“There are two ways to conquer and enslave a nation. One is by the sword. The other is by debt.” – often attributed to John Adams, second US President, 1826)
With the recent onslaught of the Covid pandemic and economic hardship, some quarters are warning of an emerging global debt trap set by wealthier nations.
Total global debt has tripled to 350% of global gross domestic product from four decades ago.
Whether because of corruption or pure greed, certain leaders around the world have fallen into this debt trap. Such leaders may rig elections or resort to vote-buying to remain in power indefinitely.
Major economic powers may grab this once-in-a-lifetime opportunity by offering enormous amounts of unsecured loans in return for vital access to a debtor country. This is what’s happening in Sri Lanka and currently happening in our country as well.
If we keep on borrowing and investing heavily in white elephant infrastructure projects, we might fall into this trap.
Several projects in Malaysia are mired in controversy, although none of the culprits has been sent to prison so far.
Huge national debts – a curse to future generations – have ballooned, thanks to short-sighted leaders.
If we are unable to service the loans, then we will be indebted to lender nations. Our sovereign nation might even be pawned to these new powers that be – our new masters. If that happens, we will have to listen to their commands like slaves. Our nation will spiral into economic hardship while the elites abandon the mother ship with their loot.
Ordinary people will suffer the consequences – poverty and untold hardships – as they struggle to make ends meet. The luckier ones will migrate to greener pastures.
The geopolitical and socioeconomic goal post will be altered forever by the creditors to their advantage.
The grim scenario mentioned above may sound like what is happening in some war-torn countries, but slowly it could be our fate as well, if we fail to spot the oncoming train at the end of the tunnel.
When people are in dire need of food, gas and other essentials, upheaval and chaos could ensue. Already some economists say that a vast cloud of uncertainty over food security is engulfing our nation, if not the world.
The prices of essential goods have spiralled, and we are already planning to increase the minimum wage.
Will it work? Time will tell, as the root cause of the problem has not yet been addressed.
Vijay Shanmugam is an Aliran reader based in Taiping