An impressionistic view of international debt

ODIOUS DEBTS: LOOSE LENDING, CORRUPTION AND THE THIRD WORLD'S ENVIRONMENTAL LEGACY Patricia Adams Publisher: Probe International Price: $13.95

 
By Rajiv Vora
Last Updated: Saturday 04 July 2015 | 03:16:47 AM

PATRICIA ADAMS attributes the current environmental imbroglio of developing countries to their debt crisis, which has been aggravated by loose lending, corruption and anti-democratic policies. She unearths various links between borrowing, lending and "development" projects to expose the mercantilism of Third World development.

She does this by asking simple questions like who lends for what, who borrows, and how loans are swallowed by corruption. Through interesting anecdotes, she shows how the Mobutos and Marcoses of the developing countries have, by borrowing huge sums for development, rendered their countries debt-ridden. The author quotes a 1975 advertisement carried in Fortune by the Filipino government under Marcos, when foreign borrowing was at its peak: "To attract companies.... like yours.... we have felled mountains, razed jungles, filled swamps, moved rivers, relocated towns, and in their place, built power plants, dams, roads.... All to make it easier for you.... to do business here."

The sale of assets to the West did yield rich dividends to Marcos till the people threw him out. Whether it is Marcos or someone else is immaterial. The author feels that the rulers of all developing countries have the same attitude towards their environment and people. They have all shown an inclination to resort to the loans dished out by the International Monetary Fund and the World Bank.

Developing countries, as we all know, are burdened by huge debts and suffer from the consequences of the "development" such debts seek to finance. This includes environmental transformation: "felled mountains, razed jungles...." and so on.

But Adams sees a silver lining in the Mexican example: here the environment was actually saved thanks to the country's debts. She quotes Mexican President Gustavo Esteva as stating that "the debt crisis has helped Mexico's environment: it has given to the land and to the people a reprieve by shelving unsustainable logging and agricultural schemes, and by delaying Mexico's nuclear programme and other environmentally risky projects."

A popular Indian saying goes: Marz ka had se guzar jaana dawa ho jaana hain (disease, on crossing all bounds, becomes the cure). Adams' "silver living" smacks of frustrated environmentalism.

She offers a radical solution to the debt problem that has international precedents. She invokes the doctrine of "odious debts", a legal mechanism to repudiate borrowings, first used by the US to repudiate Cuban debts after the Spanish-American war. Debts contracted in the name of a nation for dubious purposes by illegitimate parties became known as "odious debts". The author suggests that international lenders collect their debts, not from the people but from the rulers.

Though the book makes good and easy reading, its remedies are based on sweeping generalisations. No doubt Adams is an enthusiastic advocate, but like the many western rulers and leading environmentalists, she does not care to decipher the grossly inadequate and misleading categorisation: the Third World. Her penchant for clubbing all developing country rulers as "Marcoses and Mobutos" repeatedly, her impressionistic methodology, and haste to bail out the entire developing world dilutes the impact of the argument.

The haste is transparent. Only in a hurry does one see a "silver lining" in debts which grind a nation to a halt. Would we wish everyone in developing nations to drop dead to solve population problems? And in many countries in Asia and Africa, democracy and debt are not intrinsically inversely related.

The author would have rendered us a valuable service had she pointed out specific cases of odious debts. And, finally, what happens if we take the principle of odious debt to its logical end to finish those who derive sustainability by ravaging the weak? The "Marcoses and Mobutus" are beneficiaries, just as agents and brokers are in any business transaction.

If the author had grasped the nature of the relationship between the ruling classes and the people in developing countries, she would not have toyed with superficial concepts like accountability to the people. Many a developed democracy is highly indebted and their environment is greatly ravaged. Is the US not heavily in debt ?

Patricia Adams has certainly highlighted an important issue. But in doing so, the relationship she establishes among debt, corruption and environmental degradation is not comprehensive. However, she must be congratulated for reminding us of an international law which could benefit some indebted nations of the world.

Rajiv Vora works for the Gandhi Peace Foundation, New Delhi.

Subscribe to Weekly Newsletter :
We are a voice to you; you have been a support to us. Together we build journalism that is independent, credible and fearless. You can further help us by making a donation. This will mean a lot for our ability to bring you news, perspectives and analysis from the ground so that we can make change together.