Solve the debt problem in order to democratize trade relations

NIGD Press release UNCTAD XI

By maintaining the debt problem, hindering development by ruining local and national agricultural markets and by arming the poor countries with Northern weapons, the world prepares for more poverty and a new debt crisis.

The debt problem not only ties the hands of the political leadership of poor countries in terms of IMF and World Bank conditionalities, it also puts down consumption and investments and leads to social maldevelopment.

In addition, the debt results in problematic dependency relationships between the rich creditor countries in the North and the poor debtors in the South. According to UNCTAD’s least Developed Countries Report 2004, in 2002, the total debt service payments of over 46 least developed countries (LDCs) reached a record level of almost USD 5.1 billion. This represented 3 per cent of their combined gross national income (GNI). Simultaneously, the increase in debt stock is widespread among LDCs.

The EU, US and Japan pay USD 300 billion annually in agricultural subsidies. This allows the producers to export their surplus and dump it in foreign markets in the South. The agricultural products dumped in Southern markets severely disturb the local and domestic markets. This agricultural policy of the North not only distorts the Southern markets but also causes unemployment and restlessness.

By inserting “security exceptions” in free trade agreements, Northern countries provide themselves with a justification for not following the principles of free trade by subsidising their defence industries. The defence industry is closely linked with civil production, which thus also benefits from subsidies and furthers unequal competition. The defence industry relies on high-tech know-how, existing more in rich than in poor countries, again breeding ground for new dependency relations between the North and South in terms of maintenance, training and etc.

Unemployment and restlessness are not won over by military means. In order to start democratic and peaceful processes we call for, in particular:

• Solving the debt problem by organising audit of the legitimacy of the existing debt, cancellation of debts when illegitimate, and by way of creating a new process for the fair resolution of the debt crises
  
• The abolishment of security exceptions in free trade agreements
  
• From a global perspective, a fair review of Northern agricultural subsidies