Should third world ex-dictatorships have their debts forgiven?

[TCO]

Originally posted by Ramo
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.

I agree with Ramo's point. (Could you stick in a dictator that the US opposed please...since i agree on the point regardless of who put the dictator in there. I'm too lazy to think of one right now. )

[TCO]

Originally posted by Rothy
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.

Would you support an invasion of a country that didn't pay back it's loans? Piracy of their shipping? What will you do if they just default?

[Sikander]

We need to simply tell our banks that they are on their own in this regard. Lend to Chavez and reap the whirlwind.

[Sikander]

Originally posted by Ramo
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.

What makes you so sure that Lumumba was the exception in a region that produces an excess of Mobutus as the rule?

[TCO]

That works for me. And really that IS the way it is. The moral hazard is all implicit. Witness the Russian default that collapsed LTCM. We don't always have a bail out...

[Sikander]

Originally posted by GP
That works for me. And really that IS the way it is. The moral hazard is all implicit. Witness the Russian default that collapsed LTCM. We don't always have a bail out...

I agree. We've bailed our banks out time and again, and used our national power at their behest even more often to see that their crap loans were repayed. Let the market decide.

[Plan Austral]

Argentina had less than 5.000 million dollars of debt in 1975, after a 7 years dictatorship our debt increased to 45.000 million dollars.

[David Floyd]

Is no one in favor of my suggestion of forcing loan repayment but reducing or cancelling interest rates?

[TCO]

Originally posted by David Floyd
Is no one in favor of my suggestion of forcing loan repayment but reducing or cancelling interest rates?

nO.

[TCO]

Originally posted by GP


nO.

i DON
T THINK THAT GOVERNMENTS SHOULD ENFORCE DEBT COLLECTION BY BANKS TO RISKY OVERSEAS LENDERS. LET THEM TAKE THEIR OWN RISKS.

[Oerdin]

I'm all for the old Imperial style of dealing with things. In the 19th century when a two bit Latin American dictator refused to repay his debt the US would invade the country, take over the revenue service and make sure the foreign investors got repaid first. Sounds like a good policy to me.

[Saras]

Amen, Brother Oerdin!

[Berzerker]

This highlights the inherent moral/ethical dilemma created by lending money to countries as opposed to companies and individuals. Some say the debt is unfair because dictators are not legitimate representatives of the people. But upon what basis? People didn't vote for the dictators? So what? Tens of millions didn't vote for Clinton or Bush, so why do these guys get to lend or borrow money in our name only to make those who didn't vote for them liable for the loan or debt? Even the people who did vote for them are not liable for the action unless they specifically instructed their "legitimate representative" to lend or borrow the money. And since our system isn't run that way, not even Congress has the moral authority to lend or borrow money only to make us liable for the results.

I agree, a dictator cannot legitimately borrow money on behalf of the people, therefore, the people are not liable. Not even a democratically elected president can borrow money on behalf of the people for the same reason. Can I borrow money and stick you with the debt? That is the relevant question...lender's beware...

[FrustratedPoet]

Originally posted by Rothy
Remember a Dictator is often voted into power before turning his country into a dictatorship,

I'm very disappointed in this forum's US-haters. Such an obvious place to crowbar in a Bush-is-a-fascist troll and they missed it.

[chequita guevara]

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

Frankly, the loans should have been aportioned out to each of the break away republics. Russia, however, is considered the successor state, so it gets almost everything (had to share nukes with Ukraine and Kazakstan).

[chequita guevara]

Originally posted by Sikander
We need to simply tell our banks that they are on their own in this regard. Lend to Chavez and reap the whirlwind.

Chavez was elected and hasn't kept himself in power by illegal means. He is not, therefore, a dictator.

The rule of thumb for declaring a debt odeous or not is whether or not the loan was used to improve the nation. So, in the example of Zaire/The DRC, the loans used to build the bridge would not be forgivable, but loans that were looted would be. The bridge is a capital improvement to the nation, and it is not the loan holder's fault that the dictator didn't keep up repairs. On the otherhand, loans used, for example, to build up Iraq's military could be declared odeous, and Iraq could probably get away with not paying them. The tricky part will come in showing whether the money was actually used for the project, or whether it was used to allow the dictator to syphon money away elsewhere.

Now, here's the wrench in Shi's machine. What do we do about loans that originated with dictatorships twenty or thirty years ago, that the debtor has renegotiated multiple times, because it was always told it could not have its debt forgiven. So, (pulling example out of ass), Argentina takes out a 5 billion dollar loan to pay for it's war against Great Britain. After the fall of the dictatorship, the loan gets renegotiated, to six billion, because the payments were extended over another decade (and made smaller). Over twenty years of renegotiating that debt (because the economy's been falling apart much of the time), it now owes twenty billion on that loan. Should Argentina still have to pay back that money?

[TCO]

Regardless of the odious debate about explicitly letting countries off, what do you do if a country defaults? invade? Piracy?

[TCO]

Regardless of the odious debate about explicitly letting countries off, what do you do if a country defaults? invade? Piracy?

[TCO]

Regardless of the odious debate about explicitly letting countries off, what do you do if a country defaults? invade? Piracy?

[TCO]

Regardless of the odious debate about explicitly letting countries off, what do you do if a country defaults? invade? Piracy?