When Debt Cancellation for Africa Isn't Enough

Interview With Ettore Gotti Tedeschi, Bank Executive

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ROME, JULY 5, 2005 (Zenit.org).- Some Group of Eight industrial nations have proposed canceling the debt of African countries. Others have suggested allocating 0.7% of their gross national product to help that continent’s poor.

Will these technical measures be enough to free millions of people from underdevelopment?

ZENIT posed this question to Ettore Gotti Tedeschi, the president of the Italian division of Santander Central Hispanic Bank and a professor of the Catholic University of Milan.

Q: How do you evaluate the cancellation of the debt of 18 poor African countries and of the American continent by the Group of Eight members?

Gotti Tedeschi: As I have read it, it seems to me irrelevant and even imprudent.

It is irrelevant from the practical point of view, as they would never have paid this debt.

It is irrelevant from a programmatic point of view, as each one of these poor countries needs, individually, investments directed to projects, which can only be carried out and managed by private businessmen, with local partners, if possible. But they must have considerable joint investments by the governments [of the G-8].

However, for these investments to take place, governments must made adequate — and not just symbolic — funds available, and private investors must have confidence in the profitable realization of the projects themselves.

Do the governments of the G-8 and Europe have the adequate funds available? Are they willing to increase their deficit by 0.7% of the GNP? After the cancellation of the debt, will private investors have more confidence?

Q: If I said that I have doubts about the answers to these questions, will I be accused of being a pessimist?

Gotti Tedeschi: That is why I thought the cancellation of the debt was somewhat imprudent, although from the point of view of image it has been very correct.

This cancellation decrees the failure of the economic policies of the African countries, it decrees the complexity of the necessary aid, the greater risk, the greater need for capital and projects.

It would have been better to be vague, to increase the deadline for payment to some 1,000 years. But the cancellation of a debt that would never have been paid seems to be a rather painful act of charity.

What should have been done was to put these countries in a condition of being able to pay the debts, even if in 1,000 years, helping them to create the necessary wealth for their own survival, as well as for their own dignity as human beings, who do not want to feel incapable and failures, in need of non-repayable charity.

Q: The G-8 summit will be held in Gleneagles, Scotland, from July 6-8. What are the most important economic problems it will have to address?

Gotti Tedeschi: I wonder if the G-8 countries can address the real challenge, namely: aid to Africa with 0.7% of the GNP? In exchange for what? For policies to block births? How?

What will be the role of the private sector, which necessarily wants to draw profits? I hope the G-8 members will not let themselves be influenced by statements of contempt for those who work in the financial and industrial world.

Instead, the G-8 members should listen to the suggestions of Pope Benedict XVI, who shows himself to be the most concrete “statesman,” inviting them to take concrete measures to help Africa, appealing for the just distribution of the goods of the earth. And, in order to distribute them, it is necessary to make them bear fruit, “to plow, plant, water and harvest.”

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