Worldwatch Paper #155: Still Waiting for the Jubilee: Pragmatic Solutions for the Third World Debt Crisis

Author: David Malin Roodman

ISBN: 1-878071-57-2
Publication Date: April 2001
86 pages

Since the end of World War II, the richest countries have lent the poorest ones hundreds of billions of dollars, much of it in the name of democracy, freedom, and development. Yet scores of the borrowing countries are now mired in debt and poverty—some 47, according to World Bank benchmarks, all but 10 of them African. Together, they owe $422 billion, or $380 per person—a substantial sum for them, but just 11 months of military spending for western governments.

Responding to pressure from nongovernmental organizations such as the international Jubilee 2000 Campaign, creditor governments have recently offered to cancel up to 55 percent of the debt they are owed by 41 poor debtors. But these offers, though seemingly impressive, have major flaws. First, almost all of the debt set for cancellation would never have been repaid anyway, so canceling it will not make much financial difference. Second, on the questionable ground that they are too creditworthy to need debt relief, the offers exclude major debtors Indonesia, Nigeria, and Pakistan.

And third, the offers do not change the systems that created the crisis in the first place. They do nothing, for example, to reduce rich-country barriers to the exports of crops and clothing from the poorest nations. In effect, rich countries are demanding that poor ones repay the debts while refusing the goods offered as repayment. Only when governments confront the causes of debt trouble in the poorest nations will they bring a lasting end to a problem that is stalling sustainable development.