War on crippling debt

by Editor · February 16, 2005

Many South Africans will be familiar with the debilitating effects on the home budget of accumulated debt mortgage, car finance, credit card, hire purchase, bank loans. It is not unusual that much of a monthly income is spent on servicing the interest of loans, never mind actually repaying them.

Personal debt inhibits financial investments and security. The debtor is a perpetual hostage to financial institutions.

Likewise, the heavily indebted countries of the so-called Third World are unable to sustain growth and development while shackled by huge foreign debt. Widespread poverty can in large part be attributed to the conditions attached to a country’s foreign debt.

It is therefore necessary that the Church, with its preferential option for the poor, should call for debt cancellation (among other measures such as fair trade and more suitable development aid) to alleviate poverty, as the bishops of Southern Africa did earlier this month.

The world showed its capacity to respond to an international disaster after the tsunami catastrophe in South-East Asia in December, which killed about 300000 people.

The bishops noted that poverty kills “the equivalent of a tsunami every week throughout the world.” The fact that the combined death of hundreds of thousands each week excites no media headlines shows that the world has accepted poverty as a matter of nature rather than as a man-made affliction in a world that produces enough food to feed every person in the world.

The bishops of Southern Africa echoed the frequent call for the collective worldwide political will to fight and eradicate poverty.

The total foreign debt of the world’s poorest nations amounts to $39 billion much less than the US budget for destroying and rebuilding Iraq.

Of course, debt cancellation must not be unconditional. States and institutions that take such a step are entitled to expect good governance, anti-corruption measures, accountability and feasible poverty alleviation and development programmes.

Much foreign debt has been passed down through generations, often misused by corrupt despots. Today, the poverty induced by these despots is perpetuated in countries looking towards good governance in a democratic system. Democracy, however, cannot function when hunger dictates fierce competition for scarce resources a contest that often makes the difference between life and death.

Often foreign loans were given to corrupt leaders with the expectation of reciprocal benefaction. It is fair to say that not all foreign loan agreements were entered into with the welfare of the population in mind.

Likewise, much of South Africa’s foreign debt is ethically dubious, having been obtained by the apartheid government, not to develop impoverished areas of the country, but to perpetuate its racist, oppressive system.

Today, democratic South Africa continues to pay a heavy price for loans secured by a noxious regime. Calls for the cancellation of apartheid debt are therefore reasonable and justifiable.

Signs are that some Western governments, notably that of Britain, are slowly mustering the political will to fight global poverty.

When world leaders meet in September to review the progress made since the 2000 Millennium Declaration, which has failed in its aim to halvepoverty, may they hear the echo of the words of Nelson Mandela in his speech in London earlier this month:

“Massive poverty and obscene inequality are such terrible scourges of our times that they have to rank alongside slavery and apartheid as social evils.”