[pake in millions while Third World children starve…]

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pake in millions while Third World children starve Behind the suave bankers... the armed fist of imperialism

(... s. sitia dain still ten sited.

ments that the optimists used to e aploy a few years ago to back up their contention that rising indebtedness was not a major problem for the world economy. They used to say, for example, that the biggest debtors tended to be those which would have least problems in repaying ten the debt was therefore 'rational'). Two-thirds of the debt is owed by 12 countries.

Inflation

In fact, however, some of the lowest debtors have (because their economic situation has been so bad) been least able to repay. Zaire is an example of this.

And at the other end the country most quoted in support of the optimists' argument was the biggest debtor of all - oil-rich Mexico - which, far from experiencing a miracle, has since last August been effectively bankrupt.

The optimists also used to say that debt was a perfectly rational thing in a period of inflation since rising prices would erode the real value of the debt. The argument is perfectly valid in theory but unfortunately misses two points.

The continuation of world inflation in the 1970s did not include the prices of the raw material exports of Third World countries. Those prices have been tending to fall, and that has made the burden of debt worse in real terms and not easier. And the intense recession of the last three years has curbe i world inflation quite suddenly.

Along • with monetarist policies in the USA and elsewhere, that has made real interest rates un borrowing soar upwards.

The optimists also used to say that debt should be nu problem for poor countries as long as the borrowed money was used to finance real economic development. It would then create the means for its repayment in the future out of higher production and income.

Again an argument which is very sound as long as you don't place it alongside the real world. The reality is that, especially since the oil price increase in 1973, debt has been incurred by the poor countries not to finance development plans but simply to survive at present levels without cutting back their existing very low levels of living.

And the emergency element in the borrowing has been reinforced since then because the much slower growth of the advanced countries has reduced the export earnings of most of the underdeveloped ones. Had the underdeveloped countries not borrowed to meet this problem, then, as their spokespeople often argue, the world would have been plunged into even deeper slump than it has been.

The optimists also failed to foresee (indeed, so did most other people) the only partly fortuitous coincidence of a number of political events which led three of the world's largest debtor countries to a point of virtual bankruptcy within a few months of eachother. They are, of course, Puland, Argentina and Mexico.

Nowadays, therefore, there is not much left of the optimists' argument except a faith that a major financial crash is impussible because of the ingenuity and flexibility of the capitalist banking system.

This highlights a difference between the rules of national financial systems and the international one. In each country there is a central bank which has some obligation to act as a lender or last • resort 1m and - that means flooding the system with cash if there is a panic and a run on the commercial banks. This, in principle, should stop a collapse of the banking system and the loss . of peoples' deposits in the banks.

The lender of last resort system has seldom needed to be put to the test in modern times. In the 1930s in the USA it failed dismally, though it has been much strengthened since then. It might be responsible for the fact that the numerous bank failures in the USA in recent years have not resulted in a domino effect as they did in 1933.

But there is no question that, even if the domestice. central banks are stronger in this respect than during the financial panics of the 1930s, there is still no international central bank to act as lender of last resort.

Two institutions are candidates for this role. One is the Bank of International Settlements with its headquarters in Switzerland. This is often known as the Central Bankers' Central Bank. But its powers to give creat to lentral banks of countries in financial difficulties is extremely limited and so far it has played very little role in sorting out the current debt crisis.

The other potential world central bank is the International Monetary Fund, which is one of the main characters of the present drama. But it is trying to play a role for which it was not intended and is ill designed.

The original idea of the IMF was that it should lend money to countries with balance of payments problems. A small amount was available to the subscribing nations unconditionally. But if they wanted substantial loans they were obliged to implement economic policies approved by the IMF. And these were balance of payments deficits by imposing economic contraction.

The rule of the IMF as a kind of conservative financial probation service in the Third World has become legendary. And a few advanced countries have also been placed in its care. The best known case of tha: is Britair during the last Labou: govemment when James Callaghan imposed massive cuts in state spending imuch more than Thatcher) at the behest of the IMF.

But the credit-creating possibilities of the IMF have proved much too small to cope with the rash of near defaults and bankruptcies of the last two years. Nonetheless the IMF has, in the absence of an alternative, played the role of World Central Banker, not so much by lending itself to the bankrupt countries but by makiing agreements with them and then advising the private banks that it is safe to lend enough money to stave off the crisis.

This system has for the last few weeks been threatening to break down. And that is the reason why this week the Group of Five who dominate the IMF (Britain, France, West Germany, Japan, and the USA) have been holding emergency meetings near Frankfurt to agree on an enormous expansion of the credit creating powers of the IMF.

The set have the effer. Of rEctOiLE the overwhelming pomer of the Is government over the policies of the IMF. And for a long time that made the Reagan administration hostile to the change. The fact is that it has now changed its position is an indication of how alarmed it is at the possibility of a forced default by a major debtur leading to a domino effect and the crash of the world financial system.

Expansion

Whether this expansion of the IMF's lending resources is enough to convert it into an effective lender of last resort remains to be seen. There is no doubt, however, that the present crisis has forced it to alter many of its former ultra-conservative policies. No doubt its officials would still like as much as they ever did to instruct borrower countries to balance their budgets and cut back their spending. But they have realised thire is no hope of implementing such policies at the present time without some form of catastrophe.

So in Mexico, for example, the IMF is now appealing to the government to try to reduce its deficit in the coming year to 10% of the national income, figure which a few years ago would have made an IMF official blanche. Yet tuday Mexico is getting IMF loans even without giving any convincing commitment to reduce government spending. This at least is one of the symptoms of what has been called "debtor power"

The debtors' power, however, would be greater if it ere not for the fact that they need not only to have their present debts rolled-over (rescheduled) almost in‹finitely, but also that they will need to borrow more and more simply to stay above water. The balance of payments deficits of the underdeveloped cuintries combined (excluding the oil producers) is projected by •EE OECD to DE $100 million for each of the next fes years. This implies the need to borrow that amount extra each year.

It is already clear that that is going to be extremely difficult since after the experiences of the last two years the commercial banks are already much less eager to lend to underdeveloped countries. And in any case they do not have the same excess of loanable funds which the oil price increases gave them during the seventies.

Now: atter a sudden worsening in the oil market as the recession creates over supply and falling prices, many of the oil producing countries . are also beginning to have trouble balancing their own payments. Some of them are coming to the financial markets as borrowers and not lenders.

And that situation certainly means that the threat of major defaults will nut lessen over the next year or two.

But if bankers fear aeraults like tne angel or 1:1--11 -death, shouldn't socialists welcome default as a means of andlino tho donondant CHULLIG status of poor debtor nations and in effect expropriating the property of the rich financial capitalists?

This is a legitimate question, and the answer to it is not a simple one. Certainly an essential part of any socialist programme in poor countries would be the ending of debt obligations; if necessary by default. And the counterpart of this would,be that in the advanced countries the banks should be expropriated without compensation to their capitalist owners and the savings of ordinary people in them protected. If defaults on international loans were taking place in that context, then they would be very desirable.

But as long as defaults occur in the context of the unmolested rule of capitalist norms, then their effect could be disastrous for the inbabitants of poor co=iries as well as zonere class people in the i= countries. At preset defaults are such anather to capitalist baniers it= the immediate reactos « any serious default, where the country concerned was not willing to negotiate a satisfactory rescheduling agreement, would be the imposition of an array of sanctions against that country to force it to heel: the freezing of any assets it might have left, the confiscation of its property abroad, the banning of trade with that country and so on. The measures imposed against Argentina during the war are a taste of what would be in store for a defaulter.

If a default was not rectified and led to the closure of banks and the collapse of international lending -an event which could happen very suddenly -then again, in the context of capitalism, the result could be a frightening cullapse of world trade and thus a gigantic international slump. This could even put the slump of the 1930s in the shade, since the capitalist economy is today much more internationally interdependent than it was in the 1930s.

Savers

And in such a slump it would be the exploited and the under-privileged who would suffer most: workers who lose their jobs, small savers who lose their money and so on.

There is nothing in the present crisis of the world's financial system which would of itself benefit the dispossessed of the world or aid the struggle for socialism. But its potentially horrific consequences, which could be imminent, should focus attention on the need for socialist measures which would completely change the rules under which the economies of individual countries and the world market function, so that social need could take over from private profit as the motor of the world's ecunomy.

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Socialist Organiser no.113 December 1982 Page Bob Sutcliffe reviews and the Law', by Paul 'John Cooper Clark - Ten Years in an Open Necked Shirt, both WHEN you have finished doing the Christmas competitions in the Mirror and the Financial Times then try this SO competition (for which there is no prize).

Read the following everyday scenario and be prepared to answer questions about it.

Scene: A gentlemen's somedatory at Britain somewhere Only two people (men) are apparently present, A and B. They evidently do not know each other. By coincidence, A's 21st birthday was yesterday; B's is tomorrow• A looks at B in a friendly manner and says 'Hello' , B ignores him. A persists: •Would you like to have sex with me?' he asks. B declines the invitation and makes as if to leave but then appears to change his mind. A, emboldened, repeats the invitation. B says yes. They kiss. They then go into a cubicle and lock the door and enjoy sex during the course of which A fucks B.

As they are on the point of leaving the lavatory, it becomes clear that they are not, as they thought, alone. A policeman emerges from his hiding place. He has seen everything via a system of mirrors (apparently not an uncommon use of taxpayers' money). 'I arrest you both,' he says. 'For what?' ask A and B, amazed since by coincidence both are tourists from, respectively, Portugal and Hungary, where nothing they have done would be illegal.

So here are the competition questions about this entirely private and consensual act: 1. In total under British law how many crimes might A and B have committed? 2. A has committed two more crimes than B. What are they? 3. After they first met, how could A and B still have had sex without breaking the 1. Possibly, Paul Crane's book reveals, as many as eight. They include conduct liable to cause a breach of the peace, importuning, gross indecen(Pluto Press, £4.95)

cy, buggery with a minor and insulting behaviour. 2. A committed importuning by approaching B more than once. He also committed the crime of having sex with someone under 21 years of age. In the case of buggery B is equally guilty since he was an accomplice. 3. If B had said 'Yes' the first time this would have removed the crime of importuning; if they hadn't kissed then that would have saved two possible charges of conduct liable to cause a breach of the peace. If they'd gone home to A's lodgings then they would have avoided the crime of gross indecency in a public place. And it might with luck have been after midnight when they arrived, so B would no longer be a minor. But perhaps it would have been more fun to go back to Hungary or Portugal.

Paul Crane's excellent and exhaustively informative book Gays and the Law provides the source of all the legal conclusions in the above scenario. Not that his book is predominantly about the problems of men cruising in public lavatories.

The story, however, does illustrate the extraordinary vulnerability of gay men to the British criminal law. It should dispel the common illusion that sex between men was legalised in 1967. In fact since that date there has been a considerable increase in the number of convictions and prosecutions of men especially for gross indecency, an event which has led to apalling repercussions for many, including loss of jobs, destruction of family and personal relations, press witch-hunts, and other forms of humiliation.

Gays and the Law also, however, describes • very fully how the law discriminates against and persecutes young gay people (by denying young gay men for instance any right to have sex before the age of 21), against Lesbians (by accepting as 'fair' their sacking from a wide range of jobs and frequently by cruelly denying rights to Lesbian mothers), against and what he as a lawyer advises anyone in trouble with the law to do to minimise punishment - make yourself out to be as 'respectable' and remorseful as possible.

It is •a contradiction which highlights the immense and hypocritical anti-gay bigotry which exists in our society. And some of the most interesting parts of the book are illustrations of these attitudes . as they display themselves in the police and the law courts. For instance, the Chapter on 'Police and Prisons' is headed with a quotation from a Police Federation press release in 1981 which •deplores the way official thinking on this subject appears to be surrendering to the pressure groups who try to persuade society that homosexual conduct is perfectly normal.' In 1977 the House of Lords ruled in a child custody case that the fact that the father was homnsexual 'destroys at once the main argument which is strong in normal cases that the maintenance of the tie with the possibility of parental influence is valuable to a child and should not be cut off' The case of the Queen's bodyguard was the occasion for a new wave of anti-gay bigotry in the press. And this was more respectably expressed in the report on the case published three weeks ago by Lord Bridges. Referring to Trestrail's taste for 'casual and promiscuous homosexual encounters which he himself recognised as sordid and degrading',. Bridges comments:

'The risks he took and the indiscretions he committed, no matter how compulsive the urge that drove him to act as he did, must be seen as raising serious doubt as to the soundness of his judgement.' (And I don't think Lord Bridges is criticising Commander Trestrail's taste in men. I He goes on to add that 'even in todays permissive society (sic), indiscriminale promiscucuc behaviour, whether homosexual or heterosexual, particularly when it involves relations with prostitutes, still attracts general disaproval; to have continued to employ, in a position of close responsibility to the Cuten, a man known to have indulged in such practices would clearly be unacceptable.' Thus Lord Bridges expresses the hypocrisy of the ruling class. The last part of the Christmas competition is to estimate, if the same standards were applied to the members of the House of Lords, how many of the noble peers would be left.

Given the extent of discrimination, oppression and bigotry which such things illustrate one can only hope that Paul Crane's book will not remain the most authoritative work on its subiect for long.

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