Relief and Reform in Third World Debt

‘If it is not necessary to change, it is necessary not to change.’ On the basis of this fundamental precept of conservative thought there has been a tendency among observers of North-South disputes, particularly those who proclaim themselves primarily interested in positive-sum games (or interdependence), now to write off ‘the debt problem’ as a non-issue. In parts of the international financial community ‘realists’ and ‘pragmatists’ have engaged in a certain amount of self-congratulation with respect to the ease with which the industrialised world weathered the recent shocks of inflation, recession and oil price increases. Yet the debt issues do not and will not go away. They remain for essentially 3 reasons: (1) they cannot be dissociated from the whole range of other trade and financial issues which remain a source of conflict between North and South; (2) the ‘successes’ associated with the financing problems and debt accumulations of the past few years may be irrelevant as guides to the resolution of the debt-related issues of the future; (3) there exist major shortcomings in the way the world financial system at present protects developing countries, and perhaps the industrialised world as well, from major external shocks.