Fallout from debt calamity leaves legacy of poverty and repression

In A public AIDS clinic in Guatemala City, health cutbacks have forced patients to participate in a lottery to determine which…

In A public AIDS clinic in Guatemala City, health cutbacks have forced patients to participate in a lottery to determine which of them will live a little longer. More than 100 patients queue for the expensive drugs but there are only enough for six people for six months.

In Honduras, human rights groups uncovered a "social clean-up" squad last month, involving police and army troops which killed 200 "delinquents" in the past two years. Peruvian doctors have sterilised 300,000 women in the past four years, often without their consent, a silent "ethnic cleansing" of poor women's reproduction rights by doctors who earn productivity bonuses for each woman they operate upon.

At first glance these horror stories have nothing in common beyond the shared misfortune of people born poor in countries where injustice and inequality are considered as natural as the floods and earthquakes which sweep away precarious homes built of cardboard and corrugated iron.

A closer look at the origins of the debt crisis reveals a direct relationship between repression and resistance, debt and death in a permanent downward spiral.

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The United Nation's Commission for Historical Clarification, which investigated abuses committed by all sides during Guatemala's 40-year civil war, touched on one critical aspect of the debt crisis when its authors commented that the origin of the violence had its roots in "the socio-economic arrangements imposed on the country by the United States and global corporations".

Central America's fragile economies dedicate 40 per cent of gross national product to service debt payments each year, a transfer of resources from poor to rich countries which has paralysed social progress at home. "Nicaragua celebrates her economic independence today," announced President Arnoldo Aleman last week, at a special Mass to launch three days of national festivities in honour of the nation's entry into the club of Highly Indebted Poor Countries (HIPC).

This losers' club includes the world's poorest 42 countries, whose special status entitles them to debt forgiveness and the restructuring of outstanding loans.

ONE of the conditions of HIPC membership is that member nations must apply World Bank economic recipes, notably the dismantling of labour rights, the reduction of social spending, the elimination of subsidies to the poor and the privatisation of public firms.

In Central America and elsewhere in the region, external debt was contracted by authoritarian regimes in the 1970s, aided by unscrupulous foreign banks turning a blind eye to the borrowers' dubious credentials.

The US government insists on compliance with debt repayments, a far cry from foreign policy goals pursued a century ago. In 1898 the US expelled Spain from Cuba, cancelling the island's debt to that country, on the grounds that it was "odious" - a debt forced on Cuba by relations of subordination.

If ever there was a region subject to unfair conditions of subordination, it would have to be Central America, where banana companies and US-backed tyrants imposed economic policy through the barrel of a gun.

The prolonged crisis of indebtedness has increased the disparity between rich and poor and speeded up the process of social exclusion, pushing thousands of teenagers toward violent crime.

One important step toward reducing the risk of indebtedness was taken by Chile, where the centre-left coalition which followed Pinochet's regime introduced restrictions on capital inflows to reduce short-term speculative investment.

The only long-term solution to the region's crisis is unconditional debt cancellation and an overdue apology to the region's majority poor, sucked dry by belt-tightening measures imposed from afar.