The Ongoing Cost of Independence: The Global South Debt Crisis
Learning about debt justice
Our Team Weekends bring all our volunteers together to share what different Working Groups have achieved and to reflect on what comes next. They are really valuable opportunities for building inter-Working Group bonds through celebrating and problem-solving but they’re also chances for us to learn from other organisations doing work in or adjacent to the climate space.
At our June Team Weekend in London, we heard from Tess and Skye from Debt Justice, who generously came in (on a Sunday!) to share their knowledge about the debt crisis, its roots in colonialism, and its importance for climate justice.
54 countries in the Global South are currently in debt crisis.1 This means that repaying their national debt is preventing them from spending money on vital public resources such as their health and education systems. Many more countries are struggling with paying exorbitant interest on loans, which often come with restrictive conditions.
Debt Justice (formerly Jubilee Debt Campaign) works to put human life before debt, both in the UK and globally. As well as the debt crisis in the Global South, the Debt Justice team and their supporters organise with communities in the UK to tackle the issue of household debt. Tess and Skye gave us the background to the current debt crisis in the Global South, explaining its links to colonialism. Global South debt is often presented as a result of poverty, corruption and inefficiency, or just as the way things are. In fact, the debt crisis is both a legacy of colonialism and a tool of neo-colonialism.
Debt as a colonial tool
Colonial powers exploited resources and people, establishing economies based on exporting commodities from the countries they colonised. For countries in the Global South, this meant their economic (and physical) infrastructure channelled wealth and natural resources directly to the Global North. As just one example, King Leopold of Belgium extracted vast quantities of ivory, rubber and other natural resources from what is now Democratic Republic of Congo, generating over $1 billion in personal wealth between 1885 and 1908.2
All of this extraction made the colonising powers rich, and kept Global South economies dependent on exporting raw materials to them. Alongside other harmful legacies (white supremacy, ableism and homophobia to name a few), some former colonies were forced to pay “compensation” to their former colonisers (Haiti) or to take on the debts accrued by colonial rulers (the Democratic Republic of Congo and Zimbabwe).3
Starting their independence saddled with debts and economies weakened by overextraction, many Global South countries were forced to borrow from former colonial powers to cover their basic needs. Many of these loans were framed as support for the development of self-sufficient economies but actually came with crushingly high interest rates or were tied to projects that benefited the Global North lenders – such as the Bataan Nuclear Power Plant in the Philippines which was funded by the US Government and banks despite local opposition, with the contract (and payment) going to US firm Westinghouse.4
More recently, crises like the 2008 financial crash and COVID-19 have exacerbated the debt crisis, with countries taking on loans as global prices plummeted. For example, in Barbados, public debt reached 140% of the country’s GDP in 2020, leaving the government with no money for crucial development projects.5
Debt Justice is Climate Justice
That brings us to another crisis that particularly impacts the Global South: climate change. As Tess and Skye made clear to us, the debt crisis is undermining climate action. Global South countries are currently spending five times more on debt payments than climate adaptation (let alone mitigation).6 Moreover, some loans come with conditions that lead countries to turn to extracting fossil fuels and other natural resources to pay the interest; one example is the International Monetary Fund (IMF) loan condition encouraging Argentina to frack in the Vaca Muerta oil and gas fields to raise money for loan repayments.7
This relationship goes both ways. The debt crisis is worsening the climate crisis, but climate change is also intensifying the debt crisis. Climate-related disasters such as floods, droughts and hurricanes cause damage that rich countries are often unwilling to cover costs for, despite being disproportionately responsible for climate change. Much of the financial support they do offer – 70% in fact – comes in the form of loans, plunging countries affected further into debt.8
What can we do about the debt crisis?
Debt justice is climate justice. UKYCC’s COP Working Group‘s new campaign will focus on making this point and pushing for international cooperation on this issue, building on the vital work of Debt Justice. Debt justice is especially relevant for UKYCC as young people around the world should not have to pay for the legacy of colonialism, either financially or through an increasingly inhospitable climate. We’re looking to engage with existing campaigns and campaigners in the Global South who have been taking action in this space for decades, building on the work of leaders like President Kwame Nkrumah in Ghana who pushed for a “New International Economic Order (NIEO)” in the 1960s.
Action on the debt crisis is possible, we just need to put more pressure on governments and banks. Over 90% of debts owed to private lenders by lower income countries are governed by English law, making this a key issue for UK-based campaigners. The Jubilee Debt campaign in the early 21st century made great strides, leading to $130 billion of debt cancellation. But it didn’t go far enough. What we need now is a complete restructuring of the global debt system.
Reach out to us if you’d be interested in joining the campaign, and look at Debt Justice’s website for great resources on this topic (including a fantastic report on the Colonial Roots of Global South Debt which was the basis for this blog)!
by Olivia Horne
- https://debtjustice.org.uk/press-release/growingdebt-crisis-to-worsen-with-interest-rate-rises. ↩︎
- ‘King Leopold’s Ghost: A Story of Greed, Terror and Heroism in Colonial Africa’, Adam Hochschild, 1998 ↩︎
- https://www.opendemocracy.net/en/zimbabwes-odious-debts/. ↩︎
- jubileedebt.org.uk/countries/philippines. ↩︎
- IMF World Economic Outlook database. ↩︎
- https://debtjustice.org.uk/press-release/lower-income-countries-spend-five-times-more-on-debt-than-dealing-with-climate-change. ↩︎
- https://debtjustice.org.uk/press-release/rising-debt-locks-global-south-countries-in-fossil-fuel-production. ↩︎
- https://re-course.org/wp-content/uploads/2024/11/A-safe-pair-of-hands_Recourse_November-2024.pdf. ↩︎