The crushing burden of debt

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There is one thing above all others that humans can never escape and that is the burden of debt. Almost everyone except millionaires has a debt load. However, extremely wealthy people can also be in debt. Everyone seems to owe someone. There are different kinds of debts such as the “debt of honor” or in Filipino, “utang na loob”, which allows to control the life of the underling of the person in ancestry. We owe parents, loved ones, benefactors and schools. They all claim that we owe them something. Religious leaders claim we even have a debt to God although Jesus came to say that once we repent and do penance for our sins and debts all is forgiven and said if we are good Samaritans , he gives us friendship, without debt.

Political debts are crushing and, like some Church leaders, controlling people. The reigning patriarch of the family dynasty keeps almost everyone in his or her city or province in debt when he or she performs a public service, considered not as a right but as a personal favour. Then there is the debt to the banks, to the property owners; the mortgage and car or car loan must be paid. Now, rampant inflation is raising the cost of living and more debt is piling up. There is no end to debt.

The global economic system rests on a debt that must be paid and can never be forgiven. Restitution to victims must be paid, war reparations must be paid. Russia will pay war reparations to Ukraine for the next 50 years. All international debts must be paid on time. There is no escape, pay or perish.

US dollar bills are counted at an exchange office. PHOTO RENE H. DILAN

Nations borrow, and they must pay. The International Monetary Fund (IMF) is the big lender and debt collector of rich countries and banks that lend to poor countries. It’s like an extension of colonial control. The IMF pressures poor countries that cannot pay to open up their natural resources to multinational corporations for extraction and exploitation. Colonialism in another form.

In the Philippines in 1977, President Ferdinand E. Marcos borrowed billions of dollars and passed Presidential Executive Order 1177 known as the “Automatic Credits Act” to service the debt. He decreed that the national treasury should pay the loan with interest, leaving the government without much money for public services or development and poverty soared. Then-Senator Antonio Trillanes 4th tried to repeal this decree but failed. The Philippines is the only country in the world with such a law.

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The borrowing continues. The Philippines’ external debt stood at $109 billion in March 2022, according to the Central Bank of the Philippines. The national debt rose 3.1% from $106 billion, or another $3.3 billion borrowed. Where it went is what economists are still trying to figure out.

To the Covid crises, perhaps. To infrastructure, yes, and most went to importing oil on which the government levies a high tax.

The beneficiaries are the “seven new sisters” oil-producing nations as they are called. These are Aramco from Saudi Arabia, Gazprom from Russia, CNPC from China, NIOC from Iran, PDVSA from Venezuela, Petrobras from Brazil and Petronas from Malaysia. They are the big players in the Organization of the Petroleum Exporting Countries or OPEC, a price-fixing cartel that controls the price of oil and holds nations and the world to ransom. Led by Russia, they are raising prices and getting rich considerably because of the war in Russia which is financed by sales of Russian oil and gas to Europe and elsewhere.

They are nationalized companies and they control a third of all the oil and gas in the world. They control the price of oil and gas. By increasing the production, the price will go down. Reduce production and they create a shortage and the price will go up. The law of supply and demand rules the world. They have the power to manipulate the global economy and cause inflation, rising prices, job losses and social unrest that could threaten the stability of governments. Nations owe huge debts to OPEC nations.

Argentina cannot pay its debts to the IMF and lacks foreign currency. Putin is fanning the flames of inflation by cutting off gas supplies to Europe.

Oil is energy and the fossil oil industry is still shamefully subsidized by many governments, prompting companies everywhere to seek more oil.

Some rich countries put pressure on poor countries like Senegal which cannot pay its debts and is obliged to open its natural resources of oil and gas to the multinationals so that they exploit them for their profit. It is colonial exploitation that continues today. It’s the debt trap and China is playing it too well. It is a form of national bondage on a global scale.

This oil rush continues despite the need to stop burning fossil fuels and reduce carbon dioxide or CO2 emissions and build renewable energy sources to save the planet from destructive global warming. Humans are in self-destruct mode. The burning of oil and gas has caused dramatic climate change. Global warming is drying and burning forests and land and making the atmosphere more toxic leading to increased global warming, more droughts and less water for crops, food shortages, hunger and more unrest social and more debt by poor nations for the rich just to survive.

Poor countries in the South suffer the most from destructive climate change and yet they contribute only a tiny fraction of the CO2 emissions to the atmosphere that cause global warming. In fact, 85% is rejected by the rich industrial countries which cause huge losses and therefore owe the poor climate reparations. Because of their history of polluting habits, rich nations have a huge responsibility and huge climate debts to pay to the poor who owe them money.

So why not stop? Cancel the external debt of poor nations and, in turn, cancel the climate debt owed by the rich to the poor?

Forced repayments of interest and principal by poor nations will stop and disappear to support food production and renewable energy projects for these nations and this will translate into less debt to buy oil. That is, if poor people can stop their corrupt leaders from stealing what is left in the national treasury. If so, this should help solve the terrible debt burden.

The rich nations will lose power and control over the poor and stop exploiting them with every underhand dirty business to enslave the latter into debt bondage. A massive effort to mobilize international public opinion on this agreement is necessary. Most of the rich have no compassion and no pity, just self-interest, so it is the ordinary people, the poor who must act and demand that their rulers refuse to pay their unjust debts until the world’s wealthy polluters are paying them for damage caused by climate change, droughts, crop failures and fires and doing climate justice.

www.preda.org

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