UNITED NATIONS — A decade ago, economists and politicians suddenly realized that the Third World was locked in a fearful debt crisis.
The oil shock increases of the 1970s had made sheiks and some lucky governments so rich that they had deposited an extraordinary excess in British and American banks. Trying to make these deposits work for them, the bankers showered risky loans on developing countries. These countries foolishly grabbed the loans without much thought of whether they could be paid back. Then this house of cards collapsed.
Despite the enormity of the crisis, economists thought it was temporary and manageable. Stringent steps were set down to ease the developing countries out of their woes. But now, after 10 years of hand-wringing, loan rejiggering and even some forgiveness, the Third World owes governments, banks and international agencies more than ever.
In a special report, Secretary General Javier Perez de Cuellar informed the U.N. General Assembly last month that the total debt of developing countries had reached a staggering $1.2 trillion--more than double the $560 billion owed in 1980.
More and more Third World leaders are insisting that the developing countries cannot struggle out of the morass unless the rich start forgiving much of their loans.
In a speech to the General Assembly, President Ibrahim Babangida of Nigeria, who is also chairman of the Organization of African Unity, said: "May I emphasize that Africa's indebtedness is the single major obstacle to development in the continent? The debt problem is a central element of Africa's critical economic situation. Africa's debt is crippling."
Babangida proposed a system of rewards for Africa: When African countries accept the structural adjustment programs recommended by international agencies (low wages, austerity, low inflation, high unemployment), "let us consider the idea of debt forgiveness." When the countries produce credible environmental protection programs, "let us consider the idea of debt forgiveness." When they adopt democratic processes, "let us consider the idea of debt forgiveness."
The Nigerian leader, citing the latest statistics produced by Perez de Cuellar, said that "the realities are as startling as they are depressing."
It is hard to disagree with him. The total foreign debt of all black Africa except Nigeria in 1980 was equal to its gross national product--in other words, equal to all the goods and services that these countries produced. A decade earlier, black Africa owed less than half of its production.
Black Africa's debt now totals four times the value of its exports, and its loan and interest payments come to 25% of the value of its exports.
The Perez de Cuellar report said that the 15 most heavily indebted Third World countries--Argentina, Bolivia, Brazil, Chile, Colombia, Ivory Coast, Ecuador, Mexico, Morocco, Nigeria, Peru, the Philippines, Uruguay, Venezuela and Yugoslavia--now have a total debt equal to half their gross national product. A decade ago, the debt was only a third of GNP.
Debt has increased from 1 1/2 times the value of their exports to 2 1/2 times during the decade.
In the only glimmer of hope in the U.N. report, Perez de Cuellar said that the percentage of the value of exports that these heavily indebted countries spent on loan repayments and interest had decreased slightly from 31% in 1980 to 27% in 1990. This stemmed from the higher prices many of these countries received for their oil exports.
To deal with the overall debt problem, the secretary general called for policies that would increase the value of Third World exports, lower international interest rates and cancel part of the debts.