Who Owes Who: 50 Questions about World Debt

by Damien Millet, Éric Toussaint

Using 50 questions and answers, this book explains the debt impasse for developing countries in a simple but precise manner. It details the roles of the various actors involved, the mesh in which indebted countries are caught, the possible scenarios for getting out of the impasse, and the various alternatives to future indebtedness. It also sets out the various arguments - moral, political, economic, legal and environmental - on which the case for a wholesale cancellation of developing countries' external debt rests. It replies to the range of possible objections and proposes new ways of financing development at both local and international level.

Genres: Nonfiction

214 pages, Paperback

First published January 1, 2004

Reviews

[Ali Hassan · Rating 4 out of 5]

The world is marked with a vivid division between the Global North (industrialized countries) and the countries which are developing (DCs). Among DCs, former Soviet bloc and South is distinguished for historical reasons. According to the book, 86 percent people live in the developing countries or the third world and annual income of the richest 1 percent of the world's population is equivalent to that of the poorest 57 percent of the planet. Living conditions of poorest populations are considerably deteriorating, with 2.8 billion people living on less than a dollar per day and 75 percent of Aids deaths occurring in sub-Sahran region.

There are multiple factors behind the origins of debt, with Eurodollars and Petrodollars being two of them. Leaders of Global South easily fell prey to Western powers after the Second World War when decolonization was at its last stages. North brought South under control by indebting it and easily overthrew all dissenting and anti-imperialist voices.

When in 1970s there was oil crisis, and reduced profitability of capital took a downward spiral in the industrialized countries and caused American balance of payment deficit. The banks began a frenzied campaign to incite Third World countries to take up loans on easy terms. Real interest rates were very low because of high inflation.

When hit by crisis, DCs have no alternative other than to take more loan to pay previous ones. IMF is the main actor in such a management. According to the writer, IMF and World Bank helped DCs to develop industries. Theoretically, this reduced the gap between North and South, but practically these projects did not enhance any industrial development; instead, they were designed to integrate DCs into global arena to serve the interests of multinationals of the North.

The US and other four powers: Japan, Germany, France, and UK sometimes reduce debt money and also impose easy conditions on account of their hidden agendas. The USA's strategic allies like Pakistan, Egypt and Poland have benefited from such measurements. For instance, Pakistan for Afghan war and Poland for withdrawal from Warsaw Pact.

[Maura · Rating 1 out of 5]

I read this because I regret not having taken any economics classes in college, and I'm embarrassed about my lack of understanding about how debt and international financial institutions work. I was hoping this would help me, but it didn't at all. It was just way too simple, like something I'd expect to be assigned to a high school economics class. Also, it kept arguing for total forgiveness of developing countries' debts. I wholeheartedly agree that this should happen, but the book didn't provide any analysis as to how to realize this (very idealistic) goal--ie, how can pressure be applied to IFIs, how can people be mobilized around this issue, how can developing countries organize amongst themselves to stand up to IFIs, etc. Also, it didn't talk about alternatives--if a struggle for debt forgiveness is unsuccessful, what are other ways that developing countries can work to unbind their economies from IFIs? Overall I felt the book was way too simplistic and lacking in analysis.

[Hukuna Matata · Rating 3 out of 5]

Good