Thinking About a Debt Beyond Our Own
We’ve been hearing a lot recently about the so-called fiscal cliff: that moment, a few weeks off, when massive spending cuts kick in and major tax breaks expire. There has been a lot of frantic talk and heady discussion about how (and whether) America will dig in right now and face the hard facts about our federal deficit and debt.
Amidst all of this it can be easy to ignore the truly crushing debt afflicting countries all across the Global South, and to ignore America’s implications in this crisis and to forget to consider what we could do to help.
In the second half of the 20th the fall of colonialism followed by the birth of many new countries, the development of cash-crop economies (highly encouraged by the United States) followed by the collapse of world commodity prices, and the founding of major international financial institutions like the World Bank and the International Monetary Fund made large-scale international lending a possibility and massive international debt a harsh reality. Much of this debt is held by multi-national entities like the World Bank and the IMF, but a considerable amount is held by the U.S. – as of December 2010 the U.S. held nearly $7 trillion in foreign debt.
A number of these countries have paid back considerable portions of their debt already. From 1970-2002, African nations received some $540 billion in loans and paid back $550 billion in principal and interest. Yet Africa remains today with a debt stock of $295 billion.
Many times these countries need to take out additional loans in order to pay back the interest on their debt. These loans frequently come with Structural Adjustment Programs (or SAPs), requirements that make the loans conditional on massive cuts to government spending. Not only does debt force these countries to slash their budgets in order to repay debtors, but the terms of new loans redouble these effects. Too often these cuts come to social programs, education systems, health care – the very things that make real development possible.
Does this conversation sound familiar? The worry about how to pay down debt and balance budgets without decimating critical government programs and the social safety net? Debt crises look the same around the world as they do here, only in countries where dire poverty is the norm further cuts to social programs can wreak even more havoc.
So as the U.S. considers our next moves in our own fiscal crisis, it is crucial to remember that we can make a huge difference in the quality of life and development in other countries with a relatively small act of debt forgiveness. And as we reflect this week on the things we have and the things we are thankful for, we should take some time to think about how we can help those around the world who have much less. The Union for Reform Judaism has long been a part of interfaith group called Jubilee USA, a group dedicated to questions of debt relief. Take a look and see how you can become more involved.
Image courtesy of un.org