Daily Press Cuttings

Friday 22^nd October 1999

FT: US Congress/Debt: The US Congress is preparing to consider legislation that would impose restrictions on how money raised by the IMF for a new debt relief plan for poor countries can be spent. The proposal, expected to come before the Banking Committee of the House of Representatives next week, would also widen the scope of a separate US initiative to forgive its $6 billion bilateral debt with eligible states. According to a draft of the legislative amendment, Congress would authorise the revaluation of 14 million ounces of its gold reserves, but it would forbid the IMF from using some of the new money for the ESAF, the framework it uses to structure lending to poor countries. Instead, the bill calls for further reforms to ESAF, recently renamed the Poverty Reduction and Growth Facility. The legislation would also require complete cancellation of the US bilateral debt to poor countries that commit to spending t savings on human development and would require the US to put pressure on other creditors to do the same. Although President Clinton announced such a move last month, congress had previously only been prepared to cancel 90 per cent of most of the debt. If the new amendment is passed by in committee, supporters would most likely try to include it in a final budget package currently being negotiated by the White House and Congress. A foreign aid bill that was earlier approved by Congress but vetoed this week b Mr Clinton contained only a fraction of the $370 million needed to fund the debt relief plans. However, both sides are optimistic that most of the necessary funds will be reinserted during final talks. Indonesia: A day after her dramatic defeat in Indonesia's presidential race, Megawati Sukarnoputri, the popular opposition figure, was elected vice-president by the country's top legislative assembly, giving Indonesia yet another leader who symbolises a decisive break from its authoritarian past. As on Wednesday, the vote by the 700-member People's Consultative Assembly brought thousands of supporters of Ms Megawati on to the streets of Jakarta. But this time, instead of rioting, they joyously paraded around the capital, honking horns and embracing passers-by. Feature article assesses the presidential pairing of Abdurrahman Wahid and Megawati Sukarnoputri and the hopes of a new era that leaves behind Suharto-style authoritarianism. There are four major challenges: they must prevent food shortages; they must resolve the scandal surrounding Bank Bali; they must draw up a government budget; and they must reform the notoriously corrupt legal system. UK: The UK is heading for a budget surplus this year of £12 billion, according to the Institute of Fiscal Studies.

The Guardian: Debt/Canada: Letter from the Minister of Finance of Canada, Paul Martin, MP, explaining Canada's contribution on debt relief. “Canada is a leading player in the international effort to reduce the debt burdens that are crippling HIPCs and to ensure that debt relief is linked to poverty reduction. Contrary to the views expressed (in the Guardian), we are neither slow or reluctant to provide funding. Canada has fully paid its US$27 million contribution to the HIPC trust fund, making us the second most generous G7 donor to date. In March, we became the first G7 country to commit to 100 per cent cancellation on all bilateral official debts for the poorest eligible countries. In fact, since 1986, Canada's foreign aid has been delivered entirely on a grant-only basis.” Conflict: At least 110 000 people were killed last year in armed conflicts around the globe, according to the latest edition of the Military Balance report of the International Institute of Strategic Studies. In hte12 months to August 1999, 10 international wars and 25 civil wars were being fought. Around 60 per cent of the deaths from armed conflict occurred in Sub-Saharan Africa. Excluding South Africa, spending on arms in SSA increased by about 14 per cent at a time when the region's economic growth rose by less than 1 per cent in real terms. The US remains the world's largest arms exporter, accounting for almost half of all arms sold. France is the second largest, followed by Britain.

The Independent: Kosovo: The Kosovo war will cost Nato countries $11 billion and peacekeeping in the Serbian province will add $10 billion to that each year.

Thursday 21st October 1999

FT: Indonesia: Abdurrahman Wahid, a liberal Muslim cleric, was yesterday selected as Indonesia's next president, sparking violent protests from the supporters of Megawati Sukarnoputri, winner of June's election. Burma/Myanmar: The Asian Human Rights Commission, a Hong Kong based NGO, has accused the military junta of pushing parts of Burma to the brink of famine. They say that there is widespread food scarcity among farmers in Burma's rice-growing heartland because peasants are forced to sell their crop at prices well below market rate, and crops are destroyed by the army as retribution in its fight against insurgents. Sudan: Intense rivalry between the factions of Sudan's ruling party has split the country's Islamist political elite and may force a clash between the military hierarchy and religious leaders. World Trade: Interview with Pascal Lamy, the EU's recently appointed trade commissioner, who believes that free trade is good for everyone, but is a staunch defender of strong global trade rules.

The Independent: Indonesia: Abdurrahman Wahid, known by everyone in Indonesia by his nickname Gus Dur, is not its most popular leader, nor its most progressive—and certainly not its healthiest. But he is without question its most brilliant political operator, a man who combines tolerant inclusiveness with treacherous cunning, an Indonesian Nelson Mandela and a Brutus rolled into one.

The Guardian: UK/ECGD: A top director who advises trade secretary Stephen Byers on how to spend billions of pounds on guarantees for arms and construction exports was forced to resign from her government duties last night. Lesley Knox, who holds 12 directorships, quit her post as a member of the export credit guarantee advisory council after being exposed on Channel 4's Mark Thomas Product for failing to declare the posts on a public register. Angola: The Angolan government announced yesterday that its troops had captured the two headquarter towns of the UNITA rebels during a wide-ranging offensive which has restored Luanda's control of important parts of provinces in the north. Unesco: The Japanese ambassador to Paris, Koichiro Matsuura, was elected as director general of Unesco yesterday. He has promised to clean up a body steeped in corruption, cronyism and mismanagement.

IHT: Pakistan: Focus on the economic problems facing the military government. The immediate crisis concerns the colossal international debt. Debt service eats up 36 per cent of the government's $14 billion annual budget (the military takes another 30 per cent). Nigeria/US: The US secretary of state, Madeleine Albright, warned that African countries could not achieve their economic potential until they overcome crime and corruption by “those who consider public office a license to steal.” Latin America: Comment in the LA Times that Latin American countries have made significant gains in reforming their political and economic systems in the past two decades. But the third leg of successful government, the justice system, lags severely.

Channel 4: (Tuesday) UK/ECGD: The Mark Thomas Product programme carried out a trenchant satirical attack on the British government's Export Credits Guarantee Department. Comedian Mark Thomas took “Iraqi scrap metal” in a skip to the ECGD offices and offered it as part payment for the outstanding debt owed to ECGD from Iraq. The ECGD press officer, confirmed to Mark Thomas that dictators were often looked upon favourably by the department, because they “don't default.” Mark Thomas also came close to obtaining millions of pounds of credit to back a spoof export scheme of triple decker buses, including a top deck of only a few feet in height to accommodate toddlers. His exposure of one of the ECGD's advisers, Lesley Knox, who had not declared her 12 directorships, led to an apology on air and a resignation the next day.

Wednesday 20th October 1999

FT: Indonesia: Indonesia's top legislative assembly narrowly voted to reject an accountability speech by President Habibie, in effect ending his attempt to retain the presidency in a separate vote scheduled for today. His lack of broad-based support in the 700-member People's Consultative Assembly (MPR) is likely to lead his ruling Golkar party to replacing him as its presidential candidate. Global finance: Economist Martin Wolf expresses his support for the need to limit IMF packages in the event of financial crisis and the imperative of burden-sharing with the private sector. He agrees with a report from the US-based Council on Foreign Relations, which argues that all countries should include collective action clauses in sovereign bond contracts, while the IMF should be prepared to support a temporary halt in debt repayments. The protests from representatives of the private sector and some of the borrowing countries should be dismissed. The risks inherent in foreign-currency borrowing—as opposed to equity investment—are very large. They must be priced into contracts, not assumed away. Yes, the critics are right to complain that these proposals may raise the cost of borrowing. That is not a compelling objection. It is among their benefits.

The Independent: Tanzania: In the biggest outpouring of collective grief that southern Africa has ever seen, Tanzania yesterday began a 48 hour mourning for Julius Nyerere, who died from leukaemia last Thursday in London. 30 million people are grieving as one for Mwalimu—the teacher.

The Guardian: Afghanistan: Article looks at the human rights abuses carried out by the Taliban in Afghanistan, including 130 000 refugees in the Panjshir valley, driven from their homes.

IHT: US/Congress: Washington Post leader is very critical of the US Congress decision to block President Clinton's request for funding foreign operations. It uses the desperate plight of Sierra Leone, visited this week by Secretary of State, Madeleine Albright, to illustrate the need for humanitarian attention and peacekeeping, but criticises Congress' indifference. Nigeria/US: The US secretary of state, Madeleine Albright, made the fourth stop of her tour of Africa in Nigeria on Tuesday.

Tuesday 19th October 1999

FT: US/Congress: President Bill Clinton yesterday delivered on his promise to veto a $12.7 billion foreign aid bill. The veto intensified the last-minute budget battle between the White House and the Republican-led Congress and underscored the extent to which this year's end of session posturing is likely to fix the debate for the presidential front-runners in the coming elections. The foreign aid bill provided significantly less funding than Mr Clinton had requested for the world's poorest countries. Botswana: Botswana's ruling party, helped by divisions among its opponents, has won Saturday's general election. The Botswana Democratic party (BDP), which has governed the country since independence in 1960, had won 30 of the 40 elected seats by last night. Bangladesh: Bangladesh has rejected the IMF's demand that it speed up financial and administrative reforms in return for structural adjustment funding. No agreement has been reached with the IMF over a new structural adjustment programme following the end of the last one in 1993. Bangladeshi officials said it was difficult for the government to take unpopular measures such as privatisation, which could lead to labour unrest, before the election in 2001.

The Independent: Zimbabwe: The Zimbabwean President Robert Mugabe has announced that the government is ready to compensate the families of an estimated 25000 people killed in an opposition stronghold during the civil war in the early 1980s.

IHT: US/Congress: With tensions growing between the White house and Congress, President Clinton vetoed the $12.6 billion foreign aid bill. He said: "I vetoed the foreign operations bill this morning because it seems to me to be the next big =chapter in the new American isolationism, right after the Comprehensive Test Ban Treaty.” Indonesia: Comment from the Economist says that Megawati Sukarnoputri seems to be the least bad choice to rule Indonesia. If she becomes president, she will at least have the backing of many of the rural poor and many of the students who have been agitating for reform. But among the umpteen uncertainties of a Megawati presidency would be the role of the armed forces. It would be impossible to rule Indonesia without the goodwill of the army. but it would also be impossible to rule it democratically with the army in its current position of influence. Whoever is chosen should insist that there be no place in Indonesia's politics for any soldier in uniform. Nigeria: New York Times leader says that without more local control of the oil money and how it is spent, the oil-producing Delta could explode. Mr Obasanjo's greatest contribution to Nigeria's stability may eventually be his willingness to reduce his own powers.

The Guardian: Pakistan/Commonwealth: Pakistan was in effect suspended from the Commonwealth last night. After last week's military coup, ministers from the eight-country Commonwealth ministerial action group (CMAG) said the suspension would be effective “forthwith” and would remain “pending the restoration of democracy in the country.” Tanzania: 1 million Tanzanians turned out to pay their last respects to Julius Nyerere. The South African president, Thabo Mbeki, has ordered flags to fly at half mast throughout South Africa, acknowledging the debt that the country owed Mr Nyrerere in the battle against apartheid.

Monday 18th October 1999

FT: UN/Africa: The UN will today warn that Africa faces an escalating food crisis, which could make 60 per cent of its population go hungry in 25 years. In a study released to mark World Food Day, the UN predicts that continuing soil degradation will bring about starvation and poverty on an unprecedented scale. The problem will be compounded by an expected increase in population to 1 billion by 2025.Colombia: The Colombian government has agreed to restart peace negotiations this week with the country's largest leftwing guerrilla group after an 11-month delay. In order to restart the talks, the government backed down from insisting that an international arbitration committee act as peace broker, despite the fact that both sides had previously agreed to an international presence. Mozambique: Survey. In the ten years to 1996, net aid disbursements averaged $1bn annually—45 per cent of GDP. The downside was the doubling in the country's debt stock to $6 billion by the end of 1997 as it slipped into an unsustainable debt trap. In July, Mozambique received $3.7 billion in debt relief under the HIPC initiative, an ironic commentary on the sustainability of aid programmes. MSF: Medecins sans Frontieres, the medical relief group, yesterday won the Nobel peace prize, dedicating it to the forgotten populations of the world from Congo to Afghanistan. The Norwegian Nobel committee said the prize honoured MSF for “pioneering humanitarian work on several continents,” and for its speed and fearlessness in providing emergency aid.

The Voice: Burundi: Stalled negotiations to end nearly six years of civil war in Burundi will resume on November 8^th, despite the absence of the chief mediator, former Tanzanian president, Julius Nyerere, who died last week. More than 150 000 people have died in fighting between Burundi's Tutsi-dominated army and Hutu rebels since 1993.

Business Week: Ecuador: Comment by Laura D'Andrea Tyson, former adviser to President Clinton, on the lessons of the Ecuador default. She says that history clearly shows that a long delay in rescheduling an unsustainable debt burden benefits neither the debtor country nor its creditors. And although international guidelines requiring private bond-holders to agree to restructuring under certain circumstances could reduce their willingness to lend to emerging market economies, such guidelines would also encourage more prudent lending, discourage over-borrowing by individual countries, and reduce the likelihood and severity of future financial crises.

IHT: World Trade: Comment from the Los Angeles Times that pressure must be applied to countries where sweatshops and child labour are common, but argues that the WTO is not the place to do this.

The Observer: UK/IMF: Article says that some of the British Chancellor's continental colleagues have been questioned whether they would support him in a bid to become the IMF's next Managing Director.