News Release

Critics Blast Treasury Secretary for Comments on Debt Relief

WASHINGTON — Treasury Secretary Lawrence Summers faced criticism today for derogatory comments about a U.S. congressional commission’s call for the International Monetary Fund and the World Bank to use their resources to cancel 100 percent of their debt claims against poor countries.

Speaking at the National Press Club on Thursday afternoon, Summers said that full implementation of recommendations made by the bipartisan Meltzer Commission — which urged cancellation of all the debts of the world’s poorest countries — “would do very serious damage to the economic and financial interests of the United States, and would in a meaningful and important way undermine the prospects for successful economic development around the world.”

But today, some analysts blasted the treasury secretary’s comments as a smokescreen for policy prescriptions that continue to give low priority to reducing global poverty.

“The majority of the poor countries that have been approved for ‘debt relief’ under the initiative supported by Secretary Summers will still pay more in debt service than they will spend on health care,” said Robert Naiman, senior policy analyst at the Center for Economic and Policy Research. “At least one country, Zambia, will pay more in debt service after ‘debt relief’ than it was paying before.”

The limited debt-relief plan favored by Summers “won’t actually deliver the benefits which have been promised in terms of ending the debt crisis, reducing poverty, and increasing access to primary health care and education,” Naiman said. He faulted the Clinton administration for “defending the International Monetary Fund and the World Bank to the hilt, supporting their disastrous interventions in Asia, Russia, Brazil, Turkey and Argentina, so New York banks could collect on their bad loans.”

Institute for Public Accuracy communications director Sam Husseini, whose questions about debt relief at Thursday’s briefing prompted Summers’ remarks, said today: “It was obvious from his responses that, at the end of the Clinton administration, U.S. policies continue to give much higher priority to maximizing the profits of Western bankers than reducing global poverty, contrary to the generous veneer of ‘debt relief.'”

ROBERT NAIMAN

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SAM HUSSEINI

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A transcript of the Summers briefing