Global Policy Forum

By Eric Pianin

Congressional leaders agreed yesterday to a plan to write off loans to 30 of the world's poorest countries, fulfilling a pledge by the United States to help alleviate the often crippling debts that have hindered economic development in the Third World. The plan is part of a major foreign aid package that will include the full $435 million sought by President Clinton for Third World debt relief as well as language allowing the International Monetary Fund to release $800 million from the sale of its gold reserves for additional debt forgiveness.

The debt relief agreement should clear away one of the last major obstacles to Congress completing its work this week. The full House and Senate will take up the $14.9 billion foreign aid package as early as today. Although the White House was not shown the final details of the plan until late yesterday, lawmakers said they expect Clinton to sign it. White House economic adviser Gene Sperling said the administration is "extremely pleased" with the debt-relief provisions, although budget officials were still reviewing the overall bill.

The package also would lift GOP-imposed restrictions on aid to international family planning groups that advocate liberalized abortion laws and would provide $100 million in assistance to Serbia provided officials there cooperate with an international criminal tribunal and meet other conditions. This marks the first tangible congressional step to recognize the newly democratic government in Yugoslavia since the defeat of President Slobodan Milosevic, an indicted war criminal.

Clinton spearheaded an international effort to bail out debt-laden Third World countries, on the theory that it would relieve them of interest payments that might otherwise go for education and other initiatives to help their economies. But until now he has been unable to persuade skeptical U.S. lawmakers to go along; a key factor in changing the situation was pressure from an eclectic coalition that includes Pope John Paul II, Nobel Prize-winning economists and singer Bono of the rock group U2

"This means the United States will finally be able to live up to the pledges made over two years ago to the international community to engage in meaningful debt relief for the world's poorest countries," said Rep. Nancy Pelosi (D-Calif.), the ranking Democrat on the House Appropriations subcommittee on foreign operations. Rep. Sonny Callahan (R-Ala.), chairman of the subcommittee, said that while he "was never against providing direct debt relief to these poor countries," he remains concerned that the money will simply pay off bad loans made by banks rather than directly assisting poor people. As part of the compromise, Callahan insisted on a 24-month moratorium on construction project loans from international banks to countries that will benefit from the debt relief effort. However the negotiators rejected demands by Sen. Phil Gramm (R-Tex.) to prohibit the IMF from extending debt relief or any new loans to countries that violate human rights or close their markets to foreign goods.

Much of the debt being targeted for relief are long-standing bilateral loans by the World Bank and other international financial institutions. The debt relief approved yesterday would come in two parts: $435 million in appropriations that would be funneled through the World Bank to regional African and Latin American banks. The rest would come from legislative language authorizing the IMF to use the full proceeds from the sale of gold from its reserve to finance a new debt relief trust fund. The negotiators adopted language negotiated months ago by Senate Foreign Relations Committee Chairman Sen. Jesse Helms (R-N.C.) and Sen. Joseph R. Biden Jr. (D-Del.) with fairly mild reporting requirements for recipient countries.

The White House, meanwhile, apparently prevailed in a dispute over funding of international family planning groups that perform abortions or lobby for abortion rights overseas. House Republicans pressed to continue a compromise reached last year when Clinton agreed to some restrictions for one year in exchange for congressional agreement to pay U.S. debts to the United Nations.

For the first time under yesterday's compromise, family planning organizations abroad receiving U.S. funds may use their own money to provide abortion services, although the restriction on federal funds continues. Also, Congress will boost international family planning funds, from $370 million last year to $425 million. "We think it's a real victory for family planning and women's health," said Steven Biel of Population Action International. However, the money will not be made available until Feb. 15--after Clinton leaves office. Republicans are hopeful that if Texas Gov. George W. Bush is elected president, the new Republican administration will block the release of those funds.

The new foreign aid package includes $8 million for Yemen. That includes the initial $4 million that the House provided earlier in the year for democratization, food and education, and an additional $4 million for counterterrorism, to assist in the hunt for perpetrators of the bombing on the destroyer Cole. The bill also includes a significant increase for children's health programs, a priority of Callahan, who oversees the drafting of the bill in the House. The final version provides $963 million for child survival and disease programs, $413 million more than the administration requested and $248 million more than this year.

The money will be used for immunization, prenatal care, polio eradication, combating illicit trafficking in young women and children, and to establish orphanages and care for displaced children. Of the total, $110 million is earmarked for the United Nations Children's Fund (UNICEF).

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