The False Promise of Debt Relief
With debt relief for poor countries shaping up as a focal issue at the July G-8 summit in Scotland, it is a shame that so few people appreciate what a farce such measures could turn out to be. Unfortunately, most of the public, egged on by well-meaning rock stars, religious leaders, and other popular figures, seem brainwashed into believing that debt relief is a giant step on the road to ending world poverty. But forgiving poor countries’ debts without agreeing on a better framework for future aid flows is an empty gesture.
At first glance, it seems incredibly generous and statesman-like for G-8 leaders to endorse debt relief for the world’s poorest nations. But no one really expects the debts to be paid anyway. Indeed, thanks to ongoing grants and future loans from national aid agencies and multilateral lenders like the World Bank, most of the poor “debtor” countries look set to receive considerably more money than they pay back, with no end in sight.
Citizens of rich countries may be self-centered and self-indulgent, but things are not quite as horrible as some would have us believe. True, the ultra-rich United States does only give a pathetic 0.2% of its income in aid. But at least it doesn’t tax poor countries, as rich-country imperialists did until well into the twentieth century.