Dialogue on Development

(This dialogue is adapted from the Education and Action Guide 1991 of Ten Days for World Development, an ecumenical program concerned with international development and justice - ed.)

Concerned Canadian: I’m frustrated! I support our church development fund. I’ve campaigned for more Canadian government aid. Yet I’m told the poor are getting poorer. What’s wrong?

Third World Citizen: We’ve been SAPped.

-You’ve been what?

-SAPped. We’re being drained of our wealth. Interest rates on our foreign debt have risen, while our export earnings have fallen. SAP is short for Structural Adjustment Program. It’s the name given to all the conditions the International Monetary Fund and the World Bank attach to loans to debtor countries.

-What kind of conditions?

-They want us to devalue our currency, raise our interest rates, cut government spending. They also demand we lower our tariffs and quotas, sell off public companies and promote exports.

-What are these conditions supposed to do?

-They’re supposed to help us pay foreign debts. For example, lower tariffs and import quotas were supposed to increase international competitiveness and improve efficiency. The real result has been an undermining of local industries and food self-reliance. Luxury imports are encouraged while the poor can’t afford basics. We are actually becoming poorer.

-Really? How much poorer?

-UNICEF says “Over the course of the 1980’s, average incomes have fallen by 10% in most of Latin America and by over 20% in sub-Saharan Africa ... in many urban areas, real minimum wages have declined by as much as 50%.”

-What do these cuts mean for the people?

-Many of our children die before they can walk. We have fewer health clinics and fewer schoolbooks. There’s more hunger. Preventable diseases are spreading.

-But if SAP’s contribute to so much misery, why do creditors insist on these policies?

-We think it’s because they help lenders collect interest on loans they’ve made to our governments.

-How?

-SAP’s promote exports whose earnings go to pay interest on otherwise unpayable debts.

-Wait a minute! I heard a banker say the debt crisis is over.

-It’s true that many private banks have put the crisis behind them. They’ve stopped making new loans to the Third World. One bank calls it a “discontinued business”.

-Does that mean banks have cancelled the debts?

-Only a small part of the debt has actually been written off. To get those partial write-offs countries like Mexico and the Philippines had to agree to continue making structural adjustments.

-How much debt remains on the books?

-About $1.3 trillion. That’s over a million million U.S. dollars. ($1,300,000,000,000)

-I can’t grasp such a huge number. Is it all owed to the banks?

-No. Banks have been selling off many of their loans. Governments and international financial institutions hold about half of the debt.

-I read that the Third World is actually transferring more money to the North than it receives.

-Sad to say, that’s true. Between 1982 and 1989 we paid out U.S. $240 billion more in debt payments than we got in new loans.

-Doesn’t this drain of wealth set back development plans?

-It sure does. After we make debt payments there’s little left for investment. With SAP’s we’re moving backward, not forward, becoming colonies again.

-What do you mean “becoming colonies again”?

-We export raw materials and import consumer items. We also supply cheap labour to assembly operations run by transnational corporations.

-You seem to be saying that SAP’s are actually leading to greater underdevelopment.

-That’s right. SAP’s have led to more misery and less development for our peoples.

-If SAP’s don’t help you, whom do they benefit?

-SAP’s help transnational companies trade, invest and move profits around the globe with a minimum of government interference. That’s why Morgan Guaranty Trust hailed them as “liberation for the private sector”.

From Third World Resource Centre Newsletter, Winter ‘91, No.49

(CX5094)

See also:
The Third World Debt: The Comforts of Newspaper Pie - Canadians are unaffected by the Third World, since most of it arrives in the form of newspaper headlines. (CX5084).

Subject Headings

• Development
• Structural Adjustment

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