LONDON, Feb. 5 -- Finance ministers from the world's seven richest nations agreed in principle Saturday to write off up to 100 percent of the debts of the world's poorest countries but remained deeply divided on the best way to do it.
Treasury Chancellor Gordon Brown of Britain, the meeting's host, said Group of Seven ministers had achieved a breakthrough by agreeing not only to work toward wiping clean the debts owed to their nations by the 27 poorest countries -- most them in Africa -- but also to eliminate debts these countries owe to multilateral institutions such as the World Bank and International Monetary Fund.
"This is the first time we have ever made this offer," Brown told a news conference at the conclusion of the meeting, which he characterized as "the 100 percent debt-relief summit."
"It is the richest countries hearing the voices of the poor . . . [and] showing that no injustice can last forever," said Brown, who has been promoting the idea of a new "Marshall Plan for Africa" in recent weeks. He brought former South African president Nelson Mandela to London this week for a speech in Trafalgar Square and a personal lobbying session with the ministers Friday night in which he sought a new $50 billion aid commitment.
But while U.S. officials insisted they supported debt relief and increased aid in principle, they made clear they could not support the specific mechanisms Brown and other European leaders had proposed.
Brown had proposed having rich nations put up money to pay off the Africans' cost of servicing their debts to the World Bank and the African Development Bank, and using the International Monetary Fund's vast gold reserves -- perhaps selling some of them -- to cover the cost of canceling the fund's loans to poor countries. He also proposed doubling aid to about $100 billion a year, by creating an international financing facility that would essentially require rich nations to make long-term aid commitments.
The Bush administration opposes those ideas. Washington prefers an approach in which the World Bank would essentially convert future assistance to poor countries to grants rather than loans -- an approach the Europeans fear could undermine the bank's financial strength. The United States is willing to consider using IMF gold reserves in some way to help fund debt relief, but "we're not convinced of the need at this time," John B. Taylor, the Treasury undersecretary for international affairs, told a news conference.
On the question of Brown's proposed financing facility, Washington has rejected it outright because future Congresses cannot be bound by commitments made by the current one. "This particular mechanism does not work for the United States," Taylor told reporters.
Taylor, who led the delegation here after Treasury Secretary John W. Snow pulled out citing illness, repeatedly stressed the Bush administration's support for increased aid to Africa. He noted U.S. aid to Africa had quadrupled from $1.1 billion to $4.6 billion per year over the last four years.
The finance ministers will meet again at least twice before their heads of state meet at the annual G-8 summit, which will be held in Scotland in July.
U.S. officials took pains to express support for the thrust of Britain's efforts, if not the details. But Snow's absence from the proceedings, coupled with the lack of a hearty U.S. endorsement for Brown's Marshall Plan-style rhetoric, suggested American skepticism about at least the means, if not the ends, the British are pursuing.
Supporters of African development have pushed debt-relief to ease the economic burdens of African governments, many of which spend more annually paying off old debts to western nations and multilateral institutions than they do on health care or education. But even though G-7 countries have been endorsing relief for the past decades, many African states are still mired in debt both because they have not been granted full relief and they have continued borrowing.
"Though we are encouraged to hear that for the first time the G-7 have officially embraced the call for 100 percent multilateral debt cancellation, we insist that this plan must be actual cancellation -- not just debt service relief, that it apply to all impoverished countries, and that it must come without devastating economic conditions," said Neil Watkins, national coordinator of Jubilee USA Network, a Washington-based group working for debt relief.
