Western economists, as the decade wore on, were fearful of a collapse of the debt market. Would developing countries make their interest payments? As it turned out, some have been able to. Others, such as Argentina, have not. The nations of Western Europe have consequently decided to take the lead in the economic field. France in particular has declared there is no alternative but to forgive 1/3 of the debt of each relevant developing country.
Oil doubled in price 1979-80. The shock was too great for fragile economies. The silver market crashed in 1980. A general deflationary trend set in worldwide. By late 1982 the United States economy began a recovery. European economies only later followed suit. East Asia weathered the economic storm. But Latin America and Africa as a whole became disaster areas, with great disparities between rich and poor.
In simplest terms, much of the developing world for nearly a decade has been drowning in debt not entirely of their own making. Only a few bright spots exist. One such nation, Bhutan, in the eastern Himalayas, has managed its natural resources with great economic wisdom. A contrasting example of a nation with no debt, Romania paid off its international debt at great speed-but at the cost of reducing its people to poverty.
This European lead in proposing specific debt forgiveness policies and the decision to have Europe manage the economic rescue (an initiative launched by President Bush) of Poland and Hungary is evidence the United States has lost significant superpower status. This brings us to the last drastic change in events of the 1980s.