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Tuesday, June 15, 1999 Published at 18:48 GMT 19:48 UK

Gordon Brown answers your questions

UK Chancellor Gordon Brown answers questions put to him by users of BBC News Online on international debt relief.

Q. Do you think some nations are afraid of cancelling the debts of poor countries as debt is one more weapon in their armoury against them? They can use debt as a leverage against them, it seems. Do you think this is the case?
Marie Evans, UK

A. I think people have come to a general agreement now that unpayable debt should not be retained but should be redeemed, but that does not mean to say that all debt should be wiped out because most of the countries we are talking about want to be able to borrow and have international investors that give them money.

But what we will do now is seek to remove much of the unpayable debt and set a first target of $50bn. That would be an enormous improvement from where we were a few years ago.

Until now, as a result of the debt redemptions of the last few years perhaps only two or three billions have been redeemed and it could be 50 billion by the end of the next year, so there's a very big change and I think it will be welcomed by the countries affected.

Q. Isn't $50bn a drop in the ocean, where international debt is concerned? I realise this is a start but I believe Jubilee 2000 are calling for £350bn to be cancelled. Did you join in the linking of hands around Whitehall?
Jo Wilson, England

Gordon Brown: "Debt redemption is one of the great campaigns of the last few years"
A. I was not there, I was returning from Germany, but I know people who were there and who found it very encouraging that so many people had turned out.

I do think the efforts of the churches and the voluntary organisations to awaken public opinion and governments around the world for the need for debt redemption has been one of the great campaigns of the last few years and I do congratulate the churches and the non-governmental organisations for what they've done.

As far as the amount of money is concerned, I think $50bn is a very substantial amount of money. It is, of course, not the summit of our ambitions.

$50bn will have added to it £20bn of what is called ODA debts, so there's about $70bn under the present proposals which I hope will be agreed by the prime ministers and the heads of states this weekend.

But there's more to be done and we'll be looking at new ways of pushing the figure up. In fact, as we set up the machinery for contributions to the World Bank trust funds to help debt relief we'll invite not only governments but also private companies, which are involved in Africa say, to make a contribution as well.

Q. I believe that international debt has to be tackled by western countries but is there anything, you believe, individuals can do? What if there was a change in government, do you think the steps you have taken forward would be reversed?
Paul Burrows, Wales

Q. Do you think there is a general apathy about third world debt? What has been the response to your millennium gift aid scheme? Do you think we are living in a more materialistic society?
Helen Beckett, England

Gordon Brown: "We are all dependent on each other"
A. I think we've always go to remind ourselves that the wealth of the richest countries is a responsibility and the needs of the poorest countries and meeting them are an obligation the rich countries must discharge.

John Kennedy said once, 'if the free society cannot help the many who are poor it cannot save the few who are rich'. I think there is some truth in that we are all dependent on each other.

As far as what individuals can do, they can do a great deal and that's why millennium gift aid was introduced.

The answer to the question whether it has been successful or not is that more and more people are giving more money to the charities and non-governmental organisations helping the poorest countries.

We set a target of $1bn in two years so that we would increase the amount of giving by the British public to overseas charities by 50% and we think that can be met.

But obviously, it's a constant reminder to us all that we should do more and it's our responsibility, particularly in the year of the millennium when debt redemption is such an important issue, its our responsibility to mark the millennium in this way by removing and leaving behind in the last century some of the great injustices which include unpayable debt.

Q. What is your personal view on the debt run up by third world countries and do you personally believe that we should write off debt owed by those countries?
Andrew Webber

A. I think we must do our best to write off the unpayable debts and that's what I've been trying to persuade our fellow governments and fellow ministers to do.

I think there has been now a very significant shift in opinion. It's not just that people are prepared to reduce a lot of the debt, they are prepared to sell off some of the IMF gold to pay for the debt reduction, they are prepared to set up the millennium trust fund that would allow individual countries to contribute to the reduction of debt and I think there has been a marked change in opinion.

I think to celebrate the millennium by making not just debt relief happen but poverty relief happen as a result of debt relief is very important.

Q. The prospect of Indonesia fragmenting under weak government is now such a serious threat that all possible steps should now be taken to bring the nation back together by putting as few obstacles in the way of economic recovery.
The widespread corruption in the country is the result of the abysmal funding of public service personnel, and the creation of a new culture is needed, in which UK has lately contracted, but should extend its role.
Assuming that the election in Indonesia on 7 June has a valid result, will the UK government consider putting serious resources into ongoing support, not just projects, to alleviate poverty and sickness in that country, and to ease their international debts?
Richard Scott, ex-ODA Forest project officer in Kalimantan Indonesia

A. I've been in Indonesia not so long ago and Indonesia is, of course, one of the biggest countries in the world but it has some of the poorest communities. I visited a World Bank project that is doing a great deal in Indonesia to help particularly women and children.

I think it is true to say that the original IMF programme for Indonesia did not take into account the social needs of many of the people then and since then the World Bank and the IMF have tried to do more.

We have funded £11m of initiatives since the crisis began, for the election programme, community recovery, feeding programme, healthcare and for forestry, and you'll find the Department for International Development is now working up a new country strategy to help in Indonesia.

The IMF is also giving quite a lot of assistance of which $9.5bn has been dispersed and Indonesia has had its sovereign debts rescheduled at the Paris club, but, of course, we want to see the reforms that are necessary so that money actually gets to the poor.

Q. Just like the United States implemented a Marshall Plan which enabled Europe to recover from World War II, does not he think that the crushing overhang of debt on developing countries should be cancelled in order to enable them to develop and increase the standard of living of their peoples?
Furthermore, the suggestion that 'resident auditors' be stationed any 'debt' owing country will be contrary to international law and a breach of national sovereignty.
When the UK borrowed £6bn from the US in the mid 1940s, no such attachments were made. Also, the interest charged on such 'odious debts' are illogical, and highly exploitative in nature.
No doubt, corruption by ruling elites is a major factor in causing poverty. But if such debts are in Swiss bank accounts it the same countries which lent the money that benefit, not the poorest people on earth!
Olukemi Saka, Nigerian, University of Plymouth

Gordon Brown: Debt relief must see money ploughed into health and education
A. I think the important thing everyone wants to see is debt relief leading to more money going to healing the sick, teaching children, tackling poverty, making possible economic development.

If debt relief is to be achieved in a way that helps us to relieve poverty, we have to be sure that money actually goes not to weapons, not to corrupt institutions, not to bureaucracy or luxury projects but to education, health, economic development and anti-poverty strategies.

Therefore, I think it is important that we maintain the policy of setting down conditions but it is important that once the conditions have been met that we really do help people by giving them proper and high levels of debt relief.

So I think there is a case for us working with the international institutions and I have argued that our social code that we are now agreeing around the world, our code of social principles, should apply to all countries, rich and poor. All of us should be prepared to undergo surveyance and all of us submit ourselves to the auditing requirements that are necessary.

I am appalled that a staunch supporter of financial caution such as yourself should advocate simply writing off debts. What kind of a message are sending to people: borrow as much as you can get your hands, you may never have to pay it back. Perhaps you will be willing to abolish student debt by closing down the Student Loan Company in the same spirit and reconsidering tuition fees.
Matthew Simpson, UK

A. The difference is between debts that are unpayable, such as debts in Africa that are of such a huge and tragic nature that they are preventing economic development, and debts that are sometimes owed in the form of loans by students, that can be repaid, because in most cases if someone finishes and gets a job then a graduate's earnings, in some cases, are twice those over a life time than of a non-graduate. So that's the argument of not redeeming the debts that have come from student loans.

Q. What are the criteria used to judge whether a country should be let off its national debts ?
Chris Milburn

A. That the countries have an unsustainable burden of debts and, secondly, that they are taking all the action that is necessary that will assure us that when we leave will go to health, education and economic development.

So there are criteria set down to show the debt is unsustainable, unpayable, and there are also criteria will be met showing that the money will actually go to the good purposes for which it is intended.

Most people would agree that you don't want to relieve debt and then find the money and wasted on more military, more arms expenditure. You want to see it used for health, education, housing and poverty reduction.

Q. Would the chancellor agree that any debt relief should be conditional on a covenant from the country concerned that it would not borrow again until a defined economic target had been reached and that it would provide full details of how the relieved debt had been used with an audit trail of all bank transactions?
Barry Lester

A. I don't think that's necessarily the exact way forward. I think it is true that most countries want debt reduction and debt redemption of unpayable debt to enable them to, one, reduce their debt interest payments so they can spend money on health, education and every thing else, and, secondly, so that in time they can begin to borrow again.

I think it is important to remember that all countries borrow money and they borrow money for good reasons in many, many cases. The good reasons are they want to have industrial development, they want to have housing, they want to build the schools, build the hospitals.

We mustn't put people in a position of believing it would ever always be wrong to borrow money. What is wrong is that people have been saddled, and, indeed, crippled by unpayable levels of debts that are unsustainable.

Q. It has been touted that the costs of rebuilding Kosovo will come directly out of the government's overseas aid budget. What commitment will you give that the UK's aid contribution, as part of the four point plan to cut the debt of the world's poorest countries, will not be subject to cuts to off-set such rebuilding costs?
Malcolm McCandless, Dundee, Scotland

A. The government is committed to supporting hundreds of thousands of refugees displaced by the crisis and war in Kosovo and just as we have played a leading role in reversing the situation where people have been persecuted and forced to leave their country, the task is to focus now on the immediate humanitarian needs.

Yesterday, we announced a new commitment of £50m to help meet this cost. This is on top of the £40m of humanitarian aid we have already committed and the contribution we are making through the European Union.

But at the same time and in the same week we have announced a contribution to help relieve third world debts and so you can see that in addition to making our commitments to Kosovo we are maintaining, indeed, stepping up our commitments to tackle the problem of unpayable debt.

Q. What reasons are the Japanese and Americans citing for dragging their feet on the issue of debt relief, what is your analysis of their reasons and how can they be brought around to the Jubilee 2000 viewpoint?
I suspect that the over extension by the Japanese banks domestically and internationally has put the Japanese government in a predicament, but call a bad debt a bad debt should not preclude them from this action. The Americans seem to have no reason at all.
Randal Smith

A. I think that the governments of all the G7 countries have now taken the view that it is right to tackle the problem of unpayable debt in a faster and deeper way.

I was actually pleased on Saturday at Frankfurt that so much progress was made with all the governments unanimously agreeing that there were many things we had to do together.

Now, of course, some of us have proposals which we think can do more but I think the important thing is there has been agreement on a package to reduce debt by $50bn that will bring 36 countries into deeper debt relief and we will have $20bn of overseas development loans written off as well.

Q. I think it would be wonderful to all of us to have a break on the payments of the debt we have to pay, but it is not that much your fault as developed countries, willing to help other economies, or even helping them in order to avoid a larger crisis, just like it happened with the Tequila Effect. The fault it is really of those bad administrators and governments in the less developed countries, who had wasted all those resources.
How come Japan and Germany have been able to overcome their crises after World War II, and became major economies, and others, who have never seen a war, are so poor?
Rosa Maria Barba Pacheco, Puebla, México.

A. I think the important thing to recognise is the countries you are referring to are the countries that are actually now firmly engaged with debt relief and they are making their contribution and they are prepared to do more than what was happening a year ago, two years ago.

We should look forwards now that we can altogether meet the millennium challenge, that we can do it collectively as the major industrial nations of the world, that we owe it to the poorest countries, but we owe it also it to the idea that we're not simply a global market place, we're one moral universe where each of us have responsibilities to each other.

Q. Is this just gesture politics or a serious attempt to address third world poverty? Are you embarrassed by leaving to charities such as Jubilee 2000 and Comic Relief to bring this issue to the public's attention? How are you going to persuade your European partners and other nations to join you in this?
Richard Taylor, UK

Gordon Brown: Governments and churches are working together on debt relief
A. We're a partnership, and I think we have been working together. What the charities and the churches have achieved is some great movement of public opinion that shows there are millions of people of conscience and faith and belief who actually believe there is something bigger than simply ourselves and they have been a very strong motivating force in what governments around the world are doing.

But at the same time it is a partnership and governments must do their bit and governments must make their changes and show they can reduce and relieve the debts.

So I don't see people who work through the churches and who are trying in governments to do new things as being people at odds with each other. I see us working together as a partnership.

I think the only way we are going to deal with this debt issue is for governments to do more, is for people to remain alert as concerned citizens so public opinion in all countries is moved and at the same time we, as individuals - and I, as an individual take my share of the responsibility - we know we can do more ourselves, as well as governments doing more to help relieve poverty and help the education, health and social programmes that are needed in the poorest countries.

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