Most of us will have read it: Confessions of an economic hit man. For those who have not: in it Perkins (the author and the “Economic Hit Man”) describes how the US are abusing lending to get political leverage over poor countries.
The method is quite simple: Perkins as an economist produced reports that were overly optimistic about the economic advantages to be created by big infrastructural projects, like electricity generation. The projects would be financed by the US or their allies like IMF or World Bank. Then the poor country would be saddled with a big BIG HUUUGE loan. Because the reports were overly optimistic the economic advantages do never materialize and it appears impossible to repay the loan. So the poor country has to “restructure” the loan with the US who abuse this power to get political leverage over the poor country. The government of the poor country is by then in such dire straits they cannot do otherwise then prescribed by the US. Handy for international power politics!
This should all be clear to us by now, right?
Today we read in the newspaper a story about Malawi taking out 1.5 BILLION U$ on loans from China, mostly for an electricity project. That looks familiar, doesn’t it? The total government spending of Malawi per year is less than 1 billion, so these loans are going to be impossible to service by Malawi, that should be clear to all experts. So our government is happily putting the head of Malawi in the noose that the Chinese government is dangling before us.
Did they not read the classic book? Did they not understand it? Or don’t they care and do they have a mentality like: we have only bad news, let’s act like this is development, so we have something to show for and when the loan is to be repaid there is going to be another government anyway: their problem, not ours. After us the deluge!