Lenders and Illegitimate Debt

Asserting that "it takes two to tango," the Jubilee movement argues that it is high time lenders assume their share of responsibility for the debt crisis. Many projects benefited creditor country firms, but not the people who now have to pay.

The Bataan Nuclear Power Plant in the Philippines is a prime example. Built on an earthquake fault line at the foot of a volcano, the nuclear plant is unsafe and has never been used, but it costs the Philippines $155,000 a day in debt payments to U.S., Swiss, and Japanese banks. Like much of the Philippines' foreign debt, this debt was incurred during the 24-year dictatorship of Ferdinand Marcos, who was supported by successive U.S. administrations eager to maintain two key military bases on Philippine soil.

As a U.S. ally, Marcos was favored with loans from commercial and multilateral lenders, despite clear knowledge of rampant corruption. For instance, Marcos and his close associate Herminio Disini together are said to have personally taken some $80 million from the Bataan nuclear project; Westinghouse, the U.S. firm that won the contract, admitted to having paid Disini $17.3 million in cash as a commission. Today, although the Philippines is considered a middle-income country, 40 percent of Filipinos live in poverty. Like many other countries, it struggles to develop while shouldering the heavy yoke of illegitimate debt.

Read the Full Article

Sojourners Magazine August 2007
​You've reached the end of our free magazine preview. For full digital access to Sojourners articles for as little as $2.95, please subscribe now. Your subscription allows us to pay authors fairly for their terrific work!
Subscribe Now!