How the west can stop the global south being strangled by debt | Heather Stewart
The specter of a debt crisis is once again tightening its grip across the global south, a chillingly familiar narrative that feels both urgent and heartbreakingly preventable. Just last week, the stark reality of this escalating emergency crystallized when Ethiopia, a nation already grappling with profound challenges, faced the imminent threat of being hauled into English courts by its creditors.This legal ultimatum, a potential lawsuit over a collapsed $1 billion debt restructuring deal, isn't just a line item in a financial report; it's a human crisis in the making, a stark warning of what happens when negotiations fail and the most vulnerable are left exposed. The backdrop to this is a perfect storm of rising global borrowing costs and shrinking lifelines, as western governments, including a retreating UK, continue to slash their aid budgets.This isn't merely an economic adjustment; it's a strategic unraveling of decades of development progress, pushing nations towards a precipice where servicing debt trumps educating children, funding hospitals, or building resilient infrastructure. Labour’s manifesto promise to revive British leadership on global development now hangs in the balance, a pledge that feels more critical than ever as the architecture of international finance shows its cracks.The situation in Ethiopia is a microcosm of a systemic failure—a failure of empathy, of foresight, and of collective responsibility. When countries are forced to choose between paying foreign creditors and feeding their own people, the very foundations of global stability are shaken.We've seen this story before, in the Latin American debt crises of the 1980s and the more recent Greek austerity measures, and the lessons are clear: protracted debt distress doesn't just stall economies; it fuels social unrest, deepens poverty, and creates power vacuums that can have geopolitical consequences for decades. The mechanisms for orderly debt resolution, like the G20's Common Framework, are proving woefully inadequate, mired in bureaucratic delays and a lack of creditor coordination, particularly from private lenders and non-Paris Club nations like China, who often operate with different strategic priorities.What is needed now is not just piecemeal restructuring but a fundamental rethink—a Marshall Plan for the 21st century that couples debt relief with green investment, that views stability in the global south as inextricably linked to security in the west. The alternative is a world increasingly fractured by inequality, where the hope for a sustainable future is strangled, quite literally, by the weight of compounding interest and political indifference. The time for the west to act is not when the courts are involved, but now, before another generation is lost to the ledger books.
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