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A global economy crying out for balance

Their mission is cancellation of the poor nations’ debts. Yet the world’s Catholic relief agencies, in pushing the commercial banks and international financial institutions on debt relief, have embarked on something far more significant.

Intended or not, these Catholic agencies are midwives to the first global opposition party in a world where the only prevailing “government” is that of economic power. These Catholic agencies are participating in the cranking up of a sort of Judeo-Christian miracle machine called Jubilee 2000. The principle of Jubilee in the Hebrew scriptures declares the moral conviction that debts should be forgiven before people are driven to misery and hopelessness.

For Christians, forgiveness is a central tenet.

Admittedly, in the practical world of global economics, a roster of supporters and endorsers rarely means much. Nonetheless, Jubilee 2000 marshals some heavyweights: John Paul II, the Latin American Catholic bishops, the Anglicans in Britain. In the United States, those joining with Catholics in the effort include Episcopalians, the Evangelical Lutheran Church in America, the Islamic Society of North America, Mennonites, Methodists, Presbyterians, United Church of Christ members.

They all want concerned people to sign a petition and get involved.

These very same agencies are also representative of a new type of global solidarity tying together North, South, East and West, as well as the rich world and the poor world.

In concert, therefore, these religious and humanitarian organizations are giving the poor their universal voice. Seen in that light, debt relief becomes simply the first item on the agenda of the poor people of the world.

How did we get into all this? Well, commercial banks and governments behaved irresponsibly, knowing that in all likelihood the international financial agencies would bail them out.

It began with the oil embargo in the 1970s.

Oil prices shot up. The oil producing countries suddenly had zillions of dollars they didn’t know what to do with. Inflation set in worldwide. Interest rates skyrocketed beyond usury.

The oil money flooded into where the interest rates were highest. U.S. Government Treasuries were paying 14 percent -- guaranteed.

When the oil money was deposited with banks and government treasuries, the new holders of the cash had a problem -- now THEY didn’t know what to do with it.

So they did what banks and similar institutions always do -- they loaned it out. Or loaned it to those who loan it. The lenders then loaned it to those who needed it most. The poor. The only problem with loaning money to very poor people or poor nations is that they’re precisely the ones who don’t have the money to pay it back.

So, when you lend money to poor nations or poor people it’s essential to get the highest interest rate possible -- after all, they’re a risk. And it’s essential to make sure the interest rate is adjustable, like a home equity loan, so that if the general interests rates rise, you have even more money coming in. They borrowed the oil money, the interest rates rose, they’ve already paid many times more money back in interest than the original loan and they still haven’t paid off the loan.

The result? Ten years ago, Jean-Marie Fardou of CIDSE told NCR that Zambia had one of the highest primary school attendance rates in Africa. Now, because of public expenditure reductions imposed to service the debt, fewer than half of Zambia’s children are in school.

How do the commercial lenders get paid when governments of poor nations are economically strapped? The nations have to borrow more. In order to do that, the lending agencies -- IMF, the World Bank, you know who they are -- come up with a set of rules to ensure repayment.

Meanwhile, the IMF rules are so strict that what little money was being spent on rudimentary health care, elementary education, and minuscule social services and infrastructure building disappears.

It goes to servicing new debt.

The other option is to allow outsiders to come into the poor country with their money, buy up what they like and take their money and the poor country’s money with them when they leave.

The global economy.

Zip goes the local economy.

The previously existing little local economy, which once involved the poor people themselves, is also thrown to the wealthy wolf who has come in to buy up the poor country’s assets (telephone systems, mineral rights, forests) on the cheap.

The situation is untenable. The world’s capitalist governments know it. The only remaining question is how to fix it. Debt forgiveness makes sense, even to many capitalists. Today’s debtors, once freed, are tomorrow’s customers.

Presuming the Jubilee 2000 scheme works and the poor nations’ debts are forgiven or considerably lessened, what then? For starters, the poor nations might realize that in harmony with the First World’s religious and nongovernmental organizations there is in the making an extremely potent way of redressing wrongs.

Suddenly highly visible and politically sophisticated people in poor and rich countries in unison will perhaps demand a seat at the World Trade Organization table -- and get it. Perhaps they will successfully demand new international standards regarding investment in poor nations. Perhaps they will successfully demand more protection for local economies. And perhaps, before any more wealth is drained from the poorer countries, some balance will be brought to the new politics of global money.

National Catholic Reporter, May 1, 1998