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The greatest debt crisis in history is upon us

The debt burden crushing poor countries will not be alleviated until creditors in rich countries are made to give up some of their wealth
 
by John Smith 

Part 4 - What about the rest?

The debt crisis facing the poorest countries is one facet of a colossal global debt crisis. Including the private and public debt of middle income and rich countries, global debt now totals $277trn. This increased by $6trn between 2012 and 2016, and by $52trn from 2016 to the end of September 2020, and is now equal to 365% of global gross domestic product – up from 320% at the end of 2019.

Even before the COVID-19 pandemic hit, the global capitalist economy was in intensive care, staving off depression thanks to extreme monetary policies such as negative interest rates and ballooning debt. Only a return to strong and sustained economic growth can avert a crisis qualitatively more profound than anything experienced in history, but there is absolutely no reason to expect this growth to materialise.

Six poor countries – Zambia, Ecuador, Lebanon, Belize, Suriname and Argentina – already defaulted on their debts in 2020, compared with only three during the global financial crisis.

The debt crisis now engulfing poor countries is just one manifestation of the profound structural crisis of the global economic system, a crisis from which there is no capitalist way out. One person’s – or one country’s – debt is another person’s asset. Cancellation of debts owed by the many to the few is the only possible solution, and this is necessarily a revolutionary solution since cancellation of debts owed by the poor majority means cancellation of wealth owned by the super-rich minority.

All of progressive humanity can and must unite and act on the words of Cuba’s president, Miguel Díaz-Canel, who, in his speech to the United Nations General Assembly on 22 September 2020, called for the resumption of “the just struggle to write off the uncollectible foreign debt which, aggravated by the social and economic effects of the pandemic, is threatening the survival of the peoples of the South.”

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