U.S. Considers Plans for Debt Relief

U.S. officials said Thursday that they were considering proposals to write off as much as 100% of the debt of the world’s poorest countries, and that they would press other wealthy nations to embrace the idea.

“Grants and debt relief must be significantly increased,” Treasury Secretary John W. Snow said in an address keyed to meetings of global finance officials this weekend in Washington. “We are considering more options to do so, including those that would provide up to 100% debt relief and grants from the international financial institutions.”

Although Snow’s statement appeared to improve prospects for debt relief, a long-held goal of advocates for Third World nations, analysts said differences between the United States and other creditors over how to structure it could block progress toward a solution.

The unpaid debt of developing countries is one of several contentious issues confronting finance ministers and central bankers arriving in Washington for the fall meetings of the International Monetary Fund, World Bank and Group of 7 industrial nations.

Chinese currency reforms, U.S. budget deficits and Iraq’s reconstruction needs also are up for discussion as leaders prepare to gather behind police barricades, amid security precautions triggered by concerns about a possible terrorist strike.

Starting today, two dozen blocks surrounding the IMF and World Bank buildings in downtown Washington will be closed to vehicular traffic, and pedestrians will be allowed inside only if they have proper identification and a reason to enter.

The stepped-up security, based on 3-year-old intelligence suggesting the buildings had been surveyed for potential attacks, was needed because Al Qaeda often makes preparations years in advance, U.S. authorities said.

Four years ago, IMF and World Bank meetings attracted 20,000 protesters to Washington, but police are expecting only a few hundred this weekend.

Organizers said they decided to scale down this year’s protests because people are more focused on the presidential election and the war in Iraq. Instead of a big march, protesters plan to hold a noon rally today in front of the U.S. Treasury building, then proceed to an all-night vigil near the World Bank offices.

“It’s a pretty low-key kind of thing,” said Soren Ambrose of 50 Years Is Enough, which advocates debt cancellation. “It’s more of a presence than a rowdy demonstration.”

The demonstrators will be calling for full debt relief for impoverished countries, an issue that appeared to be gaining traction within the international financial institutions, as well.

Advocates say debt service requirements are diverting limited resources from AIDS treatment, health, education and poverty alleviation programs. The problem is particularly acute in sub-Saharan Africa, where many of the poorest countries are located.

According to Jubilee USA Network, a debt relief advocacy group, it would take about $8 billion to cancel 42 poor countries’ remaining debt to the IMF, and another $13 billion to eliminate their remaining debt to the World Bank.