The September attacks may have been a destabilising event for the United States, but they did not shake the views of American leaders and commentators. You might have expected such people to wonder if something they had not previously considered was happening out there in the world, but, at first, the effect of the attacks was a further closure of American minds. All the early post-terror talk was about attacks on our way of life, resentment of our prosperity and peace (although the US has 50m poor and one of the world's highest murder rates). You got the sense that people thought the problem was envy in the global South for the American way of life.
US leaders did not mention the possibility of a deep sense of injustice in the South which has nothing to do with envy; that our way of life comes at the cost of hunger, deforestation and indebtedness in the South; or that the South is angry with the powerful corporations and governments of the North. Socio-economic devastation cannot be held solely responsible for terrorism, which is a distinct, extreme act; terrorism requires a specific, added ingredient that some within Islam can find in the old battle with the West.
There are other ways to create the added ingredient. Terrorism does not always have to be as purposeful as it was on 11 September: consider the militarised gangs in Bosnia in the war's aftermath, or even the gangs in devastated inner cities in the US. But without any doubt, rage and hopelessness thrive in a landscape where poverty and inequality are growing and governments are so overwhelmingly indebted that they cannot afford resources for development. For many countries, debt is not new: most rich countries are themselves indebted.
But the history of debt changed in the 1990s; debt then became a crucial poverty factor in the South, and the South is now caught in a trap from which it is structurally impossible to escape. Southern debts may be only a small fraction of the global capital market now estimated at $83 trillion but that does not reduce the politico-economic significance of debt to the South. Because the Southern debts are not just about commerce, but about countries, rich Northern countries will eventually become indirectly entrapped, through illegal trafficking in people, drugs, arms, through the re-emergence of diseases thought under control, through more devastation of our increasingly fragile eco-system
There are now about 50 countries recognised as hyper-indebted and unable to do anything about it. It is no longer a matter of loan repayment but a new structural condition, and it will take major innovations to revive these countries. The structure and servicing of these debts, how the debts fit into debtor countries' economies, suggest that most of these countries will not be able to pay up in full under current conditions. Debt service ratios to GNP in many poor countries exceed sustainable limits. Many are far more extreme than the levels considered unmanageable in the Latin American debt crisis of the 1980s: in Africa, the levels reach 123% (compared with 42% in Latin America and 28% in Asia). The IMF asks these African countries to pay 20-25% of export earnings toward debt service. Yet the Allies cancelled 80% of Germany's war debt in 1953 and only insisted on 3-5% of export earnings debt service. These were also the terms asked of central Europe after the fall of the Berlin wall.
What can be done to pull the poorest countries out of the debt trap? Poor countries need to import goods and the West will only accept payment in dollars or other high value currencies. One solution would be to allow poor countries to pay in their own currencies, so they could import goods for development. But few poor countries can avoid trade deficits: out of 93 low and moderate income countries, only 11 had trade surpluses in 2000. They would like to export more, as shown by the Organisation of African Unity's establishment this February of an African trade insurance agency supporting exports to, from and within Africa.
Most Southern countries are also heavily dependent on imports of oil, food, and manufactured goods. They need loans, and once they have debts, interest payments and other debt servicing costs escalate rapidly and their currencies devalue further. Borrowing in foreign currencies is a debt trap for these countries. Interest rates are high; developed countries, on the other hand, have no problem getting loans at good rates. This promises disaster.
What the world needs is not a lender of last resort to bail out the rich investors but a lender of first resort to help the South pay for essential development-linked imports in Southern currencies. This would make poor governments less dependent on private lenders who demand international currencies and charge a premium. We might reduce terrorism by showering Afghanistan with gold. Gold and bombs: two universal languages.
In the US the young are beginning to see what escalating violence may result from war. They do not want it. There are tiny signs, often inchoate and inarticulate, of an emerging anti-war movement. There have been anti-war vigils and demonstrations. I have heard many young people say, on radio call-in shows, that, no matter what their politics, they want a good life and are scared that war will lead to more terrorism in the US. In the impromptu memorials that have been built in squares and around fire stations in New York, the thousands of short statements and graffiti, are almost all against war, despite the public patriotic slogans.
The growing interconnectedness of the world has given new meaning to old asymmetries as well as creating new ones. Debt, poverty, and disease in the South are beginning to reach deep into the rich North. We can no longer turn our backs on misery as we so often have done in the past. And if we don't like humanitarian reasons for addressing these issues, we can opt for self-interest
* Ralph Lewis professor of sociology at the University of Chicago, author of The Global City, (new edition, Princeton University Press, 2001)