Back in the mid-1980s, as Dominican farmers and trade unionists were teaching me and the rest of the world about debt conditionality, structural adjustment and the International Monetary Fund, their critics said they merely mimicked the government’s excuses for inept policies. The fact that we’re having the same conversations again almost 40 years later says to me that the farmers and workers were right.
Take a moment to recall what people in many global South countries were enduring in the 1980s. A glut of oil money in U.S. and European banks in the 1970s had led to a loans frenzy: developing countries got cheap credit. But the recession in the 1980s saw interest rates skyrocket.
The resulting “third-world debt crisis” (as it was called at the time) became a shock-doctrine opportunity to strengthen a harsher form of capitalism, one that came to be called “neo-liberal economic globalization” (or simply neoliberalism or globalization). Dominicans and countless others around the world protested, but by the turn of the millennium, this new world order was firmly entrenched.
A new crisis—the effects of the Covid-19 pandemic—has revealed the old, unhealed fractures as countries struggle to sustain already-weak health systems, provide testing and vaccines, and keep economies at least partly functioning.
To their credit, the United Nations secretary general, Antonio Guterres, and Prime Ministers Justin Trudeau of Canada and Andrew Holness of Jamaica, convened a conversation March 29 among world leaders and heads of various international financial institutions.
Holness and Argentinian President Alberto Fernández called for fundamental reform of “debt architecture” and the need for a “multilateral framework for debt restructuring.” Such steps would break from current practice, which allows wealthier countries (G7, G20) or groups dominated by them (the World Bank and International Monetary Fund), along with private creditors, to make decisions binding on all the other countries. Fernández added that there can’t be a global recovery when there are countries excluded from the solutions.
Venezuela’s president, Nicolás Maduro, said nations should ensure that “measures are not a weapon to control our countries.” He urged “comprehensive restructuring” and an end to use of “unilateral, coercive and criminal” sanctions against his country and others.
The civil society organizations (CSOs) that have laboured for decades to build a system to manage and resolve debt issues said later that the leaders “continue to kick the can down the road” on meaningful reform. The groups welcome measures like the G20 agreement to further delay debt payments by the most impoverished countries (a mechanism called the Debt Service Suspension Initiative, or DSSI) to June 2021, and action to use global reserve funds (“special drawing rights,” or SDRs) to support recovery efforts in developing countries. [On April 1, the IMF approved a third tranche of grants for debt service relief for 28 countries through Oct. 15.]
But more needs to be done, said the CSOs. “Rich countries are continuing to prioritise their own power over global solidarity, leaving many people behind.” Moreover, the measures do not do enough to assist middle-income countries (like Argentina and Jamaica) with their challenges, or address the problem of the private-debt “cartel.”
“Throughout decades of exploitation, rich countries accumulated a social and ecological debt owed to the people in developing countries which is higher than our financial debt. Today these same rich nations fail to deliver the system changing solutions that we need, including immediate debt cancellation by all lenders for all countries in need”.Lidy Nacpil, Coordinator of the Asian Peoples’ Movement on Debt and Development (APMDD)
“A multilateral framework under the UN is the only way to resolve the crippling debt crises affecting the world’s poorest. This is the only way to ensure debt cancellation in a fair and orderly fashion, where developing countries have a seat at the table. This would ensure a future of responsible lending and borrowing together with regulation based on human rights and gender justice.”Patricia Miranda, Advocacy Coordinator at the Latin American Network for Economic and Social Justice (Latindadd)
One potential forum for further work would be a global conference next year on Financing for Development—”Monterrey+20”—with the issue of global economic architecture firmly on the table.
At the 2002 Monterrey conference, the World Council of Churches was among those who pressed for
“Pursuit of a permanent solution to the debt problem both for poor countries and middle-income countries starting with an immediate cancellation of the external debt of poor countries and setting up, under UN auspices, an independent and fair debt arbitration mechanism for current and future loans which will promote ethical lending and borrowing policies.”
As Ngozi Okonjo-Iweala, the newly appointed Director-General of the World Trade Organization, stated during the meeting: “lost decades are a policy choice.”
No doubt those Dominican farmers would agree.