Should third world ex-dictatorships have their debts forgiven?

Shi Huangdi · May 25, 2003, 03:12

What do you guys think about the collection of debt in third world countries, which used to by a dictator, but have since lost their dictatorship? I think in such cases we should not continue collecting on their debts for loans taken out by dictators. Dictators, IMO, are not legitmate representatives of their people and in fact often through their regimes plunder their own country. It is not right to hold their people accountable for what the dictators do. Furthermore, if third world countries have their debt removed upon becoming a democracy, they will be in a better economic situation, and economic stability aids political stability, helping to ensure the safety of the new democracy.

Worthingtons · May 25, 2003, 03:32

Removing the debt is not fair on the lenders - If you lend out your money to a Man who says he needs to feed his family but wastes it on drink you've still lost that money and would want it back.

What would be more fair would to remove all Interest associated with the loan and allow them to pay it back on terms which would suit them better.

Edan · May 25, 2003, 03:34

Quote:

Originally posted by Rothy
Removing the debt is not fair on the lenders

Maybe lenders would stop lending to dictatorships.

Worthingtons · May 25, 2003, 03:40

There is always the situation where money is borrowed on false promises. Remember a Dictator is often voted into power before turning his country into a dictatorship, In many cases the money is borrowed before the political freedoms of the citizens are removed.

I do agree however, that in the case of Companies purposefully trading with dictatorships (like France) that there should not be protection to the companies/countries involved.

Nubclear · May 25, 2003, 03:43

Quote:

Originally posted by Rothy
Companies purposefully trading with dictatorships (like France) that there should not be protection to the companies/countries involved.

What an interesting example

You've pointed out yet another thing France and the US have in common

Worthingtons · May 25, 2003, 03:47

Best Example there is , since it's a well known fact France were Iraq's (previous) best trading partner.

Sandman · May 25, 2003, 06:13

Quote:

Best Example there is , since it's a well known fact France were Iraq's (previous) best trading partner.

Better than Syria? I take it you don't support the erasing of Iraq's debt to Russia?

Even though Zaire/Congo has had a change of government, it's expected to keep paying for the excesses of the Mobutu regime, when the country is falling apart. Debt cancellation is a way to help them get back on their feet.

Frankychan · May 25, 2003, 06:48

What they should do is remove third world debt....wipe the slate clean. It sounds drastic, but the Third World will stay in debt indefinetely (but maybe this is what some countries want?

)

I propose that when countries wipe the slate clean, they instead propose different legislation. For example:

Let's say Zimbabwe has a huge debt to the United States. The US wipes out the debt by Zimbabwe. Zimbabwe in return signs legislation where they only import goods from the US for a certain amount of time. That way, Zimbabwe can develop their country with US goods, and the United States get's a buyer for their goods.

Everyone is happy. US gets money, Zimbabwe develops their economy resulting in more money being flowed into the US exclusively.

Saras · May 25, 2003, 07:35

I wonder why Russia didn't repudiate USSR's debts? It's a completely new country...

uh Clem · May 25, 2003, 08:04

I you lend money to some third-world scumbag, not only do you richly deserve to lose all of it, you should be liable as an accessory for crimes committed by the scumbag's government.

Saras · May 25, 2003, 08:09

How about everyone on the London money markets that lent to Vneshtorgbank in the late eighties-early nineties? The money was used to suppress freedom movements all over CEE...

David Floyd · May 25, 2003, 17:50

I'm opposed to cancelling any of this debt. As has been pointed out, it's unfair to the lenders, regardless of the supposed (il)legitimacy of the government in power at the time.

Shi Huangdi · May 25, 2003, 18:02

Quote:

Originally posted by David Floyd
I'm opposed to cancelling any of this debt. As has been pointed out, it's unfair to the lenders, regardless of the supposed (il)legitimacy of the government in power at the time.

You are worried about unfairness to the rich lenders? What about the impoverished third world people who suffered under the dictatorships? They never had a choice whether or not to enter into the debt at all.

David Floyd · May 25, 2003, 18:09

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You are worried about unfairness to the rich lenders?

What does their economic status have to do with anything? If they lent money, they should get it back.

Quote:

What about the impoverished third world people who suffered under the dictatorships? They never had a choice whether or not to enter into the debt at all.

That's funny. If I made that argument about taxes, you'd laugh.

And of course, many of these people don't even support individual freedom and capitalism and the like - take the people in Iraq, for example. I read in the NYT today that the US was disbanding the Iraqi armed forces, yet the former Iraqi soldiers threatened to fight if they didn't keep receiving paychecks. Duh, how stupid are these people?

Or, say, Nigeria. Do you really think that, in the absence of debt, Nigeria would develop a truly free society? Please

Shi Huangdi · May 25, 2003, 18:26

"And of course, many of these people don't even support individual freedom and capitalism and the like - take the people in Iraq, for example."

But if there rights are indeed naturally existant, do their political views really change that? Do you have a right to go rob Che because he wants to take away your freedom? The fact is I don't see how you are justifying making the people pay a debt they never agreed to.

Pekka · May 25, 2003, 18:28

In general, No they should not be forgiven. But, they should be thought case by case, and given different solutions like take the interest away and help them to pay the lender back, like further business deals or so, and not be forced too hard to pay back too early. But not just forgiven like that.

Besides, they could just give the money to third world poor countries, we lend it. Just give it then, you don't see a dime coming back anyway. At least not in our lifetime. I'm all for helping them to pay back though, like cutting sweet deals and so, without exploiting their country too much.

Zylka · May 25, 2003, 18:30

The fruits of this grown-up debate are overwhelming my feable mind

David Floyd · May 25, 2003, 18:36

Quote:

But if there rights are indeed naturally existant, do their political views really change that? Do you have a right to go rob Che because he wants to take away your freedom? The fact is I don't see how you are justifying making the people pay a debt they never agreed to.

That's true, I do believe in natural rights. I just find it hypocritical that those who deny natural rights would try to claim certain rights for themselves at the expense of others.

Further, it's not as if forcing debt repayment is robbery - the money was never their's to begin with. In fact, NOT paying it back is robbery.

Now, if you want to argue interest rates, that's certainly different, and I would see little wrong with forgiving INTEREST on debts, in certain cases.

David Floyd · May 25, 2003, 18:42

Quote:

The fruits of this grown-up debate are overwhelming my feable mind

You misspelled "feeble"

Zylka · May 25, 2003, 18:45

I'd like to, but then I'd be spelling things properly in a post in which I desperately need to

Spiffor · May 25, 2003, 19:11

Third world countries should have their debts erased if these debts are a significant weight over their development, no matter if they are dictatorships, democratic, whatnot.

If the debt isn't a real hindrance to the develoment, I fail to see why the debts contracted by former dictatorships shouldn't be followed after the overthrow. It can only ruin the reputation of the country as a borrower, especially if there is a political instability which threatens to overthrow the new government.

David Floyd · May 25, 2003, 19:19

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Third world countries should have their debts erased if these debts are a significant weight over their development, no matter if they are dictatorships, democratic, whatnot.

So if repaying a bank for my house loan or car loan is a "significant weight on my development", I shouldn't have to pay the bank back?

I like the way you think!

Spiffor · May 25, 2003, 19:25

Quote:

Originally posted by David Floyd
So if repaying a bank for my house loan or car loan is a "significant weight on my development", I shouldn't have to pay the bank back?

With the right definition of "significant weight", Yes.

Ramo · May 25, 2003, 19:27

They should definitely be forgiven. Why should the people of a state have to pay for the actions of a despot who subjagated them?

Ramo · May 25, 2003, 19:47

To come up with a concrete example, in the 60's, the CIA knocked off the hope for democracy in the Belgian Congo Patrice Lumumba, and insured the rule of ruthless dictator, Mobutu. Mobutu ruled Zaire for about 30 years. In the course of his rule, Mobutu secured lots of western loans. One of the earliest involved a billion dollar loan for a huge bridge across vast expanses of jungle; it quickly fell into disrepair (big suprise). The same thing repeated itself over and over again; either through bullshit "development" projects or Mobutu outright depositing the money into his bank account. He has lots of castles and private planes, etc., etc. for his personal amusement, but we've been forcing the people of Congo to pay for his greed. Congo is still several billion dollars in debt.

David Floyd · May 25, 2003, 19:49

Quote:

With the right definition of "significant weight", Yes.

At least you're consistent, as long as you don't try to define your idea as "freedom" - it totally destroys the idea of both property and contractual agreements. Surely you aren't really telling me that if I lose my job, I shouldn't be forced to make a house/car payment or lose my house/car, are you?

Spiffor · May 25, 2003, 19:55

DF :
You have a reference point of an American Middle Class, i.e someone who has very little challenge towards his daily survival

I indeed don't consider my ideas to be paragon of freedom, and property is very far from being a moral value in my book.

If you want a better comparison than the nonsense you are spouting, I indeed think that if you're a bum who has just got laid off of a kebab house, you shouldn't be forced to sell all your clothing and a kidney in order to repay for past loans.

Ramo · May 25, 2003, 19:58

David, if Shrub decides to use a loan to buy a few castles in Europe and writes them off as a state expense, should you be forced to pay back that loan?

Worthingtons · May 25, 2003, 20:38

I dont think David is 'spouting rubbish' he simply beleives that what is lent should be repayed, it's a fair enough principle.
Guys, it might sound all nice to free Third world countries of debt but the ludicrous idea will never happen. But as I say, i doesnt matter how much the Fee is, When you wipe Interest on the debt and relax the timescales then the lender get THIER money back (Eventually) and the Nation isnt crippled with repayments - the Comprimise that suits everyone.

Spiffor makes an Interesting personal comparison, and in his situation he woudnt have to sell his kidney but rather be declared Bankrupt - the problem is that the consquences of allowing a 'bankrupcy norm' to be extended from Individuals to entire nations could be devastating.... World trade under credit terms would suffer a catastrophic loss of confidence.

TCO · May 25, 2003, 20:42

Quote:

Originally posted by Shi Huangdi
What do you guys think about the collection of debt in third world countries, which used to by a dictator, but have since lost their dictatorship? I think in such cases we should not continue collecting on their debts for loans taken out by dictators. Dictators, IMO, are not legitmate representatives of their people and in fact often through their regimes plunder their own country. It is not right to hold their people accountable for what the dictators do. Furthermore, if third world countries have their debt removed upon becoming a democracy, they will be in a better economic situation, and economic stability aids political stability, helping to ensure the safety of the new democracy.

I think that the people of the country can default on bad debts from situations like that. Perhaps this is a simpler way, than officially "forgiving them". My understanding is that countries renounce debts at times. And that pretty much the debtholders have to lump it. Just as investors have to lump it if a government nationalizes (i.e. seizes) their property.

In fact, I see a lot more moral justification for a newly free country to renounce old debts, than for a newly unfree country to seize assets.

This would have the good effect of eliminating some of the moral hazard of bankers lending to dictators and of World Bank and such going to insane efforts to paper over bad loans.