Haitians selling biscuits
made out of dirt.
"International debt in
excess of $200 billion is a hurricane wreaking havoc upon the lives of
impoverished peoples throughout Africa,
Asia and Latin
America. Canceling most international debts owed the US would cost $3 per US
"Love for others, and especially
for the poor,
is made concrete by promoting justice.
It is not a matter of giving some surplus,
but of helping entire peoples.
It requires a change of lifestyles,
a reorientation of ourselves
and our organizations
toward the whole of the human family.
It asks for effective international agencies
to coordinate the powerful nations
and take into account the weaker ones—
which even the most powerful state on earth
would not be able to do on its own."
John Paul II
"The Hundreth Year"
The National Catholic
Vol. 192 No. 10, March 21,
Editorial: Debt Burdens and Poor Countries
debt burdens accumulated over the past several decades
still weigh heavily on many of the world’s poorest
countries. As they struggle to repay what they owe to
rich countries and financial institutions like the World
Bank and the International Monetary Fund, they find
themselves with inadequate resources to cover the cost
of basic services for education, health, clean water and
rural roads. In 1994, Pope John Paul II urged in
Tertio Millenio Adviente that in the spirit
of the Book of Leviticus (25:8, 10), the international
debt should be reduced or canceled outright, because it
“seriously threatens the future of many nations.” Some
progress has been made through the Heavily Indebted Poor
Country (H.I.P.C.) initiative of the I.M.F. and the
World Bank—adopted in 1996 and expanded in 1999. Kathy
Selvaggio, advisor on economic justice issues at
Catholic Relief Services, told America that
although the levels of debt reduction have fallen short
of what is needed, the money saved in debt service
payments has been put to good use. She gave the example
of Tanzania, which made a commitment to provide free
primary education after it received debt relief, making
it possible for over two million more children to attend
school. She went on to say, however, that the steps
toward debt relief have been insufficient.
What advocates seek, therefore, is 100 percent debt
cancellation for all countries included in the H.I.P.C.
initiative, as well as others that are also very poor
and indebted. Finance ministers of the G-7
countries—Canada, United States, Japan, Britain, France,
Germany and Italy—met to discuss the debt issue in early
February. Held in London, the meeting was chaired by the
United Kingdom, with the U.K. serving as leader. The
U.K. has been pressing for a more generous approach to
debt cancellation. Unlike the United States, it believes
that more than the 37 H.I.P.C. countries should be
included in the cancellation process. Gerald Flood, a
consultant to the U.S. Conference of Catholic Bishops,
told America that other poor countries like Haiti
should also be included in the H.I.P.C. initiative; but
they do not qualify under the initiative’s terms,
because their debts are not considered heavy enough. So
far, the U.S. view is that debt forgiveness should be
limited to H.I.P.C. countries, a position with which the
U.S.C.C.B. and C.R.S. disagree. In either case, to
receive relief, indebted nations must meet various
conditions, including making arrangements to ensure that
debt relief savings will be used to reduce poverty.
Most rich lender countries have acted on their own to
eliminate the debts owed them. Britain’s finance
minister, for example, recently announced that it will
cancel Mozambique’s $150 million debt to the U.K. No
concrete decisions by the G-7 countries were made in
February, but another meeting is scheduled for April. So
far, with the possible exception of Japan, all these
countries appear to be in favor of up to 100 percent
debt relief. What is unclear is how debt relief on this
scale should be financed. The U.K.’s Gerald Brown has
suggested that the I.M.F. use part of its gold reserves
to write off a portion of the poorest countries’ debt.
Some resist this approach, fearing that it might hurt
the organization’s financial standing.
But generous debt forgiveness is possible, as can be
seen in the fact that the G-7 and other wealthy nations
agreed in a single day to cancel 80 percent of the $39
billion owed by Iraq, with no conditions imposed and
even without insisting on the track record of good
economic management it requires of other poor countries.
As Ms. Salvaggio pointed out, it comes down to a
question of political will. But advocacy groups like
C.R.S. and the U.S.C.C.B. also fear that large-scale
debt cancellation might tempt some creditors to seek to
recoup their losses by reducing the levels of financial
assistance provided to developing countries. This would
amount to a zero-sum game, because the debt
cancellations would result in little poverty reduction
in the neediest countries.
Nelson Mandela, who was in London at the time of the
G-7 meeting in February, pleaded for an end to the debt
crisis as one of the steps that the developed countries
could and should take. The debt crisis goes counter to
the United Nations’ millennium goal of halving the
extreme poverty of developing countries. The time has
come for 100 percent debt forgiveness to become a
reality. All it takes is an exercise of political will
on the part of the world’s richest nations.