By Gretchen Keiser

Most people in the United States remember the oil crisis of 1973-74 when prices soared, austerity measures were imposed and lines at the gas station were common.

A decade later in the U.S., that experience is simply an unhappy memory. Today there are no lines at the gas stations and the prices have fallen back dramatically, although they are still higher than the 50-cent-a-gallon luxury of 1973.

From this perspective, it is difficult to realize that what was an oil crisis in the U.S. was a catastrophe in developing countries around the world. Their less stable economies could not absorb the change in oil prices as the American economy, in time, did. The oil crisis and other international economic events are borne most heavily by the poor of the world, since their countries are particularly vulnerable to major economic changes. And within their countries, the poor are the ones least able to absorb the cuts in public services that result and the rises in the cost of food, clothing and energy.

The U.S. bishops, in the fourth major part of their first draft letter on the economy, examine the relationship between the U.S. and the world economy. In part, they call for a new approach in U.S. foreign policy. “We want to stand with the poor everywhere,” the draft says, “and we urge that U.S.-developing world relations should be determined in the first place by a concern for the basic human needs of the poor.”

While the bishops did not apply these principles to specific countries, it may be helpful to look at a particular place where economic struggles are taking place.

The island of Jamaica in the Caribbean, south of Cuba, was one of the countries devastated by the oil crisis of the 70s. Newly independent in 1962, after being under British rule, the island was struggling to take its place in the world economy. As is typical in a developing country, Jamaica had to import many necessary goods from other countries and constantly struggled with an unfavorable trade balance in which many more goods were imported than were exported. This meant that the Jamaicans were spending much more on imported goods than they were earning from exports.

When oil prices shot up, the country had to pay even more for the necessary imports than it already was. Its own exports to industrial counties were cut back because of the recession taking place in those more highly developed nations, which cut back on spending. By 1978, according to a report by the World Bank, economic conditions had reached “alarming proportions.” The Jamaican government had to introduce a “stabilization program” under the guidance of the International Monetary Fund and the World Bank to provide financial support for its shaky economy. The program involved “very austere fiscal and financial measures,” the World Bank reported in a 1978 book, “The Commonwealth Caribbean; The Integration Experience.”

The changes that took place during those years, aggravated by political crises in the nation during the 1970s, are still being felt, painfully, by Jamaicans. In 1960, according to World Bank statistics, the cost of energy imports amounted to 11 percent of the island’s merchandise exports. In 1981, the cost of energy imports was 51 percent of its merchandise exports. In 1970 the island had a balance of payments deficit of $153 million dollars. In 1982, the deficit was $403 million.

As of 1982, the external public debt of the island was $1,511 million, which equals 49.9 percent of the country’s gross national product.

One of the aspects of international finance which comes into play for developing countries is assistance from the International Monetary Fund and the World Bank. When the IMF comes to the aid of a country in crisis financially, it establishes conditions for the aid which attempt to pressure the country to move toward better financial health. Typically those measures press for fewer imports and greater exports. They might also call upon the government to reduce the cost of government services. While the specific means are not spelled out, whatever actions are taken affect the poor most heavily.

“To provide its funds or its stamp of approval, the IMF requires the borrowing country to increase the proportion of exports to imports and decrease the proportion of spending relative to output, i.e., to save more,” the bishops’ letter notes. “These adjustments…usually fall most heavily on the poor through reduction of public services, consumer subsidies, and after wages; they thus exacerbate the already straitened circumstances of the poor.”

In a telephone interview, a Kingston, Jamaica bank manager, Clovis Metcalfe, said that the actual conditions set by the IMF for financial recovery in Jamaica have not been made public by the government. However, he noted that in 1984 several measures have been taken by the government which appear to be the government’s response to IMF conditions.

A government effort to cut the civil service work force by 10,000 began about three months ago, he said, putting many people out of work. Unemployment on the island is already approximately 20 percent.

The currency has been drastically devalued in 1984, causing prices to rise dramatically for the average Jamaican. In February 1983, the rate of exchange for one American dollar was $1.78 Jamaican. In February 1984, the rate was approximately $3 Jamaican for one American dollar. By December, the rate was fluctuating between $4 and $4.60 Jamaican, Mr. Metcalfe said, after reaching a high of $4.90.

Bank interest rates have risen to 23 to 27 percent, he said, threatening many businesses with bankruptcy.

Mr. Metcalfe said that the average wage for a Jamaican would be $7,000 Jamaican dollars per year.

Asked how people were managing to survive with such massive inflation, he said, “They’re not, they’re not. Obviously you have a privileged few…But a part of the society is obviously starving.”

The situation in Jamaica, according to World Bank and IMF statistics, is far from the worst in the world. The island does not fall into the category of the least developed countries in the world, where the per capita annual income is the equivalent of $400 or less. It is not among the famine and drought devastated regions of Africa.

But it appears to be one of the countries caught in a worsening bind. In need of development funds to upgrade exports and provide new jobs, money is having to be spent instead on basic, essential goods and energy, and on managing old debts.

From the perspective of Mr. Metcalfe, international efforts to provide financial help have the wrong strings attached. “The utmost interest (internationally) should be the development of the country,” he said. If that is the intent of international efforts, it is not having enough of that effect in Jamaica, he said.

Martin McLaughlin, a consultant to the U.S. Catholic Conference on social development, agreed that the “general impact of IMF conditionally is disadvantageous to the poor.”

However, he pointed out that the intent of the IMF, which was founded to reestablish world trade after World War II, was to take care of short-term financial problems for countries, not to serve as a development bank.

It would be up to member nations, including its most influential member, the United States, to propose changes in the way the IMF deals with the developing word, he pointed out.

According to the bishops’ letter three themes emerge from recent papal teaching: “the need for reform of the international system, the need to refashion national policies, and the acceptance of a ‘preferential option for the poor’ as an overall policy imperative.”