WHERE DID ALL THE MULTILATERALISTS GO?:

U.S. Considers Forgiving Poor Nations' Debts (Paul Blustein and Mike Allen, June 9, 2004, Washington Post)

The Bush administration is considering throwing its weight behind a British-backed plan that would eliminate the debt owed by some of the world's poorest countries to international lending institutions, according to people familiar with the matter.

The initiative would significantly deepen the debt relief available to poor countries under a program launched during the 1990s. It may help Washington obtain broad backing for its efforts to forgive most of Iraq's debt, because proposals to grant debt relief to Baghdad have raised questions about why an oil-rich country should get generous terms while poorer nations remain financially strapped. [...]

[T]he plan has powerful boosters -- top officials in the U.S. and British treasury departments. The British government has been a leading champion of increasing aid and debt relief, and for Prime Minister Tony Blair, getting American backing for the plan would enable him to show a payoff for the support he gave to President Bush on the Iraq issue. [...]

The rich nations would have to put up substantially more money -- over $1 billion a year for the next few years, and significantly greater amounts in later years -- to fund the proposed 100 percent write-off plus the conversion of loans to grants. Otherwise, the loss of debt payments from the poor countries would hurt the financial condition of the World Bank and other multilateral lenders, restricting their ability to aid other developing countries that need assistance.

The need to ensure that money will be forthcoming from the rich countries is a potentially major obstacle.

Suddenly the French, Germans and Canadians support our acting unilaterally...

Posted by Orrin Judd at June 9, 2004 3:49 PM