----- Original Message -----
From: "Andy Mensah" <[log in to unmask]>
To: <[log in to unmask]>
Sent: Monday, January 26, 2004 12:31 PM
Subject: [unioNews] Make debt relief available to all
> Jan. 26, 2004. 01:00 AM
> <H3>Make debt relief available to all</H3>
> CHUCK GASTLE
>
> <B><i>When is the United States ever going to be this interested in
> debt relief again?</i></B>
>
> Last week, President George Bush sent James Baker abroad as his
> personal envoy seeking debt relief for Iraq. Baker's mission appears
> to have been a success.
>
> On Friday in Switzerland, Prime Minister Paul Martin agreed to
> forgive most of Iraq's debt and thinks other countries should do the
> same as quickly as possible.
>
> It is a mistake for Canada and other countries to bow to pressure by
> the United States and agree to forgive Iraq debt, unless it occurs
> through the International Monetary Fund as a change to its Articles
> of Agreement.
>
> Any such change would then be binding on the 184 members of the IMF
> and, depending on their terms, would be available to any developing
> world nation facing financial crises.
>
> Iraq presents a compelling case for debt relief. But so do any number
> of countries in the developing world, without the extensive oil
> reserves available in Iraq to service the debt.
>
> Africa is a basket case and Latin America is staggering under immense
> debt loads that inhibit meaningful development.
>
> In Monterrey, Martin placed a new emphasis on social development, in
> addition to regulatory reform and trade liberalization.
>
> Debt relief represents an opportunity for the Prime Minister to show
> leadership on an issue of real significance to the hemisphere.
>
> Debt relief is likely to contribute to economic stabilization in
> Latin America and contribute to the kind of growth that will be
> necessary to reduce the grinding poverty evident there.
>
> It would help to reinvigorate multilateral initiatives such as the
> Doha Round and the Free Trade Agreement of the Americas.
>
> Iraq presents an opportunity to establish a policy of debt relief as
> well as a "bankruptcy" process for nations that can be used by
> developing world nations equally in need of a second chance.
>
> Such a bankruptcy process can include "standstill" provisions, giving
> debtor nations some breathing space when confronted with massive
> capital flight. It should be binding not only on creditor nations but
> also on private creditors, who now hold two-thirds of Latin American
> debt.
>
> The need for a formal IMF policy arises from the fact that countries
> are not allowed to go bankrupt.
>
> The IMF provides emergency funds to those in danger of default, with
> conditions attached that impose austerity measures promoting fiscal
> responsibility at the expense of social conditions.
>
> Some criticize the IMF as simply bailing out foreign banks without
> regard to social justice and in a manner that promotes lax due
> diligence standards on the part of lenders.
>
> The other viewpoint is that such guarantees are necessary to keep
> risk premiums in check. Without them, credit markets might not be
> available to developing nations and/or the additional risk would
> result in punitive interest rates that would be far more devastating
> to the ability of the developing world to raise capital or service
> existing debt.
>
> The IMF adopted an enhanced initiative for Heavily Indebted Poor
> Countries in late 1999. But only three countries in the hemisphere
> has qualified thus far, including Bolivia, Nicaragua, and Honduras.
>
> Iraq will not fit under the existing HIPC framework, in part due to
> its oil resources. It can be treated differently than equally
> deserving nations if it is treated on an ad hoc basis, and its
> special treatment will be due largely to the fact that the United
> States desires it.
>
> There is significant pressure to resolve the Iraq debt issue, due to
> the chaotic situation there and an American election in November.
>
> Of course, if a chaotic situation alone is justification, Argentina,
> Bolivia, Columbia, and Venezuela already qualify for similar
> treatment.
>
> This pressure may not allow the development of a debt relief policy
> beyond the HIPC initiative or a bankruptcy mechanism before Iraqi
> debt is forgiven.
>
> Nevertheless, the concessions given to the United States regarding
> Iraq should be tied to a commitment that the principles justifying
> Iraqi debt relief should form the basis of a new IMF initiative and a
> timetable should be established for a new mechanism to be developed.
>
> Martin's emphasis on the relationship between trade and social
> development is incomplete if the issue of debt relief is not dealt
> with. He has an opportunity to show leadership on an important issue
> shortly after making an important commitment to social welfare in
> Monterrey.
>
> It will be interesting to see how he deals with this issue during the
> election campaign now on the horizon. But honouring Bush's request
> for Iraqi debt relief provides an excellent opportunity for him to
> immediately show just how deep this commitment runs.
>
>
> ***
> Chuck Gastle is a partner at the law firm of Shibley Righton LLP and
> is chair of the policy committee of the Canadian Council for the
> Americas, a private sector link between Canada, Latin America and the
> Caribbean
>
> Copyright Toronto Star Newspapers Limited. All rights reserved.
>
>
>
> lllll
> QUOTATION:
>
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in our lifetime can so work and act as to make the dream a possibility
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Marcus Mosiah Garvey <i>(1887 - 1940)</i></A></html>
>
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