Debt Relief Naysayers Say Live 8 Expectations Are Too High

Critics undercut debt relief, say foreign aid could fall into the wrong hands.

You've seen the campaign and heard the slogan: "Make Poverty History." Sure, it sounds like a decent enough plan — eliminate unnecessary debt, double aid, reform trade rules and suddenly, Africa will be well on its way to eradicating extreme poverty.

But extreme poverty is a global pandemic that affects more than a billion people, so is it really going to be that simple to wipe out (see "The Road To Live 8: Why Are We Here?")? Will canceling debt and providing more aid really better the conditions in Africa, or are the problems related to something other than money? Many experts would put their money on the latter.

"Debt relief is a very complicated subject, and there is a lot of mythology out there about canceling debt," said Dr. William Easterly, a New York University economics professor and former World Bank senior advisor. "You have to face reality. If debt cancellation and relief has not brought that much in the way of benefits over the last 20 years, why do we expect it to today?"

According to Easterly, the G7 — which became the G8 in 1997 with the addition of Russia — has been canceling increasingly larger chunks of debt for almost 20 years. Recently, nearly $40 billion of debt has been canceled for 18 impoverished countries — 14 of which are in Africa — and up to 28 more are expected to have their debts completely wiped out over the next four years (see "Bush, Blair Lead Up To G8 — And Live 8 — With Commitment To Aid Africa"). Yet that still leaves some $260 billion owed by 40 other countries.

Live 8 artists stress debt relief, critics of the plan sound off and the G8 summit is explained in "Live 8: A Concert To End Poverty" on Overdrive.

Another concern with foreign aid is that it could fall into the wrong hands. Most indebted African countries are helmed by brutal dictators and oppressive regimes. Former dictators Mengistu Haile Mariam (Ethopia) and Mobutu Sese Suko (Zaire) were given billions of dollars in aid during the Cold War, but much of that money ended up lining their pockets rather than feeding their people. "The sad reality is that Africa has not had very good governments. There's been a lot of corruption, and they're just not very effective at getting good things to the people," Easterly said.

"The money didn't go to build clinics or schools or roads or hospitals, [it] went into Swiss bank accounts to build houses on the Riviera for these rulers," said Salih Booker, executive director of Africa Action, a nonprofit U.S. organization that promotes political and economic justice in Africa.

Another pitfall of monetary aid is the means by which it is distributed. Most aid money is distributed through international establishments like the World Bank and the U.S. Agency for International Development, which Easterly says are "arcane bureaucracies that don't function very well on the ground."

Many advocates of debt relief see these difficulties as opportunities for creative solutions. Jamie Drummond, executive director of DATA (Debt, AIDS, Trade, Africa), a nonprofit group founded by U2's Bono in 2002 to spread awareness about the African crises, says once governments prove they can spend money wisely, only then should their debt be canceled. "Debt cancellation needs to come as part of a package which makes sure the money is well spent, and you can't have confidence that every country in Africa is going to spend that well," he explained.

South Africa's Finance Minister Trevor Manuel and his counterpart in Ghana, Kwadwo Baah Wiredu, agreed in a recent Newsweek report, saying until African leaders start spending appropriately, aid will not function properly.

There is little doubt that progress has been made over the last few decades but, but Easterly says Western expectations are too high. "I think that slogan ['make poverty history'] is kind of a symptom of what's wrong with the whole foreign aid debate," he said. "What I'm afraid of is the expectations of the public and rich countries are being raised so high by this effort and the goals are so ambitious that when the goals are not reached, which I think is pretty much inevitable ... they'll be a big wave of disillusionment.

"It would be much better if we could move away from those types of utopian goals of ending world poverty by tomorrow and just focus on the little things that can be done by lots of people."

Get involved: Learn about the poverty crisis in Africa, the proposed solutions, and how you can help. Plus find all of our coverage of the international Live 8 concerts and more at our thinkMTV Live 8 hub.