ARTICLES

NEWS

ROAMIN' CATHOLIC

Contents © 1998
by Jim Holman.
All rights reserved.

More Menacing Than the Cold War

POPE AND BISHOPS CALL FOR THIRD WORLD DEBT REDUCTION

By Christopher Zehnder

On November 5 of last year, His Eminence, Roger Cardinal Mahony, held his Fourth Annual Public Policy Breakfast. Organized by the Justice and Peace Commission of the Archdiocese of Los Angeles, the Public Policy Breakfast features exchanges between Cardinal Mahony and key business and civic leaders on important policy issues. The November 5 breakfast hosted Cardinal Mahony and James Wolfensohn, President of the World Bank.

The exchange between His Eminence and Mr. Wolfensohn centered on the subject of debt relief for Third World countries. The World Bank, along with the International Monetary Fund (IMF), provide capital for Third World nations, ostensibly for economic development. Critics of World Bank and IMF policies charge that these loans exacerbate and perpetuate poverty, rather than cure it. These critics include many Catholic bishops, and Pope John Paul II, who have called for debt forgiveness for debtor nations, or, at the very least, debt reduction.

At the November 5 breakfast, Cardinal Mahony, according to Catholic News Service, said "[t]he scope and impact of the external debt of developing nations is staggering... In poorest countries the debt repayments divert scarce financial resources from social investments necessary for sustainable development: health care, schools, food production for domestic consumption, environmental protection and preservation and other key foundations of the social infrastructure." He called on the World Bank, according to CNS, "'to work with its government sponsors--and when necessary, to pressure and cajole them' to respond positively to the Holy See's recent appeal for a 'rapid application of new debt reduction terms to the widest number of countries' by the year 2000."

Wolfensohn stated that if the World Bank used all its assets of $28 billion in debt forgiveness, most of the debt would remain, and "you lose the World Bank because it has nothing left," according to CNS.

The Justice and Peace Commission and the Office of Justice and Peace of the Archdiocese of Los Angeles have taken up the cause of Third World debt relief. They have sponsored activities for the education of leaders, encouraging them to act on the issue. Contemporaneous with their efforts, an international organization, called Jubilee 2000, has instituted a petition drive. Jubilee 2000, according to their website, will present the petitions, collected from all over the world, to the G7 (key industrial nations) Summit in 1999 in Germany. The petition calls "upon the leaders of lending nations to write off these debts by the year 2000. We ask them to take effective steps to prevent such high levels of debt building up again."

Sister Anne McMullen, Coordinator of the Sisters of St. Joseph Justice office and Jubilee 2000 California at the Carondelet Center in Los Angeles, told the Mission that Jubilee 2000 is "an inter-faith group started by Catholics throughout the world." The name, "Jubilee 2000," she said, is also being used by the Archdiocese of Los Angeles "to commemorate the millenium in connection with the Jubilee year of the Old Testament" where the Law of Moses mandated every 50th year as Jubilee--a period when all debts would be forgiven.

The brunt of debt payment in Third World countries, said Sister Anne, does not fall on the rich elites in those countries, but on the poor. Structural adjustments to Third World economies, required as a prerequisite for debt repayment, affect the very poor adversely, said Sister Anne, through the deflation of currency and the cutting of social programs. In Peru, she said, "only one percent of the monies was going to social programs: education and health care" on account of debt.

The Mission also spoke to Father John H. Miller, C.S.C., editor of the Social Justice Review, the journal of the Catholic Central Union of America in St. Louis, Missouri. Founded in 1908 by German Catholics, the Social Justice Review is the oldest American Catholic social justice journal. Its advisory editors include Donald DeMarco of the University of Toronto; Rev. Matthew Habiger, OSB of Human Life International; and Charles E. Rice, J.S.D., law professor at the University of Notre Dame in Indiana.

Father Miller told the Mission that he agreed with the pope and the bishops, that debt relief be extended to Third World debtor nations. "The purported purpose" of World Bank and IMF loans, says Father Miller, is "to help the countries get on their feet and to progress economically. The problem is that many or most of the loans have no useful purpose. In many cases [Third World] politicians line their own pockets; the amount of graft is just tremendous. The people who have to pay off the debt, of course, are those who are already so poor that they cannot manage themselves."

The poor in these debtor countries, says Father Miller, pay the debt through taxation, and the restructuring of their economy into a predominately export economy. In such an economy, the poor work for companies, often First World corporations, at very low wages. The effect of these loans is a profound rift between the very rich and the very poor, with little or no middle class.

Father Miller believes that such groups as the World Bank and the IMF are the instruments whereby First World elites marginalize the Third World. "We are really trying to keep them poor," says Miller. "If we were trying to develop these countries, we would share our know-how, we would teach people how to produce. We're not doing that. We're selecting a local elite, subject to the First World elites who have manipulated and developed the economies of the First World. They are selecting the local native elites, keeping them subjugated by keeping them well payed off, if you will, so that they will do their bidding, and continue to enslave their own people."

Oddly, part of this subjugation of the Third World seems to be population control--an aspect that, Sister Anne admits, Jubilee 2000 does not address. Often touted as a humanitarian measure, population control has long been an imperialist policy of control, according to "Population Control in American Foreign Policy," an article by Elizabeth Liagin in the November-December, 1997 Social Justice Review. Declarations of population control, writes Liagin, are,"[a]s a general and practically universal rule...imposed on developing nations as a condition for aid or credit with such international financial institutions as the World Bank." Population control, as a policy, has been pursued by the United States since, at least, 1958, says Liagin, and as late as 1991 a study "commissioned by the U.S. Army Conference on Long-Range Planning... saw current population trends in the developing world as something 'even more menacing than the cold war.'"

Citing a book by Michel Schooyans, The Totalitarian Trend of Liberalism, Father Miller says, "The United States alone spent $352 million in 1991 to have women sterilized and men vasectomized in the Third World countries. The U.S. is the highest, and the next one is Germany, with $75 million. Next to Germany comes Japan, with $63 million. The total for all the developed countries is $774 million."

Of course, the obvious question in connection with the forgiveness of Third World debt is, will not the Third World elites, rather than the poor, benefit by debt relief? Sister Anne McMullen recognizes this problem. She thinks that groups of the people in Third World countries "need to be involved with happens to the money" gained by debt forgiveness. "Germany," she says, "had forgiven a large portion of [Peru's] debt, and the monies were given to the bank system. What this whole Jubilee is calling for is that the monies go toward some kind of sustainable development, that they go back into the system in a way that helps to break the poverty cycle."

Sister Anne notes that, though there are no universal proposals for how to promote sustainable development, there are local groups studying the question. "In Peru, the bishops had called Caritas, which is similar to our Catholic Charities, and the Catholic Church human rights groups and several other groups, [to meet together] and they were talking about this. In countries there are groups talking about how it could happen in their country."

Forgiving debt, by itself, will not help Third World countries, says Father Miller, "because they will turn to some other poverty-increasing device. They have to, because their governments keep them in subjugation." However, observes Miller, "nobody with any business sense is going to just forgive a debt [unless] they combine [debt relief] with sharing knowledge, showing the people of the Third World how to work and produce and save. They're not educating the people of the Third World, because once you become educated, you quickly learn whether you are a slave or a free man."

Making Third World, and First World, peoples free men is at the heart of a proposal found in the book Curing World Poverty: The New Role of Property, published by the Social Justice Review. The thesis of this book, says Father Miller, is that true economic security and prosperity will be attained, not when more men can become employees, but when employees can become owners of the means of production. This can be accomplished, says Father Miller, through the formation of ESOPs--Employee Stock Ownership Plans--and through granting employees participation in decision making in their companies.

"This is what we are proposing for the ordinary worker," says Father Miller, "that the workers of, say, Plant A are sold the business by the owner, and they establish an ESOP, which is an entity that owns it in the name of the employees. They get a loan from a bank to buy it from the owner, and distribute ownership of the stock to all of the employees according to their input. In other words, they buy the business on future income or dividends of the business, and once they've payed off the loan, they get the money directly, and they're not penalized by having to pay off the dividends. So, the employees have not only their salary, but also the dividends that will come to them. In addition to that, really wise businesses that go into this also have profit-sharing."

This plan, says Father Miller, is not merely theoretical: businesses have already put some or all of these ideas into practice. In the United States, he says, there are about 10,000 companies, with nearly 11 million employees, who have adopted ESOPs. Allied Plywood of Alexandria, Virginia has adopted profit sharing and the company's CEO, Bob Shaw, puts himself up before his employees for election each year. Another businessman, Jack Stack, saved Springfield Remanufacturing Plant in Springfield, Missouri, when International Harvester in Chicago wanted to close it down. Father Miller relates that Jack Stack said, "'I can't stomach the idea of 118 people losing their jobs,' so by hook and by crook, he borrowed and begged and got enough money to buy the plant from International Harvester, and set it up on an ESOP plan. Now he has 650 employees."

Miller, however, asks the question, "How can you expect ordinary workmen, who have no education in the main, to make valid decisions regarding income, and how to govern expenditures, and so on. Jack Stack told me, 'Father, you obviously have to give them some education, teach them how to read a balance sheet, explain what all these things mean, and once they've got the basics they make very good decisions because they're playing now with their own money!' They're no longer employees complaining about what management is doing; they are now in the decision making. They learn fast because they don't want to make mistakes."

But, perhaps, the real question is, how can you expect the ordinary employer, in the First or the Third Worlds, to adopt a plan that requires so much labor in education, so much loss of control over his company--especially, when profits can be made otherwise? "We have to evangelize, here,"says Father Miller, and through this evangelization learn what it means to embrace the spirit of poverty. "The spirit of poverty means," says Father (and, incidentally, the pope), "to prefer people over things." Only in that spirit may we solve the problem of Third World, and First World, poverty.

For more information on the Social Justice Review and the books mentioned in the article, write SJR at 3835 Westminster Place, St. Louis, MO 63108; or call (314) 371-1635. For information on the Jubilee 2000 petition, call the Sisters of St. Joseph Justice Office at (310) 889-2119; or the Los Angeles Archdiocesan Office of Justice and Peace at (213) 637-7550; Fax (213) 637-6550.

TOP