The world's poorest nations have piled up hundreds of millions of dollars in debt. And they are not in a position to pay up. U.S. President Bill Clinton has a suggestion: forgive the debt. RFE/RL's Andrew F. Tully reports from Washington.
Washington, 30 September 1999 (RFE/RL) -- U.S. President Bill Clinton is offering to forgive up to 100 percent of the debt owed to the United States by the world's poorest, most indebted nations. And it appears that Congress will approve the proposal.
Clinton outlined his plan Wednesday during the annual meetings of the World Bank and the International Monetary Fund (IMF). The bank and the fund also have designed a joint program to alleviate the debt of the same 36 countries in sub-Saharan Africa, Southeast Asia and Latin America.
Treasury Secretary Lawrence Summers said the current proposal includes "hundreds of millions" of dollars in debt that would be erased.
But Clinton stressed that not all the debts of these countries will be erased, and the offer is not unconditional.
"Today I am directing my administration to make it possible to forgive 100 percent of the debt these countries owe to the United States when -- and this is quite important -- when needed to help them finance basic human needs and when the money will be used to do so. In this context, we will work closely with other countries to maximize the benefits of the debt reduction initiative. We believe the agreements reached this weekend will make it possible for three-quarters of the highly indebted poorest countries committed to implementing poverty and growth strategies to start receiving benefits sometime next year, actually receiving the benefits sometime next year."
Support for the president's proposal in the U.S. Congress is strong, even at a time when Clinton and his opponents from the Republican Party are struggling over designing a way to pay for government operations in the 2000 fiscal year, which begins Friday October 1.
Mark Kirk, the chief counsel for the International Relations Committee of the U.S. House of Representatives, said his committee and the House Banking Committee are working together with the Clinton administration to draft legislation that will make the debt-forgiveness proposal a reality.
But Kirk stressed that the United States is not acting unilaterally. He said if the United States acted on its own, the beneficiaries of debt forgiveness would not be the poor countries but the other wealthy lenders whose own debts could then be repaid more quickly.
Instead, Kirk said, these countries -- Britain, France, Japan and Germany -- will join the United States in forgiving debt, and thus the benefits will be felt by the debtor nations.
But Kirk complained that Clinton has yet to decide how the debt forgiveness will be reflected in the budget, and that could slow the legislation's progress through both houses of Congress.
And the proposal faces opposition from conservatives in Congress. They argue that making loans, then forgiving them, puts an undue burden on American taxpayers.
The White House said after Clinton's speech that his announcement was an expansion of the previous U.S. commitment to debt relief made in June at the summit of the Group of Seven industrial nations (G-7) in Cologne, Germany. A spokesman (Jake Siewert) said the United States at first planned to forgive 90 percent of the debt owed by these nations.
At the same meeting in Cologne, the G-7 leaders agreed to forgive about $70 billion worth of loans to these countries.
On Sunday, the World Bank and the IMF announced a joint initiative to help ease the burden of up to $100 billion in debt owed by these 36 countries.
That program will be paid for by revaluing 14 million ounces of the IMF's 103-million-ounce stockpile of gold to raise $50 billion, and to raise an equal amount through pledges from among the IMF's 182 member states. Already, about $30 billion has been pledged.
Clinton said all these plans to alleviate poor countries' debt is important as the world embarks on a new millennium.
"I don't believe we can possibly agree to the idea that these nations that are so terribly poor should always be that way. I don't think we can, in good conscience, say we support the idea that they should choose between making interest payments on their debt and investing in their children's education. It is an economic and moral imperative that we use this moment of global consensus to do better."
And Clinton said the debt-relief proposal is an investment in the future of the industrialized world as well.
"We have before us perhaps as great an opportunity as the people of the world have ever seen. We will be judged by our children and grandchildren by whether we seize that opportunity. I hope and believe that we all will do so."