IN OTHER WORDS: Not an island
Developing countries have sparked their share of international financial crises over the years. But this time it is not their fault. As the world’s richest nations spend trillions of dollars to rescue their own financial systems from the maelstrom caused by years of excess, they must also be prepared to provide billions of dollars to poorer countries that did not cause
this crisis but are nevertheless its victims.
Fortunately, some people are thinking ahead. The International Finance Corp., an arm of the World Bank, is mulling a $3 billion fund to help recapitalise shaky banking systems in the world’s poorest countries. The Inter-American Development Bank said it would increase its lending and announced a $6 billion facility to help companies in smaller Latin American countries that lose access to funding. The IMF said it is flush with cash to mobilize if needed.
The world’s richest countries have exhibited enormous myopia throughout this crisis - originally scurrying for ad hoc individual “solutions” that worsened the collective mess.
As the world’s financial powers struggle to contain the disaster, they should not lose sight of its effect on other countries. Every economy for itself makes no sense — and could prove highly dangerous — in today’s interconnected world.