Debt of the mis-developing countries

11. The unilateral massive rise in oil prices that occurred in 1973 and 1979 had far-reaching percussions on the non-oil producing countries. The releasing of massive volumes of liquid funds, that the banking system endeavoured to recycle, caused a general economic slow down, as a result of which the poor countries suffered considerably. For a variety of reasons, during the Seventies and Eighties most countries were able to borrow heavily at variable rates of interest and the countries of Latin America and Africa wereable to develop their public sector to an exceptional degree. This period of easy money led to many excesses: unnecessary projects which were poorly designed or badly implemented, the wholesale destruction of traditional economies, and the spread of corruption in every country. Some countries in Asia managed to avoid these mistakes and were able to develop very rapidly.

Soaring interest rates—caused by the mere interplay of unbridled and probably uncontrollable market forces—placed most of Latin America and Asia in a position of having to withhold debt repayments. This caused a flight of capital abroad, which in the short-term, posed a threat to the local social fabric, in many cases already mediocre and vulnerable, and also threatened the very existence of the banking system. That made it possible to gauge the extent of the damage caused in every sphere: economic, structural and moral. Purely technical and organisational solutions were initially sought. But such measures, which are necessary when sound, need to be supported by a thorough overhaul of behaviour on the part of everyone, particularly people, who in every country and at all levels are able to evade the enormous constraints which poverty imposes on decisions regarding their lives.

At the beginning of the adjustment period, transfers became negative: loans were blocked; oil prices were artificially pegged at unsustainable levels for developing countries; raw material prices slumped as a result of the economic slow-down due to the high price of oil compounded by the debt crisis itself; excessively slow reaction was evidenced on the part of international organisations, except the International Monetary Fund, to re-inject liquidity into the system; etc. During all this time, living standards in the over-indebted countries began to fall.

This demonstrates the knowledge required to manage money, and not merely technical and economic know-how. The release of such huge volumes of liquid funds created considerable structural and personal damage instead of leading to any spectacular worldwide improvement in the plight of the most deprived.

There is a conclusion to be drawn from this: human advancement depends on the human being's capacity to practise altruism, love in other words, which has extremely important practical implications. In succinct and realistic terms, love is not a luxury. It is a condition for the survival of a very large number of human beings.