A primer on third world debt

You probably missed the discussion last night at the Union Project on Third World debt. Gene Tibbs from CCO showed a film on it and made a compelling argument which goes as follows:

1. During the 1970s Western banks got flooded with money made from the 1973 oil crisis ("petro-dollars") and to maximize profit on this money, they encouraged -- even pushed -- developing countries to borrow at very low and variable interest rates.

2. Many of these developing countries (e.g. South Africa, Argentina, Philippines) were being ruled by brutal regimes in the 1970s.

3. Especially in these countries, the population suffered without seeing any benefit from the new loans. Often the loans went straight into the bank accounts of the dictators, to build up the military which brutalized its own citizens, or to projects contracted out by Western corporations (um, sounds like Halliburton in Iraq?) which ultimately never got completed.

4. Years later, interest rates on these loans skyrocketed to over 20% (surprise) with new governments of developing countries inheriting the loans. They had to take out more loans just to make the loan payments.

5. In doing so, the governments have spent more on paying down the debt than on social services like health care and education. These countries' citizens are again suffering for something over which they had no responsibility whatsoever.

Based on the above, Jubilee USA and others have called this sort of debt odious, a legal concept which international law has recognized as debt that is immoral and should not be repayed.

Some further reading/resources:
- Wikipedia on third world debt
- a comprehensive article from the National Catholic Reporter about the debt crisis and Jubilee's efforts
- an FAQ on the debt crisis by Jubilee Debt Campaign in the UK.
- Drop the Debt Pittsburgh's blog
- of course, Jubilee USA has a lot of educational materials on the topic.

My thoughts on this to follow...