This administration has been late in responding to the debt crisis. And when it did respond, with the "Baker Plan," this administration simply reinforced an already failed strategy of dealing with the international debt. . . .
Under the Baker plan, the administration simply asked the financial establishment for the continuation, and a slight increase, in international lending, as if the debt crisis could be solved by a new financial influx, over and above the current levels of external debt, in the developing countries. It also asked the major industrial countries to coordinate decisions on exchange rates, as if the stabilization of the international monetary system could be undertaken without considering the interests, and involving the participation, of the whole community of nations, including the developing nations of the Third World. . . .
The solution to the debt crisis is not a simple one. The crisis itself was the result of a complex process, and it calls for fresh, creative approaches in response. The underlying factor which created the present debt crisis was a $500 billion increase in the debt of non-oil exporting developing countries from 1974 to 1982. Of this amount, $240 billion was used to pay for the increase in the price of oil. One-hundred billion dollars represents losses from deterioration of terms of trade, and $40 billion was due to the rise in floating interest rates. It is evident, therefore, that a series of structural conditions in trade and international finance, and a responsibility shared by both developing and developed nations, led to the spread of bankruptcy throughout the economies of many developing nations. Any effective solution to the crisis must therefore recognize this shared responsibility.