Iou: The Debt Threat and Why We Must Defuse It

by Noreena Hertz

Book Overview

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• Format: Paperback
• Language: English
• ISBN: 0007178999
• ISBN13: 9780007178995
• Release Date: January 2005
• Publisher: Harper Perennial
• Length: 304 Pages

Customer Reviews

Genuine relief

The relief of debt for poorer countries is an issue which many support but few really understand. Noreena Hertz is someone who knows what she is talking about. She formerly worked at the World Bank and in now Professor of Economics at Cambridge. She is also a tireless campaigner for debt relief. What I most appreciated was her ability to explain the economics in a way that was both understandable and convincing. She tells us how the debts came about - often during the cold war in an attempt by the West to gain and maintain areas of influence in the developing world. She also reminds us that many of these loans went to corrupt leaders of countries whose citizens now have to pay the price. As a result basic human needs - food, housing, and healthcare are sacrificed to service the debt payments. We are left in no doubt that we carry a significant responsibility for this situation. This is why we should lobby our leaders to write of these debts. It is easy to say that fault lies on both sides. That may be so but if poor children have to pay then we who are in a position to do something should do all that we can. She writes all of this in a very readable style. This book did far more than big events such as Live 8 to convince me of the need to do something. I would urge all readers to get hold of a copy and read it!

Should public and private creditors not be paid if they gave money to corrupt governments?

Debt cancellation for developing countries is a subject that has attracted much attention and little real action, despite in 2005 G8 countries and few other countries have taken some clear-cut commitment. This readable book provides: a) a quick description as to how developing countries got trapped into unsustainable debt levels. But among developing countries it fails to distinguish between middle-income emerging market economies and low-income economies. Therefore, the author jumps to the conclusion that Argentina (or Turkey) and Somalia (or Botswana) should be treated the same. b) a simple theory, which suggests that developed countries often offered loans to corrupt governments (or full-fledged dictatorship) of developing countries and therefore, the peoples of those countries cannot bear the burden of servicing that debt, for which they did not benefit at all. Thus understood the problem, the full debt cancellation is a moral (and maybe legal) obligation. The author does not develop further that theory, but in practice she says that those countries that have violated human rights, or more specifically, at the time of borrowing were violating civil and political liberties, and/or economic, social and cultural rights should be provided full debt cancellation. Who and how the violation would be assessed is not clear, but this idea merits to be developed further and into operational detail. I would recommend it for the general reader and those interested in development issues.