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11 June 2005

Odd Alliance Brings About Debt Relief By ELIZABETH BECKER The New York Times Published: June 11, 2005

WASHINGTON, June 10 - It took them more than five years and required the star power of Hollywood names like Brad Pitt and leading evangelicals like Pat Robertson.

But the potent campaign built by Granola Belt charities, flamboyant rock musicians and movie celebrities, number-crunching economists, conservative and liberal religious groups - not to mention the Dalai Lama - finally helped persuade the world's wealthiest nations to forgive the debt of some of the world's poorest. The British and American proposal goes before the industrialized countries meeting this weekend.

It is a story reminiscent of the global campaign to abolish land mines, only this is just the first chapter.

Half a dozen commissions and reports have already called for the elimination of the more than $40 billion in debt that has hobbled the world's poorest countries for decades. Experts agreed that the money would never be paid back and that simply keeping up with interest payments was forcing countries to charge fees for elementary schools and health care at the most rudimentary clinics.

But policy makers from Washington to Berlin hesitated, torn between memories of corrupt governments that misspent and pocketed much of the aid themselves and contemporary fears that debt relief was just the opening salvo in a campaign that would require far more money than some wanted to spend.

They were right. But in the end it did not matter. The dam broke as the campaign grew in numbers - about 150 million people at the last count - and in sophistication. Led by Bono, the Irish rock star, the African debt-relief campaign made enough strategic alliances, especially with conservative groups and within the Bush White House, that some success proved inevitable.

Bono applauded Mr. Bush one minute, then chastised Paul Martin, the Canadian prime minister, for failing to pledge more money for global poverty reduction. And lately the flashy stars leading the way have adopted a political sophistication that would have been abhorred by their predecessors in the antiwar movement of the 1960's and 70's.

In a video, which is also broadcast as an advertisement on national television, Penélope Cruz, Jamie Foxx and other celebrities join Mr. Pitt and Mr. Robertson in asking Americans to demand that the government give 1 percent of the national budget to reduce poverty.

That works out to about $25 billion. There will be live rock concerts around the globe for the summit meeting of leaders of the Group of 8 nations, not violent protests, and sophisticated pitches for the aid.

"Give credit where credit is due," said Max Lawson, the debt expert for Oxfam, the charity that has been one of the movement's leaders. "The Bush administration has increased its aid budget, but it has to do much, much more."

Neither the Bush administration nor the government of Prime Minister Tony Blair of Britain, which has pushed the hardest for debt relief among the leaders of the rich industrial powers, has ceded the moral high ground to their critics. Mr. Bush said this week that poor countries trying to improve their governments "shouldn't be burdened by mountains of debt," making it clear that corrupt and incompetent countries were ineligible.

If those standards had been applied when governments granted some of the original loans, the poor nations of Africa, Latin America and Asia would not be in such a mess, according to Jeffrey D. Sachs, the Columbia University economist who led a United Nations-sponsored report on poverty, and helps the movement with its economic statistics.

During the 1970's and 1980's, the United States, France and other rich Western countries lent billions of dollars to corrupt governments whose only qualification was their opposition to communism. Some of those regimes disappeared but the loans remained, many with flexible interest rates tied to the ups and downs of the global financial marketplace.

The costs shot up and a downward spiral began. Countries had to borrow just to make their interest payments. Many of the loans from the World Bank were used to cover those interest payments but they came with conditions, often including cutting budgets. Soon children in the poorest African nations were forced to pay fees to attend public schools and families lost free coverage at rudimentary health clinics.

When the World Bank and the International Monetary Fund began to slowly reduce the debts of some of the 18 countries now scheduled to receive full debt forgiveness, those programs were the first to be reinstated. Tanzania spent its $3 billion in debt relief to eliminate its education fees and an additional 1.6 million enrolled in its elementary schools.

"This is a recognition at the very minimum that the debt burden has impeded economic growth - has strangled many of these countries - and I would like to believe it is a recognition by the advanced industrial nations of a degree of culpability for much of the overall debt," said Joseph E. Stiglitz, a former chief economist at the World Bank.

The World Bank disputes much of the criticism, especially since Paul A. Wolfowitz, its new president, has made helping Africa his top priority.

"We don't get kudos for helping reform courts, beginning debt relief and financial systems but we get knocked about the head for just about every negative aspect of globalization," said Damian Milverton, the spokesman at the World Bank.

Rich nations are right to consider this week's negotiations to wipe out debt only the first episode in an unfolding story. This stage will last through the G-8 summit of the seven industrial nations, plus Russia, at Gleneagles, Scotland, next month.

The second big push will be in September when the United Nations holds a global summit meeting in New York and the United States will be under special pressure.

"Debt is only a small part of the total needed," Mr. Sachs said. "The most consequential element is development assistance and the White House isn't doing what is needed."

The last stop will be Hong Kong where the World Trade Organization meets in December to try to change rules to aid poor countries. "This is a pitch for the poor we've never seen before," Mr. Lawson said. "It's quite exciting and it just might work."

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