We used to write a lot about an unpronounceable acronym, HIPC. This was the Heavily Indebted Poor Countries initiative, established by the World Bank and IMF in 1996.
It was basically a rod to beat the world’s poorest countries into economic rectitude in return for debt relief. In the strange twist of fate of our times, the same rod is now in action against the Heavily Indebted Rich Countries and they don’t much like the feel of it.
Obama has whinged about the decision to downgrade the US credit rating. The Spanish and Italians are not going to take kindly to the looming emasculation of their social programmes.
African countries are by no means off the debt hook, with new Chinese loans piling up on their balance sheets. But the geo-political dynamics of sovereign debt management have changed utterly.
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this post was first published by OneWorld UK