Wednesday, June 22, 2005

AFRICAN DEBT, EXPLAINED

I've been reading lately about the US, and a major drive to get us to forgive the African countries their debts. The idea behind this is that, by effectively allowing the in-over-their-heads countries to declare bankruptcy, we will be giving them a clean slate, and letting them start over again. Which, according to the theory behind the debt forgiveness, should set things right.

Oh, yeah?

In 1996, a campaign began to persuade the wealthier nations to cancel debts to HIPCs - Heavily Indebted Poor Countries. It's been a popular cause with many liberals.

Folks, allowing the African countries to walk away from their debts does several things, all of them bad:

  • It lets the governments that incurred the debts to continue their spending, without penalty.

    Many Christian groups favor debt-forgiveness. They point out that it's Biblical - regularly recurring forgiveness years are built into the ancient system of Old Testament justice.

    And that's true.

    But, the difference is that the OT debt was incurred to buy animal stock, food, seed, and the like.

    Not enrich themselves.

    One thing that has to be looked at is what the original money was spent on. Yes, that requires a judgement. And we all know how liberals hate JUDGEMENTAL people.

    But, realistically, if we don't make some attempt to apply some criteria for debt cancellation, we risk encouraging countries to spend foreign aid on non-necessary projects. Sort of like allowing a bankrupt person to keep ALL their assets, regardless of whether it is a beat-up car, or a Mercedes. A basic wardrobe, or furs, designer dresses, and Manolo Blahniks. A black & white TV, or a 5-foot HD-plasma screen.

  • It subverts the democratic process. When a leader of a country can bring in the goodies, whether or not he has the support of the people, that dilutes the impact of participatory democracy.

  • It teaches them nothing. It's like enabling a drunk - we'd be enabling Paris Hilton-like spending.

    Like it or not, suffering teaches you something. Generally, it teaches you not to act like such an idiot. By having consequences, life delivers more lessons than The Old Red Schoolhouse.

Not all African countries are in favor of debt cancellation.
"(Debt cancellation) ... cannot work if African governments do not adhere to fiscal discipline, a critical phase in the management of a country's resources," Malawi treasury secretary Milton Kutengule told Reuters in the commercial city Blantyre.

Furthermore,
"Those faithful in servicing their debt like Kenya are being ignored while HIPC (Highly Indebted Poor Countries) who have failed to service the debt are getting more attention. This is not good for Africa," Kenyan Planning and National Development Minister Peter Anyang Nyongo told Reuters in Nairobi.

We do that all the time in American life. And it's not a good thing. People who are totally out of control, like a sodding drunk, are given special treatment by the courts when they create havoc. A one-time drunk gets the book thrown at him.

Someone who tries to clean up their debt pays a lot more money than someone who ignores the whole thing until a crisis brings the house of cards falling down on them.

We need to encourage the countries that have tried to meet us 1/2 way.

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