The Guardian July 5, 2000


Banks, debts, exploitation & poverty

by Richard Stone

The Central Branch of the SA Communist Party recently hosted a meeting on 
the role of the World Bank in the international economy. Following soon 
after the recent successes scored by the Jubilee 2000 movement and the 
developing opposition to the forthcoming World Economic Forum to be held in 
Melbourne on September 11, the meeting was timely.

Mr Gerald Lipman, from the SA Jubilee 2000 organisation, previously held a 
position for 25 years in the World Bank with specific interest in the 
developing countries. He provided a fascinating insight into the role of 
the World Bank  a nerve centre of international capitalism and finance. 
Mr Lipman has an accountancy and Anglican Church background. 

Dealing with some of the practicalities of international trade, the lending 
of money and other aspects of international banking and how changes take 
place, Mr Lipman gave a picture of how the finance sector works from the 
inside  the corridors of power, the heartlands of capitalism.

He spoke about the 1972 OPEC oil crisis within the context of how the debt 
problem began. The crisis had a knock-on effect for many developing 
countries.

Failed

Mr Lipman said that the reality for most developing countries in the 
present period is that while investment has risen by ten times, most aid 
budgets have been cut by half. Investment is largely from private sources 
in search of lucrative high returns on initial loans and investments. The 
cutting of aid budgets seriously affected those on the receiving end.

The shackling of these countries with enormous burdens of debt has had a 
serious effect on economic development potential right across the southern 
hemisphere. Realistically, the debts are unpayable and uncollectable 
while the effects upon millions of people are dreadful.

Reports by the International Labour Organisation (ILO) in June of this 
year, have specified that a quarter of the world's six billion people live 
on less than US$1 a day. The report found that 30 percent of adults in 
developing countries are illiterate, 30 percent had no access to clean 
drinking water and 30 percent of children under five years of age were 
beneath normal weight. The report further specified that more than 40 
percent of the population of sub-Saharan Africa and Asia live in poverty 
and that the proportion is increasing. The same report found that in the 
past five years, the world's poor have increased by 200 million.

Under such economic conditions it has become a realistic option for the 
international banks and countries of the industrial world to write off the 
debts, hopefully clearing the way for a better future for countless 
millions of people in the developing world.

Role of churches

Opposition to the grinding exploitation and enormous debts foisted upon 
various governments within the developing world has originated from many 
sources during the past twenty years. While numerous progressive political 
organisations and countries such as Cuba, using international forums, have 
entered the political debates and voiced demands for debt reduction, the 
role of the Churches should not be overlooked.

By applying pressure on decision-makers, often through mass actions such as 
the one organised by Jubilee 2000 in Adelaide in April, the Churches have 
had some influence upon decision-makers.

Considerable time was spent during the meeting on the dramatic economic 
increases in the Chinese economy which have given rise to rapidly improved 
living standards for millions of people. 

Time was also spent discussing how Vietnam had been able to advance 
economically even under difficult conditions. Some discussion about the 
role of banks within the two countries provided an insight into banking 
systems in the socialist world.

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