Sir, Mr James Skinner (Letters, April 11) charges me with misuse of statistics and understanding the debt burden of poor countries. He cites Africa to support his contention. The statistics I used refer to Latin America, the principal thrust of the argument of the Bishop of Oxford, which focused largely on Brazil. The bulk of African debt is owed to official lenders under various aid agreements. The debts represent loans with a substantial grant element. The limiting case is the international development association loans, 50-year loans, unindexed for inflation, at zero interest. The debts of African countries have often been cancelled or rescheduled, frequently several times for the same country. To treat debt as necessarily burdensome also ignores the initial transfer of resources. This is like saying that banks, building societies, and governments issuing saving certificates are burdened when they pay interest. If the funds are used productively, debt service is not a burden in the critical sense that the debtors would be better off if they had not borrowed. I do not know what Mr Skinner has in mind in referring to institutions serving only western interests, and by clear implication inflict suffering on the poor. What I do know is that throughout Asia, Africa and Latin America the level of material achievement declines as we move away from the effect of western commerce. To harp on alleged external causes of Third World poverty diverts attention from the real factors behind this poverty which are domestic, and thereby from the possibilities of addressing these. These factors include, among others, government policies and extensive, often enforced, dependence on precarious subsistence production. It is pertinent also that the poorest are low among the priorities of the local rulers. State help for the poorest, especially the rural poor, conflicts with the political and personal interests of the rulers, and may not accord with local mores. Such considerations are reinforced by ubiquitous civil conflict. An Arab-dominated Sudanese government will not help the poorest blacks hundreds of miles away with whom it is in armed conflict; the Sinhalese government will not help the Tamil poor, nor will the government of Ethiopia the poor of Tigre. As I said in my letter, harping on alleged western causes of Third World poverty reflects and reinforces feelings of guilt, which is a self-centred sentiment. Encouraging Third World countries to default inhibits the inflow of productive commercial capital, which, together with the skills that went with it, over the last 150 years transformed life in many poor countries, notably in south-east Asia, west Africa and Latin America. Bauer House of Lords, Westminster SW1
Lord Bauer, House of Lords, makes the following comments to "Letters to the Editor," Financial Times, from a Mr. Skinner: a. Skinner charged Bauer with misunderstanding the debt burden of poor countries. Bauer comments that the loans do not increase with inflation and are at zero interest. Further, these loans are often canceled or rescheduled. b. Skinner claimed that Southeast Asia's poverty is externally-caused. Bauer believes that it is domestically-caused by government policies. c. Bauer believes that the poor are at the bottom of the priority list of local rulers. d.Skinner's encouragement of default is counter-productive. Bauer points to the success of Africa.