WP: Debt Cancellation For Honduras and Nicaragua Is Urged (fwd)

[Robert Weissman <rob@essential.org>]

Debt Cancellation For Honduras and Nicaragua Is Urged

By William Branigin
Washington Post Staff Writer
Friday, November 20, 1998; Page A42 

Despite the Clinton administration's mounting humanitarian efforts, aid to
hurricane-ravaged Central America is falling short of the region's massive
needs, and a U.S. postponement of debt repayments is "inadequate,"
according to religious groups, private charities and advocacy organizations
involved in the relief campaign.

So far, the United States has pledged aid totaling $290 million, including
emergency relief, food supplies and the cost of a military contingent 
helping deliver goods to more than 2 million homeless in Honduras and 
Nicaragua. During a tour of the region, first lady Hillary Rodham Clinton 
also announced a two-year moratorium on U.S. debt repayments, a measure
that would postpone, but not cancel, $54 million that the two countries had
been scheduled to pay back through 2000.

While the aid from the United States and other nations has been met with
gratitude in the storm-ravaged countries, Central American advocates say
Honduras and Nicaragua cannot hope to recover without relief from their
foreign debt. They want the United States to cancel the debts outright and
help arrange similar moves by other creditors.

"What is happening now is just scratching the surface in terms of what the
need is," said the Rev. Mark Poletunow, head of the Spanish Catholic
Center, a social service agency that has been coordinating private
donations in the Washington area. "This devastation has really set people
back by about 50 years."

The agency has collected $230,000 in the area and hopes that additional
funds will be raised by a benefit soccer match Sunday at RFK Stadium
between D.C. United and a team of Central American all-stars.

According to the charity Oxfam International, "The task of reconstruction
will last decades, continuing long after the cameras have left and media
interest has waned." Besides emergency aid, the group said in a briefing
paper, "debt relief is also vital to ensuring that the region's governments 
can direct their resources to reconstruction, rather than servicing foreign 
debts."

Even before Hurricane Mitch, Nicaragua and Honduras were among the
poorest nations in the hemisphere, with nearly half their populations living
below the poverty line. Nicaragua owes creditors $6.1 billion, the highest
per capita debt in the world. Debt-service payments of $254 million last
year absorbed 52 percent of the government's revenue and was 2 1/2
times the country's spending on health and education combined, Oxfam
said. The U.S. share of Nicaragua's debt comes to more than $60 million,
it said.

Honduras owes $4.1 billion, and the amount of money it spent paying back
that debt accounted for a third of the government's revenue last year.
About $164 million is owed to the United States.

In a statement, the White House said the United States would urge other
countries to emulate its two-year moratorium on debt payments and would
"take a leading role in organizing a meeting of international donors in 
early December in Washington to discuss long-term financial assistance." 
U.S. officials are "looking into ways to provide additional bilateral debt 
relief" and are discussing a broader response to the problem with 
institutions such as the World Bank, the International Monetary Fund and the
Inter-American Development Bank, a State Department spokesman said.

Saul Solorzano, director of the Central American Resource Center in
Washington, called the U.S. debt moratorium "an immediate measure that
will enable [the administration] to review the issue of debt in the long 
term." He added, "I would think that the best solutions are yet to come."

A more critical stand was taken by Jubilee 2000 USA, a Washington-based 
coalition of more than 40 religious and civic groups that is part of an 
international campaign to cancel the debts of impoverished countries. The 
U.S. debt-relief plan as announced by Hillary Clinton is "grossly 
inadequate," the coalition said in a statement.

The United States previously has annulled debts for political reasons,
forgiving $7 billion owed by Egypt and $2.5 billion by Poland in 1991.
According to the State Department, the U.S. government also reduced the
debts of Nicaragua and Honduras that year by more than $700 million. 

         ) Copyright 1998 The Washington Post Company