Last year, Bono of the band U2 used his fame to bring international media attention to the cause of Third World debt relief: Joining forces with Jubilee 2000 — an interdenominational Christian religious coalition — Bono met with the Pope and toured the world speaking out against International Monetary Fund and World Bank policies that have plunged developing countries into a spiral of debt.
What Jubilee 2000, Bono, rock activist Bob Geldof, and organizations like Oxfam and 50 Years Is Enough are calling for is total debt cancellation for debtor nations, especially in Africa. But is erasing the debt really a panacea? A growing number of economists and policymakers are pushing for a more nuanced approach to debt relief — and it isn’t just the usual suspects.
This spring, several African finance ministers told the IMF that while total debt cancellation is a nice idea, it may not have any practical virtue in poor countries. Wiping out the debt could bankrupt the lenders and thereby cut off any future capital investment, they said; what’s more, it could cause any additional assistance to those countries to dry up. (Of course, the IMF and World Bank’s insistence that they can’t afford to cancel the debt is the subject of spirited debate.)
Instead, African nations are asking the IMF and World Bank to reduce their debt and expand investment in their struggling nations. “I will be happy to have debt relief,” said Basil Mramba of Tanzania. But “it will not be wise to kill the hen that lays the golden egg.”
Economist Judith Dean, at a panel discussion at the Wheaton College’s Center for Applied Christian Ethics, noted that simple debt forgiveness does not erase poverty or guarantee more spending on health and education. Further, she argues, total debt cancellation could destroy developing nations’ credit and credibility, hindering future investment.
There may be a third way, between total debt forgiveness and economic enslavement. Some economists call for conditional debt forgiveness that could provide immediate relief to poor nations without destroying those nations’ credit or bankrupting their lenders.
The trick, of course, is who decides on the conditions. The IMF and World Bank offer their own version of conditional relief, a special payback program for Heavily Indebted Poor Countries (HIPC). But critics have assailed that initiative, saying it forces countries to adopt new Western-style economic strategies and invest in certain types of development (a.k.a. “structural adjustment programs”) in order to qualify for forgiveness. For example, in exchange for debt relief, the IMF insisted that the government of Honduras privatize its electrical utilities.
Ethiopian Prime Minister Meles Zenawi said in 1999 that “[t]he choice which we are left with under HIPC is thus to either abandon all independent and rational thinking in economic policy making or wallow in the quagmire of unsustainable debt. It is a choice between the devil and the deep blue sea. To use the whip of the debt overhang to enforce this orthodoxy in debt-ridden countries, is in some ways tantamount to blackmail and is therefore both unviable and immoral.”
As an alternative, some religious groups have a novel idea for a framework in which debts may be forgiven in exchange for constructive commitments to change: tie debt forgiveness to human rights and social investment. For example, a proportion of a nation’s debt may be forgiven in exchange for its commitment to use the money to build schools or improve sewer systems, or for relaxing restrictions on the press.
Bits and Pieces
Julia Butterfly Hill isn’t tree-sitting anymore, but the fight over Northern California’s ancient forests is far from over, and far from peaceful. A group of anti-logging activists recently took up residence, Butterfly-style in several trees marked for felling in northern California’s Mattole Forest and shackled themselves to cattle guards along logging roads. The activists say loggers contracted by Pacific Lumber owners Maxxam Inc. to log the tract are continuing to “limb” trees where the protestors are sitting, causing minor injuries, and attacking protestors on the ground.
VIAGRA MAY SAVE ENDANGERED SPECIES
Scientists are speculating that the popularity of the prescription drug Viagra could cause a dip in demand for traditional Asian folk medicines and aphrodisiacs which are derived from endangered species. Canadian observers say harbor seal hunting is down markedly, and some wonder whether reduced demand for aphrodisiacs made from seal penises is a contributing factor. Still, conservationists are cautious about concluding that the threat is anywhere near over.
YOU LOOKIN’ AT ME?
The European Commission is considering a program to intercept all telecommunications traffic — such as email, faxes, and telephone conversations — and store each bit of data for 7 years, according to documents leaked to London-based civil liberties journal Statewatch.