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by Lydia Kruger
Sunday, Feb. 06, 2005 at 7:13 PM
Between 1980 and 2003, .8 trillion in interests alone flowed from the South to the North. The heavy debts of developing countries more than tripled in this time period.
“A SUBTLE FORM OF HYPOCRISY”
Offer of Deferring Debt Payments to Tsunami Countries was not Meant Seriously.
Interview with Lydia Kruger
[This interview originally published in: junge Welt, 1/21/2005 is translated from the German on the World Wide Web, http://www.jungewelt.de/2005/01-21/019.php.]
[Lydia Kruger is project director at WEED (World Economy, Ecology and Development) and works in the nationwide ATTAC study group “Financial Markets”.]
After the flood catastrophe in the Indian Ocean, the leading industrial states offered deferment of debt payments to the stricken countries. Is this more than a drop in the ocean?
This is not a solution in any case. On January 12, 2005, the creditor lands in the Paris Club discussed “debt reduction”. Absurdly little came out of this. They offered a moratorium. The debt service due this year may be paid later. The problem is only shifted to the future.
The offer was not meant seriously. The larger countries refused this moratorium. Thailand and India immediately refused because they feared being punished by the private capital markets. Indonesia, Sri Lanka and Seychellen seemed to accept the offer. On January 13, 2005, German finance minister Hans Eichel (SPD) met with the Indonesian foreign minister and the same day the Indonesian government refused the offer. Indonesia must pay Germany 442 million Euro this year.
That marvelous offer follows the motto: We offer you deferment of payment but woe to you if you accept it…
This is a very subtle form of hypocrisy. For several decades, many countries have been heavily indebted, not only the countries now afflicted by the flood catastrophe. Between 1980 and 2003, .8 trillion in interests alone flowed from the South to the North. Nevertheless the heavy debts of developing countries more than tripled in this time period. A few years ago there was a HIPC initiative (Heavily Indebted Poor Countries) that should have cancelled the debts for the poorest countries. This only happened to a small extent under the conditions of the International Monetary Fund for introducing neoliberal structures.
With all the mourning over the flood disaster, we hope this is at least the occasion for setting the theme debt cancellation on the political agenda again. This will certainly be discussed February 4/5 at the meeting of the finance ministers of the G7 countries in London. We urge the German government to lead with a good example. The first necessary step would be the waiver of the German government’s demands to heavily indebted developing countries. Spread over 20 years, the annual costs will amount to 1.7 billion Euro. This can be financed. 1.7 billion Euro is the equivalent of three frigates for the German navy or as much as the German army spends for foreign deployments.
How heavily indebted are the countries of the so-called third world to the leading industrial countries as a whole?
Altogether there are .43 trillion in public and private debts. The economic aid of all industrial countries amounts to billion a year while the debt service of developing countries comes to 3 billion, more than six times the economic aid. This subsidizing of the rich countries by the third world must finally end.
What impulses for solving the debt problem do you expect from the World Social Forum that begins January 26 in Porte Alegre?
Strategies with other groups and debt cancellation initiatives from the whole world will be discussed. We start from the fact that we agree on common demands so we can finally reach a real debt cancellation. The developing countries must be liberated at last from the debt burden – not only with alms after disastrous natural catastrophes.
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