[stop-imf] Wash Post / Wall St. Journal on US Support for 100% Cancellation

[robert weissman]

News of the US Treasury's support for full debt cancellation was
reported in the Washington Post and the Wall St. Journal today. See
articles below - and please write letters to the editor! It is important
to affirm the need for full debt cancellation in response to these
articles in the letters section.

Also, Jubilee's message is that we support 100% cancellation, but that
we think more than just 30 countries need it - the Jubilee Act, for
instance contains 50 countries, and there are many more countries with
illegitimate and odious debt. Also, we want to be clear that debt
cancellation should not come with structural adjustment conditions attached.

We are making progress, but let's keep up the pressure and keep our
message in the media in the next critical 2 1/2 weeks leading up to
October 1!

++++++++++++++++++++++

Below:
1) Paul Blustein, "U.S. Wants to Cancel Poorest Nations' Debt,"
Washington Post, September 14, 2004
2) Michael Schroder, "US to Push Debt Relief for Iraq, Poor Nations,"
September 14, 2004, Wall Street Journal


1) The Washington Post
September 14, 2004, p. A6

U.S. Wants to Cancel Poorest Nations' Debt;
Other Countries Concerned Proposal May Leave Global Lenders Short of Money

BY Paul Blustein, Washington Post Staff Writer

    Bush administration officials are advancing a plan to cancel billions of
dollars in debt owed by some of the world's poorest countries, a move
that could
boost the United States' image abroad but which institutions like the
World Bank
fear could leave them strapped for cash.

    The plan, disclosed by members of aid groups and government
officials, would
dramatically increase previous debt relief programs for at least 27 poor
nations
such as Uganda, Bolivia and Ethiopia.

    The Treasury Department, which is putting the plan forward for
discussion at
a meeting in Paris this week, contends that the current approach has
been too
slow and piecemeal to truly free those nations from the burden of
repaying money
borrowed from the World Bank, International Monetary Fund and other global
lenders. The Treasury is also proposing that for very poor countries,
all future
IMF and World Bank assistance come in the form of grants rather than loans.

    The initiative, which would require broad support from the 184
member nations
of the IMF and World Bank to be implemented, is getting a frosty
reception from
the governments of other rich countries and from the staffs of the lending
institutions. Some critics oppose such drastic debt relief for certain
countries
as unwise and unfair to other indebted nations that don't qualify. Other
opponents contend that the administration is trying to accomplish debt
relief on
the cheap, without imposing any direct cost on U.S. taxpayers, by
fobbing off
the cost on institutions like the World Bank, whose aid-giving ability
may as a
result be curtailed.

    No matter whether the proposal is enacted, its impact, both
political and
economic, could be significant. It may help Washington secure support
for its
efforts to forgive most of Iraq's debt, because nations such as France have
rejected granting more generous terms to Baghdad than to other, poorer
nations.

    Moreover, if, as some administration officials hope, President Bush
takes a
strong position on the emotionally charged debt issue, he may burnish
his image
both at home and overseas as a "compassionate conservative," winning
plaudits
from groups normally on the liberal end of the spectrum.

    Marie Clarke, national coordinator for the Jubilee USA Network, a
leading
advocate of Third World debt forgiveness, said in a statement yesterday
that her
group was "very encouraged to hear that the U.S. Treasury Department is
apparently pushing for full multilateral debt cancellation."

    Officials from several government agencies confirmed the basic
elements of
the Treasury plan. They spoke only on condition that they be granted
anonymity
because of the sensitivity of the proposal. A Treasury spokesman, Tony
Fratto,
who was in Paris yesterday with John B. Taylor, the undersecretary for
international affairs, declined to comment.

    Clarke noted that the Treasury plan for 100 percent debt forgiveness
first
surfaced in June during the Group of Eight summit in Georgia. At that
time, it
was opposed by a number of U.S. policymakers from outside Treasury, but
sources
said that since then Treasury officials have garnered greater backing
from other
elements of the administration.

    "We had heard from the White House . . . that one of their big
concerns was
whether they would receive applause for taking this kind of action," Clarke
said, adding that Jubilee USA has "been working around the country" with
many
religious groups to galvanize enthusiasm for the plan.

     A complete debt write-off would be much more generous than the terms
currently being granted to 27 countries under the Heavily Indebted Poor
Countries initiative. The HIPC plan, which was launched in 1996 and
expanded in
1999, is aimed at reducing the countries' obligations to a manageable
level, set
as a multiple of their exports.

    Currently, HIPC is saving the 27 countries about $900 million a year
in debt
payments, according to figures compiled by DATA, the group started by
the Irish
rock star Bono to advocate for Africa. But those countries are still paying
about $800 million annually.

    The IMF and World Bank have acknowledged that the HIPC program has
failed to
reduce most poor countries' debts to "sustainable" levels.

    But even strong advocates of debt relief are worried that the
Treasury plan
would in effect reduce the help that poor countries get, particularly if the
World Bank is unable to give as much aid as before. Sources said that the
British government has strongly urged that an initiative like Treasury's
should
go forward only if rich nations somehow cover the cost of forgiving
World Bank
loans.

    A spokeswoman for the British Treasury noted that in a July speech,
Chancellor of the Exchequer Gordon Brown endorsed greater debt
write-offs, but
added: "To achieve this, let us accept that we need to develop a new
financing
vehicle."


2) Wall Street Journal -  WORLD NEWS

U.S. to Push Debt Relief
For Iraq, Poor Nations

By MICHAEL SCHROEDER
Staff Reporter of THE WALL STREET JOURNAL
September 14, 2004; Page A18

While the U.S. is nudging allies to forgive much of Iraq's huge foreign
debt, the Treasury Department is pressing industrialized countries to
cancel debt from the world's poorest nations.

The debt negotiations are separate issues expected to be on the agenda
of Group of Seven meetings in Washington next month. But reaching an
agreement soon on helping poor countries could make it easier for the
U.S. to make the case that Iraq deserves similar help to get its economy
going.

John Taylor, Treasury undersecretary for international affairs, is
pressing the debt plans during meetings in Paris with finance
representatives of the G-7, said an official familiar with the talks.
The meetings are designed to set the agenda for the coming gathering of
G-7 leaders.

Treasury Department spokesman Tony Fratto declined to comment.

The U.S. and the U.S.-appointed interim government in Iraq have lobbied
for at least a 90% write-off of $40 billion in Iraqi debts owed to
nearly 20 industrialized countries, known as the Paris Club. Iraq's
commercial foreign debt totals more than $120 billion.

France, which opposed the U.S.-led war in Iraq, has said a 50% write-off
should be the limit. French President Jacques Chirac has argued that
Iraq, which has the world's second-largest oil reserves, shouldn't
receive better terms than the poorest countries.

The discussion within the G-7 about the possibility of full debt
cancellation began in June at the summit on Sea Island, Ga.

The World Bank's program for highly indebted poor countries and other
debt initiatives currently provide debt relief of up to two-thirds for
27 countries, most in Africa. To receive the relief, nations must have a
proven record of economic improvements and poverty reduction. But the
program's recent annual progress report provides evidence that poor
countries need more help. The report said nations that have successfully
qualified under the program still hold debt burdens equivalent to at
least 150% of exports -- a level considered unsustainable by World Bank
standards.

Write to Michael Schroeder at mike.schroeder@wsj.com

Neil Watkins
Outreach and Communications Coordinator
Jubilee USA Network
(202) 783-0129
www.jubileeusa.org