Comments

Gordon Brown says double aid!
But aid is no replacement for debt cancellation

Gordon Brown's speech to the Federal Reserve Bank in New York on 16th November advocated that wisely-managed globalisation can lift millions out of poverty and lead to a just and inclusive global economy, He also unambiguously stated that a substantial increase in development aid to those nations most in need was an essential part of the strategy for relieving world poverty. "This generation has in its power - if it so chooses - to abolish all forms of human poverty," he said. The challenge he set was to raise development assistance by $50 billion a year (double current levels) to 2015. An enlightened vision it must be said, which JDC welcomes, as well as the Chancellor's reminder that richer nations must face the poverty reduction targets they themselves have set and agreed to. We also welcome Brown's references to enhanced debt relief and his interest in a 'new framework' for debt reduction/fairer procedures for handling debt crises. However, we believe that this is not enough and urge Gordon Brown not to sideline the debt issue with promises of aid. We cannot accept that the doubling of aid is, in itself, a substitute for debt cancellation for several reasons:

- Aid is not designed to go towards debt repayments. The chains of debt will not go away with the doubling of aid.

- The doubling of aid is reliant upon individual nations responding to Gordon Brown's call. Despite previous commitments to raising the level of overseas development assistance to 0.7 per cent of GDP, levels are still much much lower. Donor and aid preferences create a situation whereby aid can be here today, but gone tomorrow!

- Debt cancellation, on the other hand, effectively provides a reliable additional source of income for the next 10 to 20 years. Indeed, 'with the huge uncertainties over the consistency and timing of aid inflows and the volatility of commodity markets…debt relief is probably the most secure and most predictable source of HIPC government revenue.' (Henry Northover, CAFOD)

- Evidence also suggests that debt relief is the most effective and efficient way of generating domestic resources for investment. Again, according to Henry Northover: "Too often HIPC governments make up shortfalls in revenue by borrowing from domestic markets leading to high and recessionary levels of interest rates. The evidence suggests that substantial levels of debt relief can undercut the pressure on domestic credit sources and lead to enhanced levels of investment and economic growth."

Just like on the trade issue, we can't allow the government to think that aid is an alternative to debt cancellation. Conveying that message will be an important part of our New Year campaign.

Jubilee Debt Campaign, December 2001