What advocates seek, therefore, is 100 percent debt cancellation for all countries included in the H.I.P.C. initiative, as well as others that are also very poor and indebted. Finance ministers of the G-7 countriesCanada, United States, Japan, Britain, France, Germany and Italymet to discuss the debt issue in early February. Held in London, the meeting was chaired by the United Kingdom, with the U.K. serving as leader. The U.K. has been pressing for a more generous approach to debt cancellation. Unlike the United States, it believes that more than the 37 H.I.P.C. countries should be included in the cancellation process. Gerald Flood, a consultant to the U.S. Conference of Catholic Bishops, told America that other poor countries like Haiti should also be included in the H.I.P.C. initiative; but they do not qualify under the initiative’s terms, because their debts are not considered heavy enough. So far, the U.S. view is that debt forgiveness should be limited to H.I.P.C. countries, a position with which the U.S.C.C.B. and C.R.S. disagree. In either case, to receive relief, indebted nations must meet various conditions, including making arrangements to ensure that debt relief savings will be used to reduce poverty.
Most rich lender countries have acted on their own to eliminate the debts owed them. Britain’s finance minister, for example, recently announced that it will cancel Mozambique’s $150 million debt to the U.K. No concrete decisions by the G-7 countries were made in February, but another meeting is scheduled for April. So far, with the possible exception of Japan, all these countries appear to be in favor of up to 100 percent debt relief. What is unclear is how debt relief on this scale should be financed. The U.K.’s Gerald Brown has suggested that the I.M.F. use part of its gold reserves to write off a portion of the poorest countries’ debt. Some resist this approach, fearing that it might hurt the organization’s financial standing.
But generous debt forgiveness is possible, as can be seen in the fact that the G-7 and other wealthy nations agreed in a single day to cancel 80 percent of the $39 billion owed by Iraq, with no conditions imposed and even without insisting on the track record of good economic management it requires of other poor countries. As Ms. Salvaggio pointed out, it comes down to a question of political will. But advocacy groups like C.R.S. and the U.S.C.C.B. also fear that large-scale debt cancellation might tempt some creditors to seek to recoup their losses by reducing the levels of financial assistance provided to developing countries. This would amount to a zero-sum game, because the debt cancellations would result in little poverty reduction in the neediest countries.
Nelson Mandela, who was in London at the time of the G-7 meeting in February, pleaded for an end to the debt crisis as one of the steps that the developed countries could and should take. The debt crisis goes counter to the United Nations’ millennium goal of halving the extreme poverty of developing countries. The time has come for 100 percent debt forgiveness to become a reality. All it takes is an exercise of political will on the part of the world’s richest nations.