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...... On the other hand, John Perkins makes firm accusations as to how international debt was used as a political pressure and instrument against the recipient government. First of all, one needs to remember that most of the international debt was issued in the period of the Cold War, during a time when the United States and the Soviet Union were battling for world domination and, especially, for splitting up the world into spheres of influences
International debt could be well used in this conflict. Take the example of the United States, a country able to export capital into developing and third world countries. The capital export could have been done either through the US multinationals or in the form of governmental loans, including through financial institutions like the IMF or the World Bank. As the developing country would accumulate more and more debt, the macroeconomic imbalances that were created meant that, at some point, it would default on its credit. The case of Argentina is eloquent in this sense, but the debt crisis of 1980s really showed how the developing countries had really overextended their capacity to absorb foreign loans in a sustainable manner......

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