Mr. Bush and Africa

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Tuesday, June 7, 2005

THE BUSH administration already has done a lot for developing countries. Its global AIDS initiative has transformed the money available to fight the pandemic; its new Millennium Challenge Corp. is starting to support poor countries that have good policies. Now pressure is building on the administration to add to that progress: British Prime Minister Tony Blair hosts the Group of Eight summit of industrialized countries next month and wants to announce new help for Africa. A coalition of faith groups and entertainers that includes the rock star Bono is pressing for a U.S. contribution. Mr. Blair will meet President Bush in Washington today, and a new round of debt relief is being cooked up behind the scenes. But the administration should go further.

The Bush and Blair governments have been discussing debt relief since last year. Both agree that the previous rounds of forgiveness, in 1996 and 1999, have proved inadequate. Both want debt payments to international financial institutions such as the World Bank and the International Monetary Fund to be canceled for a group of 33 highly indebted poor countries. But the two governments have disagreed on how to pay for debt relief. The British want rich countries to shoulder the cost of repaying the World Bank, thereby getting poor countries off the hook while protecting the World Bank's balance sheet. The Bush administration wants the World Bank to absorb the cost of debt cancellation, which would mean shrinking future World Bank assistance to poor countries. Meanwhile the British want the International Monetary Fund to sell some of its gold to pay for debt relief. The administration resists because senators from western gold-producing states claim that IMF sales would drive down the price of gold; other gold producers, including Canada, share this position.

The British arguments are stronger on both counts: It's better to provide debt relief in a way that keeps the World Bank strong; gold producers, who have enjoyed rising prices lately, should not be allowed to become deal breakers. But debt relief should not dominate the discussion ahead of the G-8 summit. It is only one mechanism for increasing the resources available to finance development, and it has the perverse effect of tending to reward countries that borrowed imprudently in the past. The administration should announce a further Africa initiative of $6 billion a year -- the U.S. share of the $25 billion increase advocated by the recent British-convened Commission for Africa.

A $6 billion initiative would represent a big jump in U.S. aid; in 2003, aid came to $16 billion. But $6 billion would also be a modest contribution relative to the size of the federal budget and the nation's prosperity. U.S. generosity, measured as a share of gross domestic product, would still lag behind the average in industrialized countries. Of course, spending billions is pointless if the money is wasted. But aid does tend to accelerate poverty reduction in countries with good policies, and if such countries ever had as much money as they could usefully spend, other aid could be spent in rich countries on things that boost development. Aid could finance research into new, Africa-appropriate seeds, for example; or it could go to the fund that buys vaccines for poor countries, thereby boosting the incentive for pharmaceutical firms to allocate research dollars to challenges such as malaria. Mr. Bush has shown that he understands the case for more development spending. He should follow his instinct again, boldly.


© 2005 The Washington Post Company

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