1. International Debt & Global Disparity
The Race to the Bottom

2. How much $ do you live on?
How much money per day does your lifestyle cost?
How much money do you spend on an average day?
2.6 billion people live on $2 (USD) a day !
80% of the world lives in countries were income disparity is worsening.
Rich getting richer & poor getting poorer
# of children worldwide: 2.2 billion
# of children in poverty: 1 billion

3. World Poverty Chart

4. World Consumption Chart

5. Why ? Poverty has many causes.
Most developing and poor countries have large international debts to repay.
By repaying their debts they are forced to cut back on $ they would use to provide basic services for their people.

6. What is Debt?
Countries owe money to lenders that gave them “aid” at one point in the past.
Lenders
Other governments of the world
Intergovernmental institutions like the World Bank (WB) and International Monetary Fund (IMF)
Private agencies (Banks, investors, financial institutions)

7. How did countries become indebted?
Following WWII and during the Cold War
Many “new” nations needed capital to develop their economies/countries.
The “West” was the principal lender to most nations.
U.S.A, Western banks, etc
Both lending and spending was done irresponsibly during the 60s, 70s and 80s.
American support for ABC dictatorships.
Mobutu (Zaire), Marcos (Philippines), Hussein (Iraq)
Led to financing of wars in African, Latin America and South East Asia

8. Oil Crisis 1970s: 1st disaster
abolition of the world Gold Standard
U.S. Dollar would become the international standard for trade/finances
Given the market uncertainties OPEC nations increased value of oil by 70%
Massive inflation
US dollar - Led to market uncertainties and price changes
Huge problem for everyone, especially developing nations that needed oil for development
during 1970s and 1980s made loans extremely tough to repay (interest goes from 5% to 15%)

9. Explosion of Petrodollars
$ from oil revenues of OPEC countries accumulated in Western financial institutions
As a consequence Western financial institutions had more $ to lend
By the early/mid 1980s many debtor nations were about to default on their loans.
...and they did
Mexican weekend is the typical example: Mexican Weekend marked the beginning of the Latin American debt crisis.[citation needed] In August 1982, Mexican Secretary of Finance Jesús Silva Herzog Flores flew to Washington, D.C., to declare Mexico's foreign debt unmanageable, and announce that his country was in danger of defaulting.

10. More loans but with SAPs
Western financial institutions lent more $ but with condition
Structural Adjustment Programs
Series of measures a borrowing country must adopt
Open the country and its market
Cut social spending and use $ to pay
about to lose their “investments” so they
if it wishes to receive aid
SAPs were implemented throughout the developing world during the 1980s and 1990s with very limited success
Many believe it only made matters worse
generally enhancing the rights of foreign investors vis-à-vis national laws
to foreign invest (Eliminate trade barriers)
This meant that most countries cut back on basic elements like health care, education food subsidies.
Made life worse for the people of developing nations

11. RESULTS? Debtor nations are not closer to repaying their debts.
Most developing nations can barely pay the interest on their loans.
Has lead to serious debate about what to do.
Cancel the debt?
Readjust the debt?
(especially sub Saharan Africa)
Cancel the debt?
Jubilee Campaign: Sought to cancel debt of 50 poorest countries ($230 billion debt in 1999)
Readjust the debt?
WB and IMF: Highly Indebted Poor Countries Initiative

12. Bare Minimum For all Basic Service Total Cost Basic education for all
6$ billion
Water and Sanitation for all
9$ billion
Basic Health and nutrition
13$ billion
Where can we raise so much money?
Global priorities
Total Costs
$ spent on cosmetics in US
8$ billion
$ spent on pet food US/EU
17$ billion
$ spent on cigarettes EU
50$ billion
$ spent on alcohol EU
105$ billion
$ spent on narcotics (world)
400$ billion