'Losing our moral compass': Mia Mottley and Amina Mohammed talk debt

When it comes to restructuring the world’s debt, Mia Mottley and Amina Mohammed agree: The status quo isn’t working, and the stakes could not be higher. “Don’t be arrogant about feeling that civilizations can’t fall, or species can’t become extinct,” warned Mottley, the prime minister of Barbados, at the Global Inclusive Growth Summit last Thursday. “The notion that in the 21st century, we cannot become a failed civilization or failed humanity is unbelievable.” For Mottley, it’s personal. When the prime minister took office in 2018, Barbados had the third-highest debt-per-capita rank of any country in the world. Within one week, Mottley said, she knew she had to restructure the country’s debt. “Mercifully, I was not subject to a common framework — if not, I’d be dead,” said Mottley, referring to the debt restructuring mechanism created by countries in the Group of 20 leading economies and Paris Club, which critics say has so far struggled to reform those it’s tried to help. “The common framework is not working, and as Amina said this morning, it’s not transparent.” Today, about 60% of low-income countries are either in debt distress or at high risk of it, according to the latest World Bank figures. With countries unable to make payments on their debts — and the U.S. dollar continuing to strengthen — many governments are looking to debt restructuring, with little success. In the last three years alone, the World Bank reported 18 sovereign defaults in 10 developing countries. At the same time, Mottley said, countries like hers have borne the brunt of the climate crisis, a situation that’s forced more spending to, quite literally, keep things afloat. “If I’m trying to build out my coastal infrastructure to stop aquifers from being spoiled forever because of saltwater intrusion, I can’t spend money on building schools or building hospitals,” said Mottley. “How am I going to make it?” Her concerns were echoed by Amina Mohammed, the deputy secretary-general of the United Nations. All week at the World Bank-International Monetary Fund Spring Meetings, Mohammed said she’d heard similar frustrations from the leaders of low- and middle-income countries across the world, many of which are dealing with debt crises of their own. “There is nobody saying they’re not going to pay it,” said Mohammed. “But what they need not to do is to have a choiceless choice between paying that debt, and saying I can’t spend on education and health. Is there a nation in the developed world that’s going to tell their people they’re not going to pay for education for the next five years?” The ripple effects of that, Mohammed went on, don’t just affect the climate. If a country can’t afford the basic necessities — and opportunities — for its people, that loss can spark conflict, violence, and terrorism. Mohammed used her home state of Nigeria as an example, explaining that she grew up in the same place where the Islamist jihadist organization Boko Haram later surfaced. “If we had put the investments at scale, and in time, we wouldn’t have had this disaffection where there’s a better job working for ISIS or ISIL than for building your nations, community, or country,” Mohammed said, referring to the Islamic State. “The frustration is real because the instruments are there, and the political will, if powered, could do the things we need to do.” “We need to ask, at one point, as one humanity, do we actually respond as one humanity?” Mohammed added, shaking her head. “Because right now, we’re losing our moral compass on several grounds.” Both leaders were exasperated, yet firm — and unafraid to call out what they felt were hypocrisies between high- and low-income countries’ monetary policies. Mottley spoke about how low-income countries have been told they can’t print money, yet during the COVID-19 pandemic, high-income countries did so “like it was going out of style.” “There’s an utter frustration with the double-speak, and the lack of capacity to see, hear, and feel people,” Mottley said. “I think the whole development paradigm is still based on a colonial framework of power relationships, and until we can confront that, we’re not going to see a difference in the results.”