[Fwd: IMPORTANT ALERT]

Mon, 07 Dec 1998 09:19:54 -0500
christopher chase-dunn (chriscd@jhu.edu)

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Date: Sat, 05 Dec 1998 12:50:29 -0500
From: Barbara Larcom <larcom@bcpl.net>
Subject: IMPORTANT ALERT
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Please act on this -- thanks!

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Date: Sat, 05 Dec 1998 12:13:05 +0000
From: Soren Ambrose <soren@igc.org>
Subject: ALERT - Central America Debt - Opportunity
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December 5, 1998

CENTRAL AMERICA ALERT

Nicaragua Network
1247 E Street, S.E.
Washington, DC 20003 USA
202/544-9355; fax 202/544-9359
nicanet@igc.org

On December 10-11, governmental delegations led by the presidents of
five Central American countries -- Nicaragua, Honduras, El Salvador,
Guatemala, and Costa Rica -- will be in Washington, DC to meet with
representatives of donor nations and multilateral financial instutions
to discuss assistance in the wake of Hurricane Mitch. This meeting,
called a "Consultative Group" meeting, can be expected to result in
pledges of relief aid and supplies for the countries affected.
Such pledges, although extremely important for the hurricane victims,
will be rendered meaningless unless accompanied by complete and
unconditional cancellation of these countries' foreign debts. This
alert requests that you put immediate pressure on the head of the U.S.
delegation to the meeting, asking that the U.S., as the host of the
meeting and the most influential player in making such decisions, take
the lead in urging cancellation of these debts. To date, the
international financial institutions (the IMF, World Bank, and
Inter-American Development Bank) have been more forthcoming with
promises of debt relief. What they are promising is quite insufficient,
but at least they are talking about the right issues. The U.S.
government needs to be pushed to get into the game, particularly since
only if it takes the lead will these institutions be emboldened to
actually cancel debts.
Hurricane Mitch, which killed an estimated 9,000 people, is being
described as the most destructive natural disaster to affect the region
this century. The material losses caused by the storm are equally
staggering. In Nicaragua and Honduras, over two million people (25% of
the combined populations) were rendered homeless, while at least 30% of
these countries' harvests were destroyed. With the threat of outbreaks
of cholera, maleria, and other epidemics looming - not to mention a
possible famine - development experts predict that the worst is yet to
come for these countries.
Even as international relief pours in, Honduras is obliged to pay back
more than $1 million each day to service its foreign debt, and Nicaragua
nearly that amount. To rob these countries of their scarce resources at
the same time we supply them with emergency relief is illogical and
immoral. And long after the relief efforts end, the daily demand on
these economies will persist. That means that actual recovery from this
disaster, which has in one week robbed these countries of perhaps half
their Gross National Products, will never happen. Re-scheduling the
debt or a temporary moratorium would only postpone or draw out the
pain. Full debt cancellation is the only solution.

Although Nicaragua and Honduras have qualified in the past couple of
years for consideration for some "debt relief" initiatives, entrance
into these programs is conditioned on these countries pledging to adhere
to several additional years of strict structual adjustment policies. It
is precisely these policies, however, that were responsible for the
decimation of these countries'social services and infrastructure before
the hurricane hit. Effective and sustainable reconstruction of the
region is simply not possible within the context of increased
austerity. Given the magnitude of the losses caused by the storm,
recovery for these countries depends on the governments investing the
savings reaped from debt cancellation into health care, education,
infrastructure, and credit for small and medium agricultral producers.

Cuba and France have cancelled all debts owed them by the countries.
Austria, Norway, Spain, and many other countries have pledged partial
relief. But the United States, the richest country in the world and the
most influential in terms of setting international debt policies, has
made no commitment. While it committed hundreds of millions to
providing arms during the Central American civil wars of the 1980s, it
has not even addressed the issue of the debt burden in Central America.

Please send the attached letter to Brian Atwood, the head of the US
Agency for International Development, who will chair the US delegation
at the Consultative Group meeting, December 10-11. (There are
suggestions that Vice President Gore might attend, but even if he does
Atwood will be the one with more substantive responsibilities.) Ask him
to take the lead in advocating for complete cancellation for Honduras,
Nicaragua, Guatemala and El Salvador. Debt cancellation is the only
medicine that can save these desperate economies.

Please note that letters should reach Atwood by the end of Wednesday,
December 9. If you can fax them, please do. If you use regular mail,
please send your letters as soon as possible.

====================================

Brian Atwood, Executive Director
US Agency for International Development
1300 Pennsylvania Ave., N.W. Room 6.9
Washington, DC 20523
Fax (202) 216-3455

Dear Mr. Atwood:
With Hurricane Mitch, Central America has been hit by what may be the
worst disaster it has ever faced. On the eve of the meeting of the
Consultative Group of Donors for Central America, I call for the
immediate and unconditional cancellation of the external debt repayment
obligations of Honduras, Nicaragua, El Salvador, and Guatemala. I
understand that you will be leading the U.S. delegation to this meeting,
and that in that position you are uniquely placed to shape the U.S.
response to this catastrophe. Moreover, I understand that the U.S.
response is key to determining the response of the rest of the
international community.

The disaster has ended the ability of these countries to repay external
debt. All available resources must be used to address the needs of the
population in this crisis. Recent press reports indicate that the
reconstruction effort will cost billions and take many years. Given
these circumstances, I believe that to give aid with one hand while
taking more with the other through debt service is nonsensical and
immoral.

The bilateral debt of these countries owed to the United States should
be canceled immediately. Former Presidents Bush and Carter have both
called for immediate action on the debt issue in the wake of the crisis.
Both France and Cuba have already erased the debts owed them by these
countries, and other creditor nations are supporting debt cancellation.
But the U.S. has made no commitments for debt cancellation. This must
change at the Consultative Group meeting.

I strongly believe also that debt cancellation must not be conditioned
on compliance with IMF structural adjustment programs or similar
demands. Demands for government austerity are surely inappropriate in
the face of sudden and massive homelessness, disease, and hunger.

This disaster will take the affected nations, already among the poorest
countries in Latin America, decades to overcome. Broad coalitions of
social organizations in Central America have called for cancellation of
debt. Half-measures such as debt re-scheduling or a "debt moratorium"
would be insufficient. Anything less than cancellation of the
monumental, unpayable debt burden would extend and deepen the suffering
of the victims.

It is disgraceful that the United States, the richest and most powerful
country in the world, and the most influential in terms of economic
policies such as debt relief, has made no commitment about the Central
American debt in the wake of Hurricane Mitch. It is astounding that we
could be mounting international relief efforts while still insisting
that these countries pay back interminable debts. Please do what is
necessary at the upcoming Consultative Group meeting to make the United
States a true leader in making recovery possible for the people of
Central America.

Sincerely,

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