USA: Blessing or Curse? Corporations Urge Debt Relief
Excerpted from a summary prepared by the External Affairs Department of the
World Bank. All material is taken directly from published and copyright
wire service stories and newspaper articles.
US business and financial organizations yesterday added their weight to a
campaign to secure finance from Congress for a debt relief initiative for
the world's poorest countries, reports the Financial Times. The groups,
which include Goldman Sachs, Motorola, Bechtel, Caterpillar, and Merck,
signed an open statement calling for full US funding for the initiative for
the most heavily indebted poor countries.
"While the US is responsible for less than 4 percent of the total cost [of
the initiative], the rest of the world is waiting for full US
participation," the statement, distributed yesterday to legislators, said.
The Clinton administration is seeking a total $435 million to finance the
US share of the initiative until the end of the current fiscal year, which
started on October 1. It is also seeking authorization for the IMF to
revalue more of its gold reserves to fund its share of the initiative, says
Below is the full statement and list of signers. Per my title, "Blessing or
Curse?" Remember the UN Global Compact, consider the just announced
campaign to campaign by African NGOs urging their governments not to apply
to be an eligible country for the Africa Growth and Opportunity Act of the
U.S. and evaluate the especially in light of the following parts of the
"We recognize the importance of creating opportunities for the poorest
countries to join the global economy through enhanced trade, private
foreign investment and sustainable development policies. .... But the
poorest, heavily indebted nations in the world, mostly in Africa remain a
largely undeveloped market for U.S. goods. They represent only one percent
of our exports. With the recent passage of Africa trade legislation, the
U.S. has taken an important step toward better economic relations with many
poor nations in Africa and elsewhere. The benefits of trade and direct
assistance, however, cannot be fully realized when so many resources from
poor countries are sent back to official and private creditors. . . ."
For Justice & Dignity,
Njoki Njoroge Njehu
50 Years Is Enough Network
U.S. Business Support
Debt Relief for Poor Countries
We, as U.S. business, trade, and financial organizations, express our
support for debt relief for the worlds poorest countries and call for full
U.S. participation in the international debt relief arrangement reached last
year by the G-7 and other international creditors, called the Enhanced HIPC
We recognize the importance of creating opportunities for the poorest
countries to join the global economy through enhanced trade, private foreign
investment and sustainable development policies. Developing countries
making a large contribution to our economy.
But the poorest, heavily indebted nations in the world, mostly in Africa
remain a largely undeveloped market for U.S. goods. They represent only one
percent of our exports. With the recent passage of Africa trade
legislation, the U.S. has taken an important step toward better economic
relations with many poor nations in Africa and elsewhere. The benefits of
trade and direct assistance, however, cannot be fully realized when so many
resources from poor countries are sent back to official and private
Debt payments often consume 30-40 percent of poor countries' revenues,
diverting scarce resources from education, health systems, infrastructure,
and other investments. Huge debt overhangs undermine the private investment
essential to creating new jobs and markets. Canceling these debts, tied to
economic reform and poverty reduction, is essential to any future trade and
investment strategy for poor countries.
The Enhanced HIPC Initiative, created in 1999 by agreement among the G-7 and
other major creditors, would cancel up to 70 percent of the debts owed by 33
heavily indebted poor countries. The Initiative called on each creditor to
(a) write off its own bilateral loans to poor countries, (b) contribute to a
pool of funds to write off multilateral debts, (c) authorize the IMF to use
internal resources to write down its loans, and (d) approve a new process
for debt relief and lending at the World Bank and IMF that links poverty
reduction and economic reforms.
The cost to the U.S. for this international agreement is $920 million over 4
years ($320 million for bilateral cancellation, and $600 million for a
contribution for multilateral relief). The total cost to major creditors of
the Cologne Initiative is $27 billion. This would relieve $90 billion for
these 33 poor countries. In order to qualify for relief, countries must
have a track record of economic reform and performance, complete a strategic
development (with particular attention to health and education), and respect
international norms on human rights and terrorism.
This plan creates incentives for better fiscal management and economic
reform; it promotes transparency, anti-corruption measures, and
participation by a wide variety of stakeholders in the development of the
plan, including businesses; it supports market-led growth; and it frees up
badly needed internal resources for infrastructure, education, heath care,
and other development needs.
The Enhanced HIPC Initiative has received strong support from the President
and a wide spectrum of both Republicans and Democrats in the Congress. Full
funding of the U.S. portion of this initiative, however, is essential for
its success. While the U.S. is responsible for less than 4 percent of the
total cost, the rest of the world is waiting for full U.S. participation.
Like any such debt relief arrangement, all the creditors must act together
in order that debt relief from one creditor does not end up benefiting
another. For less than $1 billion, the U.S. can help unlock $27 billion in
funding from around the world. Considering the potential benefits to the
worlds poorest countries and to U.S. economic and strategic interests, this
seems a small price to pay.
Accordingly we urge that the Congress act promptly and affirmatively to pass
the necessary legislation to make the promise of much needed debt relief a
reality for deserving countries.
For more information, contact Father Robert Brooks, (703) 243-0684.
Alexis International, Inc.
American Cotton Shippers Association
Automatic Data Processing, Inc.
Barrick Goldstrike Mines, Inc.
Black & Veatch
Committee for Economic Development
Corporate Council on Africa
Creative Memories (The Antioch Company)
Direct Selling Association
Emerging Markets Partnership (AIG African Infrastructure Fund)
Foster Wheeler Corporation
Global Energy Investors
Golden Neo-Life Diamite International
Goldman, Sachs & Co.
Jeunique International, Inc.
Kleiman International Consultants Inc.
Louis Berger Group, Inc.
Mark Twain Institute
Merck & Co.
Morgan, Lewis & Bochius (Ambassador Richard N. Gardner)
Motorola Oriflame Corporation
PartyLite Gifts, Inc.
Samuels International, Inc.
Summit Ventures, LLC
The Bretton Woods Committee
The Stern Group, Inc.
University of Notre Dame Kellogg Institute
USANA Health Sciences
Wheat Export Trade Education Committee
- 194 World Financial Institutions