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June 10, 2005
G7 Approves $55 Billion Debt Reduction For Poor Nations

After years of trying to come to an agreement to assist the most destitute nations out of an endless cycle of poverty, the G7 has finally agreed on a plan to bail the lowliest countries out by forgiving $55 billion of debt. The move involves both the World Bank and the IMF, going beyond the agreement reached between George Bush and Tony Blair earlier this week in Washington, DC:

Eighteen of the world's poorest countries will have their debts to the World Bank and the International Monetary Fund wiped out as part of a $55bn (30.4bn) package agreed today by the G7 leading economies.

After weeks of intense negotiations, a deal brokered by the chancellor, Gordon Brown, will save countries such as Mozambique and Ethiopia a total of $15bn in debt payments over the next 10 years.

The Treasury said last night that a further nine countries would qualify for debt relief within 12-18 months, and that the total could rise to almost 40 once countries beset by civil war resolved their conflicts.

This will come as a major win for Tony Blair and a huge surprise to the British electorate, which had resigned itself to Blair coming up empty-handed from his trip to DC. Instead, Blair took the first step in allowing the poor nations off the mat -- by eliminating their debt, thus allowing cash aid to go to victims and not to service the debt interest. The money that goes to them in aid and in other kinds of direct contributions can now help build the infrastructure of the nations in order to ensure that further aid gets to the victims.

That's the vision for Live8, the effort pushed by Sir Bob Geldof. Debt relief was the first of the main pillars of their approach, tariff reform and increased aid being the other two. The nations selected, however, were not limited to Africa and have already begun the process of political reform. The British chancellor of the Exchequer acknowledged that the deal came to pass because of "outside pressure" placed on the G8 by campaign groups, Live8 certainly among them.

One nation not receiving assistance, even in the future, is Zimbabwe under Robert Mugabe. Sudan also missed the list as well as Somalia, although Chad is on the list for future assistance as political reform advances. The G8 wants to demonstrate that the world's richest nations will share their wealth, but only if the conditions are right for success. The debt relief makes for a good start. If these nations use the opportunity to create the conditions for ensure that further aid is used properly and goes to the people intended, then more assistance will follow. The Mugabes of the region will stay on notice that until they leave -- or until their subjects eject them -- they won't see any assistance at all.

UPDATE: Mark Steyn disagrees:

As long as Western progressives are divided into those who wish to keep Africa in a backward subsistence agriculture economy and those who wish to keep Africa in a backward subsistence agriculture economy but if the rude fieldhands break into something catchy enough when Andy Kershaw's passing they'll be in with a shot as the warm-up to Bananarama at the next all-star charity gala, the do-gooders will have no useful contribution to make to Africa's future. ...

The issue in Africa in every one of its crises - from economic liberty to Aids - is government. Until the do-gooders get serious about that, their efforts will remain a silly distraction.

Look, I think Steyn is correct in this assertion, and apparently so does the G8. Steyn pokes fun at Bob Geldof as a geriatric rocker, but in this case I think his sarcasm misses the mark and the point. Geldof also agreed that government is at least part of the problem, which is why he insisted that thugs like Mugabe would not see a cent -- and he was right. If these nations reform their government, don't we want to encourage that process? If we just sit around and let them starve to death, that reform will go out the window and the desperation will result in a complete breakdown of control.

I think we have to be prepared to take a risk at some point. The G8 has, I believe, balanced that risk well in this case.

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Posted by Ed Morrissey at June 10, 2005 10:32 PM

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» G7 agrees to write off $30 Billion from Narcissistic views on News/Politics
Africa: Let's see how this goes... guilty western powers led by feel good touchy feely idiots cancel yet again money wasted/stolen by African leaders, some who buy eight S-350 Mercedes Benz vehicles with gold-plated number plates [Read More]

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» I hope I'm wrong from CrosSwords
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Tracked on June 11, 2005 11:36 PM

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