Forgive Us Our Debts? Obstacles Lie Ahead. ; G-7 Approves Debt Relief, but British 'Marshall Plan' for Poor Countries Faces US Skepticism

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Britain's lofty ambition to turn 2005 into a breakthrough year for tackling global poverty has cleared the first hurdle, but development experts are unsure if it will prove a turning point.

Last weekend's agreement in principle by the G-7, the group of seven countries to write off up to 100 percent of debts owed by dozens of poor countries kick-started the British-inspired "Marshall Plan" for the developing world.

But economists and charities warn of formidable challenges to truly transforming the relationship between rich and poor.

They also note that the world's foremost financial power, the US, appears skeptical of some of the British initiatives.

"As long as the US keeps saying they are not interested, then that slows down what will happen," says Oliver Morrissey, professor of development economics at Nottingham University. "The Europeans can go it alone on some aspects, but whether it's enough remains to be seen."

Debt-relief campaigners have for years argued that the heavy burden of repayments was stunting growth and exacerbating health, education and development problems in poor countries. Many countries still devote more resources to paying off loans to rich countries and international institutions than they do on healthcare.

But simply forgiving debt is not that straightforward, experts say. Western governments want to know that the money they are releasing will go toward poverty relief and not be spent on presidential palaces and fighter planes.

They also need to know that their domestic public is prepared to pay. Loans given out by institutions like the World Bank originate in national treasuries, which are underwritten by taxpayers.

Professor Morrissey says donors have gone a long way toward making relief more acceptable.

"The mechanisms for monitoring and allocating aid have improved significantly," he says. "There is a greater understanding of which countries have implemented mechanisms and which haven't."

Saturday's G-7 agreement trumpeted by British Chancellor Gordon Brown calls for a case-by-case analysis of poor countries. Some who meet criteria for good governance and economic reform, like Ethiopia, Mozambique, and Uganda, stand to cash in. Others ruined by conflict and corruption, like Sudan and Somalia, may not.

"Countries that are clearly not going in the right direction aren't eligible for this kind of relief," says Adrian Lovett, campaigns director at Oxfam International, which is a partner in a broad coalition called Make Poverty History.

He points to an Oxfam program in Malawi that checks if schools have received funding directed toward them. If they haven't, reports are published in the local press. "It's democracy in action, triggered by the debt-relief process," he says.

Then there are budget pressures. …


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