Saturday, September 25, 2004

Britain on the way to forgiveness? The eradication of Third World Debt

As reported in today's New York Times, Britain is apparently offering to pay off 10% of the Third World's debt, which is mostly owed to the IMF, World Bank, and African Development Bank. Britain has also challenged other wealthy, first world nations to pay their share. The article does note that Kerry has already promised to forgive some of the debt during his campaigning. As I was reading this, I thought, "What a lovely idea, lets see if it really happens".

While I already knew that the Third World is facing horrible debt, and that this is keeping many poor nations, particularly in Africa, from serving their own poor populations, one particular point in this article caught me off guard: The IMF has devalued its own gold reserves, saying that its worth $40 an ounce, while the market price is $400 an ounce. The IMF has more than enough gold to sell some off and forgive the debts. What confuses me about this debt is why the First World is so set on keeping Africa and other impoverished nations in poverty. In the long run, if Africa is able to improve its economy, and the standard of living of its population, the First World will benefit from having another area to produce goods, to trade with, etc. Or from an exploitive capitalist standpoint, more sweatshop laborers. I understand there are few more hurdles for African to jump, including overcoming corruption in government, and slowing the spread of HIV/AIDS. However, boosting the economy could help with both of these hurdles too. Since I have actually done research on the AIDS epidemic, I can make the connection there: the standard of living in Africa gets better after the debt is forgiven because the government is spending more money on healthcare. People have more resources available for them, and can get treatment extending their life span if they are already infected with HIV, and obtain condoms and be advised how to avoid the virus by healthcare providers if they are not. Africans have longer, healthier lives, with fewer sick family members to care for. (Note: in countries where HIV prevalence rates are extremely high, HIV infected adults have to care for sick elderly parents, and their children, some of which are infected with HIV themselves. They don't have as much help from siblings because each sibling may be facing a similar dire situation.) Healthy workers are much more productive than sick workers, giving another boost to the economy.

In any case, I am interested to see what happens with Britain's promise, as well as if Kerry gets elected. Also, if anyone has more insight on the IMF and what their rational is for valuing their gold at only 10% of market value, please enlighten me.


At 12:53 PM, Blogger Erin said...

I wonder how the magnitude of the HIV/AIDS epidemic and the nation's debt compare. That would be really interesting to know as part of the case to make for forgiving third world debt. interesting stuff.

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