‘Without being radical or overly bold, I will tell you that the Third World War has already started - a silent war, not for that reason any the less sinister. ...It is a war over foreign debt, one which has as its main weapon interest, a weapon more deadly than the atom bomb, … ‘

1. Introduction

To deal with the question of world poverty means to deal with one of the major problems of the late 20^th century. It is, however, difficult to give qualified advice, as this problem is as most human matters ambiguous and complex. Feasible solutions, based on sound analyses and co-operating with all parties involved, must be worked out. I do not believe that there is a genuine Christian solution as to how world poverty is to be tackled. Such a solely Christian approach is not desirable either, as the problems concern the world as a whole, and one should be careful in putting forward arguments so specifically Christian that others will hardly follow. Christianity has to seek others’ co-operation, but can of course resort to its own tradition and teaching where this seems plausible. Inflexible recourse to tradition will lead to its insignificance as the example of church teaching on interest during Reformation and post-Reformation centuries shows. Similarly Christians have tended to reject the market system a priori as the main source of injustice and inequality, without making themselves familiar with its functions.

Nevertheless, there has been some truth behind this teaching as well, though its application has been hindered by stiff repetition of outdated formulae and by simplifications. The relevance of these truths will be discussed in the conclusion of this essay. First we shall examine the situation, as it is, and present models for its solution.

2. Some facts about poverty

The term poverty can be understood in relative or in absolute terms. As indicators of absolute poverty some key data is used. These are general health, infant mortality, life expectancy, income, and government spending on social and related fields. Reasons for these data will be suggested. The general state of welfare can best be measured in looking at children (and women) as the weakest in society. For their death famine and disease are the chief causes. Contrary to other claims, actual violence plays only a minor role, about 20 times less than starvation and lack of medical treatment. Child mortality in Africa, though reduced, is still 10 times higher than in industrialised countries. But starvation shows only a small percentage of the impact malnutrition has on child mortality (see tables 1, 2, 3 ). So says the World Health Organisation (WHO) that ‘every year in the developing world 12.2 million children under 5 years die, most of them from causes, which could be prevented for just a few US cents per child. They die largely because of world indifference, but most of all they die because they are poor.’

Table 1
The number of Malnourished: Different estimates (mil.)
Source	FAO 5th survey	FAO toward 2000	World Bank 1986	ACC/SCN 1987	FAO 1992	FAO 1992
Period	1979-81	1983-84	1980	1979-81	1979-81	1988-10
Method of calculation	1.4 BMR	1.4 BMR	90% of FAO/WHO/UNU	1.2 BMR	1.52 BMR	1.54 BMR
SSA	99	142	150	80	128	175
Asia*	313	291	510	197	363	351
Latin Amer.	56	55	50	30	47	58
Near East & North Africa	25	24	20	10	15	12
TOTAL	493	512	730	317	553	596
Incl. China		685	1045	465	843	785
* without China

Table 2
Country	Under-5 mortality rate		Country	Under-5 mortality rate
	Value	Rank		Value	Rank
Niger	320	1	Indonesia	68	68
Rwanda	170	21	UK	7	163
Iraq	122	37	Sweden	4	188
India	108	45
Table 3
% of malnutrition - assisted deaths where malnutrition was mild or moderate only			% of all under five deaths - associated with malnutrition (all degrees)
India	74	67	Rwanda	96	44
Bangladesh	73	66	Uganda	91	39
Indonesia	92	54	Brazil	99	26

Life expectancy is much lower, at 54 years, still 20 years below that in the industrialised world. In the least developed countries it lies at 43 years, being calculated to drop further. Since the beginning of the debt crises, the impact of which shall be elucidated later, food production has fallen and so has the average household income. ‘Today, approximately 18 million people are at risk of malnutrition and starvation from famine and drought spreading across Africa.’ 310 million people do not have access to safe water (40% of the children), 385 million no adequate sanitation. Apart from physical deficiency symptoms of both, mothers and children, the latter lack care as the former carry much of the burden of poverty, and education. Worldwide some 48 Million children and women are in extreme danger (For the general state see table below).

Table 4	Total population (mil)	Population under 18 (mil)	Annual no. of births (thous)	Annual no. of under-5 births deaths (thous)	Annual under-5 mortality rate (thous)	Net primary GNP per capita ($)	Under-5 children under- weight (%)	Primary-school enrolment/ attendance rate (%)	Total fertility rate	Maternal mortality rate
	1996	1996	1996	1996	1996	1996	1987-97	1987-97	1996	1990
Rwanda	5.4	2.9	263	45	170	190	29	61 y	6.2	1300
Iraq	20.6	10.1	770	94	122	1036	23	83 y	5.4	310
India	944.6	382.9	24381	2706	111	380	53	68 y	3.2	570
Indonesia	200.5	77.8	4732	336	71	1080	34	97	2.7	650
Brazil	161.1	60.2	3211	148	46	4400	6	94 y	2.3	220
UK	58.1	13.3	706	5	7	19600	-	100	1.7	9

1. The role of third world debt

Similar figures are confirmed in the "World Development Indicators 1997", released by the World Bank. It also shows financial help made up about 30% of these countries national income (for sub-Saharan Africa $32 per capita 1994). We shall see, however, that this help is outstripped by debt services these countries pay to their creditors in the developed world. In 1997/98, the International Monetary Fund (IMF) alone extracted a net $1 billion from Africa in debt services. Globally, ‘developing countries paid back $13 for every $1 they received in grants 1998.’ Summed up, in the time between 1982 and 1991 third world debt services amounted to $1.463 billion, opposed by $1.065 billion in new credits (ironically chiefly to service older debts to the same organisations that gave the new credits), development aid and investments. The difference measures up to 6 Marshall Plans in modern money. The recent drop in financial aid lies apparently in the economic crisis in the developed countries, especially in bailouts necessary for Asian banks after their crashes early last year.

Adding to increasing debt and decreasing aid comes the fall of commodity prices on the world market, at 16% in 1998, perpetuating earlier trends. Export is the main income for developing countries, often enforced by Structural Adjustment Programs (SAP) of the World Bank and the IMF. These were introduced to ensure debt reimbursement after the debt crisis of the early 1980’s. They aim at more efficiency in the debtors’ economies. It is appropriate to suggest at this point that SAP has been on the cost of the population and environment of the countries concerned, as efficiency had to be achieved despite slow increases in export rates. SAP usually implies that debtors

• ‘spend less on health, education and social services - people pay for them or go without
• cut back on food subsidies - so prices of essentials can soar in a matter of days
• cut jobs and wages for workers in government industries and services
• encourage privatisation of public industries, including sale to foreign investors
• take over small subsistence farms for large-scale export crop farming instead of staple foods. …
• devalue the national currency, lowering export earnings and increasing import costs.’

As many countries face the same situation, the markets do not offer enough capacity for all of them to increase exports, especially as the developed countries import up to 2/3 of their imports from other developed countries, chiefly by agreements on tolls and restrictions (protectionism).

In the 1970’s money was cheap. The real interest rate (nominal interest 10% – inflation 12%) was at times at –0.2%. As the US had printed more dollars to pay its costs, an economic chain reaction followed at the end of which the interest rates fell. This made it easy for underdeveloped countries to borrow and the developed world had an interest in lending to stop the slide. The crisis began when interests rose again in the 80’s. Unfortunately, they rose sharply and too many of the so-called development projects proved hardly efficient. By 1982 it became clear that most of the debtor countries would not be able to service their debt adequately. For over about 16 years this stage has led to ever-higher indebted countries in the third world. One should be aware that Latin America’s debt payments make up 36%, sub-Saharan Africa’s 83% of its GNP.

Not only human rights activists but officials in governments and multilateral institutions have realised that this situation cannot continue, neither from its humanitarian aspects, nor possibly from its economic ones. One of the answers proposed is the "Highly Indebted Poor Countries Initiative" (HIPC) of the IMF, which has been launched in 1998. It is a result of the insight ‘that the external debt situation for a number of low income countries, mostly in Africa, has become extremely difficult.’ 41 countries with a present value of debt higher than 220% of their export or higher than 80% of their GNP benefit from this program. They must

• ‘be eligible for concessional assistance from the IMF and World Bank;
• face an unsustainable debt burden, beyond available debt-relief mechanisms such as Naples terms (where low-income countries can receive a reduction of eligible external debt of up to 67 percent in NPV terms);
• establish a track record of reform and sound policies through IMF- and World Bank-supported programs.’

The cost of the initiative is an estimated $9.5 billion, ca. $700-800 million for the IMF. How relief under the HIPC initiative works is shown in this table:

There is also criticism of this program. Fife main points have been singled out by the Jubilee organisation:

1. ‘the debt sustainability ratios are too high;
2. the time-frame for debt reduction is unnecessarily long;
3. there is a lack of flexibility for post-conflict countries, and
4. eligibility for debt reduction is too rigidly linked to an IMF ESAF track record
5. there is an inadequate connection between debt relief and poverty reduction.’

Some countries with "onerous" debt burdens, even in the standards of the IMF, e.g. Malawi, are not eligible for the program. Oxfam proposes to establish a "human development window" establishing ‘concrete and transparent linkages between debt reduction and a development strategy that focuses on reducing poverty’.

1. Discussion: Where Christian ethics come in

As I pointed out in the introduction, this matter concerns us all and calls for instant action. Christianity can contribute from its traditions as well. So is the most popular of the concepts used the Old Testament notion of limited inequality as expressed Lev 25:10. "And you shall hallow the fiftieth year, and proclaim liberty throughout the land to all its inhabitants; it shall be a jubilee for you, when each of you shall return to his property….’ The joint campaign Jubilee 2000 is grown out of this idea and finds increasing support: ‘Antonio Fazio, director of Italy's Central Bank, has ...made it crystal clear that the ideals of the Jubilee campaign were realistic. "The conditions exist to be able to carry out this endeavour before the year 2000, just as the Church, international organisations and distinguished political personalities have requested."’ More basic to the Christian faith is the summary of the commandments, as Jesus put it in Mt 22:37-39, that one shall love God and one’s neighbour as oneself. I would like to follow Preston in his judgement that such Christian answers to the problem have to be applied cautiously. We cannot be more specific than to follow some "red threats" running through the bible. Comprising them, Preston gives several examples how those concepts have been defined. I will propose the following two: 1.) Equality: Humankind stands in a relationship to God (divine image) in which potentially all participate equally. From this derives a dignity shared by all human beings. 2.) Creation: Humankind is situated within creation and has stewardship over it, but must not cause its destruction. From these concepts follow the postulates of Community and Liberation: Humankind has to organise itself in a way that limits inequality and ensures a life in dignity. The aim of community is to ensure justice and bring all people to a conscious, responsible living together in and with the world, for present and future generations.

1. What is possible?

According to Susan George some 500,000 children die additionally per year as a result of debt; according to Jubilee 2000 even 134,000 could be saved per week, if debt services could be used for healthcare and nutrition. For too long a time there seems to have been hardly any awareness of the consequences of debt and adjustment for the people in the third world. Other explanations were used for the humanitarian catastrophe in much of the southern world. One of those "myths" is that there is not enough food production. Actually, everyone could be currently provided with 3000 calories per day.

Neither is undernutrition caused mainly by natural catastrophes. It is to 90% created by human influence. Nor does poverty result so much of overpopulation, rather the reverse. A high unemployment rate is both, agent and consequence .

We shall turn to debt again. External debt is owed in six forms:

1. Bank loans (private)
2. Debt securities issued abroad (private and public)
3. Brady bonds (World Bank)
4. Non-bank trade credits (OECD)
5. Multilateral claims (IBRD, IDA, IMF)
6. Official bilateral loans (OECD, DAC creditors, often referred to as the "Paris Club" of creditor countries.).

We have to differentiate between private debt and public debt. Anyway, private debt is only about 10% of total debt. About half is owed directly to individual governments. Most of the rest is multilateral debt.

The proposal of the Jubilee organisation, taking up the idea of limited inequality, is not the solution for the problem of world poverty. It is indeed one of the things the developed world can do, even without harming itself financially to an intolerable extent. According to a Jubilee case study, cancellation of direct public debt to Britain would make up £2 per capita. Third world debt, after all, is not so high. It is about half the sum as public debt in the US alone. But what next? In the past, credits have been given for armament and nearly exclusively for western-styled gigantic industrial projects. After the cold war, in a time formerly supported dictators are brought to justice, and in a time the global impact of local ecological catastrophes is undoubted, a change in policy is no longer a matter of altruism. It has become a matter of middle- and long-term self-interest. Economically, too, money spent in armament is unprofitable.

Other factors have to be thought of. Taking the Christian position seriously, we cannot reduce the question to financial aspects. Susan George shares in this approach. She calls for a new lending responsibility and development policy. This she calls "creative reimbursement" or a "3-D Solution". It basically proposes not to cancel debt, but to change the direction of reimbursement flows. The money should constitute national funds, used for improvement in healthcare, social security and environment. The administration should not lie exclusively with the debtor government, but be conditioned and controlled by the creditors or appointed international bodies as well as Non-Governmental Organisations (NGOs). It is related to the "human development window" as suggested by Oxfam. The difference is that it does not leave the responsibility for redistributing the money with the debtor governments, but implies direct involvement of controlling agencies. I believe that it is a practicable method, as it can cope with those countries as well, that do not show willingness of structural adjustment in social and environmental terms. We have to keep in mind that third world elites often profit from low wages, whereas the majority of the people carry the burden. It is estimated that in some countries capital flight made up 70% of new loans in the 80’s. Uganda has recently become a positive example of how it could work, if a government is willing to improve its people’s situation and gets external assistance. The government has established a Poverty Action Fund connected with debt relief to mobilise resources for primary education, primary health, water, road infrastructure and agriculture, including both donor and Government of Uganda resources. NGOs are invited to attend donor meetings on quality of social services. This covers ideas proposed as Christian: working on dignified living standards and more equality for all by means of shared responsibility in the community. It is not solely a task for the developed countries to cancel debt, but also for both parts of the world to work together on the common future.

The situation with private loans lies slightly different. New criteria should be used. Debt services need not be paid if a certain minimum of subsistence is not ensured. In 1986, Peru tried to reduce its services to 10% of its GNP. It was forced to resume payments by international pressure, but the idea is striking, as it takes into account both the debtors and the creditors needs. A similar demand was proposed for third world debt in general by UNCTAD, first in 1986, then again in its 1998 Trade and Development Report. The proposal, best elaborated by Raffer, suggests to apply Chapter 9, Insolvency (US) "Adjustment of Debt of a Municipality" to international legislation.

1. Conclusion: For a common future

We have seen the impact of plunging commodity prices on third world economies. What had been an aim of the credits given in the 70’s, to improve third world economies, cannot be forgotten. Twenty years later those economies are in a state worse than before. Only some Asian economies have experienced unprecedented booms, but usually without accompanying social improvement. A Christian position must press forward a better correlation of the two. Some Christians still ignore the usefulness market mechanism can have for improving social conditions and the environment. This results from an identification of indifferent mechanisms, such as the price mechanism, with capitalism, understood as an ideology and often confused with situations produced by monopoly structures, the reverse of a free market system with its main agents, price and competition. The market needs both to be run efficiently, and that requires some self-interest and results in some social inequality. It is naive to ignore that, but utopian to reject the system on these grounds. The Christian community has to think within the system, if it wants to achieve anything. If it ceases to think, it will cease to count, as R. H. Tawney formulated it for the church’s teaching on interest in the 17^th century. Not rejection, but control must be the Christian position, a control on the basis of an ethical groundwork. In short, politics are needed to provide a framework in which the market serves the people and not the other way round: the human life has priority over capital. Some things would be better, if the market would be allowed to work freely where it is constrained and the reverse. One issue of importance is the question of free trade. As we have seen, imports from developing countries are restricted and market forces on which the third world has few if any influence dictate commodity prices. It would be a good step towards fairer trade to break tariff barriers and allow the market to work in their stead. Aid is needed to support developing countries first, they ‘cannot be left to market forces generated by the prosperous…’ Further time must be allowed for specialisation and/or diversification. Under the present conditions most of the developing countries struggle in hard competition for small markets for their cash crops. Food self-sufficiency must have priority, especially in the light of the fact that the EU spends half its budget in agriculture subsidies to ensure this for its well-off members. Limited growth is necessary, but it is what Preston calls a ‘mercantilist fallacy’ to believe that higher imports would harm developed economies. Trade enriches all if it is fair and follows mutually accepted rules. The General Agreement on Tariffs and Trade (GATT) is one step in this direction, though it has primarily helped the rich so far. Market and politics have to play together to ensure a just allocation of needed resources. There is no need to expect an unbearable downfall of prosperity from this. The restrictions to growth from an ecological perspective (resources and temporal limited inequality) are a different matter. It is sufficient to say that some aspects of human reality, social and ecological, cannot be internalised in the market system. It has its restrictions and need of control. Humans are requested to set priorities and see them practised. This is not an easy enterprise and not easier from a Christian perspective. Knowledge is needed and discourses. Situations change. There is nothing like the Christian position. ‘In weighing data Christians are quite likely to assess the weight and relevance of it differently…’ to use the words of Preston. But we have to allow for this, as personal conscience and responsibility belong to what we hold as the human dignity before God. To make reference to Preston again, much time is spent in Christian thought on nonessentials: To reverse Tawney’s judgement, if the church begins to think, it might begin to count.

	George, S.,	A Fate Worse Than Debt, London: Penguin, 1988
	George, S.,	The Debt Boomerang, Colorado: Pluto Press, 1992
	http://www.ictsd.org
	http://www.imf.org
	http://www.jubilee2000.org
	http://www.unicef.org
	http://www.who.org
	http://www4.law.cornell.edu/uscode/11/ch9.text.html
	Preston, R. H.,	Religion and the Ambiguities of Capitalism, London: SCM, 1991
	Raffer, K.,	'What's Good for the United States Must Be Good for the World: Advocating an International Chapter 9 Insolvency', in: Bruno Kreisky Forum for International Dialogue (ed.) 1993 http://www-personal.umich.edu/~russoj/debt/Raffer2.html
	Tawney, R. H.,	Religion and the Rise of Capitalism, London: Penguin, 1938
	World Commission on Environment and Development, Our Common Future, Oxford 1987
	UNCTAD (1998) Trade and Development Report 1998, UN, Geneva 1998 http://www.unctad.org
	Uvin, P.,	The State of World Hunger, http://www.brown.edu/Departments/World_Hunger_Program/hungerweb/intro/