Pact on debt relief expected from G-7

Deal would wipe slate clean for 14 of Africa's poorest countries

June 11, 2005|By Tom Hundley | Tom Hundley,CHICAGO TRIBUNE

LONDON - Maybe it has nothing to do with Bob Geldof or Bono.

But suddenly, debt relief for the impoverished countries of Africa is high on the political agenda in Europe and the United States.

This weekend, finance ministers of the Group of Seven leading industrial nations - the G-8 minus Russia - are expected to announce an agreement in principle on a comprehensive plan to wipe the slate clean for 14 of Africa's poorest nations.

The deal was put together in Washington this week during British Prime Minister Tony Blair's meeting with President Bush ahead of next month's G-8 summit in Scotland.

Blair has been campaigning hard to make the plight of Africa and progress on global warming the signature issues of the summit, for which he will be the host. But the Bush administration has been cool toward both initiatives.

Bush's initial offer of $674 million for immediate African famine relief this week was widely dismissed as insufficient.

At the same time, Geldof's plan for a series of "Live 8" concerts has kicked into high gear.

The Irish rocker, whose Live Aid concerts 20 years ago raised $100 million for Ethiopian famine relief, is planning a series of free concerts in London, Paris, Rome, Berlin and Philadelphia, and then to deliver a million protesters to Edinburgh, Scotland, for the G-8 summit.

The idea, Geldof explained, is to raise awareness, not money. And that seemed to concentrate the minds of political leaders.

The British-U.S. plan was presented to the G-7 finance ministers at a dinner yesterday in London. It would enable 14 of the poorest nations in Africa and four in Latin America to cancel out their debts.

These countries owe about $15 billion to international lending institutions such as the World Bank and the International Monetary Fund. Instead of spending $1 billion a year on interest payments, the African nations would be able to redirect the money toward development projects.

The idea of canceling the debt of poor nations has been gaining momentum for several years, but questions arose over the best approach.

If lenders write off loans, it means they have less money to lend in the future.

That suited the Bush administration, but Britain and other European nations argued that wealthy countries should take over the debts themselves.

The plan on the table is apparently a compromise in which the lenders will write off the debts but receive compensation from donor nations.

The debt forgiveness plan could be expanded to include more countries and eliminate 40 years of debt worth an estimated $50 billion, according to Gordon Brown, Britain's chancellor of the exchequer.

"Of course, much is to be discussed because you are talking dozens of countries and billions of dollars ... but there is a will to come to an agreement," Brown told the British Broadcasting Corp.

Brown, who has become a strong advocate of debt relief, has proposed an International Finance Facility that would enable poor counties to borrow on the international market against pledges of aid from donor countries.

The Bush administration remains cool to the IFF proposal, and it is not expected to respond to Blair's call for wealthy nations to double the amount of aid they give to Africa. But development experts and aid agencies said the debt relief plan was a positive development.

Jamie Drummond, executive director of DATA, an anti-poverty group that he founded with Bono, said the plan "underlined significant progress" for Africa.

"We trust the debt deal will be finalized this weekend with finance ministers and the bigger debt and trade deal will be announced at the G-8 in July, with the world watching," Drummond said.

Meanwhile, Bono, who met with Bush in 2003, was in Brussels this week, discussing debt relief and other poverty issues with European Commission President Jose Manuel Barroso.

"The message to EU leaders is: Don't blow it. This kind of momentum doesn't come every year," said Bono, frontman for the Irish rock band U2.

"Put down the national flags, look up from the numbers and look to the future," he said at a news conference.

"This is not wide-eyed, misty-eyed Irish nonsense - these are achievable goals. I am excited by that. That is what turns me on."

The Chicago Tribune is a Tribune Publishing newspaper.

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