There were numerous impediments to the Third World project that was proposed from 1948 to 1979 and defended by Fidel and Cuba from 1979 to 1982.
The declining terms of trade continued to be manifest during the 1980s. The Third World strategy of forming public primary product cartels (“The Third World Project, 1948-79” 7/20/2016) was not able to reverse the process. The necessary cooperation among producing nations could not be attained with respect to many raw materials, for various economic, technical and political reasons. Even in the case of the oil industry, the formation of OPEC and the nationalization of oil companies had limited results, for they did not overturn the overwhelming power of the seven largest oil transnationals (Prashad 2007:186-89, 227-28).
In addition, South-South cooperation required the development of a transportation infrastructure and new investments in appropriate industries. It was difficult to implement, in light of the limited capital of the Third World and the continuing opposition of the core powers, who correctly saw South-South cooperation as a threat to the structures of neocolonial domination (Castro 1983:177).
But it was above all the external debt that killed Third World hopes. In 1960, the total debt of 133 underdeveloped countries was US$18 billion. By 1970, it had risen to $75 billion; and by 1982, it had risen to $612 billion (Prashad 2007:229). The escalating debt was driven by the desire of Northern commercial banks to lend. With excess liquidity due to the high levels of deposits from the OPEC countries that resulted from the oil price hike, and with loans to Third World countries being more profitable than investment in production, representatives of Northern banks traveled to the nations of the Third World during the 1970s with low interest loan offers, but with variable rates of interest. The funds were not destined to projects that could improve the productive capacity of the receiving nation, thus ensuring its ability to repay the loans; rather, they were emergency funds that represented a short-term solution to declining government revenues due to the declining terms of trade and high rates of inflation. During 1979-80, the interest rates were elevated, making their repayment impossible. The impact of the elevated interest rates was such that from 1982 to 2003, the payments of underdeveloped countries in service of the debt was twice the amount of money that had actually been lent. In 2002, debt service payments by Third World countries were five times what they received in “aid” (Hernández 2006:82-86; Millet and Toussaint 2004).
At the 1983 New Delhi Summit of the Non-Aligned Movement (“Derailing the Third World project” 7/22/2016), Fidel led the radicals in putting forth the proposal that the Third World states suspend their payments on the external debt. He maintained that a debt payment strike would constitute a collective action strategy that would strengthen the bargaining position of the Third World governments. Fidel continued to speak on the Third World debt and the need for a strike of debtor nations. In a number of speeches in Havana in 1985, at the 1986 Summit of the Non-Aligned Movement in Zimbabwe, and at a 1987 ministerial meeting of the G-77, Fidel maintained that payment of the debt: is financially impossible, as interest rates escalate the balances; would be politically impossible to impose, as the consequent reduction of necessary human services would lead to widespread popular revolt; and cannot be justified morally, as it imposes the greatest sacrifice on the poorest, who are the least responsible for it (Castro 1989). But the accommodationists of the Non-Aligned Movement argued against Fidel’s proposal for a strike of debtor nations; they advocated that each nation should individually negotiate a restructuring of debt payments. The accommodationists prevailed (Prashad 2007:214).
The negotiation of debt payment restructuring by individual nations did not have positive results for the Third World. The US Treasury Department and the IMF established conditions for the rescheduling of debt payments. The IMF negotiations prevented the Third World governments from defaulting, and they also prevented the Northern commercial banks from failing. However, the debt rescheduling plans resulted in a continuing escalation of the total debt. Moreover, the imposition of economic policies by the IMF as a condition for debt rescheduling undermined of the sovereignty of Third World states (Hernández 2006:91-92; Prashad 2007:222, 229-32, 239).
The conditions established by the IMF were in accordance with what came to be called “Structural Adjustment Policy,” which was exactly the opposite of what Fidel and the Third World were proposing. Structural adjustment policy demanded: (1) the elimination of government protection of currency, thus devaluating national currencies; (2) the elimination of government protection of national industry, thus undermining the import-substitution development project that was the plan of many Third World nations; (3) the facilitation of an export-oriented economy, thus expanding the access of core corporations to Third World raw materials, cheap labor, and markets; (4) reduction of the role of the state in the economy, thereby reducing restrictions on foreign participation in the economy; and (5) the selling of state-owned economic enterprises to private companies, thus increasing foreign ownership. The Structural Adjustment Policy was based on the premise that the state should abdicate its role in the formulation of a national development project and the management of the economy, and it should leave everything to the market (Prashad 2007:232-33, 236).
The IMF justified the Structural Adjustment Policy with an ideological attack on the state. It maintained that that the central problem was the over-involvement of the state in the economy as well as state corruption and inefficiency. It thus blamed the Third World state for persistent Third World underdevelopment and poverty, as though neocolonialism and imperialism existed only in the minds of a few Leftist intellectuals (Prashad 2007: 233, 236).
The neoliberal view of the primacy of the market in promoting economic development overlooks fundamental historical facts. Throughout history, states have played an integral role in commercial and technological development and in the emergence of civilizations. In the modern era, the colonial, neocolonial and imperialist policies of powerful states have played a central role in the economic development of some regions and in the underdevelopment and impoverishment of other regions. The neoliberal project, in ignoring the Third World proposal for a New International Economic Order, was violating an epistemological premise that is a legacy of Marx, namely, that philosophical, historical and social scientific understanding is advanced by taking the vantage point from below of the exploited classes and dominated nations. Promoted by individuals and centers associated with the most prestigious universities of the world, the neoliberal project was not based on a quest for understanding the true and doing the right, but in promoting the interests of Northern banks, transnational corporations and core countries. Neoliberalism represented the triumph of particular interests over the common good and of ideological justification over truth, demonstrating a profound indifference to the tremendous thirst of humanity for social justice. It was a project of domination carried out not by soldiers or mercenaries conscripted from the lower classes and oppressed nations, but by an educated and privileged class dressed in expensive business suits, who became the conquistadores of our time.
In imposing the neoliberal project, the International Monetary Fund violated a fundamental right embraced by various documents of the United Nations: the right of the sovereignty of nations, which necessarily includes the right of each nation to formulate a national development plan and to define the role of its state in its economy. The International Monetary Fund assassinated the Third World national liberation state, the embodiment of the hopes of the formerly colonized peoples of the earth.
But the Third World would rise again, as we will see in subsequent posts in this series on the Third World project. The Third World would recover its revolutionary faith and its spirit of struggle, invoking such words as: “A better world is possible;” “No to neoliberalism;” “The dignified example of Cuba;” “Fidel: the comandante of all excluded peoples;” and “Socialism for the twenty-first century.” Hugo Chávez would exalt: “We are making real the dreams of Bolívar and Martí;” “We again are singing The International in the streets of our America.”
Castro, Fidel. 1983. La crisis económica y social del mundo. La Habana: Oficina de Publicaciones del Consejo de Estado.
__________. 1989. Fidel Castro y la Deuda Externa. La Habana: Editora Política.
Hernández Pedraza, Gladys. 2006. “Evolución de la Deuda Externa del Tercer Mundo,” in Libre Comercio y subdesarrollo. La Habana: Editorial de Ciencias Sociales.
Millet, Damien, and Eric Toussaint. 2004. Who owes who? 50 questions about world debt. Translated by Vicki Biarlt Manus with the collaboration of Gabrielle Roche. NY: Zed Books
Prashad, Vijay. 2007. The Darker Nations: A People’s History of the Third World. New York: The New Press.
Key words: Neoliberalism, structural adjustment policy, SAP, International Monetary Fund, IMF, Non-Aligned Movement, Third World