THE THIRD WORLD DEBT CRISIS IN THE 1980s AND 1990s/83RECYCLED PETRODOLLARS
Many analysts and opinion-makers in the North have incorrectly
blamed the surge in Third World debt on the 1973 increase in the
price of oil, decided by the OPEC cartel of oil-producing countries from
the South. They have got their facts wrong. As we have just shown,
debt had increased significantly well beforehand. Two factors linked
to the oil shock did, however, accelerate indebtedness. First, most of
the revenues obtained by oil-producing countries were transferred by
the South's governments into the North's financial system. This
further heightened the excess liquidity of the North's banks. As a
result, these banks sought to loan money to the South even more
aggressively than they had done in the late 1960s and early 1970s.
Second, non-oil-producing countries of the South were hit by the
increase in their oil bill, creating a deficit in their trade balance. To
finance this deficit, they were forced to borrow in the North's
financial markets (Montes, 1996; Norel and Saint-Alary, 1988).
It is one thing to identify these two factors, quite another to blame
OPEC countries for the Third World debt crisis.
It should come as no surprise, however, that a number of analysts
have indeed blamed OPEC countries. It is an easy way to let decision
makers in the North off the hook. Beyond this, it is also a way to
blame OPEC for the 1974-75 world economic crisis.
At the time, Ernest Mandel warned against such an explanation for
the crisis (see in particular his article 'La hausse du prix du petrole n'a
pas provoque la 20eme crise de surproduction depuis la formation du
marche mondial du capitalisme industriel', Inprecor, 16 January
1975; Mandel, 1982; see also Norel and Saint-Alary, 1988). A reg-
ulationist economist such as Michel Aglietta has provided a similar
explanation (Aglietta et al., 1990).
THE RESPONSIBILITY OF THE NORTH'S BANKERS
The North's banks pursued increasingly audacious (and risky) loan
policies, especially with respect to Third World countries (to both
their governments and their private companies). Policy-makers in
Third World countries soon grew accustomed to a situation in which
banks 'offered' them loans at very low rates (between 3 and 8 per cent
until 1978) (Norel and Saint-Alary, 1988). When inflation was
factored in, interest rates were almost nil, and even negative at times.