International debt relief only the first — but necessary — step

By in Opinions

Last week the Canadian government announced the cancellation of $130 million in debt owed it by Côte d’Ivoire. Canada has been a pioneer in debt relief for decades; it is a founding and permanent member of the Paris Club, a loose affiliation of some of the world’s largest economies that seeks to find solutions to impoverished countries’ debt problems.

Debt relief is an essential first step on the road to seeing developing countries break out of their decades- and sometimes centuries-long struggles for economic stability. To break this cycle, which will benefit both impoverished and rich nations, the debts of the world’s poorest countries should be forgiven immediately. Interest payments alone cripple many troubled economies, preventing countries from developing the infrastructure and resources they so desperately need.

But debt relief alone is not nearly enough.

Forgiving the debts of a chronically impoverished country like Côte d’Ivoire allows that country’s government to use its money on programs its people actually need. But without further aid, many of these countries will not be able to get out of their longstanding cycles of debt and poverty. Lacking basic business infrastructure means that these countries cannot generate much money on their own, and still require outside help even after their debt is erased.

The Canadian government can provide assistance in the form of traditional international aid but must consider issues associated with this type of aid; international aid comes with its own set of issues, such as the often stringent conditions placed on it and its debatable efficacy. International aid is well-known for failing to take into account the needs of individual recipient nations and for being overburdened with restrictions and requirements placed on it by the countries providing the aid.

In a stark example of the onerous restrictions placed on foreign aid, George W. Bush’s first act as president was to sign an executive order denying funding to any foreign organizations that provided abortions, lobbied in favour of more permissive abortion laws, or even counseled women about abortion. Not only is this incredibly restrictive and damaging to countries that desperately need funding for public health organizations — many of which, like the International Planned Parenthood Foundation, provide abortions and abortion counselling in addition to a host of other essential services — but it does not take into account the needs of the nations receiving funding.

Another, much newer, method of development is the Chinese model. Without making any demands regarding human rights or democratic politics — indeed, without even really bothering to ask about these things — China has provided ample funding to many African nations that have been overlooked by the U.S. as empty pits into which money disappears and out of which no progress emerges. China has netted exclusive contracts to improve the infrastructure in many African countries, thereby both establishing necessities in nations that sorely need them and earning lucrative construction contracts.

Canada has begun to adapt to this process somewhat in recent years, looking more and more to development and aid funding in Latin American nations where the federal government sees itself benefiting from trade relationships. While Canadian aid still comes with more strings than Chinese aid, there has been an unmistakable shift away from the supposedly unselfish motivations of previous iterations of foreign aid toward something that is mutually beneficial.

Whether Canada and the international community want to continue to follow the old method of international aid or adopt the Chinese government’s strategy, it should be clear that helping developing nations out of their current cycle of poverty and debt hinges on first forgiving all existing debts held by impoverished countries and then continuing with an onslaught of generous funding.

Graphic: Samantha Braun/The Sheaf