“Debt Cut Is Set for Poorest Nations” was the headline in Sunday’s Washington Post over the lead story.
“The world’s wealthiest nations,” wrote Paul Blustein, “agreed yesterday to cancel more than $40 billion in debts that some of the world’s poorest nations owe to international lenders – a move inspired by the belief that full debt forgiveness is necessary to give those countries a chance to escape the trap of hunger, disease and economic stagnation.” Sounds wonderful.
Alan Cowell’s story in the New York Times explained: “The deal [is] expected to ease the 18 poorest countries’ annual debt burdens by $1.5 billion. They are Benin, Bolivia, Burkina Faso, Ethiopia, Ghana, Guyana, Honduras, Madagascar, Mali, Mauritania, Mozambique, Nicaragua, Niger, Rwanda, Senegal, Tanzania, Uganda and Zambia. All must take anticorruption measures.”
It is hard not to break out laughing at that last line.
This $40 billion debt write-off is being hailed as the most magnanimous act since the Marshall Plan. But there is another way to see it: George Bush signed onto one of the biggest bailouts in history. For, here, children, is what has just gone down:
- First, that $40 billion was squandered or stolen by the most corrupt regimes and biggest thieves in the Third World. The money is gone. We shall never see it again. And all the wastrels and crooks who got away with it will not be pursued.
- Second, the idiot-bankers at the IMF, World Bank and African Development Bank who failed to do due diligence when they made the $40 billion in loans, and lied about how good the loans were, will not be exposed and prosecuted, or tarred and feathered as they should.
- Third, the IMF, World Bank and African Development Bank will see all their lost funds replenished, so they can start flying around to those same exotic countries and capitals, shelling out new loans to the same crowd of crooks and incompetents, or their successors.
- Fourth, American taxpayers will have to pony up the cash for this historic bailout of the international banks.
Why is this happening? Because George Bush owes Tony Blair, and because Blair, bless his socialist soul, believes in the salvific power of foreign aid and has to bring home some bacon to show his skeptical countrymen the “special relationship” between the two is not that of master and poodle.
Make no mistake. This not a bailout of Africa’s poor or Latin American peasants. This is a bailout of the IMF, the World Bank and the African Development Bank. They will get the money to replace their lost loans. As in a Monopoly game where the rules are thrown out, they will be handed new money to play with. Bush and Blair are bailing out failed global institutions run by the highest-paid bureaucrats on earth.
What should have been done?
The IMF, World Bank and ADB should have been held to the same standards as any U.S. government bank that squandered capital entrusted to its care. Congressional auditors should have gone over their books, looked at the bad loans, looked at the backup provided and statements made at the time by lending officers, then let the American people know whether they had been faithful custodians of our tax dollars or clowns who ought not to be trusted with kids’ lunch money. If the banks failed, they should be forced to undergo the same discipline and downsizing as any public bank that made similar unsecured loans and lost $40 billion.
At the least, we should shut down the World Bank-IMF country club in Montgomery County, Md. – and make them all travel coach.
But none of this is going to happen. All three of these institutions will soon be back at the same game, and their critics will be denounced as hard-hearted conservatives who lack compassion for the world’s poor.
When an American worker has to take a hit for every foolish or failed investment in the family portfolio or 401K, why do international bankers and bureaucrats work with a safety net and always get a bailout? Why do they never have to answer or apologize for the follies they commit? By all means, give the African people debt relief. But why let the lenders who lied and lost the money off the hook?
In the last analysis, it is Congress that has failed in its stewardship of the money entrusted to it by the most generous people on earth. A self-confident government would not give the IMF, World Bank or African Development Bank another dime. Let them call us names.
Unfortunately, we have a Congress that cannot say no to any demand for foreign aid in the name of the “world’s poorest” and a U.S. government that cannot stand up to a moral shakedown.