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7 July 2005 Edition

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Third World Debt - a tool of subjugation

Arthur Morgan TD - Sinn Féin spokesperson on Trade and Employment

Arthur Morgan TD - Sinn Féin spokesperson on Trade and Employment

Third World Debt - a tool of subjugation



Sinn Féin spokesperson on Trade and Employment

The debt burden on developing countries is a symptom of the disease that is at the core of the international financial institutions, namely the International Monetary Fund (IMF) and the World Bank. The role of these two anti-democratic bodies in world politics needs to be challenged.

Sinn Féin demands the overhaul, reform and democratisation of the IMF and World Bank. These institutions and the interests they represent are responsible for the debt crisis. Every action they take is designed to benefit developed states at the expense of developing states. They were designed for this purpose and they are structured in a way which subjugates the interests of the developing countries to that of the powerful developed states and in particular the USA. They have played a huge role in the growth of inequality in the world. The voting rights within both these bodies are stacked in favour of the developed states and against the developing countries

The selection procedure for IMF and World Bank leaders are totally undemocratic with the Presidency of the World Bank being always reserved for a North American. Voting rights within the IMF are based on the entry fee or share bought by the country when they join. This share is determined on the basis of the economic and geopolictical importance of the country concerned. The number of voting rights each country is entitled is based on its share value. It is unacceptable that the USA has a blocking minority.

Many of the developing states burdened by debt are within their rights under international law to refuse to pay these debts on the basis that the debt is "odious", that is where a despotic power contracts a debt not according to the needs and interests of the State.

The notion of odious debt was invoked in Cuba in 1898, Costa Rica in 1922, Namibia in 1995 and Mozambique in 1999. When the notion is successfully used, the state debt becomes the personal debt of those responsible during the dictatorship and cannot engage the financial resources of the state. The fact that it is open to developing countries to pursue such a course needs to be highlighted and promoted by governments concerned with the issue of the debt burden on developing countries. This state should actively encourage such states to invoke the notion of odious debt where possible.

People need to understand the reason why certain states will be opposed to the abolition of world debt. It is because to them it would amount to giving up a tool of control and subjugation, giving up the method by which they carry out the economic colonisation of developing states. It is the method by which they force their liberal economic agenda on a large part of this world with disastrous consequences in terms of poverty, hunger and disease.

Citizens of developing countries are disempowered as economic policy is decided by the IMF and the World Bank. This is done by way of the structural adjustment programmes which are imposed upon indebted countries and which have dramatically aggravated the problems facing those states. Their central aim is to impose upon developing countries economic policies approved by Washington.

Structural adjustment programmes (SAP) force governments in developing countries to open up their state's economies — to export more and spend less. Developing countries' governments are forced to drastically reduce public spending, cutting social budgets in areas such as health, education, housing and infrastructure, and ending subsidises on products and services of primary necessity. SAP's also involve the opening up of markets through the elimination of customs barriers, the devaluation of local currency to make local exports cheaper and more competitive on the global market and high interest rates to attract foreign capital. DC's end up reducing the production of staples necessary for the survival of local inhabitants in favour of cash crops for export. All of this has had drastic consequences for local populations as living conditions in these countries have substantially deteriorated since the introduction of SAPs

The United Nations Human Rights Commissions adopted a resolution in 1999 which stated that "the exercise of the fundamental rights of the population of an indebted country to food, housing, clothing, work, education, healthcare services and a healthy environment may not be subordinated to the application of structural adjustment policies or economic reforms generated by debt".

Debt cancellation needs to be accompanied by the ending of structural adjustment programmes and the thorough reform of the international financial institutions.

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