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July 16, 2005
Europe Undermining African Debt Relief?

Normally the United States gets cast in the role of bad guy for insisting on economic and political reform as the basis for aid, especially to Africa. However, the Guardian (UK) reports that a group of smaller European nations has attempted to "undermine" the G8 agreement at Gleneagles pushed by the Live-8 movement by tying debt relief to verifiable reform:

A group of small EU countries are seeking to water down some of the key proposals agreed last week by G8 leaders in Gleneagles, leaked documents have revealed.

The documents, which were obtained by the Jubilee Debt Campaign group, showed that Belgium was leading an initiative that would make it more difficult for 18 of the world's poorest countries to be granted 100% debt relief. ...

Under the deal brokered by Tony Blair at last week's G8 summit 18 of the world's poorest countries on the HIPC list - highly indebted poor countries - which have met debt relief criteria in the past will have 100% of their debt cancelled. Debts to the World Bank and the African Development Bank will be funded by the G8 countries, while debts to the International Monetary Fund will be met from "existing IMF resources".

But Belgium, Austria and Luxembourg are arguing that the IMF should still exercise strict controls over the 18 countries by being given the right to approve key economic policies.

The proposal was made by Willy Kiekens, the Belgian representative on the IMF's executive board, at a meeting on June 22 after G8 finance ministers had approved the 100% debt cancellation deal.

Calling for debt relief to be phased in over time, Mr Kiekens said it would enable the fund "to continue having active policy dialogues with poor countries, monitor their policies closely and provide financial support in a phased manner and on condition of the implementation of adequate policies".

The US may find itself surprised to be surpassed in fiscal conservatism by Luxembourg, Austria, and Belgium. What Kiekens proposes actually matches the general rhetoric of the Live-8 organizers, who pointedly insisted that aid would require the establishment of political reforms. Kiekens and the European countries involved simply propose extending this sensible prerequisite to debt relief as well as explicit aid payments.

Politically, however, this would prove difficult. For one thing, the G8 conference has already committed to the debt relief, and reversing that decision in any way risks losing all the political capital acquired from this agreement. Amending the agreement would require at least another summit to table proposals on the various thresholds for cooperation and debt-relief scales based on specific milestones -- the exact kind of details that will have to come later when discussing aid, of course, but that the G8 avoided in Gleneagles on debt relief. The Kiekens group should have spoken at Gleneagles or even before, with specific recommendations ready for review at the top-level meeting.

Still, the Kiekens effort makes financial and strategic sense and should have been considered at Gleneagles. One wouldn't get that same level of sense from Kiekens' critics, who predictably reacted with wild emotion and little logic to the rational counterproposal of the three-nation group:

Stephen Rand, co-chair of the Jubilee Debt Campaign, said: "These proposals are in direct contradiction of what millions of campaigners and more importantly people who were poor were told by the G8. The response of the African delegates at the IMF [who placed their concerns on the record at the meeting] will be amplified around the world by the outrage, anger and disgust at the west that this betrayal will prompt if the G8 let it happen."

Martin Powell, of the World Development Movement, said: "The G8 controls the IMF, and nothing can pass there without their support. If this proposal goes ahead the G8 will be responsible for the greatest political betrayal in the history of their meetings. The one redeeming feature of an otherwise woefully inadequate debt deal will have been lost."

The greatest political betrayal? Please. The proposal does not attempt to eliminate African debt relief. It only asks for verifiable reform as a prerequisite. I don't know if it's practical at this stage to adopt such measures, but it hardly qualifies as "the greatest political betrayal" for those nations being asked to foot the bill for debt cancellation to consider some preconditions for spending the billions of dollars necessary to implement it. It's this kind of hysteria that inevitably attaches itself to these aid movements that cause rational people to roll their eyes and to disassociate themselves from their causes, no matter how just they may be.

Tinkering with the debt-relief pact now probably would not do much good and would likely delay reform and constructive aid. However, the irrationality of the African aid movements may do even more damage to their cause in the long run. Hysteria and hyperbole do not make for strong credibility.

Sphere It Digg! View blog reactions
Posted by Ed Morrissey at July 16, 2005 9:44 AM

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