nettime's_roving_reporter on Mon, 8 Feb 1999 23:16:16 +0100 (CET)

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<nettime> WSJ back debt-relief


Wall Street Journal says poor countries need a bankruptcy

The Wall Street Journal has joined the growing call for an
insolvency or bankruptcy procedure to deal with the
unpayable debts of the world's poorest countries. The call
comes in a 2 February editorial. "Debt service costs in
some Third World Countries are obscene. There is a
well-established and effective way to address the problem.
... It's called bankruptcy," the editorial states.

This means the largest United States business newspaper
has joined the growing calls for some sort of insolvency
or bankruptcy procedure for poor countries. This process,
promoted by Jubilee 2000, would involve a better balance
between debtor and creditor and include some kind of
neutral arbiter deciding what level of debt service a
country can really afford to pay.

"The reason this is not an acceptable solution for the
international aid bureaucrats is that it would cut them
out of the picture. The IMF would have no excuse for
marketing its gold to build up liquidity, expand its
bureaucracy and continue experimenting with its formulas
for running the world. It surely has become obvious by now
that its formulas are not getting the desired results," the
Journal concludes.

The Journal notes the historical precedents for effective
debt cancellation. "Germany had two-thirds of its World
War II debts canceled ... Parts of Eastern Europe received
substantial debt relief after the fall of the Berlin Wall,
freeing it to pursue one of the region's most far-reaching
reform programs and attract loads of new investment. All
these exercises have more or less happy endings, so why
not do the same thing writ large for the Third World?" The
editorial also states: "NGOs such as the Britain-based
Jubilee 2000 -- which advocates wiping the slate clean on
Third World debt by the turn of the millennium -- have
been highly effective in raising public support. They are
joined in their calls by such diverse public figures as
South African Archbishop Desmond Tutu, author Salman
Rushdie and Pope John Paul II."
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