Last week, I spent some time on the phone talking to people in Laos, a small landlocked country in Southeast Asia. Laos shares a long border with China, where the coronavirus was first detected in late December 2019. Goods and tourists regularly cross this border. What surprised me was to know that neither Laos nor Vietnam – another country bordering Laos and China – has recorded any deaths from the virus. Doubts about the numbers were quickly dispelled by representatives of the International Red Cross and Red Crescent Society; it is impossible to hide the numbers, they said, and Laos certainly does not bury its dead in secret. Not a single person in Laos and Vietnam has died from COVID-19.
It is remarkable that these poor countries, Laos and Vietnam, both bordering China, have not recorded any deaths from the virus, while rich countries, such as the United States, have been so devastated. Part of the reason Laos and Vietnam have been able to fight the virus is because their socialist governments have taken a science-based attitude to testing, contracting and treatment.
US President Donald Trump’s administration, by contrast, has taken a mind-boggling attitude towards the virus; as recently as the end of June, Trump was talking about this virus as if it were just the flu. If you are not serious about a pandemic and send a strong message to the public about the methods needed to break the chain of infection, you will see the devastation that is currently being wrought in America’s sunbelt. It is likely that more people will die from this virus in Florida than have died from it in China.
That’s only half the story. The other half is tragic. During the coronavirus recession, economic activity – so tightly embedded in the pathways of globalization – has collapsed. Growth rates are forecast in negative territory as half of the world’s population struggles with unemployment and hunger. These are truly catastrophic times, as pandemics of hunger and desperation rival the coronavirus pandemic.
Even though it is clear that this coronavirus recession is not the fault of the countries that have been integrated into the global supply chain, they are nevertheless being punished. The debts of developing countries have increased, defaults are in the cards and serious debt relief is not on the cards. The US Treasury Department has been ruthless in its defiance of calls from developing countries to suspend debt payments or cancel debt obligations and to increase the International Monetary Fund’s Standard Drawing Rights (SDRs). The SDRs are the currency of the IMF, and their increase would allow these States to have liquidity when they perish under debt.
An official from the Ministry of Finance in Laos told me that his country was able to beat the coronavirus, but it cannot beat the virus of debt. This very year, Laos is obliged to pay 900 million dollars in debt service; it is the amount of interest on the debt, not the debt itself. However, foreign exchange reserves held by Laos are only $1 billion. Laos will not be able to import necessary goods – including medical supplies to maintain its control over the coronavirus – if it pays the full interest obligation. The Trump administration has taken a hard line against any form of relief to countries like Laos, whose governments have so skilfully handled the crisis.
The silence in the United States on the behavior of the US Treasury Department in these discussions is infuriating for people in countries like Laos. The Treasury Department said private and public creditors can make their own decisions about debt suspension; there should be no universal discussion and decision on this. No creditor will provide debt relief themselves; they demand that governments bring them to the table and force a deal. Otherwise, from Argentina to Laos, there will be a wave of failings, a renewed wave of austerity, cuts to public health budgets and then helplessness in the face of the next virus.
The United States government has made some very bad decisions regarding its own public health cuts and its own handling of this pandemic. Now the US government is punishing states like Laos that have made great strides in controlling the virus.
Vijay Prashad, who lives in Northampton, was born and raised in Kolkata, India. He is the director of Tricontinental: Institute for Social Research.