Arash S. Arabi

Document Type



The debt crisis facing the Third World is one so severe that it threatens to shatter the economy of countless nations and leaves the future of their lenders in doubt. The only viable solution is to come up with an "alternative" method of dispute resolution to deal with the debt crisis - one that is a cross between arbitration and mediation. A disinterested body should be created to recover some, or if possible, all of the outstanding loans owed to financial institutions, while alleviating the extreme hardships the debt and current debt repayment methods have inflicted. It should be noted, however, that the creators of such a solution cannot precede along the lines of traditional mediation methods. Traditional methods will be futile for the simple reason that both sides freely admit the loans are outstanding. This fact is undisputed. The dispute arises over how to repay the loans and by what methods. The first part of this paper will explain what the Third World is; the nature of Third World debt; why the search for a solution for this economic quagmire is one of the most important tasks facing the world today; and how mediation can help. The second part of this paper will focus on why some form of debt relief is needed and the importance of arriving at a better system of loan repayment and disbursement than the one currently being employed. The final part of this paper will pose possible alternative solutions that can help alleviate the problem of Third World debt without further straining an already volatile relationship that exists between the lenders and debtor nations, and most importantly, between the West and The Third World.