IOU: The Debt Threat and Why We Must Defuse It. Noreena Hertz

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СКАЧАТЬ was scrunching his red eyes, saying, “Run that by me again? Debt relief, debt relief. God, that just sounds so wrong in this environment. You’re a songwriter – can’t you come up with something better than that?” And I said, “Debt Cancellation,” and he said, “That’s better. Relief sounds like a handout. Cancellation sounds like justice.”’

      Selling the idea of cancelling debt to Clinton wasn’t hard. The President had just come back from the G8 meeting of the richest developed nations in Cologne, where debt relief had been high on the agenda. He had already pledged to contribute to funding the IMF and World Bank’s debt relief efforts, and also to increase the amount of American debt that would be cancelled. But cancelling all the debts owed to the US was another matter. Could the United States really afford it?

      It was up to Summers to convince the President.

      ‘I remember a frantic weekend in which Larry, Gene [Sperling who’d facilitated the first meeting with Summers] and Gene’s niece who he was minding, had come in on the Saturday to do the numbers and try to make it happen,’ recounts Bono. ‘Busy, busy people coming in on a Saturday to get shouted at and reasoned with. Trying to work out what it’d actually cost to cancel these debts. The extent to which they could be written down so that we could meet the 100 per cent cancellation objective.’ (For, given that there was no real possibility of their ever being repaid in full, these debts could be discounted so as to reflect a realistic market value.)

      ‘And we did it,’ says Summers with a smile. ‘In the last 36 hours we worked out that we could afford to do this.’ By writing down the value of their loans by approximately 90 per cent, the real cost to the United States of cancelling the $6 billion debts owed would only amount to around $600 million.

      On September 29, 1999, at a speech at the World Bank, with Summers’ numbers in his back pocket, President Clinton announced that the United States would cancel 100 per cent of the $6 billion debt owed it by the world’s poorest 33 countries – the first country in the world to make such a huge commitment.

      Bono was in France when he heard the news of Clinton’s announcement. ‘I got a phone call from Bobby and it felt like, you know, just the biggest thing ever. We had been working so hard, I was jumping up and down. It was a real break-through. One hundred per cent, no nonsense, no games. The United States were stepping out in front. Okay, it was only 33 countries [Jubilee had been calling for the cancellation of the debts of 52 poor countries] but it was a clear melody, a clear cut idea.’

      It seemed as though they were on track. But when Bono started to hear the critics say that Clinton was only doing this because he knew it wouldn’t get past Congress, that Congress would never fund the scheme, he was reminded of just how complicated his mission was. Because in the United States, it is Congress and not the Administration that holds the purse strings. And Congress was controlled by the Republicans. If the money to fund Clinton’s 100 per cent debt cancellation pledge, as well as meet the commitment he had made at Cologne to contribute to bailing out the IMF and World Bank – $545 million in the first instance – was to be found, it was Republicans who were going to have to vote for that amount to be released.

      Getting $545 million dollars allocated to what is essentially foreign aid was, in a Republican-controlled Congress, never going to be easy. Money to poor countries doesn’t tend to poll well for American politicians. ‘It was very hard even for people who wanted to be for this, to be for this,’ explains Sandberg. ‘Debt relief for Africa? The United States just doesn’t do this.’

      It was time to get the Terminator involved.

      Bobby Shriver, who had done such a majestic job in getting the bankers, liberals and cognoscenti on board, wasn’t the man when it came to bringing the Republicans on side: his Kennedy lineage got in the way. His sister Maria, however, was married to someone who helped him get over that problem. Arnold Schwarzenegger, the movie star and Bobby’s brother-in-law, was already, five years before becoming Governor of California, moving in Republican circles.

      ‘Bono and I explained the idea to Arnold,’ remembers Bobby, ‘and Arnold thought about it and said, “I know a guy who might help you. A friend of mine who’s the Congressman from Columbus, Ohio, John Kasich.”’

      Kasich, who Schwarzenegger knew through the ‘Arnold Classic Body Building Contest’ which is held in Columbus each year, was, at the time, the Chairman of the Budget Committee in the House of Representatives, a very influential position. He was no nambypamby liberal. ‘John was a hard, right-wing guy,’ says Shriver, ‘and someone who was very smart. Not book smart like Larry. But, you know, street smart. Smarter than most people in Congress. And he got what we were talking about. He had travelled overseas, and could see that people did not like Americans. This was before 9/11. And he didn’t like that. And he saw that cancelling their debts, for what, in his view, was a relatively small amount of money, was a way to say to people, “Look we’re not just a bunch of pricks flying B1 Bombers over your country.”’

      Kasich came on board, and his-support was key. Not only did he bring with him other important members of the Republican leadership including House Speaker Denis Hastert, and House Majority Leader Dick Armey, but also lower-profile but equally essential Republican politicians from both House and Senate.

      And, in November 1999, two months after Clinton’s historic pledge, Congress agreed to appropriate $110 million.

      Although this was a start, the $110 million was far less than the $545 million the campaigners had been after. This would only cover the first year of America’s own debt cancellation schedule, and it didn’t cover any financing for the participation of the regional development banks in the debt cancellation initiative, nor provide for the IMF and World Bank, the poor world’s major creditors, to cancel any of their debts. If the international Cologne initiative was not to crumble, an additional $435 million had to be found.

      ‘I called Bono,’ recalls Sandberg, ‘and said, “If you want to help get this through, you’ve got to come back to town.” We needed him. Bono could get in to see any member of Congress and we needed to rally support. He said that he was recording his new album, and making a documentary and couldn’t come to town over the next few weeks because they were filming. And I said if you can’t come now it’ll be too late. Two days later, he was here. And once he landed in DC he was a machine. He went round from member to member telling them that they could change the world if they got behind us. He would get up early in the morning, and would walk the halls and work it all day. And then we would have dinner late at night and he would still bring a Member of Congress or some staffer. He was tireless. And when you think of the combination of a rock star who can get in to see anyone and someone who knows as much as some staffer who works on it full time and can speak with the kind of passion that he speaks with, well, the world had never seen anything like it.’

      But although politicians from every end of the political spectrum were falling under the Bono spell, one key man continued to hold out. Sonny Callahan, the libertarian conservative Congressman from Alabama, was Chairman of the Foreign Operations Subcommittee of the House Appropriations Committee, and he held the cheque book. It was up to him to recommend how much money to allocate to debt cancellation. And Callahan wasn’t having any of it. He believed that the additional monies being asked for ‘would encourage the World Bank and others to continue to make bad loans and leave poor countries to have to borrow and get into debt all over again.’ As far as Callahan was concerned, debt cancellation was ‘money down a rathole’.

      Shriver got his feelers out and tried to influence Callahan through an old fishing friend, but to no avail. And, in June 2000, Callahan’s committee recommended to the House of Representatives that Congress fund only $69 million of debt relief that year even less than Congress had agreed in November, a sixth of what the campaigners had been gunning for, and an amount, effectively, that meant СКАЧАТЬ