Rethinking Bretton Woods | Tue, Feb 22, 2005
From The Financial Times
Published: February 5, 2006
From Mr Aldo Caliari.
Your editorial ("Tackling the challenge of poverty", February 5) argues that the existence of unpayable debts "is proof of past failures".
This is, indeed, true. The question is: whose past failures? To argue that the failures should be attributed to the debtor countries themselves can hardly be reconciled with the reality of more than 20 years of debt reduction initiatives managed by the creditors and, arguably, for the creditors.
From Plan Brady to the Enhanced Heavily Indebted Poor Countries Initiative, including the successive changes of Paris Club rules, debt relief deals have always been deals among the creditors. Neither have these deals given up on the use of intrusive conditionalities led by ideological dogmatism often out of touch with the reality of the recipient countries, such as privatisation and rapid trade and investment liberalisation.
Against this backdrop, your editorial's conclusion that elimination of debt "will trigger no renaissance" must be seriously challenged. Quite the contrary, if the creditor-led, piecemeal approach has not worked, it is time to let the debtors define the terms of a comprehensive debt relief scheme. Until the debtors get that opportunity, any speculations about the impact of debt reduction should be treated as that: speculations.