Friday, July 16, 2004

The Case Against Debt Relief

Two days ago, I got an email from Africa Action asking people to contact the U.S. Treasury. Why? To call on the Bush administration to support 100% multilateral debt cancellation for poor nations. They claim that "this year alone, 3 million people in Africa will die due to the HIV/AIDS pandemic. Yet countries on the African continent will send an estimated $15 billion in debt service to the IMF, World Bank, and wealthy creditor nations this year."
What part of "loan" do people not understand? It seems like the more debt relief there is, the further the country gets into the red. Why should horrible economic management be rewarded? Why should U.S. taxpayers cover other people's bad debts? I'd also argue that it's not the debt that is harming regular folks, but kleptocratic Marxist dictators and their cronies. Let's talk about the massive millions (occasionally, even billions) that flow into Swiss bank accounts. Or used to pay off the military to keep kleptocratic elites in power.
What rich countries can and should do is lower their remaining trade barriers on agricultural goods. African farmers would thus have a fair shot at world markets, and there would be lower prices for Western consumers. Instead of subsidizing inefficient industries, Western countries can plug their money into what they do best and where they have a fair competitive advantage.


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