by Norman Lowe
Although a great deal of financial aid was given by the North to the South, much of it was on a business basis – the countries of the South had to pay interest. Sometimes a condition of the deal was that countries of the South had to spend aid on goods from the country which was making the loan. Some countries borrowed directly from banks in the USA and western Europe, so that by 1980 Third World countries owed the equivalent of $500 billion; even the annual interest payable was about $50 billion. Some states were forced to borrow more cash just to pay the interest on the original loan.
Another problem for Third World countries was that their populations were increasing much faster than those in the North. In 1975 the total world population stood at about 4000 million, and it was expected to reach 6000 million by 1997. Since the population of the South was growing so much faster, a larger proportion of the world’s population than ever before would be poor (see Chapter 28).
Many Third World countries had suffered long and crippling wars and civil wars, which ravaged crops and ruined economies. Some of the worst wars were in Ethiopia, Nicaragua, Guatemala, Lebanon, the Congo/Zaire, Sudan, Somalia, Liberia, Sierra Leone, Mozambique and Angola.
Drought was sometimes a serious problem in Africa. Niger in West Africa was badly affected: in 1974 it produced only half the food crops grown in 1970 (mainly millet and sorghum), and about 40 per cent of the cattle died. As global warming gathered pace towards the end of the century, droughts became more frequent and many countries were dependent on overseas aid to feed their people.
Table 27.3 What commodities could buy in 1975 and 1980
Barrels of oil Capital ($US)
Copper (1 tonne could buy)
1975
1980
115
58
17 800
9 500
Cocoa (1 tonne would buy)
1975
1980
148
63
23 400
10 200
Coffee (1 tonne would buy)
1975
1980
148
82
22 800
13 000
Cotton (1 tonne would buy)
1975
1980
119
60
18 400
9 600
(d) The Brandt Report (1980) was full of good ideas
For example, it pointed out that it was in the North’s interests to help the South to become more prosperous, because that would enable the South to buy more goods from the North. This would help to avoid unemployment and recession in the North. If just a fraction of the North’s spending on armaments was switched to helping the South, vast improvements could be made. For example, for the price of one jet fighter (about $20 million), 40 000 village pharmacies could be set up. The Report went on to make some important recommendations which, if carried out, would at least eliminate hunger from the world:
the rich nations of the North should aim to be giving 0.7 per cent of their national income to poorer countries by 1985 and 1.0 per cent by the year 2000;
a new World Development Fund should be set up in which decision-making would be more evenly shared between lenders and borrowers (not like the International Monetary Fund and the World Bank, which were dominated by the USA);
an international energy plan should be drawn up;
there should be a campaign to improve agricultural techniques in the South, and an international food programme should be drawn up.
Did the Brandt Report change anything? Sadly, there was no immediate improvement in the general economic situation of the South. By 1985 very few countries had reached the suggested 0.7 per cent giving target. Those that did were Norway, Sweden, Denmark, the Netherlands and France; however, the USA gave only 0.24 per cent and Britain 0.11 per cent. There was a terrible famine in Africa, especially in Ethiopia and the Sudan in the mid-1980s, and the crisis in the poorer parts of the Third World seemed to be worsening. Throughout the 1990s the US economy boomed under the Clinton administration, whereas the plight of the Third World became even more serious. At the end of 2003 the UN reported that 21 Third World states, 17 of them in Africa, were in crisis because of a combination of natural disasters, AIDS, global warming and civil wars (see Section 25.15). Yet the richest 1 per cent of the world’s population (around 60 million) received as much income as the poorest 57 per cent. Norway was top of the UN’s league table for human development: Norwegians had a life expectancy of 78.7 years, there was a literacy rate of virtually 100 per cent, and annual income was just under $30 000. In Sierra Leone life expectancy was about 35, the literacy rate was 35 per cent and annual income averaged $470. The USA seemed to attract the most hostility and resentment on account of this imbalance of wealth; it was widely believed that the growth of terrorism – especially the 11 September attacks on the USA – was a desperate response to the failure of peaceful attempts to bring about a fairer world economic system (see Sections 12.1 and 12.2).
UN economic advisers were clear about what needed to be done. It was up to the West to remove trade barriers, dismantle its over-generous system of subsidies, provide greater debt relief, and double the amount of aid from $50 billion to $100 billion a year. This would enable poor countries to invest in clean water systems, rural roads, education and proper healthcare.
27.3 THE SPLIT IN THE THIRD WORLD ECONOMY
During the 1970s some Third World states began to become more prosperous, sometimes thanks to the exploitation of natural resources such as oil, and also because of industrialization.
(a) Oil
Some Third World states were lucky enough to have oil resources. In 1973 the members of the Organization of Petroleum Exporting Countries (OPEC), partly in an attempt to conserve oil supplies, began to charge more for their oil. The Middle East oil-producing states made huge profits, as did Nigeria and Libya. This did not necessarily mean that their governments spent the money wisely or for the benefit of their populations. One African success story, however, was provided by Libya, the richest country in Africa thanks to its oil resources and the shrewd policies of its leader, Colonel Gaddafi (who took power in 1969). He used much of the profits from oil on agricultural and industrial development, and to set up a welfare state. This was one country where ordinary people benefited from oil profits; with a GNP of £5460 in 1989, Libya could claim to be almost as economically successful as Greece and Portugal, the poorest members of the European Community.
(b) Industrialization
Some Third World states industrialized rapidly and with great success. These included Singapore, Taiwan, South Korea and Hong Kong (known as the four ‘Pacific tiger’ economies), and among others, Thailand, Malaysia, Brazil and Mexico.
The GNPs of the four ‘tiger’ economies compared favourably with those of many European Community countries. The success of the newly industrialized countries in world export markets was made possible partly because they were able to attract firms from the North who were keen to take advantage of the much cheaper labour available in the Third World. Some firms even shifted all their production to newly industrialized countries, where low production costs enabled them to sell their goods at lower prices than goods produced in the North. This posed serious problems for the industrialized nations of the North, which were all suffering high unemployment during the 1990s. It seemed that the golden days of western prosperity might have gone, at least for the foreseeable future, unless their workers were prepared to accept lower wages, or unless companies were prepared to make do with lower profits.
In the mid-1990s the world economy was moving into the next stage, in which the Asian ‘tigers’ found themselves losing jobs to workers in countries such as Malaysia and the Philippines. Other Third World states in the process of industrializing were Indonesia and China, where wages were even lower and hours of work longer. Jacques Chirac, the French president, expressed the fears and concerns of many when he pointed out (April 1996) that developi
ng countries should not compete with Europe by allowing miserable wages and working conditions; he called for a recognition that there are certain basic human rights which need to be encouraged and enforced:
freedom to join trade unions and the freedom for these unions to bargain collectively, for the protection of workers against exploitation;
abolition of forced labour and child labour.
In fact most developing countries accepted this when they joined the International Labour Organization (ILO) (see Section 9.5(b)), but accepting conditions and keeping to them were two different things.
27.4 THE WORLD ECONOMY AND ITS EFFECTS ON THE ENVIRONMENT
As the twentieth century wore on, and the North became more and more obsessed with industrialization, new methods and techniques were invented to help increase production and efficiency. The main motive was the creation of wealth and profit, and very little attention was paid to the side effects all this was having. During the 1970s people became increasingly aware that all was not well with their environment, and that industrialization was causing several major problems:
Exhaustion of the world’s resources of raw materials and fuel (oil, coal and gas).
Massive pollution of the environment. Scientists realized that if this continued, it was likely to severely damage the ecosystem. This is the system by which living creatures, trees and plants function within the environment and in which they are all interconnected. ‘Ecology’ is the study of the ecosystem.
Global warming – the uncontrollable warming of the Earth’s atmosphere caused by the large quantities of gases emitted from industry.
(a) Exhaustion of the world’s resources
Fossil fuels – coal, oil and natural gas – are the remains of plants and living creatures which died hundreds of millions of years ago. They cannot be replaced, and are rapidly being used up. There is probably plenty of coal left, but nobody is quite sure just how much remains of the natural gas and oil. Oil production increased enormously during the twentieth century, as Figure 27.2 shows. Some experts believe that all the oil reserves will be used up early in the twenty-first century. This was one of the reasons why OPEC tried to conserve oil during the 1970s. The British responded by successfully drilling for oil in the North Sea, which made them less dependent on oil imports. Another response was to develop alternative sources of power, especially nuclear power.
Tin, lead, copper, zinc and mercury were other raw materials being seriously depleted. Experts suggested that these might all be used up early in the twenty-first century, and again it was the Third World which was being stripped of the resources it needed to help it escape from poverty.
Too much timber was being used. About half of the world’s tropical rainforests had been lost by 1987, and it was calculated that about 80 000 square kilometres, an area roughly the size of Austria, was being lost every year. A side effect of this was the loss of many animal and insect species which had lived in the forests.
Too many fish were being caught and too many whales killed.
The supply of phosphates (used for fertilizers) was being rapidly used up. The more fertilizers farmers used to increase agricultural yields in an attempt to keep pace with the rising population, the more phosphate rock was quarried (an increase of 4 per cent a year since 1950). Supplies were expected to be exhausted by the middle of the twenty-first century.
There was a danger that supplies of fresh water might soon run out. Most of the fresh water on the planet is tied up in the polar ice caps and glaciers, or deep in the ground. All living organisms – humans, animals, trees and plants – rely on rain to survive. With the world’s population growing by 90 million a year, scientists at Stanford University (California) found that in 1995, humans and their farm animals, crops and forestry plantations were already using up a quarter of all the water taken up by plants. This leaves less moisture to evaporate and therefore a likelihood of less rainfall.
The amount of land available for agriculture was dwindling. This was partly because of spreading industrialization and the growth of cities, but also because of wasteful use of farmland. Badly designed irrigation schemes increased salt levels in the soil. Sometimes irrigation took too much water from lakes and rivers, and whole areas were turned into deserts. Soil erosion was another problem: scientists calculated that every year about 75 billion tons of soil were washed away by rain and floods or blown away by winds. Soil loss depended on how good farming practices were: in western Europe and the USA (where methods were good), farmers lost on average 17 tons of topsoil every year from each hectare. In Africa, Asia and South America, the loss was 40 tons a year. On steep slopes in countries like Nigeria, 220 tons a year were being lost, while in some parts of Jamaica the figure reached 400 tons a year.
Figure 27.2 World oil production in billions of barrels per year
An encouraging sign was the setting-up of the World Conservation Strategy (1980), which aimed to alert the world to all these problems.
(b) Pollution of the environment – an ecological disaster?
Discharges from heavy industry polluted the atmosphere, rivers, lakes and the sea. In 1975 all five Great Lakes of North America were described as ‘dead’, meaning that they were so heavily polluted that no fish could live in them. About 10 per cent of the lakes in Sweden were in the same condition. Acid rain (rain polluted with sulphuric acid) caused extensive damage to trees in central Europe, especially in Germany and Czechoslovakia. The USSR and the communist states of eastern Europe were guilty of carrying out the dirtiest industrialization: the whole region was badly polluted by years of poisonous emissions.
Getting rid of sewage from the world’s great cities was a problem. Some countries simply dumped sewage untreated or only partially treated straight into the sea. The sea around New York was badly polluted, and the Mediterranean was heavily polluted, mainly by human sewage.
Farmers in the richer countries contributed to the pollution by using artificial fertilizers and pesticides, which drained off the land into streams and rivers.
Chemicals known as chlorofluorocarbons (CFCs), used in aerosol sprays, refrigerators and fire extinguishers, were found to be harmful to the ozone layer which protects the Earth from the sun’s harmful ultraviolet radiation. In 1979, scientists discovered that there was a large hole in the ozone layer over the Antarctic; by 1989 the hole was much larger and another hole had been discovered over the Arctic. This meant that people were more likely to develop skin cancers because of the unfiltered radiation from the sun. Some progress was made towards dealing with this problem, and many countries banned the use of CFCs. In 2001 the World Meteorological Organization reported that the ozone layer seemed to be mending.
Nuclear power causes pollution when radioactivity leaks into the environment. It is now known that this can cause cancer, particularly leukaemia. It was shown that of all the people who worked at the Sellafield nuclear plant in Cumbria (UK) between 1947 and 1975, a quarter of those who have since died, died of cancer. There was a constant risk of major accidents like the explosion at Three Mile Island in the USA in 1979, which contaminated a vast area around the power station. When leaks and accidents occurred, the authorities always assured the public that nobody had suffered harmful effects; however, nobody really knew how many people would die later from cancer caused by radiation. The worst ever nuclear accident happened in 1986 at Chernobyl in Ukraine (then part of the USSR). A nuclear reactor exploded, killing 35 people and releasing a huge radioactive cloud which drifted across most of Europe. Ten years later it was reported that hundreds of cases of thyroid cancer were appearing in areas near Chernobyl. Even in Britain, a thousand miles away, hundreds of square miles of sheep pasture in Wales, Cumbria and Scotland were still contaminated and subject to restrictions. This also affected 300 000 sheep, which had to be checked for excessive radioactivity before they could be eaten. Concern about the safety of nuclear power led many countries to look towards alternative sources of power which were safer, particularly sola
r, wind and tide power.
One of the main difficulties to be faced is that it would cost vast sums of money to put all these problems right. Industrialists argue that to ‘clean up’ their factories and eliminate pollution would make their products more expensive. Governments and local authorities would have to spend extra cash to build better sewage works and to clean up rivers and beaches. In 1996 there were still 27 power-station reactors in operation in eastern Europe of similar elderly design to the one which exploded at Chernobyl. These were all threatening further nuclear disasters, but governments claimed they could afford neither safety improvements nor closure. The following description of Chernobyl from the Guardian (13 April 1996) gives some idea of the seriousness of the problems involved:
At Chernobyl, the scene of the April 1986 explosion, just a few miles north of the Ukrainian capital Kiev, the prospect is bleak. Two of the station’s remaining reactors are still in operation, surrounded by miles of heavily contaminated countryside. Radioactive elements slowly leach into the ground water – and hence into Kiev’s drinking supply – from more than 800 pits where the most dangerous debris was buried ten years ago.
Nuclear reactors were also at risk from natural disasters. In May 2011 a huge tsunami hit the north-east coast of Japan. As well as killing thousands of people, it flooded a nuclear power station in Fukushima. First the six nuclear reactors were battered by high waves, and then the basement, where the emergency generators were situated, was submerged, disabling the entire plant. Again the ongoing problem was how best to deal with the widespread radioactive contamination. There was a great outburst of anti-government feeling when it later emerged that the authorities had ignored and then lied about reports of design weaknesses in the reactors.