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By Brenda Clemons
2005.02
Bono has long been a supporter of debt relief for the world's poorest countries, but even with such a high-profile backer, the concepts behind this issue are not always easy to understand. With her new book "The Debt Threat" (Harper Collins), Noreena Hertz has managed to achieve the impossible task of putting into layman's terms the politics which govern the process of lending to developing nations. Not only does she do this effectively but she has done so in a manner that is enjoyable to read.
Hertz explains how most dept owed by the developing world is illegitimate by using the following criteria: the regime/government that borrowed the money lacked democratic consent (i.e. it did not have the approval of its citizens); the money borrowed was not used to help the people of the developing country; the lender knew the money would be used in an inappropriate manner.
Hertz outlines how "dirty" politics have played a role in creating the current debt crisis by giving examples like the United States' and China's policies of giving money to strategic countries in order to gain allies and then pulling out once the country is no longer needed; leaving the country with insurmountable debt and little money to pay it back.
It's not just wealthy nations and the IMF/World Bank who are the bad guys, according to Hertz. Private institutions have also jumped on the bandwagon, selling high-interest loans to developing countries, loans that would not make sound business sense under ordinary conditions. For instance in Togo, where German commercial banks loaned money to build a steel mill, the Togolese had no iron ore available to start production.
Harper Collins describes Noreena Hertz as someone who "looks great in leather pants" but this description does not do her justice. Hertz holds an MBA from The Wharton School at the University of Pennsylvania and a PhD from the University of Cambridge, where she is currently the Associate Director for the Center for International Business.
Hertz not only writes about the problem of debt in "The Debt Threat" but gives solutions as well. She ends her book by outlining criteria for illegitimate debt and guidelines to assure that money freed up would go to serve the welfare of people. Additionally, Hertz dedicates one chapter in her book to Bono's efforts on behalf of the debt-relief cause but perhaps should have also taken the time to mention some less-notable people involved in this fight.
In the modern age of technology we are seeing just how small our planet really is and Hertz does a great job of showing just how interdependent we all are by giving examples of how poverty leads to disease which will eventually spread to the wealthy nations, such as the case when, in 1991, a cholera epidemic started in Peru and spread to Brazil. Considering this history, if you don't read "The Debt Threat" for any other reason, perhaps you should read it out of self-interest.
By Brenda Clemons
2005.02
Bono has long been a supporter of debt relief for the world's poorest countries, but even with such a high-profile backer, the concepts behind this issue are not always easy to understand. With her new book "The Debt Threat" (Harper Collins), Noreena Hertz has managed to achieve the impossible task of putting into layman's terms the politics which govern the process of lending to developing nations. Not only does she do this effectively but she has done so in a manner that is enjoyable to read.
Hertz explains how most dept owed by the developing world is illegitimate by using the following criteria: the regime/government that borrowed the money lacked democratic consent (i.e. it did not have the approval of its citizens); the money borrowed was not used to help the people of the developing country; the lender knew the money would be used in an inappropriate manner.
Hertz outlines how "dirty" politics have played a role in creating the current debt crisis by giving examples like the United States' and China's policies of giving money to strategic countries in order to gain allies and then pulling out once the country is no longer needed; leaving the country with insurmountable debt and little money to pay it back.
It's not just wealthy nations and the IMF/World Bank who are the bad guys, according to Hertz. Private institutions have also jumped on the bandwagon, selling high-interest loans to developing countries, loans that would not make sound business sense under ordinary conditions. For instance in Togo, where German commercial banks loaned money to build a steel mill, the Togolese had no iron ore available to start production.
Harper Collins describes Noreena Hertz as someone who "looks great in leather pants" but this description does not do her justice. Hertz holds an MBA from The Wharton School at the University of Pennsylvania and a PhD from the University of Cambridge, where she is currently the Associate Director for the Center for International Business.
Hertz not only writes about the problem of debt in "The Debt Threat" but gives solutions as well. She ends her book by outlining criteria for illegitimate debt and guidelines to assure that money freed up would go to serve the welfare of people. Additionally, Hertz dedicates one chapter in her book to Bono's efforts on behalf of the debt-relief cause but perhaps should have also taken the time to mention some less-notable people involved in this fight.
In the modern age of technology we are seeing just how small our planet really is and Hertz does a great job of showing just how interdependent we all are by giving examples of how poverty leads to disease which will eventually spread to the wealthy nations, such as the case when, in 1991, a cholera epidemic started in Peru and spread to Brazil. Considering this history, if you don't read "The Debt Threat" for any other reason, perhaps you should read it out of self-interest.
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