THE WORLD is on the verge of a human catastrophe and a political disaster that this country seems determined to ignore, notwithstanding the great damage it will do to America's security and welfare.
While Washington's attention is riveted on whether the debt crisis in the Third World will weaken or seriously harm the banking structure in the West, developing countries are being put through an economic wringer that is undoing the achievements of several decades. Countries that achieved independence in the early 1960s and began the process of modernization in the early 1970s are now being demodernized. Investment projects are lying idle, children are not being taught, disease is spreading, beggars are filling streets from which they have been absent for decades, people are looting food shops, and the middle class is being destroyed by bankruptcy and high interest rates.
Increasingly, the economic strains that Third World governments are experiencing are proving too great for existing political structures to sustain. We seem to be entering a period like the 1930s, when economic distress triggered violent revolutions from Vietnam to Nicaragua. If this economic crisis is not solved, we face political upheavals that can pose grave dangers to the United States.
Perhaps we no longer fear the nexus between economic crisis and political change because in recent years the industrialized North has shown remarkable political stability in the face of economic adversity. Governments have fallen in every major industrialized democracy in the last few years, but unlike the 1930s, there has been no major challenge to the system itself.
This stability, however, may be a tribute to the safety net of the welfare state that even developed countries are finding very expensive to maintain. Most developing countries do not have such a net. They are faced with the anger of disadvantaged populations. And there is good reason why these populations should be angry.
In the last 30 years, local governments, aid donors, and international organizations have uprooted traditional ways of life of Third World people and urged them to pursue the path of "economic progress." Pushed by economic conditions from the farms and villages and lured into the cities as development economists emphasized industrialization over agriculture, these people turned cities like Jakarta, Mexico City and Lagos into wretched megalopolises. In only 30 years, for example, the population of the Lagos area has risen from 100,000 to 1.5 million, and by some estimates, to 3 million. It is as if all the pain and misery that people in the West experienced over more than 100 years of movement from country to city has been compressed into a period of three decades.
After many years of effort, citizens of Third World nations were beginning to make the adjustment from one way of life to the other, only to be told now that mistakes were made, that the future is no longer bright, and that they should return to a way of life they have abandoned. But the agricultural skills have been lost; the land has been taken; and the family unit is no longer organized to sustain the previous existence.
Even without taking China into account, the last count of the International Labor Organization put the number of unemployed or underemployed in the developing countries at half a billion. Unemployment rates have been increasing faster than in the developed countries and may now be around 40 percent.
Although the modest recovery in the developed North will have some positive impact on the developing countries' export markets, overall the situation looks bleak. Receipts from commodity exports have dropped perhaps 25 percent in the last two years; and even with an upturn in North America, Europe and Japan, the outlook for many commodities is not bright. Aid is not growing to compensate for that.
Whole continents have seen their hopes for the future disappear. According to the World Bank's 1981 report on Africa, the net flow of outside aid into Africa will have to double by 1990 if average per capita incomes are to stop eroding and begin to increase again significantly. On the other hand, if the established patterns continue, the overall per capita growth rate will be zero or negative, and there are alarming possibilities for even steeper downward spirals in some, as populations continue to grow.
Developing countries, to maintain their growth, need a regular flow of commercial loans and government grants from abroad. Yet, according to Morgan Guaranty, if the 20 percent increase in net new bank lending to Third World countries that occurred in 1981 did not take place in subsequent years, the developing countries would lose about $50 billion in investment funds from abroad.
The consequence would be a drop of three percentage points in their real growth rate. Growth in Latin American countries perhaps would decline by more than 5 percent. That is only a prediction, but, regrettably, reality seems to be supporting it. In the first quarter of 1983, private bank lending to the developing countries dropped to almost nothing.
The effects on the Third World of these reversals are extraordinary. Real income for the average person in these countries has declined for three years in a row. Sacrifices that the industrialized world has not experienced since World War II are being imposed on helpless populations. In Chile, the International Monetary Fund is demanding a 50 percent cut in government spending, even though Chile's unemployment rate has risen from 4 percent to 26 percent in the last two years. In Argentina, following IMF guidelines, the government is attempting to cut its budget deficit by an astonishing two-thirds, even though the unemployment rate has tripled in the last two years.
It is no coincidence that there have been massive street demonstrations in those two countries in the past few weeks. The military governments in Santiago and Buenos Aires are in difficulty, with pressure for political change coming even from their own supporters.
"Cuts in public spending," of course, is a euphemism for saying that health, education and welfare budgets are being slashed. (Countries everywhere are reluctant to cut defense budgets.) The IMF-imposed austerity measures that lead to improved balance-of-payments results today will lead to higher rates of infant mortality, illiteracy and malnutrition tomorrow.
Developing countries are already rebelling against IMF discipline. The main debtor countries of Latin America met in Caracas last month to discuss common action. Although the consensus at the meeting has reduced pressures for a time, many politicians in South America continue to talk about declaring a moratorium on debt payments.
In Africa, populations are actually returning to the bush. Thousands of Ghanaians expelled from Nigeria during the last year had no work to go back to in Ghana. They had to retire to their villages where the world will never learn their fate. Africa today has millions of people moving across borders and within countries in a search for survival.
Even the favored are suffering. No country in the Third World has been as blessed by the arrival of Ronald Reagan to power as Jamaica. The president has repeatedly cited the victory of Edward Seaga over Michael Manley as a victory for democracy. Jamaica, which the administration would like to turn into a showcase, now is the fifth largest per capita recipient of U.S. assistance. Nevertheless, unemployment is nearing 30 percent and a major foundation of the Jamaican economy has become the illegal drug shipments to the United States.
There is a Potemkin Village quality to the Jamaica seen by foreigners. Government officials urge potential foreign investors to visit the two "model farms" run by Israeli investors. But these employ only a few hundred people. Meanwhile, Seaga's free market policies, which are operating in a harsh international environment, have proven to be a catastrophe for the thousands of small farmers whose products cannot compete with cheap foreign food, and who cannot find jobs in the city.
Jamaica is a good example of the problems Third World governments are facing today.
Seaga has not misgoverned Jamaica. In his first year in office he curbed the rate of inflation, increased tourism and attracted the interest of foreign investors.
But any effort to float one boat in the fleet higher in the water than the others will fail. Jamaica has found that its economy floats at the same level as its neighbors, notwithstanding a favored place in U.S. aid disbursements. Investors cannot be attracted to Jamaica when the world economy is in such difficulty.
Will the Third World accept its economic fate without major political protest? Here the lessons of the 1930s are instructive, and chilling. In Latin America, the collapse of commodity prices in the Great Depression helped stimulate 50 revolutions by 1933. In El Salvador, a rebellion and the brutal repression that followed claimed tens of thousands of lives. The anger and the mythology that help fuel Salvador's civil war today date from that conflict. Violence, rioting and repression were commonplace all over the hemisphere, notably in the same countries that are causing us such concern today -- Nicaragua, Honduras, Guatemala and Cuba.
In Asia, too, the collapse of sugar, rubber and other commodity prices encouraged vast political changes. The sugar issue set off the first American attempts (sponsored by sugar-state senators) to grant independence to the Philippines. Gandhi began his civil disobedience campaign by seizing on an economic issue when he led a march to the sea to make salt illegally. The collapse of Vietnam's colonial economy led to the first serious challenge to French authority there since the turn of the century. Although put down, it fueled hatreds against the West that blazed again in the '50s, '60s and '70s.
In the 1980s the predictable consequences of economic depression will be reinforced by a powerful new factor: the large number of young people in the Third World. Social scientists have long identified a correlation between youth and violence. In many of the developing countries, at least half the population is under 20. In recent decades it has been the young people who have flocked to the cities looking for opportunity.
This explosive mixture of economic stress and impatient young populations may finally be proving too much for many governments to handle. Violence has flared and governments have tumbled all along the coast of West Africa. Tremors have moved the once-stable political landscape in Kenya.
The authoritarian governments in the southern cone of Latin America seem certain to fall. Ethnic troubles have recently rocked Sri Lanka. The Philippines appears on the verge of major political change.
A particularly troubling aspect of political turmoil in the Third World is the opportunity it offers to outside powers to intervene. As the international economic climate curbs economic prospects within their own countries and compounds their own economic mismanagement, the ability of Third World elites to buy off the angry masses decreases. They become increasingly vulnerable and outside powers move in.
Those with money can, in effect, buy out countries for a few million dollars. Libya, for example, gave $100 million to Nicaragua after the United States closed down its $75 million economic aid program. It tried to buy out Liberia after the coup there, before a panicked U.S. administration restored its support. And it provided assistance to Ugandan dictator Idi Amin in his final days in power.
Those imparting military skills can offer the local elite help in organizing a Praetorian Guard to shoot the mobs when they revolt. Cuba, East Germany and the Soviet Union are performing this security function in Angola and Ethiopia; Israel is training President Mobutu Sese Seko's bodyguard in Zaire; France provides security functions in French African states, and the United States and Cuba do the same in Central America.
The effort won't work. For this time, unlike the 1930s, the mobs will have guns. The geopolitical competition will ensure this, as will the easy availability of arms for anyone with money. Governments fear an armed population and are preparing. The extraordinary recent increases in arms sales to Africa and Latin America -- in Africa the increase has been 13-fold in the last decade -- reflect elite fears of internal insecurity more than of external aggression. Altogether, Third World countries' expenditures on arms have grown from $27 billion in 1970 to $117 billion in 1980.
It may be that the international economic trends are so unfavorable that no counter-cyclical action by the United States, even with others, can be effective. A new feudal order may then rise up in the Third World as governing elites, all desperate to survive and many without great scruples, volunteer to become clients of an outside power willing to provide protection.
In this regard, the turn of several small African states toward Libya may reflect their struggle for survival as much as any imperialist design on the part of Libya. In other words, much as the United States prefers the status quo it may have to live with change, even undesirable change. But prudent policy would call for the United States to work with others to limit the scope of change that its enemies can exploit more easily than its friends.
Realistically, however, a common effort is unlikely to occur; for the trends within the U.S. government are all in the opposite direction. As the 1983 Agenda of the Overseas Development Council points out, the United States, a superpower, is now competing with Italy for the dubious honor of being the least generous of all Western countries in the provision of aid to the developing countries. In the worst crisis since the Great Depression, the United States is insisting that the World Bank drastically cut back on its low-interest loans to the poorest countries.
Pledges from richer countries for these loans will fall from a three-year total of $12 billion to $9.5 billion; the shares of the two largest recipients, China and India, are being squeezed to less than India alone used to receive; and the future for additional resources in the next pledging cycle looks bleak.
These low-interest funds have been vital to countries unable to compete for commercial funds with the wealthier developing countries. World Bank loans, like IMF loans, also constitute a seal of approval that private banks often require before they provide commercial funds.
Today only 19 percent of U.S. bilateral development aid is going to the low-income countries. (The figure is over 30 percent for our allies.) In the last 10 years the U.S. has nearly doubled to 41 percent the share of its aid program that is politically motivated, as opposed to development oriented. The Near East, primarily because of aid to Egypt and Israel, now accounts for nearly 50 percent of all U.S. foreign aid worldwide.
But for the policy community in Washington -- the administration, Congress and the "think tanks" -- requests that the United States show more concern over the plight of the Third World have become simply annoying. Just as a physical structure may suffer from metal fatigue, official Washington now suffers from policy fatigue with regard to the Third World.
There are a number of explanations for this mood. One is the elite's loss of confidence between 1965 and 1975 that it understood the development process. The earlier hubris of Walt Rostow's "Stages of Economic Growth," in which development was detailed in an almost mechanical fashion, has disappeared. In the days of President Kennedy's Camelot, my Foreign Service Institute professor ordered me, a juniornion are per Foreign Service officer, to read that book. It was to be the blueprint we were going to follow to bring the world up to the economic level of Peoria.
Suddenly in the mid-1970s, Americans who previously claimed to know everything about development declared that they knew nothing. The announcement was, of course, premature. As nearly all development economists have pointed out, whatever the mistakes of the 1950s and 1960s, the developing countries as a group have achieved rates of growth unequalled in history. To be sure, credit for this success goes primarily to the people in those countries and not to the foreign donors. But when poor countries are desperate for cash, donations from richer countries certainly cannot hurt.
Attitudes have also affected the American government's policy. White Americans have never been entirely comfortable with the leaders of the Third World, in part because of the less-than-honorable history of this country toward the Third World people on this continent--the Blacks, the Indians, and the Mexicans. After all, until very recently, the the majority has benefited by enslaving, defeating, or stealing land from Third World citizens of this hemisphere. It is now all history, the victims probably would not have been more humane as victors, and the sins of fathers should not be visited upon sons or daughters.
Nevertheless, history does leave scars and memories. Reflecting on this legacy, white Americans seem to have divided into two camps -- conservatives who are callous in their sense of resentment and superiority toward the Third World, and liberals who are cloying in their mood of meekness and guilt toward developing countries.
Neither attitude is terribly relevant to the reality the country faces -- a Third World that ranges from major international powers like India or Brazil to specks on the globe like Grenada or Fiji, a Third World that soaks up 40 percent of U.S. exports, that in certain vital countries represents the future and in many others encapsulates the past, that may affect the global balance of power.
Given the American attitude toward both development and the Third World, however, any appeal to the humanitarian instinct of the American people and particularly the American policy community is likely to fail. The instinct is no longer politically relevant except in the type of emergency that puts faces of hungry children on the front pages of American newspapers. The indifferent U.S. reaction to the Brandt Commission report, which laid out the elements of a global bargain between North and South, is proof of this. The report was a soaring bestseller in Europe, a public relations failure that sank like a stone in the United States. It is not that every one of the report's 59 major proposals in the fields of finance, trade, agriculture, and energy was sound. Such an achievement was never expected. What was disturbing in the United States was the lack of interest.
Yet the problem of what we do about political turmoil in the Third World remains. One of the obligations of an elite is occasionally to act like one. On the issue of development, the American people will not be ahead of their leaders. Instead of exploiting congressional votes in the IMF for partisan advantage, these leaders should be looking for ways to explain to the public the long-run political effects of the world's current economic neglect of many vulnerable regions of the world.
Development experts, including officials in the Reagan administration, have their own agendas for surmounting the current crisis. Proposals range from clever arrangements for redistributing the debt burden to renewed efforts to restore the tools of past policy -- more aid, better trade, and wiser experts. The World Bank's recent report on Africa shows what reasonable increases in aid, combined with reforms, can do for that continent. But even a modest agenda cannot succeed in the current climate.
Economic distress brought political disaster to many regions of the werorld in the 1930s. Yet then, at least, we had the excuse that we did not always understand the effects on others of such actions as the infamous Smoot-Hawley tariff increases, or inflexibility in reducing the international debt burden resulting from World War I.
In the 1980s, a decade in which we could see a new age of disorder, we have no such excuse.