A way out of the debt crisis

Abstract

This text is a report prepared by Eduardo Dutra Aydos for the office of US Senator John Kerry in 1986. The report addresses the debt crisis in the Third World, criticizing the United States administration and the “Baker Plan” for its insufficiency. Furthermore, it appeals to the sensitivity of political leaders in the face of the crisis, mentioning social tensions in several countries around the world, as well as the deleterious effects of the crisis on the indebted countries, resulting in adverse social consequences and in the difficulty of honoring debt payments. The "Baker Plan" is critically analyzed, revealing the counter effects of its remedial policy imposition on debtor countries. The text suggests the need for a new strategy for international trade and financing, proposing an International Development Program as an alternative, and highlights imbalances in the flow of trade and defensive strategies threatening the stability of global financing. In addition, it proposes the implementation of the International Trade and Finance Development Program of 1986 as a legislative solution. The report addresses the flaws in traditional approaches, advocating a more comprehensive and diplomatic response to the debt crisis.