uncomfortable and say, 'Yes, we must do something about
it. There
is an urgency because death and suffering is there around us.' Thank you
very much.
Applause
Kirsten Garrett:
Father Brian Gore speaking at a seminar organised in Australia by
a group called
Economic Reform Australia.
The next speaker
was UK economist, Michael Rowbotham. He has specialised in
studying and
writing about development economics and solutions to the effects of the
Third World
debt. Part of Michael Rowbotham's work has been a far-reaching
analysis of
economic history.
Michael Rowbotham:
And I was appalled at the recurrent, perpetual mistakes that
had been made
by the international community of nations when it comes to Third
World debt.
You can't understand Third World debt… we can be outraged at it here,
as Father
Gore has made us for the appalling results that it's having now, but it's
when you understand
the full story of Third World debt, how it's been instituted, how
it's come
about, and the motives possibly behind it, that your anger really starts
to
boil.
Now this round
of Third World debt started, you might say, at the end of
the war, when
the powerful nations got together and decided the terms
of trade and
the financial architecture that was going to govern international
trade after
the war, and that was when the IMF and the World Bank
were set up.
And they expected that the poorer nations, many of them were then
colonial,
would need a source of development funds, and so the IMF and the World
Bank were
set up, partly to adjust trade and partly as sources of funds. Now the
developing
countries were offered a model, and that model was that they would
borrow money,
they would invest that money within their economies, they would
export the
products from that investment, and from those exports they would repay
their debts.
Borrow, invest, export, repay. It's perfectly rational in whatever economic
system you
care to choose. Classical, neo-classical, Keynsian, post-Keynsian;
whatever label
you adhere to, that model is perfectly rational. It hasn't happened.
It isn't just
an occasional failure, it's an invariable failure. There is no single country,
so far as
I'm aware, that has ever cleared its debts to the World Bank and the IMF.
Borrow, invest,
export, repay is a proven failure. Now if you have a model that fails
once or twice
and has occasional successes you might look at the success stories,
and try and
work out why the economies that are failing have not managed, but when
you have a
model that's an invariable failure, you must address the terms of trade,
the terms
of the loans, and the nature of that model. No responsibility for doing
that
has been assumed.
Now to get
a real impression of the change in outlook between today and 40 or 50
years ago,
I'll just read you a couple of quotes. The optimism that tended the
countries
that were achieving their independence, African countries for example.
But
not only those.
There were developed economies such as Argentina, Brazil, all
looking forward
to a period of prosperity after the war. Some of them were relatively
developed,
such as the South American countries. The African countries were
looking forward
to a period of prosperity. There's a famous quote by Kwami Nkrumah,
Ghana's President.
He prophesied in 1950 'If we get self government, we'll transform
the Gold Coat
into a paradise in ten years.' They knew they had the natural
resources,
the climatic advantages, the geographical potential to secure their own
prosperity.
The contrast
with what has actually happened within 20 years when we had
comments such
as this: 'Do not attempt to do us any more good, your good has
done us too
much harm already. Please don't lend us any more money, not even if
we plead for
another quick fix. If foreign aid stops, that will be the greatest service
they can do
us.' What an extraordinary transformation in 20 years.
Now that 'borrow,
invest, export, repay' is a very important aspect to remember,
because these
countries are lent money in a single unit, or maybe in tranches, but
they are then
left to export into the global economy in order to repay with all its
variables,
all its changing currency values and changes of price.
Now there's
another reason that we should look at Third World debt and criticise it:
there has
been a media consensus that's developed over the last five years. There
has been a
consensus developed that it is the corruption and economic
incompetence
of the debtor nations that has led to this Third World debt, and the
inability
to get out. So they're all incompetent, they're all corrupt. Well in fact
if you
study the
development literature of the last 40 or 50 years, you do find considerable
mention of
corruption and incompetence, but it's not the developing countries who
are
accused of
the corruption and incompetence, it's the World Bank and the IMF time
and time and
time again. The developing nations are accused of allowing capital flight
from their
countries, but it was the IMF that went in and imposed the deregulatory
policies that
allowed capital flight by the middle classes in the developing countries.
It was the
IMF that imposed the austerity programs that plunged those economies
into depression
so that people wanted to send the money out. The actual studies
conclude that
capital flight a) has not been a significant factor sufficient to account
for
Third World
debt, and b) it's mainly attributable to IMF and World Bank policies.
Military spending.
Well if you've got a civil war going on in your country, the result of
ten years
grinding poverty, then do you blame the government for arming itself? And
the origins
of those civil wars, largely lie, if you read Susan George, one of the
great
commentators
on Third World debt, is in the perennial poverty that has spread
throughout
those countries. We have to get the story right. We end up blaming them
for military
spending and capital flight, whereas before that came the policies that
generated
the poverty that caused the military conflict and generated the capital
flight. The
blame does not lie with them, if you look at the full story the blame lies
again with
us, or our representatives. And as I say, there are thorough studies of
all
these elements,
and they do not conclude that capital flight, military spending,
corruption
etc. are dominant causes, but because we get them in one or two
countries,
we tar all of the developing world with the same brush. It's disgraceful.
Now I don't
know if you've noticed, but there's something very odd about debt in the
modern world.
Here we are talking about Third World debt, but we've got America,
with a national
debt of $5.6-trillion, total public liabilities in excess of $13-trillion,
mortgages
in excess of $5-trillion, and almost unaccountable commercial debts,
because their
corporations produce rollover bonds in the global economy. Japan,
Australia,
France, Germany, I mean these are all major debtor countries. In fact the
$2.2-trillion
of Third World debt is just a drop in the ocean compared with the
aggregate
debt of the more wealthy countries. There is something odd about debt in
the modern
world.
Now the main
reason for challenging Third World debt is that Third World debt is a
blatant misrepresentation
of history. We are saying that they're in debt, that they owe
something
to somebody else. But for decades now, we know that they have exported
the cheapest
foodstuffs, agricultural products, minerals, raw materials, manufactured,
semi-manufactured
goods, they've been persuaded not only to export their goods and
services and
products. They've been persuaded to sell off, privatise, to export if you
like, their
actual infrastructure. So they're selling off their docks, their technological
sectors, their
Telecom, their private and public assets. Some of these countries are
virtually
owned by corporations beyond their borders. They've exported all they've
got,
and they've
actually sold the manufacturing units that produce the exports. Now in
what possible
sense can they be said to owe anything to anybody? They don't.
Now this is
actually an economic contradiction of the greatest significance, and what
it shows is
there has been a complete failure of trade accountancy. They have traded
and exported
all these products, they have exported far more of value than they ever
bought with
the loans that they were given. They borrowed money, they purchased
equipment
and expertise to develop their economies. What they bought in is trivial
compared with
what they've exported. Now that makes them creditors. In terms of the
balance of
trade, they're the ones in credit. But they have a financial print-out
that
says 'You're
all in debt'. And this is a common conflict that you have with the
financial
system and modern economics. I mean look at America, that poor country.
If you were
to look at their financial print-out, you would think it was an impoverished
nation. If
you were to go there, the obscenity of the wealth that they discard is
just
extraordinary.
Again we have this contradiction.
Kirsten Garrett:
You're listening to an edited speech about the Third World debt by
economist
Michael Rowbotham, and this is Background Briefing on Radio National.
Michael Rowbotham:
What I want to do now is have a look at the issue of free
trade, because
this is the agenda, and it's really important that we understand the
economics
behind this because it makes us more and more angry. The issue of free
trade, which
is the agenda that's been accepted by the more powerful nations, and
which has
been the ethic under which we've conducted trade for the last 40 or 50
years. Now
free trade has a theory behind it, and that theory is that if you allow
these
nations to
compete, then gradually the poorer nations will compete their way up to
the standard
of living of the wealthy nations, which clearly hasn't happened. And the
main failing,
if you like, of free trade is that there's been no protection of commodity
prices, and
there has been a determined resistance by the World Bank, IMF, GATT,
the wealthy
nations, to any form of agreement to do with commodity prices. What's
happened?
Year after year, the commodity price goes down. It might be minerals, tin,
zinc, bauxite,
it might be agricultural products, it might be computer chips, but there
is no agreed
prices. So if there's a surplus, the price goes down. Now it's been
observed for
packets of years you take sections of years, five years at a time, ten
years at a
time, as a general rule the fall in commodity prices and the failure to
get a
fair price
has more than outweighed the aid that they've got. In other words, if they
protected
commodity prices, they wouldn't have needed the extra debt, or the extra
aid.
Remember they
were completely reliant on getting revenues, no protection for the
commodity
prices. Meanwhile, the World Bank and the IMF sit there and say, 'Coffee
appears to
be a good price commodity' and puts out general advice to the developing
country community,
Coffee. I mean it's a schoolboy error. They replicate their advice
to a number
of countries, they institute programs, and what happens? You get a glut
of coffee.
What happens? The price falls. What happens? Do they get out of debt?
No, they don't.
Should we be surprised? We should be angry. This is schoolboy
economics.
You have to understand, if you institute an austerity program, structurally
adjust an
economy, it goes into recession. Well that's a great way for an economy
to
trade its
way out of debt, isn't it. If they have their domestic businesses toppling
like
dominoes,
and they get picked off by the foreign multinationals. That's a great
strategy.
They advance loans to them, in hard currencies, like dollars, francs, yen,
deutschmark,
pound, and then what do they say? 'Deregulate your currencies and
allow them
to float free.' What happened? The currencies go through the floor.
Now if your
currency falls in value by a factor of five, if beforehand you had to export
20-million
tonnes of grain, you now have to export 100-million tonnes of grain,
because you
need dollars to pay back your debt. Now to combine loans in hard
currencies
to advocate a free floating exchange rate, and to allow these currency
values to
fall, it's trivial mistakes in economics. Now people have been pointing
this
out for the
last 20 or 30 years. The latest round is, of course, that they should
privatise,
and sell off their assets to the international community of corporations.
Well
that's a great
plan, isn't it? Because they're in a position where because they're trying
to attract
foreign investment, they put their taxes as low as possible. What happens
when a corporation
comes in and produces goods and services in that country? Well
the tax revenues
that go to the State, available for repayment, are nominal, the profits
are repatriated,
the country gets nowhere and it simply becomes a manufacturing
outpost for
the West.
Now all of
this train of events which I've skirted over, there are numerous examples
of
the most appalling
blunders in economic advice, and yet they never review their
advice. Nobody
wants there to be barriers to the exchange of goods between peoples
and nations,
but if you have this entire agenda of free trade from commodities right
through to
currencies, it's a dangerous scenario, and they know it. They're
economists
who believe what they want to believe and reject the small print, which
has all the
warnings in.
Now there's
another element, this issue of debt. And the ubiquity of debt in the
modern economy.
Now why is it that there is so much debt? If there wasn't enough to
astonish you
and perhaps anger you in this catalogue of insanity to do with the World
Bank and the
IMF, this issue of the debt-based financial system really is the cream
on the cookie.
People think of money as being note and coin, but in fact note and
coin is only
3% of modern money. What is the other 97%? Well the other 97%
almost the
dominant form of modern money has no other existence other than as
numbers. There's
numbers in your bank account, my bank account, business bank
accounts,
government bank accounts, because we don't use cash that much, it's just
a thin skin
on the surface. Most money is transferred between accounts by cheque,
card, money
transfers, whatever, and that money has no physical existence. Now
who produces
that numerical money? It's entirely generated by commercial banks.
Banks make
money, and they way they do it is they lend to borrowers. If you crash
your car and
you haven't got $30,000 you can go to your bank, you can borrow
$30,000 and
you think you're borrowing somebody else's money. You are not. The
bank is able
to bank against its deposits at that time, and it will create $30,000 that
never existed
before. You will buy your car, the person receiving that cheque will put
it into his
account and hey presto, $30,000 extra has entered the Australian
economy.
We have to
address Third World debt now, we have to address it because it's
backlashing
on us. I mentioned Susan George earlier, she is not the only, but one of
the most prominent
commentators on Third World debt, and she wrote a book called
'The Debt
Boomerang' in which she pointed out how Third World debt rebounds on
us. Australia
at the moment has problems with cheap imports of agricultural produce
coming from
South East Asia. I gather there's been pressure on your steel industry
because of
cheap steel coming from South East Asia destroying your domestic
agriculture
and your domestic steel. So there's a loss to South East Asia and there's
a loss to
you. Think of the lunacy of this situation. In South East Asia where they
cannot feed
their own people, they're devoting land to producing food for you when
you can feed
yourselves. In South East Asia when they need their own industrial
infrastructure
and they need steel for their own purposes, they're undercutting your
market, when
you can produce your own steel. They're destroying three ecosystems.
They're destroying
their own ecosystem, your economic ecosystem, and the
planetary
ecosystem with all this transport backwards and forwards. We have to
address this.
And in between stands the multinational corporation which has a foot in
both camps
if you like. They're able to cherrypick. They are able to cherrypick
amongst the
developing nations and say, 'That's where I can produce that commodity
cheapest,
that's where I can get that mineral cheapest, that's where I'll go.' And
then
they can go
to the more wealthy nations and upset their domestic and established
industries
and they take the profit.
Of the 100
largest economies in the world, of the 100 largest economies, 51 of them
are multinationals.
Ford is bigger than South Africa. Mitsubishi is bigger than
Sweden. They
have this power to operate internationally, standing outside national
regulations,
and to take advantage of the impoverishment of the developing nations.
Now another
point, there is a gross misallocation of resources. Economics are
supposed to
be efficient use of resources. That is one of their prime agenda if you
like, but
the abuse of resources and the misallocation of land in the Southern
Hemisphere
producing strawberries which are airlifted to East Anglia where I live,
and
wiping out
the local fruit farms there. I mean that is a misallocation of resources.
There is a
price distortion. It means that wheat is grown at $10 a tonne in the
Southern Hemisphere
but it costs $100 a tonne, but it's still wheat. There is a price
distortion
that is introduced by Third World debt, and the economists have to address
this.
Cancellation.
Third World debt cancellation is simple. There have been numerous
mechanisms
put forward for it, methods put forward for it. Just as we can have
different
financial systems, this is all numbers and accountancy, banking is all
numbers and
accountancy. If we want to cancel debts, we can. OK $2.2-trillion is
owed to other
countries in various currencies. There is nothing to stop Britain,
America, France,
whatever country produces those national currencies, the
governments
can simply print them by fiat. They can be passed to the destinations
and channelled
back to the IMF, the World Bank and commercial banks. If there's a
problem with
inflation, you can raise the reserve requirements on banks and that
spending power,
the banks can't then go on a spending spree. So you can produce
fiat money,
it's simple. If banks can create money out of nothing, certainly
governments
can. There are numerous ways that we can cancel Third World debt,
and this is
where we come back to Father Brian Gore. He's right, he says they don't
care. In a
sense they care very much. They don't want to cancel Third World debt
because we
have an alliance between the World Bank, IMF, WTO, GATT, OECD,
American institutions
and American corporate power, that is determined to keep the
developing
countries opened up like a can of beans so we can get what we want. We
don't benefit
from it, it isn't a question of us living more simply so that others can
simply live,
it's the corporations that are profiting from it. We're losing our
environments,
we're getting a lower quality of food that's been trucked half way round
the planet
and tastes like pap, we're losing our local employment, we're getting
socially dysfunctional
communities, we are paying the cost of Third World debt too.
That's the
debt boomerang. And as has often been pointed out, we don't get cheap
coffee, we
get full price coffee. The world was warned about Third World debt.
Everything
I've talked to you about today was known and understand 50 years ago.
And if that
doesn't make you angry, it sure as bloody hell makes me angry. Thank
you.
Applause
Kirsten Garrett:
There were many questions from the seminar audience. Several
people asked
why the IMF, World Bank and G8 are so adamant that it can't be done
and shouldn't
be done, when at the same time some world leaders are saying that it
can and should.
Some small, slow debt relief has been granted, but it's very little.
Why? It's
ideology, says Michael Rowbotham.
Michael Rowbotham:
The problem is that these people are working to an economic
agenda that
they absolutely believe, and you have to understand if you've studied any
economics
you will know that neo-classical, rational economics, whatever you want
to define
it as, is an enormous edifice of belief. It's a very tight system, it's
a very
elegant system,
a very independent, it's a massive system, and they believe in that
far more.
So that when they apply their model to a country and they offer their advice
and things
go wrong, well it can't be this wonderful creation of neo-classical
economics
that's at fault, it has to be that the developing countries haven't adjusted
properly.
So they do mean it. I think the World Bank and the IMF, there's a goodly
proportion
of them really believe in what they're doing.' They've got to the point
now
where the
IMF recently held back on a section of loan to Turkey. They were going
to
get that loan,
provided they did the usual things, and they were asked to privatise
their television
company, and they've got to the point now where the IMF baulked at
the board
that they'd chosen, the board of directors for this private company. So
they
got down to
the point where they're interfering in the economy to the extent of
choosing the
personnel, they're so concerned. But will they look at the overall model?
No.
Kirsten Garrett:
Another member of the audience asked since many economists
and world
leaders think it is possible to drop the debt and that the present system
is
unsustainable,
where is the central thrust for refusal coming from? Michael
Rowbotham.
Michael Rowbotham: What I take your question to
be is the very thorny one: is there a conspiracy, is
there an agenda? And my answer to that is I don't
know. I'm occasionally tempted by both sides,
because as Father Brian says, you have a
considerable amount of desire to protect your own
self interest. You have a considerable amount also
of genuine mistake. These people believe in this
system so
much and they keep getting it wrong. It's like people who believe in
Socialism,
you try it again, State Socialism, you try it again it's still not working.
Oh
well. And
that's not to say I don't have those aspirations, I obviously have great
social
concern. I
don't actually believe in State Socialism and a planned economy but we
have this
same thing with people believing in a system. So you have ignorance, you
have self-seeking.
The question is right at the pinnacle, do you have genuine intent to
steer a course
through history that would have created this? And I don't know, we
may never
find out. If that is the case, it's restricted to a very small number of
people,
but the important
thing is this: I don't think for us it matters, because their conspiracy
and their
power only exists for one reason and that is general ignorance. If we can
burst their
bubble. Knowledge is power. Because this is an institutional violence and
this is a
historical crime that is bigger than the Holocaust. We have to be angry.
We
have to protest.
But whether or not there is this conspiracy at the top, I think we
should ignore
it, because otherwise we're in danger of coming out with an economic
program, and
economic ideas which are not accepted, and at the same time we're
saying, 'And
guess what? there's a bunch of aliens at the top there who are pulling
our strings'.
And we just sound like. You know it's difficult enough to persuade people
that you are
compus mentis and that you know your economics without
simultaneously
coming across as some sort of crackpot. So let's keep to what we
know, which
is we know about Third World debt, we understand it, and we know it
can be solved,
and let the, if there are those bad boys there, just let them go away.
Kirsten Garrett:
That was UK economist, Michael Rowbotham and earlier, Father
Brian Gore.
Both their speeches were edited. They were at a seminar organised by
Economic Reform
Australia.
Background
Briefing's Co-ordinating Producer is Linda McGinness. Technical
operator,
Mark Don, and I'm Kirsten Garrett. You're listening to Radio
National.
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