To most of us in North America, the Third World debt crisis is one of those distant and impenetrably obscure issues encountered only occasionally in those brief and confusing reports on the back pages of the newspaper. We just know we've heard somewhere that it is supposed to be a serious problem for some reason.
But for most of the world's people, the debt issue is very real and very simple, as real and simple as a loaf of bread or a bowl of rice. If their governments pay the debt under current arrangements, they may not eat.
As of 1984, Third World countries owed a total of $895 billion to Western banks and governments. Simply maintaining annual interest payments has become an impossible burden for many countries. For instance, if the government of Peru paid at the rate currently demanded, interest on the debt would consume 60 percent of the export earnings on which the country's economy depends.
Often the only source of relief open to the debtor countries is assistance from the International Monetary Fund (IMF). But votes on IMF loan policy are weighted to reflect financial contribution to the fund. Consequently, Great Britain has more votes than all of black Africa, and the United States can out-vote all of black Africa and Latin America combined. So, not surprisingly, IMF proposals for Third World economies tend to bear the stamp of Reagan-Thatcherism.
IMF loan assistance is routinely made conditional on the acceptance of draconian austerity measures, including cuts in wages, social services, and food subsidies, and the adoption of "free market" tax and trade policies. Many countries have found the IMF cure to be worse than the ailment it is supposed to treat. For millions of poor and working-class people throughout Latin America, Asia, and Africa, international debt has become the foremost issue affecting both their immediate survival and their national sovereignty.