[stop-imf] Bush Backs UK Plan For Debt Relief

[robert.weissman@essentialinformation.org]

From: World Bank Press Review <devnews@worldbank.org>
Tuesday, June 8, 2004

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Bush Backs UK Plan For Debt Relief
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George Bush will back an ambitious British-designed plan for more generous
debt relief for the world's poorest countries this week as the White House
seeks backing from the G8 industrial nations for the financial
reconstruction of Iraq, reports The Guardian (UK).

In a last-minute softening of his stance, Bush has signaled to UK Prime
Minister Tony Blair that he is prepared to offer greater generosity
towards impoverished nations in Africa in an attempt to win western
backing for a $90 billion write-off of debts built up by Saddam Hussein.
The US had been planning a modest extension of debt relief at a G8 summit
which begins today in Sea Island, Georgia, amid unprecedented security to
prevent a terrorist attack on visiting leaders from Britain, Germany,
France, Japan, Italy, Canada and Russia.

Bush, according to UK sources, is now prepared to go much further on debt
relief, following criticism that America cannot expect the slate to be
wiped clean for Iraq unless it is prepared to adopt the same approach with
poor countries in the rest of the world. With the White House also eager
to secure backing for a new UN resolution on Iraq, Bush will seek to show
a commitment to multilateralism by endorsing a proposal drawn up by the
chancellor, Gordon Brown, and the international development secretary,
Hilary Benn. This would make the world's 41 highly indebted poor countries
(HIPC) eligible for 100 percent debt write-offs from their multilateral
creditors such as the World Bank and the IMF, at a cost to rich countries
of $1 billion-plus per year.

Blair will unveil the proposal at Sea Island, and will see Bush's change
of heart as a vindication of his view that British support for the Iraq
war has won him influence in Washington. UK Treasury officials said it was
"an ambitious and unprecedented extension of debt relief", and that
details would need to be finalized by finance ministers over the coming
months. They added that it was vital that America did not use its support
for multilateral debt relief as an excuse for backsliding on other forms
of debt relief and financial assistance to poor countries. These include
plans - also due to receive G8 support this week - for a $1 billion,
one-off top-up to a trust fund that helps poor countries pay off their
bilateral debts and an extension of the HIPC program beyond the end of
2004 to allow countries in conflict to remain eligible for help.

Writing in today's editorial, The Independent (UK) notes Tony Blair will
urge his colleagues to call on the IMF and the World Bank to cancel the
debt owed to them. Blair will also propose abolishing the "sunset clause"
that would block new countries from entering HIPC if they have not met the
entry criteria by the end of this year. The clause threatens to keep
war-ravaged countries such as Sudan, Somalia, Liberia, Burundi, Ivory
Coast, Chad and the Central African Republic out of HIPC.

The news comes as The Panafrican News Agency reports that about 20 leading
African non-governmental and civil society groups have petitioned leaders
of the Group of Eight to announce a comprehensive debt cancellation
strategy for heavily indebted African nations during their summit. In a
statement issued Monday on the eve of the G8 summit, the African groups
said the debt burden was a major obstacle to the continent meeting the
Millennium Development Goals as it "strangles public expenditure and
domestic economic growth". "In many African countries, significant
resources are being diverted away from basic social services into debt
repayment obligations," the groups said in their petition. The groups
include some of the largest continental organizations encompassing women's
groups, labor, research and advocacy bodies.