The Brady Plan, World Bank
Adjustment Lending, and Conservation
Investments in the Developing World
I would like to preface the main body of my remarks with an observation that stems from the remarks Congressman Porter made about the real need for the United States to put its own house in order.We preach reduction of greenhouse gases, yet the United States is the single biggest emitter of greenhouse gases in the world. We preach protection of rainforests, but we certainly have a lot to do in Hawaii and Puerto Rico, not to speak of our temperate forests of the Pacific Northwest and Alaska.
A domestic area that requires attention is the gargantuan borrowing appetite of our government in international capital markets. US borrowing has a tremendous impact on the level of debt servicing the developing countries have to pay every year. The unprecedented high interest rates through the 1980s are due, according to many economists, to the US government's need to borrow.Most of the more than one trillion dollar LDC debt is based on adjustable interest rates; thus higher interest rates mean that the LDCs have had to pay tens of billions of dollars more every year on servicing their existing debt than they would have if we had balanced our budget.If there is true concern about the tremendous burden of the debt crisis on the ability of developing countries to deal with their environmental and social crises, intellectual honesty compels all of us to recognize that the one thing the United States can do is simply not borrow so much on international capital markets, thereby lowering international interest rates.
The Brady Plan for Third World debt reduction, the accompanying World Bank and IMF adjustment conditionality that is an integral part of that plan, and the opportunity for increased conservation investments through debt swaps in the developing world are all three inextricably and functionally related issues.Quite clearly the debt crisis and the environmental crisis in the developing world are crises of enormous proportions. So far the record of debt-for-nature swaps has been conceptually promis-____________________