First World Greed and Third
excerpted from the book
If You Love This Planet
by Helen Caldicott
WW Norton, 1992, paper
The only thing necessary for the triumph of evil is for good men
to do nothing.
Fifteen percent of the food used by U.S. homes and restaurants
is thrown away ...
... just as the world environment cannot sustain 5.2 billion people,
it can hardly sustain the present global population of four billion
cows, sheep, pigs, and goats and nine billion fowl. It takes sixteen
pounds of grain and soybeans to produce one pound of beef, six
pounds for one pound of pork, and three to four pounds for one
pound of poultry or eggs. Animals now eat ten times more grain
than do the American people, enough to feed the entire U.S. population
five times over. The production of each acre of food uses energy
equivalent to 150 gallons of oil, and the processing and packaging
of food alone accounts for 6 percent of the U.S. energy consumption.
From 145 million tons of grain fed to animals, only 21 million
tons of meat, chicken, and eggs are produced. What an extraordinary
waste of soil, water, fertilizers, pesticides, and energy-and
all for what return but increased heart attacks, obesity, and
The Feinstein World Hunger program at
Brown University has estimated that if the world population is
fed primarily with grains and vegetables, there is at present
enough food to ensure the United Nations' recommended daily per
capita calorie intake of 2,350 calories for six billion people.
While billions starve, one-third of the grain grown in the world
and half the fish caught are fed to animals in rich countries.
If the world's population reaches eleven billion, its annual food
production must increase two and a half times merely to maintain
the current situation and low per capita output. We have work
Sixty percent of the world's best agricultural
land is situated in only twenty-nine countries, which house 15
percent of its population. A mere 11 percent of the land area
of the planet is suitable for agriculture, yet soil erosion associated
with deforestation, dam construction, and irrigation is depleting
77 billion tons of the world's topsoil each year. Our global treasure
is being lost into the sea and silting up rivers. In addition,
one million hectares of rich farmland in the United States are
destroyed by "development"-covered with asphalt, freeways,
houses, and shopping centers-equal to an area double the size
of the state of Delaware...
In a world where equitable redistribution of wealth is vital,
let us now discuss the financial support that the wealthy 20 percent
currently give to the poor 80 percent. The United States will
be our example. In 1987, it allocated $13 billion, or only 0.19
percent of its gross national product, for foreign aid, but $4.8
billion of it went for military equipment. Only $1.5 billion was
for food, $3.2 billion for economic security, and $2.5 billion
for development assistance. Furthermore, over half the economic
and security aid was disbursed to Egypt and Israel. (In 1980,
U.S. aid to Israel per capita was 120 times the U.S. aid to India.)
In other words, the most needy countries were shortchanged.
Most aid serves as an instrument of foreign
policy, not really as a charitable gift. For example, in 1965-66,
during a famine, the United States threatened to cut off food
aid to India when its government attempted to take control of
U.S.-owned fertilizer companies. India capitulated because it
needed the money, thereby giving more freedom to U.S. investment
companies. In effect, while millions of Indians starved, food
shipments were stalled to force the government to capitulate to
the demands of U.S. corporations. In 1964, U.S. aid to Brazil
dropped from $81.8 million to $15.1 million because America disapproved
of the government at the time. These are just two instances in
which the U.S. government withheld food for political purposes.
Food is used to reward and manipulate poor countries rather than
to feed hungry people. ~
Surprisingly, most U.S. aid actually winds
up subsidizing American corporations. During the Johnson administration,
90 ,' percent of all foreign aid benefited U.S. corporate development
programs, such as the building of dams, nuclear power plants,
roads, and bridges in the Third World, and the profits accrued
to the relevant U.S. companies. So U.S. foreign aid serves not
only as a coercive instrument of foreign policy but also to support
private U.S. contractors, universities, banks, consulting firms,
lobbyists, and so forth. In fact, foreign aid is now recognized
to be a lucrative business, and companies are scrambling to capitalize
on it. Even in 1970, multinationals invested $270 million in Africa
and repatriated $995 million, $200 million in Asia and received
$2,400 million, and $900 million in Latin America for $2,900 million.
Corporations also tend to borrow most of their investment funds
for Third World projects from Third World banks.
In 1986, U.S. foreign aid expenditure
totaled $15.9 billion, while Americans spent $10.3 billion on
movies and theaters, $34.2 billion on tobacco, and $59 billion
on alcohol. An expenditure of five cents per person would save
the sight of 100,000 children who are blinded annually because
of a vitamin A deficiency, and a mere three dollars each would
immunize them against poliomyelitis, tetanus, whooping cough,
diphtheria, and measles. One year's expenditure by the U.S. cosmetics
industry would provide 1.6 billion people with sanitation.
In percentage of GNP given away as foreign
aid, Norway tops all countries, with 1.1 percent. The Netherlands
spends 0.98 percent. The United States ranks next to last out
of eighteen countries, with, as we have seen, 0.19 percent of
its GNP. Even the best of these figures is still very small.
How does the United States spend its money?
In 1987, America ranked first in military spending, arms exports,
military technology, naval fleets, global military bases, and
number of nuclear bombs; fifth in literacy rate; seventh in per
capita spending on public education; eighth in life expectancy;
sixteenth in the number of women enrolled in university, eighteenth
in infant mortality, twentieth in school age population per teacher,
and twentieth in population per physician. These data, though
not strictly financial, indicate present priorities in American
The United States spends about $300 billion
per year on weapons, personnel, and military equipment, while
the total global expenditure on them is $1 trillion. One-third
of the money spent on one Trident submarine, $70 million, could
eliminate malaria in the world by clearing mosquito-ridden waterways
and providing prophylactic medicines to the target population,
and one week of the global military spending of $20 billion could
put an end to all starvation.
To quote Thomas Jefferson, "The care
of human life and happiness, and not their destruction, is the
first and only legitimate object of good government." Or
as Dwight D. Eisenhower put it, "Every gun that is made,
every warship launched, every rocket fired, signifies in the final
sense a theft from those who hunger and are not fed, those who
are cold and not clothed."
International aid is but a Band-Aid on
the wounds of Third World suffering. The people there are not
just malnourished and deprived because of overpopulation, inadequate
distribution of money, lack of education, or bad land management.
They are poor and starving because financial powers in the developed
world exploit them to satisfy their own greed and continued affluence.
THIRD WORLD DEBT
Third World debt is exacerbating global
environmental degradation. Until 1973, the poor developing countries
had made great strides in public health and preventive medicine,
in education, and in crop production. But in the years 1973-74
world dynamics changed. The oil-producing, OPEC countries suddenly
increased the price of oil fivefold, and oil became scarce. There
were large and often angry lines outside gas stations in the United
States and elsewhere. The oil-rich countries made huge profits
and deposited their money, called petrodollars, in the world's
major banks, particularly in the United States.
The banks, ever eager to profit from this
windfall, decided to offer low-interest loans to Third World countries,
which could obviously benefit from extra cash. The banks called
this lending policy "recycling," but it turned out to
be, in effect, an international lending spree, in which they unloaded
petrodollars on unsuspecting developing countries.
The World Bank, which represents many
of the major banks in the United States and other wealthy countries,
decided at a conference in the Philippines in 1976 to lend this
impoverished country $4.5 billion. It openly stated that it would
rather lend to "stable" countries (that is, ones ruled
by dictators) than to democracies governed by the people. Hence
President Marcos of the Philippines was an excellent client. Countries
with similar dictatorships received huge petrodollar loans-Chile,
Brazil Argentina, and Uruguay. Other borrowers included Mexico
Tanzania, and many struggling African nations. The amount of money
available was vast. Lending to Latin America increased from $35
billion in 1973 to $350 billion in 1983.
Most of the loans were based on variable
interest rates. During 1981-82, U.S. interest rates doubled, to
20 percent, because of tight monetary policies caused by the growing
U.S. deficit, engendered by the Reagan administration's lavish
spending on weapons. But each 1 percent increase in the interest
rate meant $4 billion more that Latin America had to give American
banks in interest payments. Furthermore, a global recession at
that time decreased the demand for exports from developing countries,
thus decreasing their income. Debt servicing rose from 15 percent
of their export earnings in 1980 to 31 percent in 1986 in sub-Saharan
Africa. Between 1973 and 1980, Third World debt increased by a
factor of four, to $650 billion, and it now stands at $1.3 trillion.
This is an unbelievable burden for countries whose populations
are hardly surviving.
... When oil prices fell in the early 1980s, a crisis developed
in Mexico, an oil-exporting country. Nobody quite grasped how
severe the situation had become until 1982, when the Mexican finance
minister visited Washington announced that his country could no
longer continue payments on the $80 billion debt. Suddenly, the
U.S. government and banks realized that the global financial system
was on the brink of collapse. The banks had lent more than 100
percent of their capital to Third World countries, which appears,
in retrospect, an extraordinarily irresponsible policy for them
to have pursued.
A state of emergency existed, and heads
of banks, officials from the White House, and the U.S. Treasury
met for two weeks behind closed doors to try to deal with it.
The World Bank and the International Monetary Fund (IMF), which
represents most of the major banks in the Western world, produced
a proposal that basically demanded that developing countries sacrifice
government spending on health, education, and welfare in order
to service the debt and that they increase the export of commodity
or luxury goods to earn more money. The IMF became crisis manager
number one and instructed banks how to contribute to the Mexican
rescue. Mexico had to sign a letter of intent to earn more and
Before I turn to the dire human consequences
of these restrictive policies, let me describe how parts of the
loans had been misappropriated by people in the developing countries.
Nearly half the money lent to Mexico was not used to benefit the
people but was instead invested by rich Mexicans in foreign banks
and for the purchase of foreign luxury apartments (in other words,
the loans were stolen from the Mexican people).
Between 1980 and 1982, $40 billion ended
up in America. And during this time U.S. banks actually went to
Mexico to solicit money derived from U.S. loans by rich Mexicans
to be deposited back into U.S. banks. In short, there was no overall
stipulation about who controlled the loan money or how it was
to be spent.
In Latin America, for instance, a large
percentage of the petrodollars was used to buy expensive weapons.
Military spending in these countries increased 10 percent each
year during the 1970s and 1980s. In Africa, spending on weapons
increased 18 percent annually. The Stockholm International Peace
Research Institute estimates that 20 percent of the Third World
debt is a result of military spending. It goes without saying
that these poor countries do not manufacture military equipment
themselves. It is made in the United States, the Soviet Union,
Israel Germany, France, Britain, and other industrial nations.
Each country's military-industrial complex lobbies to sell weapons
to poor countries. Arms bazaars are held in many cities of the
United States and other countries each year. There, phallic missiles
and planes are displayed, often draped with almost naked women
in bikinis. Sheiks, Third World potentates, and military men amble
around the displays, idly deciding which nice missile they will
purchase that day.
President Marcos misappropriated millions
of dollars lent to the Philippines and deposited them in Swiss
and American banks, while millions of his people were severely
malnourished and lived in absolute poverty. The banks seemed to
support and indeed condone such behavior. The money also wound
up in other inappropriate ventures. For instance, foreign loans
were used to finance a nuclear power plant constructed in the
Philippines on an earthquake fault, near two active volcanoes.
The reactor-never operational, because of the obvious danger-
was built by Westinghouse. This fiasco now costs the Philippine
people $500,000 per day in interest alone, and the profit naturally
went to Westinghouse. Unfortunately, when President Corazon Aquino
was democratically elected, she was forced to put debt payment
above priorities for health, education, or housing, thereby violating
the Philippine constitution. In 1989, about 44 percent of the
Philippine national budget went to repay foreign debt, and most
of the people continue to live in dire poverty.
Loans to other countries were used to
finance badly planned highway systems in big cities inhabited
by the rich, as well as railroads, huge dams, and power plants.
These projects had no relevance to the millions of people trying
to sustain an existence with poor land, archaic equipment, minimal
housing, and few, if any, health care facilities. And all profits
accrued to the foreign corporations that carried out the construction.
The World Bank has encouraged countries
to destroy tropical rain forests to pay back their debt. In Brazil,
it proposed that 5 million hectares of the Amazon be "brought
under control and management"; in Ecuador, 1 million hectares;
and in India, 30 million hectares. It is the same story in the
Congo and in Papua New Guinea. The World Bank also approved a
loan of $156 million for a dam on the Serang River, in central
Java, Indonesia, which would entail the resettlement of twenty
thousand people and the flooding of huge areas of forest. Similar
projects have been prepared in Zaire and in Gujarat, India.
Since the Mexican crisis in 1982, the
IMF has decided to impose severe austerity measures that forced
desperately poor Third World countries to use more and more of
their land to grow cash or luxury crops for export, such as bananas,
coffee, cocoa, pineapples, and flowers, in order to help pay off
the debt. Forests and virgin land are being destroyed and cultivated,
producing ecological damage and leaving very little land on which
the indigenous population can grow food. The people then become
dependent upon cheap imported food from the United States (grown
with subsidies from the American government). In the 1970s, food
imports to Africa increased 600 percent, and by 1985 two-fifths
of Africa's food was imported. The net effect of these policies
has been to produce nations that are hostage to the American and
European agricultural system and that lose their independence.
Instead, foreign aid should be used primarily to establish agricultural
and economic autonomy for Third World countries.
Women tend to bear the brunt of these
IMF policies, for they spend more and more of their day digging
in the fields by hand to increase the production of luxury crops,
with no machinery or modem equipment. It becomes their lot to
help reduce the foreign debt, even though they never benefited
from the loans in the first place. Their health suffers, and they
become tired and anemic because of poor diets. Consequently, material
and infant mortality is rising in many of these countries. The
price of food, too, is increasing, and wage cuts imposed by the
IMF are severe. Millions of people can no longer afford adequately
to feed, clothe, or educate their children in the Third World.
One-fifth of the agricultural products grown there are exported
to the First World. Meanwhile, as world markets become flooded
with these commodity or luxury exports, the prices drop and the
First World benefits from cheap luxury imports (from 1984 to 1986,
the United States saved $65 million on raw materials from the
Third World because of price declines). In 1986, these price cuts
reduced the income of sub-Saharan Africa by $19 billion- nearly
four times the amount promised in emergency aid that year. The
First World determines the price of Third World-produced luxury
goods. The Third World has no say!
Most of the profits from commodity sales
in the Third World go to retailers, middlemen, and shareholders
in the First World. Only 15 percent of the $200 billion in the
annual sales of these commodities in rich countries winds up in
the countries that grow them. For instance, just 11 percent from
the sale of bananas is paid to the producing country. In Brazil,
only 4 percent in royalties is paid for the millions of tons of
bauxite (used to produce aluminum) exported to the United States.
The workers in the Third World in general receive only 1 to 2
percent of the value they create. Nicaraguan coffee pickers receive
0.5 percent of the wholesale value of the coffee, while governments
and rich plantation owners make $750 million per year. And tea
pickers in India starve because they get only eight cents per
day and food prices are high, whereas company profits in 1976-77
were $21 million. In the Caribbean, the people actually starve
beside fields growing flowers and tomatoes for export to the United
Wealthy countries impose tariffs or trade
barriers on processed goods, but none on raw materials, thus ensuring
that poor countries remain in poverty. For instance, in 1985,
British tariffs on raw cotton were zero, on cotton yam 8 percent,
and on cotton T-shirts 17 percent. So the Third World can never
break the poverty cycle, because First World tariffs work against
the importation of manufactured goods from the Third World. A
Third World country is defined as one that exports raw materials
and imports finished goods. But processed goods are worth much
more money than raw materials are.
And so the spiral continues: increased
debt leads to more cash crops and environmental degradation, which
leads to flooded markets in the First World and lower prices,
with decreased return to the Third World. Therefore, the debt
increases, and this leads to malnutrition, starvation, and helplessness.
To make matters worse, the IMF also decreed
that governments of debtor nations severely curtail spending on
social programs. In Mexico, whose economy has stagnated for seven
years, there has been a severe overall decline in health services,
education, and housing. Twelve million people are out of work;
the Mexican people consume one-third fewer calories than they
did in 1982, because food is more expensive. Two million acres
of arable land were taken out of public agriculture because of
an 80 percent cut in public funding. About 40 percent of the money
that Mexico earns from exports goes to service the debt, and real
wages for its people have fallen 30 to 40 percent. Mexican interest
payments are $1 billion per month, the debt has actually increased
by 50 percent, and the country now owes more than it did before
the crisis began. And the U.S. banks call Mexico a success story-for
Huge U.S.-based corporations called agribusinesses
also grow food in Third World countries for foreign markets, mainly
the American, and the debt crisis ensures them a plentiful supply
of cheap, if not slave, labor and cheap land. They pay virtually
no taxes to the host country. Ninety percent of the protein fed
to British animals comes from underdeveloped countries. The meat
consumption of people in the First World accounts for a volume
of grain that would feed 1.2 billion people.
In Tanzania, which organized the best
health care system in Africa in the 1970s, there has been a two-thirds
cut in real wages, and the system is now in rapid decline. Hospitals
are collapsing, and material and infant mortality is on the rise.
School buildings are falling apart, and many children no longer
have the access to primary education that their predecessors had
in the 1970s. This is a tragedy of monumental proportions. Even
worse, it is typical of all the debtor nations.
By 1983, forty-two debtor countries were
locked in repayments. Seven of them are responsible for nearly
half the total Third World debt-Brazil, Argentina, Venezuela,
Mexico, Indonesia, the Philippines, and South Korea. Some observers
say that the international banking system would be threatened
if any defaulted on their payment. In 1980, the net funds transferred
as loans from the First to the Third World were $40 billion, but
in 1983 the situation was reversed, and the debt the Third World
owed to the First was $20 billion greater than the loans it received.
UNICEF estimates that half a million children die each year because
of the debt crisis. The four Latin American countries together
owe $50 billion, and theirs are disastrously poor economies. How
can they possibly pay this?
In Britain, the banks actually put aside
or forgave half of the world debt and, in so doing, gained a huge
tax relief In fact, they made enough money from this strategy
to immunize 450 million children against preventable diseases.
They didn't, of course. From 1987 to 1989, using these maneuvers,
British banks made £1.6 billion, which is more money than
the British government paid to poor countries in foreign aid.
So the banks make money whichever option they choose all on the
backs of millions of starving, uneducated, sick children.
Third World debt does produce complications
within industrialized nations other than the inconveniencing of
the banks. Normally, poor countries buy and import manufactured
goods from the First World, but instead of importing a surplus
of $1.3 billion of goods, as it did in 1980, when Latin America
incurred a $14.1 billion deficit in 1987, they could no longer
afford to buy products made in the First World. As a consequence,
the United States lost two million manufacturing jobs. Meanwhile,
ironically, the profits of the six largest commercial U.S. banks
rose by 60 percent between 1982 and 1986. So the American workers
suffer and the Third World suffers, but the banks flourish.
Inflation in the debtor nations is horrendous.
In 1989 when I visited Rio de Janeiro, I could not quite grasp
that new Brazilian bank notes had been printed three times in
1989. I never did come to understand the value of the different
currencies, and only later did I discover that the inflation rate
in 1989 reached about 2,000 percent. I also learned that behind
the facade of great wealth in Rio and Brazil, owned by 5 percent
of the population, existed 86 million people who suffered from
The total amount of money owed by the
Third World is $1.3 trillion, which is a little more than the
$1 trillion the global community spends on weapons each year.
Debt is not a way of solving the dilemma of millions of people,
and death is not a way of solving conflicts. War is obviously
obsolete in the nuclear age. If $1 trillion were transferred annually
from the death industry to the life industry, 80 percent of the
world could feed, clothe, house, and educate itself and provide
excellent modem health care and contraceptive services, while
the First World could concentrate on solving the problems of ozone
depletion, the greenhouse effect, deforestation, global pollution,
nuclear disarmament, and species extinction.
So simple-yet so difficult because of
human nature. I stayed with some wealthy investment bankers recently
at Palm Beach, Sydney, who told me the world would never change,
because people are selfish. I suspect they were talking about
If You Love This Planet