Bruce Braley

National Journal
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Feb. 1, 2013, 5:16 a.m.

By Dav­id Hess

WASH­ING­TON (March 4, 2010) — A bill au­thor­iz­ing the Treas­ury Sec­ret­ary to “use all ap­pro­pri­ate dip­lo­mat­ic in­flu­ence” to lead an in­ter­na­tion­al drive to for­give earth­quake-rav­aged Haiti’s na­tion­al debt was ap­proved by a House pan­el Thursday and sent to its par­ent com­mit­tee.

With bi­par­tis­an sup­port, the un-amended bill (H.R. 4573) was moved without dis­sent by voice vote by the House Fin­ance In­ter­na­tion­al Mon­et­ary Policy and Trade Sub­com­mit­tee. It sets in mo­tion a bid by the Obama ad­min­is­tra­tion to rally Haiti’s cred­it­ors be­hind a massive at­tempt to res­cue the im­pov­er­ished coun­try’s people and eco­nomy from a nat­ur­al dis­aster that wrought an es­tim­ated $14 bil­lion in dam­age to its in­fra­struc­ture and harmed or dis­pos­sessed nearly one-third of its pop­u­la­tion.

In all, ac­cord­ing to es­tim­ates of the amount owed by Haiti to a bevy of in­ter­na­tion­al fin­an­cial in­sti­tu­tions and oth­er coun­tries, the West­ern hemi­sphere’s poorest coun­try is in­debted to the tune of $828 mil­lion — a sum that ap­pears clearly to be un­pay­able in light of the daunt­ing cost of its so­cial re­cov­ery and ma­ter­i­al re­con­struc­tion.

Just nine months ago, the In­ter­na­tion­al Mon­et­ary Fund wrote off $1.2 bil­lion that Haiti owed to that in­sti­tu­tion, fol­low­ing a series of pre-earth­quake dis­asters that had wracked the tiny Carib­bean is­land-na­tion. The bill was vo­cally backed by sub­com­mit­tee Chair­man Gregory Meeks, D-N.Y., Max­ine Wa­ters, D-Cal­if., Gary Miller, R-Cal­if., and Spen­cer Bachus, R-Ala. It would ef­fect­ively wipe clean Haiti’s debt slate, giv­ing it a leg up in help­ing to fin­ance its own re­cov­ery once its im­me­di­ate needs — enorm­ous as they are — are ad­dressed.

Be­fore send­ing the le­gis­la­tion up the lad­der, the sub­com­mit­tee heard testi­mony from a Treas­ury deputy, Nancy Lee, and three out­side ex­perts on aid to poor coun­tries, who gen­er­ally agreed that, in ad­di­tion to loan for­give­ness, Haiti would need dir­ect grants from the rest of the world and in­ter­na­tion­al in­sti­tu­tions to help pay for its re­cov­ery. She also said the White House is pre­par­ing an emer­gency sup­ple­ment­al ap­pro­pri­ations re­quest to Con­gress for Haiti re­lief, but provided no de­tails as to how much it would cost.

In ad­di­tion to debt re­lief, Lee said, the Treas­ury De­part­ment is pre­par­ing an­oth­er pro­pos­al to Haiti’s cred­it­ors to aug­ment the loan for­give­ness ef­fort with grants, to con­vert ex­ist­ing but un­dis­bursed loans to out­right grants, and to urge the Inter-Amer­ic­an De­vel­op­ment Bank to dip in­to its own re­serves to provide grants to Haiti. The aim, she said, would be to “cre­ate a sub­stan­tial pool of up­front grant re­sources, [sup­ply] a con­tinu­ous stream of grants, and en­sure that the U.S. gov­ern­ment’s con­tri­bu­tion [to Haiti] lever­ages the max­im­um amount of mul­ti­lat­er­al aid.”

Wa­ters cited Treas­ury De­part­ment find­ings that the bulk of Haiti’s cur­rent debt is owed to the IDB ($447 mil­lion), the IMF ($284 mil­lion), the World Bank ($39 mil­lion), and the In­ter­na­tion­al Fund for Ag­ri­cul­ture De­vel­op­ment ($58 mil­lion). Her le­gis­la­tion calls on the IMF to start selling off part of its vast store of gold to provide re­lief grants and debt-ser­vice re­lief for Haiti’s re­cov­ery.

Call­ing it “a cruel hoax to load up poor coun­tries with un­pay­able debt,” Tim Adams, dir­ect­or of the Lind­sey Group, told the sub­com­mit­tee that the en­tire ap­proach for lend­ing to the world’s poorest na­tions is a “lend-and-for­give game” that simply does not work and needs to be changed. “We must move away from ex­cess­ive lend­ing and use dir­ect grants to the poorest coun­tries,” he said.

He was joined by Melinda St. Louis, deputy dir­ect­or of Ju­bilee USA Net­work, an in­ter­na­tion­al re­lief or­gan­iz­a­tion, who praised the sub­com­mit­tee for mov­ing the le­gis­la­tion and said: “Giv­en the bil­lions of dol­lars that it will take to pay for re­cov­ery, it’s clear Haiti can­not do it. Im­me­di­ate and full debt can­cel­la­tion, as well as massive new grant as­sist­ance, are crit­ic­al to it.”

Thomas Hart, chief lob­by­ist for ONE, a glob­al group for al­le­vi­at­ing poverty, cau­tioned the pan­el that it won’t be easy to gain the as­sent of the mul­ti­lat­er­al in­sti­tu­tions in provid­ing the re­lief that Haiti needs. The “ma­jor stake­hold­ers” in those vari­ous in­sti­tu­tions, he said, in­clude the U.S., Ja­pan, Ger­many, Bri­tain, France, Canada, Italy, the Neth­er­lands, Ar­gen­tina, Brazil and Mex­ico. “All the cred­it­ors have to be at the table for it to work,” Hart said. “Oth­er­wise, debt re­lief from one cred­it­or simply makes it easi­er to pay back an­oth­er cred­it­or.”

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