I sometimes get asked, ‘If all countries are in debt, then who are they in debt to’? It’s a good question. Have we discovered life on another planet, who are lending us alien currency? Are dolphins using their status as more intelligent animals to push loans onto unsuspecting humans? Is there a secret continent in the Pacific Ocean, lending the rest of the world money?
The powerful use debt as an immovable object to push through what they want to do. We have to shut your hospital / cut your job / sell off your water company because the debt must be paid.
But why must it be paid? Who is the debt owed to? What other debts are there that go unmentioned?
Jubilee Debt Campaign exists to challenge the view that debts must always be paid, no matter the consequences for people’s lives. In our new world debt map, we try to show some of the facts about debt they don’t want you to know.
When referring to a country’s debt, the powerful talk just about the debt of a government. Government’s can owe debt to all sorts of different people. In the UK, 40 per cent of the government’s debt is owed to British citizens, through things like pension savings. A further 30 per cent is owed to … the UK government itself (via the Bank of England). The remaining 30 per cent is owed to people outside the UK, from German banks to American hedge funds and the Chinese government.
Paying these debts owed outside a country tends to be more damaging, as money floods out of a country. The Japanese government has the highest debt in the world, 235 per cent of its national income. That is 70 percentage points more than Greece, and more than double the UK’s. But over 90 per cent of Japanese government debt is owed to Japanese people. This means the Japanese debt transfers money from taxpayers to savers – which might be an internal problem – but it doesn‘t cause Japan a debt problem with the rest of the world.
Our world debt map looks at the debts owed between countries. It shows both government debt and the debt owed by and to private companies. In the UK, whilst government debt owed overseas is relatively low, the debt of the private sector – mainly banks – is gigantic, the fourth largest in the world. The UK has a debt crisis, but it is one caused by the private sector, not government debt. We need to control – and shrink – the financial system, rather than push through damaging austerity.
Of course, there is no other planet, alien currency or secret continent. For one country to be in debt, others must be lending money. The large debts of countries such as Greece, Portugal and Jamaica are matched by large lending from Norway, Saudi Arabia and Japan. The map shows both large debtors and lenders, whether this be down to governments or private companies.
We also show the impact of these foreign debt payments on a government’s finances. Jamaica, Greece, Ireland, El Salvador and the Philippines are all spending more than one-fifth of their revenue on debt payments which leave the country.
The current global financial crisis has been caused primarily by the debts owed by the private sector, not debts involving governments. Our map of private sector debts show that these are far higher across many ‘richer’ countries than those of governments. But incredibly, despite the damage they have caused across the world, such debts are rarely monitored in developing countries.
Of course statistics do not explain many of the key facts about debt, including the way debt is used to prop-up regimes, fund arms exports and force countries to follow the will of others. Our map also links through to country case studies on all continents which tell, in part, these stories. Stories about how debt has been used as a mechanism to take away people’s hospitals, bread and freedom. And how people have resisted this oppression and worked for debt justice; a world where debt is no longer used as a form of power by which the rich exploit the poor.