Credit Crisis Hits Poorer Nations Harder As They Barter for Food
Tuesday, January 27, 2009 at 7:14 am
Thousands of layoffs announced Monday illustrate the pain caused by the credit crisis here in the United States. But as the Financial Times reports, a credit crisis hits less prosperous nations much harder. From Malaysia to Morocco, the crisis, combined with high food prices, has forced some countries to revert to the old practice of bartering for food.
From the Financial Times:
The revival of these trade practices, used rarely in the last 20 years and usually by nations subject to international embargoes and the old communist bloc, is a result of the countries’ failure to secure trade financing as bank lending has dried up.
The countries have not disclosed the value of any deals, and some have refused even to confirm their existence. Officials estimated that they ranged from $5m for smaller contracts to more than $500m for the biggest.
Josette Sheeran, head of the United Nations’ World Food Programme, said senior government officials, including heads of state, had told the WFP they were facing “difficulties” obtaining credit to purchase food. “This could be a big problem,” she told the Financial Times.
The return of bartering reminds us that this is a truly global financial crisis — and less prosperous countries that are already struggling will face even tougher times. While it’s clear the Obama administration has quite enough on its plate, it’s also true that other countries are looking to the United States for leadership in dealing with the crisis, and hoping we can pull the rest of the world out of it, as Bloomberg noted recently. That’s a tall order, and it’s not clear that even the most powerful nation in the world has the ability to do that.
For us, a credit crisis means cutting back on consumer spending and trips to the mall. For poorer countries, it means struggling to find ways to pay for rice or vegetable oil, and to keep their people from starving.
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