20100314 US asks Taiwan to cancel Haiti’s US$95m debt

US asks Taiwan to cancel Haiti’s US$95m debt

By William Lowther and Shih Hsiu-chuan
STAFF REPORTERS, WASHINGTON AND TAIPEI
Sunday, Mar 14, 2010, Page 3

“Moneys borrowed by these [dictatorial] regimes should not be borne by the Haitian people who had no say whatsoever on how these moneys were spent.”— Barbara Lee, US Congresswoman

Washington is preparing to push Taiwan to forgive all of the US$95 million in debt it is owed by poverty-stricken Haiti.

Both the House and the Senate have passed bills calling for the US treasury secretary to use the “voice, vote, and influence of the US” to urge all of the Caribbean island’s creditors to “cancel immediately and completely” Haiti’s debts.

Republican Congressman Spencer Bachus singled out Venezuela and Taiwan.

“The US has forgiven all of its bilateral debt to Haiti. Now, we are asking others to do the same. We are directing the secretary of the treasury to use his influence to seek debt cancelation from others,” he said during a debate in the House.

“Among them are Venezuela and Taiwan. By far, Venezuela is the largest bilateral creditor. Taiwan is a distant second,” he said.

The “Haiti Debt Relief and Earthquake Recovery Act of 2010” is expected to be signed into law before the end of this month.

At that point, the pressure will be on to forgive all of Haiti’s debt.

Taiwan’s Ministry of Foreign Affairs said a few days ago that it planned to help Haiti pay interest on the debt it owes to Taiwanese creditors.

FULL AMOUNT

It seems that this may now be too little as the US urges Taipei to go much further and forgive the whole amount.

Haiti was struck by a devastating magnitude 7 earthquake on Jan. 12.

Figures cited by the US Congress showed that 230,000 people were killed, 300,000 injured and 1.3 million left homeless.

Haiti owes a total of US$828 million to the IMF, the Inter-American Development Bank and the International Development Association. In addition, it owes US$58 million to the International Fund for Agricultural Development and millions more to other individual countries.

Damage caused by the earthquake is estimated at US$8 billion, with reconstruction costs expected to be about US$14 billion.

“Debt relief is not a matter of charity. It is really a matter of economic justice,” Democratic Congresswoman Barbara Lee said.

“Over half of Haiti’s debt was borrowed under Haiti’s dictatorships, some of which were brutally repressive,” she said. “Thus, moneys borrowed by these regimes should not be borne by the Haitian people who had no say whatsoever on how these moneys were spent.”

“Haiti is not in a position to service debt while it is struggling to meet the basic needs of its people like food, water, health care and shelter,” she added.

Washington sources said Haiti owes US$300 million to Venezuela and US$95 million to Taiwan.

In Taipei, MOFA said it had crafted a debt relief proposal for Haiti and referred it to the Executive Yuan for approval by Premier Wu Den-yih (吳敦義).

Under the proposal, the interest on debt owed by Haiti to two Taiwanese commercial banks would be repaid using the ministry’s official budget.

Asked for a comment on the US position, MOFA spokesman Henry Chen (陳銘政) said it was unlikely the government would replace the proposed debt reduction plan with complete debt cancelation for Haiti.

CONCERN

The money lent to Haiti was taken from the country’s foreign reserves via lending contracts with two commercial banks instead of directly from the treasury, Yang has said previously.

“Such commercial contracts have to be upheld,” Chen said.

When asked whether the government would appropriate funds from the treasury to repay the loans to the two commercial banks, Chen said the size of the loans was a concern.

“As [the loan owed by Haiti] is a large sum of money, we have to take into account whether the legislature will agree to a plan to repay the full debt,” he said.　

The debt reduction proposal will deliver bailout funds to Haiti, said Chen, adding that the government would continue to help its Caribbean ally rebuild via four major programs in the fields of sanitation and healthcare, relocation of earthquake victims, job training and infant adoption.