Write off Africa's debts?

[Relbeek Einre]

http://www.cnn.com/2005/WORLD/africa/01 ... index.html

Interesting topic of discussion. What do y'all think?

[Ddrak]

Well, it's not exactly like they can pay it back anyway. The question in my mind is whether the US economy would be better off for writing off the debt, or whether it is more viable to maintain at least some of the debt.

[Substitute "US" for any country you choose]

Dd

[Relbeek Einre]

But they are paying interest on these debts, you see... Read up on it. Really interesting subject.

[Aabe]

I duh know, send em half a trillion and they in return will fight corruption?? With half a trillion floating around I would think that would increase corruption. LOL. So many poor countries get lots of cash, just never seems to make it past the "rich" folks fingers to the "poor" folks empty palms. EU is pumping money into SA currently trying to stabalize it so they can make it into another US South America/Mexico. Cheap labor and safe to invest in. We do a lot of business with SA and the principles of my company toured there last year. Lots of new highways and infrastructure going in.

And of course we selling more goods there than most other parts of the world, with EU's devlopement cash floating about.

[Akhbarali]

Africa's problems are primarily political and structural. Aid serves as a band-aid but does nothing to address the underlying problems. Debt forgiveness won't solve anything either and might actually contribute further to a business climate that already strongly discourages (desperately needed) private foreign investment.

The political fate of formerly successful African nations (Ivory Coast, Rhodesia/Zimbabwe, etc..) and resource rich nations that cannot seem to get their shit togethor (Nigeria, Congo, Sudan, etc..) will have more impact on the future of the continent than Aid agencies, UN bureaucrats, IMF officials and western diplomats combined. Regretably, there is very little the West can do to help those nations fix the real problems short of sending troops over and kicking out corrupt regimes (which has a whole host of unintended negative side effects). I am sure Ddrak is correct in assuming that a huge percentage of this debt is already effectively worthless. They should probably find some way to quietly write off the worst debts and tie future development money to verifiable political and legal reform.

Akhbar

[Relbeek Einre]

Well corrupt regimes are part of the issue, Akhbar. A lot of the debt in Africa was incurred by corrupt regimes that no longer exist - they were replaced by better governments. So governments of Africa are carrying the burden of their past regimes.

On a slightly related note, at the conclusion of the Civil War one of the things the US did was refuse to repay any debt incurred by the Confederacy. The primary reason for this was to ensure that if ever the US was divided by another rebellion, nobody would financially invest in the rebels.

Africa should follow suit - unfortunately they can't because the political consequences for them would be dire.

[Aabe]

Interesting Beek. If there were to just refuse. All external aid would cease and they would have to become self sufficient. Would be ugly at first, but would be interesting to see what they came up with later.

[Eidolon Faer]

Frankly, it's not all THAT interesting after all.

Forgive their debt or don't forgive their debt, the question is purely academic. They'll never pay it back, and they'll keep trying to borrow more until they're forced to reform. The decision is ultimately meaningless.

[Relbeek Einre]

The results would be harsh short term Aabe, definitely. As it is, they know they have to keep paying interest on their debt, and it's a huge chunk of the economies, And of course, for many of the nations, it's debt incurred by past, corrupt regimes.

Some variants on the idea are debt forgiveness on contingency - the contingency being the money saved must be spent on specific things.

I don't know what to think about it, but it's definitely something to consider, well, if the future of African nations is at all interesting to you.

[Aabe]

Beek, lots of countries I wouldnt even hope for.. But SA actually wants to change, thats half the battle IMO. They have a great effort called "Building Together" showing a black and white hand shaking. It's visible everywhere you go in the cities. It actually is a cultural movment to unite as opposed to many other superficial signs you see elsewhere in the world.

On the down side, SA has learned that buroacracy is a great place to put incompetent people and like our "IRS department shining example" (who could love there job working there anyway?) of professionals on glorified welfare, they unfortunately have learned a bit too much about the way the US runs. Their culture is set for some great changes right now, but they already got the top heavy burocracy thing rolling full swing.

If counties got into dept, changed govenerments, claimed new country, other one was responsible all the time. Might set a presedent if you weren't careful how you handled forgiving debt.

Ironically in SA, "Whites" (from any country) and "Africans" (black africans) are equal and a level above the "coloreds" (non-whites (brown or black) from anywhere but Africa).

[Relbeek Einre]

There are some countries, yes, Aabe, that just wouldn't work. Somalia comes to mind, Rwanda does too.

Other countries, like Uganda? Might be worth looking at. They still are paying the price for the reign of Idi Amin.