G7 Offer of 100% Debt Relief for Poorest Countries

Chancellor of the Exchequer Gordon Brown moved the New Labour ball closer to the goal of significant action on world poverty at the G7 finance ministers’ meeting in London. After a case-by-case review, there is a chance that the 37 poorest nations in the world will have their debts wiped off the books. However, his plan to put together $5 billion a year in aid took a heavy blow when the Bush administration turned it down. Or as the American delegation might have put it, “Allies? Who us?”

Throwing money at the problem of poverty, surprisingly, won’t work. At the same time, there is no hope for the alleviation of extreme poverty without it. Mr. Brown had hoped to deliver $5 billion in aid to Africa with loans backed by the G7, his International Finance Facility. The US government has a different plan, which revolves around grants rather than loans, with some strings (or heavy ropes) attached.

John Snow, the US Treasury Secretary was ill, and could not attend. In his place was John Taylor, under-secretary, who carried the day for the obstructionist and rejectionist White House. "The IFF is something that the US cannot support because of our legislative process,” he said. This is, of course, bunk. What he meant was, “Mr. Bush isn’t going to stop his campaign to force Social Security changes through Congress just to give ol’ Tony and Gordo a feather for their caps.” He added, “It’s not so much that we oppose the British using the IFF, or others, but it does not work for the US because we have means for providing support for poor countries that is working for us.” The question, really, is whether the means of support is working for the recipient rather that the donor.

Hilary Benn, Britain’s international development secretary and member of that Benn family, responded, “You don’t need everyone on board to launch the IFF.” Unilateralism, it would seem, can work both ways. Fortunately, in a situation like this, competition may not be a bad thing, as two different approaches are less likely to succumb to the same set of problems.

IFF or not, the reduction of foreign debt to zero for the poorest is a good idea. Had they been in a position to pay the debt off, they wouldn’t be the poorest. Rather than pay off bonds to hedge funds in the west, they can use their tax revenues to build the infrastructure they need to develop. Now, the only problem is what to do with the criminal bent of some of the recipient governments.

Except for the block quote above © Copyright 2004 by The Kensington Review, J. Myhre, Editor. No part of this publication may be reproduced without written consent.

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