The societies of South America and Central America present profound socioeconomic inequalities, which emerged during the era of colonialism and were reformed in the processes of capitalist modernization of the twentieth century. In the 1980s, the “world” opted for a clear ideological orientation in the face of the then crisis: neoliberalism. With the aim of attracting capital, neoliberalism came together with the massive privatizations of the public sector and cut the so-called welfare state to respond to the deficit. What happened next is well known, and today, globally, we have paid far more for the consequences of the dismantling of the public sector: the most extreme economic inequalities that have occurred since the First World War.

One of its crudest faces was in South America and Central America. Declining demand in the industrialized countries plunged the price of raw materials and rising interest rates increased the leakage of capital from south to north, increasing the real interest rate of debt.

The new phase of current capitalism has in most cases destroyed the public systems that were previously damaged. The most obvious proof of this can be seen in health systems.

 

 

 

 

And now, coronavirus.

According to the Pan American Health Organization, 30 per cent of the 630 million people living in South America and Central America do not have access to health care for economic reasons. Considering all countries, the average investment in public health in Europe is half. Cuba alone is at par with the spending of European countries, 10.6% of Gross Domestic Product (GDP). For example, in the Spanish State the percentage is 8%.

In this context, the coronavirus pandemic has spread throughout the world, as well as throughout the Americas, putting before the mirror the structures of the states of all countries and, especially, those of the health system.

In Europe there is a long list of gaps left by this pandemic, in the health systems that are supposedly at high levels in all rankings, such as Italy, Spain or Osakidetza. In the cases of South America and Central America, in the states where neoliberal governments have diminished time and time again, it is essential to strengthen the public muscle to face the challenge. And that means an investment and, consequently, an increase in debt to properly care for patients, focusing on the most uncertain sector of society.

Who should increase their debt?

The external debt of the countries of South America and Central America stands at 43.2% of their Gross Domestic Product. The economic dependence of states on the International Monetary Fund, the World Bank, the American Development Bank and other international organizations is enormous.

The question is therefore clear. In order to cope with the pandemic, is it legitimate to call on these countries to make effective public health policies, but without failing to pay the huge external debt burdens? Prioritizing the health of citizens or continuing to feed unjust debt most of the time?

Ongoing debt defaulting campaign

The Latin American Strategic Centre for Geopolitics (CELAG) has launched a campaign to cancel the external debt of Latin America and Central America. It has started to obtain one million signatures as a necessary measure to deal with the "health emergency and the economic crisis that has arisen". The petitions, among many others, have already been signed by former presidents of various countries, such as Dilma Rousseff (Brazil), Luis Guillermo Solis (Costa Rica), Gustavo Petro and Ernesto Samper (Colombia), Fernando Lugo (Paraguay), Evo Morales and Álvaro García Linera (Ecuador), as well as José Luya.

They say that forgiving foreign debt is a measure that has been used in other historical moments, such as wars, diseases or pandemics. One of the best known examples is the time after the destruction of Germany during the Second World War. The international forces decided to forgive the essential figures of the German debt, which had not yet been recovered.

Despite the universal character of Covid-19, they stress that this crisis, like all crises, will illuminate a new geopolitical order. Therefore, in the face of so many difficulties, “forgiving external debt is as necessary as a just action”.