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Europe: Beware Banks Bearing Micro-Loans for Poor

Source: Womens eNews - Thu, 10 Nov 2011 22:04 GMT
Author: Womens eNews
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World Bank, IMF Take Charge Even though these countries often paid off the principal on these debts, they still owed millions in interest. And the banks wouldn't let them off the hook. In stepped the World Bank and the IMF with new loans that paid off the banks. In exchange, borrower nations agreed to "structural adjustment programs" that withdrew essential public services. In 1998 the Washington-based Institute for Policy Studies reported that virtually all developing countries--particularly in Latin America and Africa, and increasingly in the transition countries of east and central Europe--had either implemented or were in the process of implementing austerity programs. This meant poor nations were cutting back public sector (government) spending on education, clean water, public transport, health care and literacy. As public programs that helped families were eliminated, the pressures on women increased. Deepening poverty triggered mass migrations, often of men, out of the countryside to cities and towns where there might be a possibility of work for wages. This left women to maintain the day-to-day lives of their families. Enter micro-lenders. Loans to destitute and desperate women--often at rates exceeding 30 percent, 40 percent and even 50 percent--responsible for feeding, clothing and educating themselves, their children, and dependent elders replaced social support for poor families that had previously come from governments. Causing the Problem Structural adjustment, another way of saying austerity, played a huge part in creating the situation micro-credit claimed it could solve. Today, micro-lenders will gather with some of Europe's largest banks to celebrate the successes of micro-credit. Micro-lenders, like the banks that are "too big too fail" are bound to cast themselves as saviors this week; and might even start promoting their wares more aggressively in Portugal, Italy, Greece and Spain, where poverty is rising as these nation's respond to their heavy levels of indebtedness. Declaring austerity the path to economic freedom, bankers will no doubt exhort Europe's debtor nations to "make sacrifices," "curtail government spending," "rein in public pensions and wages" and "cut unnecessary programs." They'll say (as they've been saying to Greece), "in exchange for the loans you need to stay afloat you better get your fiscal house in order." Guess what will happen? The same thing, but this time in Europe. Poverty and economic distress will intensify. More women and children will be hungry because governments will cut back on programs that help feed poor families. Girls will drop out of school to take care of their younger siblings, as mothers work two or three jobs, or even migrate to distant cities to earn a few Euros. Cash-strapped rural families will be unable to hang onto their ancestral homes where they've tilled small plots of land for centuries. The policies offered by the banks sponsoring the micro-credit fiesta in Valladolid this week echo the World Bank and International Monetary Fund policies of structural adjustment. Women of the world watch out. Austerity does not feed families, pay the rent, or buy heating fuel. Whether lending to poor women--as in the case of micro-credit--or lending to nation states--as in the case of Europe's deepening macro-crisis--the banks are not the solution, they are the problem. Would you like to Comment but not sure how? Visit our help page at http://www.womensenews.org/help-making-comments-womens-enews-stories. Would you like to Send Along a Link of This Story?http://www.womensenews.org/story/equal-payfair-wage/111110/europe-beware-banks-bearing-micro-loans-poor Susan F. Feiner is professor of economics and professor of women and gender studies at The University of Southern Maine in Portland. With Drucilla Baker she is the author of the award winning book "Liberating Economics: Feminist Perspectives on Families, Work and Globalization." She thanks the Office of International Cooperation for Development at the Universidad of Valladolid for the opportunity to speak about these pressing global issues. For more information: Global Microcredit Summit 2011:http://www.globalmicrocreditsummit2011.org/ Structural Adjustment, a Major Cause of Poverty:http://www.globalissues.org/article/3/structural-adjustment-a-major-cause-of-poverty

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