Profits from the Poor

By Victor Callirgos

If your family lived in a 80 room mansion and the family next door lived in a cardboard box, would you take money from them? Here’s the situation: 35 years ago your wealthy grandparents made a loan to the neighbors, knowing they were of questionable character and might just skip town, which they did. Their children were then held responsible but couldn’t pay; so your folks let them re-finance, but at twice the interest rate, and on the condition that their entire household budget be geared toward paying this loan. Now the grandchildren are still trying to pay this loan off to you. But one of your neighbor’s kids starved to death last year. Two others are too sick to attend school but they can’t afford a doctor, and the 12 year old works full time with his mother (for less than minimum wage) at the sweatshop that makes your kids’ designer clothes. The father complains that he doesn’t have cabfare to get to a decent job and that the payments to you by now are almost all interest, which you, in your 80 room mansion, don’t even need.

Still want the cash? Well believe it or not, you’re collecting it. You and I and everyone else in the U.S., as well as many other industrialized nations and multi-national corporations and organizations are making money at the expense of the destitute Third World in what is known as the international debt crisis.

The debt crisis, the 21st Century’s form of slavery, refers to money owed by the poorest nations on earth to the richest. This is more than a simple matter of paying back what was borrowed when three tragic facts are taken into account. One is that large portions of the loans were never put to use for the citizens of these countries, but it is they who bear the burden of repayment. Another is that the debtor nations are unable to educate or house their people, cannot build an infrastructure or a stable economy, and are literally starving to death in order to make their payments. The third, and the most shocking, is that in many cases the original amounts borrowed have actually been repaid, I was told, and that these poverty stricken nations are now making interest payments to wealthy organizations and nations who should beg the world’s forgiveness for profiting from the unconscionable and avoidable misery of the poor.

During the Cold War, rich countries made loans available to poor ones to create strategic political alliances, or to find new lending markets, with little attention paid to their use. Some went to line the pockets of corrupt politicians or dictators, some for instant military build-ups. In the worldwide recession of the late 1970’s, the poor countries had to borrow more money to cover their existing loans, but at sky high rates. The World Bank and the International Monetary Fund (IMF) offered to help with new loans, but these came on the condition of strict revisions in their internal economic policies, which often included cutbacks in wages and social services, making life even harder on the poorest of the poor. When full payments could not be made, the unpaid portion was added to the principal of the loan, creating a situation in some countries where, after making years of payments, the balance they owe is higher than it has ever been. There is no system of bankruptcy for countries. Their only hope is for the creditor nations to cancel their debt.

The World Bank and the IMF have identified 41 “heavily indebted poor countries” (HIPC), whose debt burdens are unpayable. The effect of the debt in these countries is so appalling it is hard to believe it is allowed to continue. For example, in Tanzania 40% of the population dies by age 35, but the government has spent as much as 9 times more on foreign debt than on health care. In Nicaragua in 1997 (before the devastation of Hurricane Mitch) over 50% of all government revenue was spent on foreign debt, more than twice the budgets for health care and education combined (Oxfam International).

To relate this to how we live, consider that the total owed to the U.S. by the HIPC’s is between $ 7 and $ 9 billion, a number that pales in comparison to the $ 165 billion spent on the savings & loan bailout (N.Y. Times 11/22/98). Incredibly, the cost of providing basic health care and nutrition for all people in developing countries could be achieved by spending an additional $ 13 billion annually, which is $ 4 billion less than Americans and Europeans spend on pet food (U.N. Development Program). Think about that from the perspective of a starving human being.

With statistics as incomprehensible as these, there is the danger of becoming numb to their reality and hopeless about any possibility for change. But there is something we can do about this structure of exploitation, greed and death. Last year I learned of a campaign called Jubilee 2000, a worldwide movement seeking to have the debts of the world’s poorest nations cancelled this year (visit or call 202-783-3566). Its broad base of support includes secular and faith-based organizations; social justice, developmental and environmental groups, and politicians from across the political spectrum in the U.S.

Jubilee 2000 contends that we have a moral obligation to end this financial tyranny with transparency and accountability to insure that the citizens of those countries are the direct beneficiaries of that relief. They are making people aware of the debts’ less obvious consequences, such as the lowering of labor standards in order to attract foreign investment, which opens the door to miniscule hourly wages, sweatshop working conditions, forced overtime, and child labor violations. Debtor nations may also weaken or ignore national and international environmental regulations. First World corporations have shown a willingness to overlook the human rights violations and environmental degradation if they can make a buck. So, in the frenzy for higher profit, an American factory closes, a sweatshop in the Third World opens, and the downward cycle for the poor continues. The despair born of crushing debt, along with the factional scrambling for the few available resources, can also inflame social conflicts, contributing to civil war and even the genocide recently practiced in Africa and elsewhere.

The U.S. has cancelled debts before without disruption to our economy. In fact, $7 billion owed by Egypt (about the same as what is owed to the U.S. by all 41 HIPC’S) was cancelled to reward them for their support in the Gulf War. Recently, countries such as Norway, Spain, and even Cuba have stepped forward to forgive debts of the HIPC’S, but U.S. progress is slow. After Hurricane Mitch, our government allowed Honduras and Nicaragua to delay debt payments for 2 years, but did not cancel them.

In 1999 congress did appropriate $123 million for cancellation of debts owed directly to the U.S., but that’s only $6.5 million more than the Cincinnati Reds appropriated for Ken Griffey, Jr. last winter. And, disappointingly, even as the G-8 countries were on Okinawa last month again announcing their intentions to relieve the suffering caused by the debt burden, the U.S. House and Senate both underfunded debt cancellation in their Foreign Operations Budgets. As inheritance taxes for the rich were cut and the Congressional Budget Office estimated the budget surplus for fiscal 2001 to be $102 billion, congress only funded 17% of the U.S. debt relief pledge for this year, approximately $73 million.

While the industrialized world enjoys record prosperity, 120 million children under age 14 work full time (People of Faith Network); and with global food supplies at an all time high, 6 million children under age 5 die annually in developing countries of hunger-related causes (UNICEF). Thanks in large part to the debt crisis, the rich are getting richer and the poor are getting poorer.

For me the classic film “It’s A Wonderful Life” parallels the dynamics of the debt crisis. Wouldn’t it suit the loathsome Mr. Potter to sit in an opulent office counting money sent to him by the starving? How many Third World men could be saved from a life of loneliness and alcoholism if someone stuck by them in their time of crisis, like the egalitarian George Bailey stuck by Mr. Gower, the druggist? How many women could be saved from a life of prostitution if given the fresh start George gave Violet Biggs? Potter peered out his window as Uncle Billy searched in the snow for the missing $8.000 which Potter held on his lap. How long will the poor of the world search for a way out of poverty while we sit in our comfortable homes holding on to their answer?

Victor Callirgos lives in Bennington with his wife Daryl. He learned about the issue of third-world debt while in Honduras after hurricane Mitch with the disaster relief organization Church World Service.

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