Third World debt is external debt incurred by Third World countries. (The term "Third World" is still in use, although many prefer less pejorative terms, such as "developing countries", "Majority World" or "global South".) For the Jamaican reggae band, see Third World (band). ... A country, a land, or a state, is a geographical area that connotes an independent political entity, with its own government, administration, laws, often a constitution, police, military, tax rules, and population, who are one anothers countrymen. ...

Unpayable debt is a term used to describe external debt where the interest on the debt exceeds the amount that the country produces, thus preventing the debt ever being paid back. It is considered by some a method of oppression or control by first world countries; a form of debt bondage on the scale of nations. For GDP in neuroscience see Giant depolarizing potentials. ... Oppression is the arbitrary and cruel exercise of power. ... Fictional agency of the United States of America federal government from the TV show Get Smart. ... The terms First World, Second World, and Third World were used to divide the nations of Earth into three broad categories. ... Debt bondage or bonded labor is a means of paying off a familys loans via the labour of family members or heirs. ...

Odious debt is debt incurred by undemocratic countries and misspent (for example, on armaments or repression of the population) or misappropriated. Some debt campaigners argue that odious debt should be cancelled at the expense of the creditors, according to a historic principle that those who suffer from the consequences of spending should not have to repay the money they never controlled. Others have argued that these funds were loaned irresponsibly in the first place. Although there are historical precedents, major recent examples, such as the Apartheid government of South Africa and the Mobutu dictatorship in Zaire (now the Democratic Republic of Congo) have not been recognized by creditors as "odious". Odious debt is debt which is incurred by a regime for purposes which do not serve the interest of the state. ... The bayonet, still used in war as both knife and spearpoint. ... This article is about political corruption. ... Apartheid (International Phonetic Alphabet or in English and in Afrikaans) is the policy and the system of laws implemented and continued by White minority governments in South Africa from 1948 to 1990; and by extension any legally sanctioned system of racial segregation. ... Mobutu Sese Seko Nkuku wa za Banga (or Mobutu Sese Seko Koko Ngbendu Wa Za Banga; October 14, 1930 - September 7, 1997) was the President of Zaire (now the Democratic Republic of the Congo) from 1965 to 1997. ...

Historical background

Most present-day states in Africa and Asia did not have an independent financial existence as recently as World War Two. Nevertheless, not all external debts of these countries were acquired after independence. Indonesia was required to assume the Dutch colonial government's debt (much of which had been acquired fighting the pro-independence rebels the previous four years) as a condition of independence in 1949. This pattern was repeated elsewhere. Africa is the worlds second-largest continent in both area and population, after Asia. ... A satellite composite image of Asia Asia is the central and eastern part of the continent of Eurasia, defined by subtracting the European peninsula from Eurasia. ... German soldiers at the Battle of Stalingrad World War II was the most extensive and costly armed conflict in the history of the world, involving the great majority of the worlds nations, being fought simultaneously in several major theatres, and costing tens of millions of lives. ... World map of colonialism circa 1945. ...

Egypt, which had not been formally colonized, but had been effectively governed as first an Anglo-French and later British protectorate, did not have control over the lucrative Suez Canal, which links the Mediterranean Sea with the Red Sea (and therefore the Indian Ocean). Denied credit to build the Aswan Dam, Egypt's government moved to nationalize the canal, formally owned by a European corporation but built (at tremendous human cost) by Egyptian labor, in 1956, sparking the Suez Crisis. For the rule of Oliver Cromwell, see The Protectorate. ... 1881 drawing of the Suez Canal The Suez Canal (Arabic, Qanā al-Suways), west of the Sinai Peninsula, is a 163-km (118-mile) maritime canal in Egypt between Port Said (Būr Saīd) on the Mediterranean Sea and Suez (al-Suways) on the Red Sea. ... The Mediterranean Sea is a part of the Atlantic Ocean almost completely enclosed by land, on the north by Europe, on the south by Africa, and on the east by Asia. ... Conshelf II in the Red Sea (Sudan) The Red Sea (Arabic البحر الأحمر Baḥr al-Aḥmar, al-Baḥru l-’Aḥmar; Hebrew ים סוף Yam Suf) is a gulf or basin of the Indian Ocean between Africa and Asia. ... Map of Egypt showing the location of Aswan and Lake Nasser Aswan is a city on the first cataract of the Nile in Egypt. ... HM Ships Eagle, Bulwark, and Albion of the British Royal Navy. ...

In the first decades following decolonization, first world and multilateral creditors such as the World Bank and International Monetary Fund lent massively to Global South governments. Money was frequently directed towards massive infrastructure projects such as dams and highways. It also financed a variety of wars, and secured military regimes in power. Additional funds focused on an import substitution model of development, creating an capacity to replace imports from industrialized countries. Such policies emerged in a convergence of ideologies towards the concept of industrial development, shared by capitalists, communists and Third World nationalists. The terms First World, Second World, and Third World were used to divide the nations of Earth into three broad categories. ... The International Bank for Reconstruction and Development (IBRD, in Romance languages: BIRD), better known as the World Bank, is an international organization whose original mission was to finance the reconstruction of nations devastated by WWII. Now, its mission has expanded to fight poverty by means of financing states. ... The flag of the International Monetary Fund (IMF) The International Monetary Fund (IMF) is the international organization entrusted with overseeing the global financial system by monitoring foreign exchange rates and balance of payments, as well as offering technical and financial assistance when asked. ... Scrivener Dam, Canberra Australia, was engineered to withstand a once-in-5000-years flood event A dam (a common Teutonic word, compare to Dutch dam, Swedish and German damm, and the Gothic verb faurdammjan, to block up) is a barrier across flowing water that obstructs, directs or retards the flow... Mitchell Freeway in Perth, Western Australia For other uses, see Highway (disambiguation). ... Import substitution industrialization also called ISI is a trade and economic policy based on the premise that a developing country should attempt to substitute products which it imports (mostly finished goods) with locally produced substitutes. ...

Massive lending was followed by the threat of major defaults, such as that of Mexico, in the early 1980s, precipitating what became known as a debt crisis. Faced with the possiblity of losing their investments lenders proposed a variety of structural adjustment programs (SAPs) to fundamentally reorient Southern economies. Most called for the drastic reduction in public welfare spending, focusing economic output on direct export and resource extraction, providing an attractive investment climate to multinational investors, increasing the fluidity of investment flows (by replacing foreign direct investment with the opening of stock markets) and generally enhancing the rights of foreign investors vis-a-vis national laws. In finance, default is what occurs when a party is unwilling or unable to pay their debt obligations. ... Events and trends The 1980s marked an abrupt shift towards more conservative lifestyles after the momentous cultural revolutions which took place in the 1960s and 1970s and the definition of the AIDS virus in 1981. ... Structural adjustment is a term used by the International Monetary Fund (IMF) for the changes it recommends for developing countries. ... Welfare has four main meanings. ... Foreign direct investment (FDI) is the movement of capital across national frontiers in a manner that grants the investor control over the acquired asset. ... A stock exchange is an organization of which the members are stock brokers. ...

As these programs became a prerequisite of lending and other development assistance from all major multilateral creditors, and as Soviet economic assistance evaporated in the late 1980s, SAPs became the dominant economic plan for much of the world's population. Saddled with massive debts, and unable to collectively alter unfavorable terms of trade, many Southern governments were pushed from the role of legislating economic policy to negotiating it. Many of them, such as Jamaica's Michael Manley, have argued they were even pushed into the job of managing an enforced economic transition against the wishes of their populations. In Governments Economic policies determine the set of actions that a government can take in terms of its expenditure, borrowing, setting of interest rates, etc. ... Michael Norman Manley (December 10, 1924 - March 6, 1997) was the fifth Prime Minister of Jamaica (1972 - 1980, 1989 - 1992). ...

Arguments about the fairness of Third World Debt

First world critics of this point of view state that many of these debts were freely entered into by those countries' governments; it has, however, been argued that many of these governments were dictatorships or kleptocracies, and that the people of Third World countries cannot be held responsible for the actions of those governments. These critics further question if "unpayable debt" truly exists, since governments can refinance their debt via the IMF or World Bank, or come to a negotiatied settlement with their creditors. Benito Mussolini and Adolf Hitler were two of the 20th centurys most notorious dictators. ... Kleptocracy (sometimes Cleptocracy) (root: Klepto+cracy) literally means rule by thieves. ... Refinancing refers to applying for a secured loan intended to replace an existing loan secured by the same assets. ... The flag of the International Monetary Fund (IMF) The International Monetary Fund (IMF) is the international organization entrusted with overseeing global financial system‘s current trade account balances of member states. ... The International Bank for Reconstruction and Development (IBRD, in Romance languages: BIRD), better known as the World Bank, is an international organization whose original mission was to finance the reconstruction of nations devastated by WWII. Now, its mission has expanded to fight poverty by means of financing states. ...

Debt relief activists claim that the debts of poor countries could easily be paid off by first world countries. For example, the Jubilee Debt Campaign argues that the UK could pay off all of the debt owed to it for £3 per person per year for the next ten years. Debt relief is the partial or total forgiveness of debt, or the slowing or stopping of debt growth, owed by individuals, corporations, or nations. ... Jubilee Debt Campaign is the UKs campaigning successor to Jubilee 2000, comprising much of the UKs original Jubilee 2000 membership. ...

Some economists argue against this course of action on the basis that it would motivate countries to default on their debts, or to deliberately borrow more than they can afford, and that it would not prevent a recurrence of the problem. Libertarian economists also question the fairness of a government taxing its own citizens to pay off debts owed to it. Perhaps as a result of these considerations, there is little political will to write off the debts of third world countries. Economists are scholars conducting research in the field of economics. ... This article deals with the libertarianism as defined in America and several other nations. ... Politics is the process and method of making decisions for groups. ...

Debt relief in response to emergencies

In 2004 the United Kingdom wrote off some of its third world debt to the poorest countries. As part of its response to the humanitarian crisis caused by the Indian Ocean earthquake, the G7 nations organized an international agreement to suspend repayment of international debt by the countries most affected. [1] (http://www.guardian.co.uk/tsunami/story/0,15671,1385701,00.html) 2004 is a leap year starting on Thursday of the Gregorian calendar. ... The 2004 Indian Ocean earthquake was an undersea earthquake that occurred at 00:58:53 UTC (07:58:53 local time) on December 26, 2004. ... 1983 G-7 Economic Summit in Williamsburg, Virginia (left to right) Pierre Trudeau, Gaston Thorn, Helmut Kohl, François Mitterrand, Ronald Reagan, Yasuhiro Nakasone, Margaret Thatcher, Amintore Fanfani. ...

Crises caused by debt

A recent and telling example of the problems posed by external debt was the Argentine economic crisis. Argentina's debt grew continuously durin the 1990s, climbing above 120 thousand million USD. Creditors continued to lend money, while the IMF suggested less state spending, as recession deepened. The crisis exploded in December 2001. In 2002, a default on about $93,000 million of the debt was declared. Investment fled the country, and capital flow towards Argentina ceased almost completely. The Argentine economic crisis was part of the situation that affected Argentinas economy during the late 1990s and early 2000s. ... The December 2001 riots took place on December 20 and December 21, 2001, in Buenos Aires, Argentina. ...

The Argentine government met severe challenges trying to refinance the debt. The IMF became wholly uncooperative. Other creditors denounced the default as sheer robbery. Vulture funds who had acquired debt bonds during the crisis, at very low prices, asked to be repaid immediately. The state was broke and the foreign currency reserves were almost depleted. For four years, Argentina was effectively shut out of the international financial markets. A vulture fund is an financial organization that especializes on buying securities in distressed environments, such as high-yield bonds in or near default, or equities that are in or near bankruptcy. ...

Argentina finally got a deal by which 76% of the defaulted bonds were exchanged by others, of a much lower nominal value and at longer terms. The exchange was not accepted by the rest of the private debt holders, who will continue to present a challenge to the country in years to come.

External links

• Jubilee Debt Campaign (http://www.jubileedebtcampaign.org.uk/)
• Third World Debt Undermines Development (http://www.globalissues.org/TradeRelated/Debt.asp) - Huge resource on third world debt.
• International Debt Crisis (http://webhost.bridgew.edu/jhayesboh/debt.htm) - curriculum materials from a Latin Americanist geographer
• "The Debt Threat: How Debt is Destroying the Developing World" (http://www.democracynow.org/article.pl?sid=05/01/13/1455234) - Author Noreena Hertz talks to Democracy Now! on January 13, 2005.