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-- by Ethan Zindler
The hour-long special "Diary of Bono & Chris Tucker: Aiding Africa" (premiering October 9 at 10 p.m.) touched on critical issues related to the disparity between the world's most and least affluent nations. To learn more about a given topic, click below, or just read on:
Third World Aid, Loans And Debt Relief
To bridge the gap between rich and poor countries and to further their own geopolitical interests, the U.S. and other Western nations have directed billions of dollars to the developing world in the form of aid and loans. The results of these efforts in many cases have been positive, as demonstrated by the Wakiso Water Project in Uganda, which was highlighted in the "Diary" program. But much of the funding has also been squandered by inept governments or embezzled by corrupt state officials.
Developing nations have received the overwhelming bulk of the aid from the coffers of rich countries' governments or via the World Bank, which coordinates international aid to the developing world. The grants often come with provisions that require the receiving countries to spend the cash on specific humanitarian projects.
Generally, loans to the third world come with provisions requiring annual interest payments. In 2001, 23 of the world's poorest nations were due to pay $34 billion in interest. In 15 of these nations, more than 10 percent of their government revenues went directly to making payments on the loans. In many of these same countries, the amount spent on interest exceeded domestic education expenditures.
When a country fails to meet its annual interest obligation, that payment is often added to the principal on the loan due for repayment. This, in turn, creates a crippling vicious cycle in which the interest obligation grows larger and more difficult to meet.
Bono and other debt-relief advocates argue that nations in the first world must significantly loosen the terms of their loans or, better yet, forgive the loans altogether. They say that nations such as Uganda and Ethiopia can never get on their feet so long as they are forced to make such substantial annual payments.
Conservatives in Western Europe and the U.S. argue that forgiving current loans would undermine the credibility of future loans. Third world countries would come to view all assistance as grants, they say. Furthermore, debt relief would do little to discourage incompetence or rein in corruption by government officials in poorer countries.
Where America Stands
In his campaign for the White House, President Bush promoted himself as a "passionate conservative," and his administration has demonstrated a willingness to reconsider the traditional conservative stance on foreign assistance. This is largely due to maverick Secretary of the Treasury Paul O'Neill, who has cultivated a relationship with Bono and took the unconventional step of touring Africa with the Irish U2 singer. The Bush administration also pledged at a recent conference on global poverty to increase American aid to the third world by $5 billion over the next three years.
On a percentage basis, the United States is among the least generous affluent nations when it comes to foreign aid. Despite being the richest country on earth, America gives away only .1 percent of its gross domestic product to the developing world. Given that the U.S. GDP is roughly $10 trillion, that is not an insignificant amount. But compared to Britain and the Netherlands, which give away .33 percent and .7 percent of their GDPs, respectively, America's contribution is quite stingy.
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Photo: MTV News & Docs
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