G8: The rich renege

Less than two weeks ago, the G8 agreed to forgive the debts of 18 poor nations. And now, before the ink is even dry on the agreement, they are trying to renege on the deal. The "problem" is that debt provides leverage over countries which can be used to force them to open their markets, privatise their public services, or otherwise pursue policies which profit the west rather than their own citizens. Some countries are reluctant to surrender this leverage, and are proposing to replace debt-forgiveness with more conditionality-laden "grants" - which could then be withdrawn if the recipient countries failed to toe the desired political line.

This is not what the millions of people around the world who campaigned to Make Poverty History fought for. But then again, should we really have expected any different? The rich nations have promised again and again and again to reduce trade barriers and open their markets to the poor through the WTO - and again and again and again they have failed to do so (and then, to add insult to injury, turned around and demanded more concessions from the poor in exchange for the same promises that they had failed to keep in the first place). This is not an abberation; it is just business as usual - the business of screwing the poor for fun and profit.

How should the poor world respond to this display of bad faith? They should repay it in kind. In The Age of Consent, George Monbiot pointed out that effectively, the poor world owned the rich world's banks. The scale of the debt is so huge that a collective default would be absolutely ruinous to the debt-holders. The poor should start using this as what it is: a weapon. They should make a collective and credible threat to default unless the rich world moves to equalise trade rules and free the poor from their burdens:

the poor world should do as the IMF and the World Bank have done, and attach 'conditionalities' to the handling of its debt. Just as the IMF has threatened to ruin the economies of the poor nations if they do not implement the reforms it demands, the poor world should threaten to ruin the economies of the rich nations if they do not agree to its terms. The point of possessing a terrifying weapon is that you do not have to use it; the fear of the weapon is sufficient to ensure that other people do as you demand. Nowhere does fear do its work with more celerity and less constraint than in the financial markets, which often flee even from their own shadows.

The financial system is built on a fantasy: that the debts on which it has constructed its wealth will one day be redeemed. The possibility that it could be awoken from its dream, that the nations which owen the banks might dump the debt on which the system is built, would induce a panic that no financial market could resist. The enemies of the poor will be forced to turn upon each other. The banks and financial speculators of the rich world, who have, through the liberalization of financial markets, been granted power over their own governments, will, when they realize that the developing nations are serious, demand that the rich world's governments must do as the poor world requests, to prevent the entire structure's collapse. Thus all the means which have been deployed by the rich against the poor are neatly turned around and deployed by the poor against the rich.

Putting together a coalition of debtor nations to do this would require a colossal collective effort - but we're already seeing the first steps towards it. The west's continued bad faith in trade talks resulted in the birth of the G22, a collection of poor nations who successfully stuck together to stymie WTO negotiations until they saw more progress on agriculture. Bad faith on debt reduction will further push the poor towards taking concerted action.

No doubt the right will decry the idea of threatening to ignore contracts and such, but bluntly, the poor world is being kept in debt-slavery. And they deserve their freedom every bit as much as the debt slaves of ancient Athens who were freed by the seisachtheia.