Is there a way out?

Published 26.06.2015 20:50
Updated 26.06.2015 20:59
After two centuries of rule, the Portuguese left behind only a small brewery in Guinea-Bissau. That is, no important industry had been developed.
After two centuries of rule, the Portuguese left behind only a small brewery in Guinea-Bissau. That is, no important industry had been developed.

Many countries are struggling with debt and corruption. But why are these countries in such a position? Is it something intrinsic in the nature of these countries, or did the colonial powers introduce a system that proved to be problematic?

Watching the meltdown of Greece over the past five years, the spiraling into debt and the recalcitrant attitude of Europe brings up a number of questions. Coupled with the failure of the Pakistani infrastructure to meet the demands of the recent heatwave, leading to nearly 1,000 deaths, how do countries get into debt, why is corruption so rife, and what is the solution? Is it inevitable for developing countries, populated by people who are often perceived – even if not so expressed– as "inherently lazy," to suffer from such problems?

Such an attitude, that is, developing countries suffer from corruption or have debts they cannot pay off due to the nature of their citizens is akin to systemic racism.

Recovering from Colonization

Related to the above sentiment is the argument that developing countries should not try to excuse their failures by blaming Western powers; if there is a local problem they need to look for local solutions and examine the way their country functions, or malfunctions, to find the cure. This rings more true than the statement of national characteristics like indolence, but is still not the entire picture.

Developing countries indeed suffer from a similar malaise – what one could call systemic imperialism or colonialism. The systems that were introduced by the colonizing powers encouraged corruption; these systems have been perpetuated until today, partly through the constitutions that were introduced upon independence (under the guidance of the former 'master' nation) partly through global loan implementations.

It is as if when treating a systemic disease one focuses on the runny nose or the cough that racks the body. One has to eradicate the disease by finding the source of the infection.

When countries became independent, particularly those in Africa, they were not left completely to their own devices. Control, overt or more subtle, was imposed, ranging from the writing up of the constitution to the giving of loans or other funds. There are important reasons for such control, particularly in the financial area. The primary reason is that international economics is fundamentally associated with international politics. If a country which is seen to pose a political threat, for example North Korea, suddenly becomes economically prosperous, from an economist's point of view this is something to celebrate; however, from a politician's stand point there are serious negative implications. Thus, action is often taken to ensure that countries which are seen as not toeing the "party" line (i.e. the capitalist Western line) will be prevented from achieving economic or political stability.

A clear demonstration of this approach can be seen in the 1940s with the introduction of the Marshall Plan. The Marshall Plan combined humanitarian goals (the economic strengthening of postwar Europe) with the creation of a political and economic bloc that would be allied with the United States. The Marshall Plan was not just a humanitarian undertaking; the main impetus was the Americans' fear that the poverty of postwar Europe would drive them into the arms of what the Americans saw as the "growing Soviet threat." It was to prevent this that the Americans invested large sums of money into the continent and the results were positive. Working from this success, a new approach developed into a "dependency theory" which dominated the relationship between the West and the "third world."

However, these new loans to the "developing" world did not have such positive results. What has happened is the system has forced the recipient countries to give priority to payments rather than providing basic services. According to the World Bank, in 2010 developing countries paid out $184 billion on debt service, three times the annual resources required for fulfilling the Millennium Development Goals.

Indeed debts have been used to force countries to adopt policies that take them away from development. Public services are privatized, foreign goods are imported to the detriment of the local market and basically the country is prevented from growing.

A South African comedian, Trevor Noah, states that colonialism is "the most arrogant form of patriotism" …He is right. Thinking that one can rule any other country better than the locals can rule themselves is extreme arrogance. With arrogance naturally comes the inability to understand what the common man is going through.

But was there a need for the native to be saved? That is, did colonization save them from a worse fate?

In the early Mughal era in India a traditional agrarian structure existed, established around the village. The chiefs provided services, as did the peasants. That is, the peasants provided food and labor in return for protection, right to land and public services. The entire tribe would make decisions on the allocation and use of the most valuable resource, land. However, with colonialism came the idea of private property.

The idea of private property led to a reduction in mass participation, a neglect of social values and customs and a change in bureaucracy. Under colonization, land owners were no longer responsible for supplying security or public services, as this was now the role of the government. When colonization came to an end, these same landlords did not have a tradition of social responsibility; this in turn led to the creation of a society with an elite that was cut off from the people.

Poor Infrastructure, Corruption and Dictatorships

In Africa, the situation was not that different.

What the colonizing powers left behind when drawing out of Africa was not of much use. Indeed, Africa, much like the subcontinent, had been seen as a source of raw material and cheap labor. For example, after two centuries of rule, the Portuguese left behind only a small brewery in Guinea-Bissau. That is, no important industry had been developed.

Education was introduced onto the African continent, but this was geared not to train and educate the people to create a better society; rather education in the colonies was designed to train clerks (men) to help run the administration. Indeed, university education was generally viewed as dangerous, as here the locals would learn about political freedom. Only the elite members of the local population could go to university. Indeed, it has been recorded that there were only four university graduates in Tanzania when the country gained independence in 1964 (not four universities – four graduates).

What happens after independence in a state run by an elite that has nothing in common with the masses, merely seeing them as the means to line their pockets, is that the state implodes and rebellions erupt. For example, Somalia in 1993, Rwanda in 1994, Burundi in 1995, Zaire in 1996, Sierra Leone in 1998, Liberia in 1999, Ivory Coast in 2000 and Togo in 2005.

Often Western powers intervened in former colonies to ensure that the person in power was a man with whom they could work. The death of Lumumba in the Democratic Republic of the Congo, in which the CIA was implicated, or Allende in Chile... Or in Gabon in the 1960s President Léon M'ba, who was removed by a popular uprising, was reinstated by the French; yet this same government did nothing to support President Youlou in Congo- Brazzaville, a year previously (Gabon is rich in oil, Brazzaville is not). We can add to this the removal of Mohammed Morsi by Abdel-Fattah el-Sissi.

Thus, as can be seen in examples from Africa, the developed world has an interest in who runs a country, but that interest can become direct interference when the country has geological or geopolitical importance.

There are many who hold that while colonialism did cause damage to Africa and other areas, internal factors such as bad leadership, poor government, systemic corruption, poor economic administration, poor investment, civil wars, tyranny, violation of human rights, et cetera have all played a great role in the poor state of the nation in question. A farmer from Nigeria, Simon Agbo, said "I heard we have a new government. It makes no difference to me. Here we have no light…we have no water. There is no road. There is no school. The government does nothing for us." (Washington Times, 10/21/1999)

It is interesting that in 2005 Dr. George Ayittey, a citizen of Ghana stated " 'The adamant refusal of an African head of state to step down or share political power will ultimately lead to the destruction of his country.' If Mubarak of Egypt, Museveni of Uganda, Mugabe of Zimbabwe, Ghaddafi of Libya refuse to leave the political scene or share power, their countries will be destroyed. This is not rocket science and it has nothing to do with the West. It is a personal or political failure that cannot be blamed on Americans, Chinese or Martians."

How strange that the above paragraph, written in 2005, has proven to be so inaccurate. Mubarak did not choose to step down, but was removed, as was Gadhafi. Libya has been torn by conflict since the last elections in 2014, and, well, we all know the situation of Egypt. After being relieved of corrupt leaders, the countries continued to implode. Thus, it is even more evident that it is not the evil leader who is to blame; he is but an instrument. The problem runs deeper.

Too many strings attached

So does this mean that countries which receive funds from the IMF and the World Bank, or other creditors, fail to thrive solely due to corruption? The problem is actually much greater.

To quote from global issues ( - 2007) there are a number of factors that lead up to debt crises:

"The legacy of colonialism – for example, the developing countries' debt is partly the result of the unjust transfer…of the debts of the colonizing states, in billions of dollars, at very high interest rates.

"Odious debt, whereby unjust debt is incurred as rich countries loaned dictators or other corrupt leaders when it was known that the money would be wasted. South Africa, for example shortly after freedom from Apartheid had to pay debts incurred by the Apartheid regime. In effect, South Africans are paying for their own oppression….in effect…the poor are subsidizing the rich."

In addition, food aid can be detrimental to the receiving economy, contributing to greater hunger and poverty. Free or subsidized food undercuts the local producers; they are unable to compete and are driven out of the market; the result, the larger producers from the West get an even greater share. It has been claimed that more powerful nations use this as a tool for dominance rather than really trying to solve problems on the ground. An example of this is the Bengal Famine of 1943. ("Churchill, as part of the Western war effort, ordered the diversion of food from starving Indians to already well-supplied British soldiers and stockpiles in Britain and elsewhere in Europe, including Greece and Yugoslavia. And he did so with a churlishness that cannot be excused on grounds of policy: Churchill's only response to a telegram from the government in Delhi about people perishing in the famine was to ask why Gandhi hadn't died yet." Time – 10/29/2010)

Another African country, Kenya, was self-sufficient until the 1980s. However, in the 1990s 80 percent of its food was being imported. In 1992 EU wheat was sold at nearly 40 percent less than the price at which it was purchased, rising to nearly 50 percent by 1993. Imports of EU grain rose and 1995 Kenyan wheat prices collapsed, and local producers were in difficulty; the result was widespread poverty.

In the mid-1980s Indonesia won acclaims for being self-sufficient in food produce. By 2000 Indonesia was the largest recipient of food aid – what had changed? The Asian financial crisis hit Indonesia hard. People lost their jobs and thus fell into poverty. There was a surplus of produce, with crops in the fields, but people had no money to buy the home grown crops. The solution was that Australia and America provided loans which included the stipulation that the Indonesian government buy wheat from them; as a result these two countries were relieved of their excess wheat stocks, selling to a country which uses minimal amounts of wheat in their diet.

Indeed, it has been determined that the debts offered by creditors, banks or countries prevent developing countries from securing basic living conditions for the people. One result is that public services are downsized and internalized.

What are we doing to solve this?

In 2000 the U.N. determined the Millennium Development Goals. These goals were to be met by 2015. Of the eight goals, the first and third are of interest to us here:

1. To eradicate extreme poverty and hunger

2. To develop a global partnership for development. This 8th goal was further divided into four subsections, three of which are of interest to us.

3 a. Develop further an open, rule-based, predictable, non-discriminatory trading and financial system. (good governance and poverty reduction – nationally and internationally)

3 b. Address the special needs of Least Developed Countries – creating tariff and quota free access for LDC exports, and enhanced debt relief.

3 c. Deal comprehensively with the debt problems of developing countries through national and international measures in order to make debt sustainable in the long term.

We are now in 2015; it is clear to all that these goals are no closer to being met than they were in 2000.

The World Bank has tried to help countries by allowing them to borrow their way into development. But as in the case of Greece, this does not always work out. As mentioned above, the Marshall Plan helped Europe (including Greece, and to a lesser extent Turkey) stand on its feet. But in more recent times, debt has become a burden on countries. Greece took credit and rather than investing it in industries or in other areas where the country could grow and thrive (i.e. long term investments) it spent it on pensions and taxes which were imposed not on the wealthy, but on the ordinary citizen. This is a very oversimplified analysis of what went wrong in Greece, but it makes clear what the problem is.

In Pakistan, corruption and poor investment means that the infrastructure of the country has not been improved. During this extreme heat wave, the demands on the grid have meant that there have been electricity and water shortages, exacerbating the problems.

As we have seen, countries have to take responsibility for their own situation; if one puts all blame on outside forces it will be very difficult for any country to develop. In Turkey, the elite government of the "White Turks" over the "Black (Zenci) Turks" (phrases that have nothing to do with skin color) has been largely dismantled. Debts to the IMF have been paid off, with Turkey even loaning money to the IMF. Social services, health and education have been implemented; the people are now receiving services that they had not been entitled to for many years. The inner problems of ravaging corruption on every level have been battled with and the functioning of the system is now equivalent to that in any European country. Today, Turkey is struggling against vested interests, be they White Turk or foreign nations. The problems are not problems of the economy – indeed the country has been growing even while other countries have fallen into the doldrums. What is facing Turkey now, as witnessed by attacks against President Erdoğan in the German media or wild unfounded accusations of extravagant spending from the local media, is political. Turkey has broken through the ceiling imposed on it by "those who be" and this is making those same powers very uncomfortable.

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