Debt-relief is far too urgent a challenge to be left to the bureaucrats

In some respects, the problem is perhaps all too familiar: a surfeit of spin. Just a year ago, at the G8 summit in Cologne that brought together the Group of Eight leading industrialised countries, world leaders boasted of their munificence in writing off much of the debt that has crippled some of the world's poorest countries. Excited headlines spoke of the $100bn forgiveness of debt. Gordon Brown, the Chancellor of the Exchequer, spoke glowingly of how such relief would begin "within weeks".

In some respects, the problem is perhaps all too familiar: a surfeit of spin. Just a year ago, at the G8 summit in Cologne that brought together the Group of Eight leading industrialised countries, world leaders boasted of their munificence in writing off much of the debt that has crippled some of the world's poorest countries. Excited headlines spoke of the $100bn forgiveness of debt. Gordon Brown, the Chancellor of the Exchequer, spoke glowingly of how such relief would begin "within weeks".

Now, here we are, one year on - and almost nothing has changed. President Clinton talked last year of "a historic step to help the world's poorest nations achieve sustained growth and independence". Instead, however, we are still enmired in bureaucracy, as though the governments themselves begrudged the decision that they claim already to have taken. The United States, for example - because of shenanigans in Congress - has managed to produce not a single cent of the $600m that was promised as a contribution towards the trust fund that was intended to cover debts to the World Bank and the International Monetary Fund.

The issue itself is not morally easy, even when it seems to be. Certainly, the repayment of debt can become a crippling burden to poor countries that are trying to drag themselves out of poverty; the debt repayments become a millstone that drags them ever further downwards. Many countries spend more on loan repayments than on health and education combined. In those circumstances, it seems that the solution is obvious: "Can't pay? Don't pay!" sounds, on the face of it, like an attractive slogan of encouragement for the poor.

In reality, waving a financial wand of forgiveness does not in itself provide the answers. Writing off debts without making any serious attempt to transform the economy is merely a recipe for ensuring that those countries will not receive any loans in future. In effect, it is a way of rubbing the poorest countries off the map, casting them into permanent oblivion.

Credit worthiness, whatever measure is used, is important if the countries are to have any chance of obtaining further loans and making worthwhile investments in the future. In the past, there has been a problem with the wealthy and corrupt dictators who have happily creamed off millions or billions of pounds of loans into their Swiss bank accounts, leaving their countries more poverty-stricken than before. That absurd situation cannot be allowed to arise again.

Clare Short, the Secretary of State for International Development, was right to point out that delivering new money does not always make much sense. As she rightly notes, "You can't just throw money at a country that is buying lots of arms and perpetuating war." Equally, however, it is wrong to suggest that debts must continue to be repaid, even if that means dragging a country downwards just when it might otherwise be coming up for air. Nor does it make sense to punish new democrats for the sins of old dictators.

The problem in the past year - quite apart from the overblown spin of last year's announcements in Cologne - has been that there has been too much bureaucracy and too little trust. It has become almost impossible for poor countries to prise open the Western purse. If governments can make a convincing case for showing how they would spend money, they should be allowed to do so. So far, only $10bn out of the promised $100bn of debt relief has been delivered. Given all the hype, that is too little. Cologne produced big words. Okinawa should make it possible to convert those to big deeds.

Comments