Ideas on a better form of American aid to the developing world; The American Opportunity, by Edwin Hartrich. New York: Macmillan Publishing Company. 300 pp. $17.95.
Suppose you don't have enough money to pay the monthly interest on your credit card accounts. You go down to the bank to ask the loan officer for money to tide you over. You don't have any collateral to secure the loan. You tell him the economy will be improving soon, then you will sell more widgets and pay back the debt. Imagine your surprise when the loan is approved.
Impossible? Not if you are the leader of a third-world country. On a somewhat larger and more expensive scale, the International Monetary Fund (IMF) assists developing countries with their debt problems - often by lending them money to pay the interest on loans overdue to large commercial banks of industrial nations.
Financial analysts assert that a significant part of the loans, totaling over profits to bank shareholders, possibly forcing a costly government rescue if the loans were government-guaranteed or if the loss were massive enough to cause a bank default. Instead of writing them off as bad loans, some of the West's most prestigious commercial banks list them as assets year after year.
Of course, if third-world countries continue to use IMF loans just to pay the interest on unpaid obligations, but not the principal, financing the IMF will become more and more costly to the world's banker nations. (With an assessment amounting to 19.5 percent of IMF operating costs, the United States leads the list of the 146 member-nation contributors, followed by the United Kingdom at 6. 8 percent, West Germany at 5.1 percent, France at 4.5 percent, Japan at 3.9 percent, and Saudi Arabia at 3.3 percent.)
Edwin Hartrich, journalist, international economic consultant, and author of ''The Fourth and Richest Reich,'' suggests an interesting alternative to staunch this perennial outward cash flow: exporting free-market business expertise to strengthen third-world economic systems.
Mr. Hartrich advocates using ecopolitics, ''industrial productivity and technology,'' rather than geopolitics, ''use or threat of military force,'' to expand the US sphere of influence in the third world.
''As the archetype of an ecopolitical nation, America has the opportunity to become the prime mover in the affairs of nations,'' Mr. Hartrich states. ''The basic ingredient'' of an effective ecopolitical system - i.e., a healthy economy - ''is freedom for the business sector'' with only the slight governmental controls necessary to prevent abuses.
Instead of demonstrating the inherent efficiency of the free-market system as a tool to achieve economic independence, Mr. Hartrich argues, over the past 35 years America has tried, unsuccessfully, to impose her cultural values on other countries. Despite this failure, the US free-market system and innovative technology provide a clear economic advantage over a state-controlled economy.
The USSR, hampered by a severe shortage of technological workers which is further aggravated by a declining population, doesn't present a serious ecopolitical challenge to the US, Mr. Hartrich says. And by choosing to allocate a whopping 10 to 15 percent of the Soviet GNP to the military, the USSR is unable to feed its own people. ''Industrial development, except that involved in arms production, is in reverse,'' he says.
Mr. Hartrich says the US foreign-aid policy has only increased resentment among third-world nations by encouraging them to put the economic cart before the horse. Construction of prestigious steel plants, bridges, and other ''symbols'' of sophisticated economic societies by countries lacking needed raw materials and technical operators can tend to lock these countries into annual demands for fresh cash infusions from wealthier nations.
Mr. Hartrich suggests future American aid be tied to projects that lay a foundation for sound economic growth - projects that would foster private-business control of a free-market economy, mass hands-on technical education, and sufficient agricultural prices to develop or ensure the country's ability to feed itself.
American's motive for helping other countries achieve financial independence need not be only altruistic or political, he argues: ''Once a third-world country can get off welfare and get involved in productive work, it can be self-supporting. It can then be an expanding market for the goods and services of the industrial nations.''
Ecopolitics has been used effectively in the past, says Mr. Hartrich. He cites Japan, where postwar American assistance has helped the country achieve a degree of world economic influence far exceeding her World War II political ambitions. The Marshall Plan, which provided loans and grants to reconstruct a war-shattered Europe, ''effectively blocked the westward expansion of Russian power and influence after World War II,'' Hartrich says.
Historical detail and meticulous documentation of economic conditions in Japan, Germany, Taiwan, South Korea, and the countries of Latin America and Africa support Mr. Hartrich's theory. His detailed analysis provides food for thought for anyone concerned about interdependencies of today's international economies.