NO DEBT RELIEF UNTIL AFTER HURRICANE FLOYD AID: US SENATOR.
The US Senate will not consider President Bill Clinton's foreign debt forgiveness plan until adequate aid is dedicated to victims of last month's Hurricane Floyd, Agence France-Presse reports Senator Jesse Helms (R-NC) said yesterday. Helms, who represents one of the states worst hit by the hurricane on September 16 and 17 and who is chairman of the powerful Senate Foreign Relations Committee, said he was putting the White House on notice. "Not until sufficient resources are dedicated to this effort by the federal government will I agree to Senate consideration of Clinton's debt forgiveness to foreign governments proposal," Helms said on the Senate floor.
Clinton last Wednesday offered to forgive all the debt owed to Washington by the world's poorest nations. If approved, the move could benefit 430 million people, says the story, adding that Clinton's offer followed the World Bank and the IMF's plan to slash some $70 billion in nominal terms off the $214 billion debt burden of the world's 40 poorest nations.
The president's proposal "diverts assistance from Hurricane Floyd victims to corrupt, economically and politically repressed foreign countries?many of whom are not even friendly to the UN," Helms said, citing Sudan as an example. The administration calculated it would cost $320 million to forgive the $5.7 billion in mostly uncollectible debts owed to the US, and the US also promised to underwrite an additional $650 million debt forgiveness to the World Bank and the IMF, Helms noted. "That's a total of $970 million which North Carolina and other devastated regions desperately need, but will not get," he said.
The news comes as the US Congress is threatening to impose cuts in foreign aid that would prevent Clinton from meeting international commitments in areas ranging from Russia and the Middle East to providing debt relief to poor countries, the Financial Times (p.8) reports. Budget negotiators for the Republican majority have put forward a bill that would provide only $12.6 billion for foreign operations?$2 billion short of the Clinton administration?s request.
The legislation provides for just $895 million in funding for multilateral development banks, nearly $500 million short of the administration?s request, the story notes. It would also make big cuts to international debt relief provisions, calling into question Congress?s willingness to fund Clinton?s proposal to forgive bilateral debt for poor countries that meet certain conditions.
The Washington Post (p.A4) reports that House Republicans met last night in a strategy session to discuss foreign aid, among other topics.
Meanwhile, reports the Bulletin Quotidien Europe (Belgium, p.13), the EU has announced its contribution of some $1 billion to finance the IMF and World Bank?s debt relief initiative, but no decision has yet been taken regarding the financing arrangements which will require the unanimous agreement of ACP and EU countries. A proposal will be presented within two weeks to the ACP committee of ambassadors, and a formal decision will be taken on December 7 and 8, the story says. Bernard Petit of the European Commission?s directorate general for development said he was confident there would be agreement between ACP countries, as most of the resources mobilized will go to lighten the debt burden of countries in the group.
News of proposed legislation in the US to cut foreign aid comes as German development organizations are warning of the dire consequences for the fight against poverty of the German government?s austerity packages, the Frankfurter Allgemeine Zeitung (Germany, p.19) reports.
Further, an editorial in the Los Angeles Times (p.A16) says that debt relief is literally a matter of life and death, and must be instituted immediately. Debt forgiveness should close a chapter on the decades-old practice of extending loans to Third World governments for political reasons regardless of how corrupt their governments are, says the article. Instead, future loans should be based on economic considerations, stimulating and rewarding reformist economic policies.