Leaders consider tsunami debt freeze

Leaders at an international conference on aid to Asian tsunami victims welcomed the idea on Thursday of debt moratorium for countries hit by the disaster, but made no commitment to do so.

Delegates appeared divided over the idea of postponing debt repayments.

Several European nations back freezing debt for some of the 11 countries where a massive earthquake and the huge waves it triggered killed an estimated 150 000 people on December 26.

Others are more wary of that strategy, saying direct payments are a more effective way to reach the stricken.

Dozens of international leaders at the summit endorsed a noncommittal joint statement saying they welcome proposals to reduce tsunami-hit nations’ debt ”to augment their national capacity to carry out the rehabilitation and reconstruction efforts”.

Australia, which on Wednesday announced $764-million in grants and loans to aid tsunami victims in worst-affected Indonesia, has said it is unimpressed by a debt moratorium plan backed by Canada, Britain, France, Germany and others.

”Our view is that Indonesia is likely to benefit substantially more by direct and active programmes,” Australian Foreign Minister Alexander Downer said.

He noted that debt moratoriums are eventually lifted while aid grants don’t have to be repaid. Aid can more easily be targeted to those in need than debt relief, which puts money into governments’ general coffers.

He said Australia will discuss the debt moratorium idea with other members of the Paris Club of creditor nations.

World Bank President James Wolfensohn said creditors can ensure the proceeds of debt relief go to those who need help, but said it is easier to control and monitor specially earmarked grant money.

Global aid pledges total nearly $4-billion.

Japanese Foreign Ministry spokesperson Akira Chiba said his country, a major aid donor that holds $20-billion in Indonesian debt alone, backs a freeze on repayments.

”I see no choice between debt relief or aid,” he said. ”Concerning loans, we are considering a moratorium and for grant aid … we are ready to provide $500-million for emergency assistance.”

He said he thinks the conference delegates’ talks might pave the way for more progress later.

Indonesia and India owe most

The World Bank says that among the tsunami-hit nations, Indonesia and India have the biggest foreign debts. Indonesia owed $132-billion and India $104-billion in 2002, the last year for which figures are available, it says.

The bank said other levels were: Thailand, $59-billion; Sri Lanka, $10-billion; Malaysia, $48-billion; Somalia, $2,7-billion; and the Maldives, $270-million.

Maldives President Maumoon Abdul Gayoom said he hopes for some relief from the debt that is equal to 40% of his archipelago country’s gross domestic product.

”We need a lot of time … to get back on our feet and to be able to pay our own debts,” he said.

United Nations Secretary General Kofi Annan took no stance on whether debt freezes will be helpful.

”What is important is that the international community does whatever it can to assist the governments in the affected countries,” he said. ”The issue of debt relief … is very much on the table and I will wait to see what the countries concerned, the creditor countries, decide.”

Annan asks for $1bn in immediate aid

Annan made an impassioned appeal on Thursday for nearly $1-billion of immediate aid for countries stricken by the Asian tsunami disaster as the embattled head of the world body took charge of coordinating the world’s response to the tragedy.

Addressing the one-day summit of world leaders called to organise what will ultimately amount to several billion dollars in relief and long-term reconstruction aid for the Indian Ocean region, Annan said $977-million is needed immediately for specific projects to help five million people.

Annan warned that without rapid action, disease in devastated areas could send the death toll soaring above the 146 000 fatalities already confirmed in 11 nations hit by the December 26 tsunamis.

”For the UN, it is the largest natural disaster the organisation has had to respond to on behalf of the world community, in the 60 years of our existence,” Annan said.

While individual governments have already pledged up to $4-billion in general, longer-term aid pledges to stricken nations, Annan said it is essential they come up with hard cash for the immediate relief effort over the next six months.

”Many of the pledges have come to us in cash and in kind. We need the rest of the pledges to be converted into cash quickly,” he said.

Leaders in favour of UN

Annan, under the shadow of a string of scandals at the UN and still smarting from the way the United States and its allies have sidelined his organisation during the Iraq crisis, succeeded in putting the world body at centre stage of the aid summit.

Leader after leader from the seven states worst hit by the earthquake and tsunamis came out strongly in favour of having the UN play the central role in coordinating the relief effort.

”We must ensure that we benefit from the experience of the UN in establishing and managing special emergency funds and relief efforts,” said President Susilo Bambang Yudhoyono of Indonesia, the worst-hit nation with more than 94 000 fatalities.

Referring to logistical and other problems that have hamstrung some aid operations, Thai Foreign Minister Surakiart Sathirathai said it is crucial the global effort ”adopt a more predictable and reliable approach with the UN at its core”.

”The UN should take bold initiatives in disaster response, and utilise all resources at its disposal,” he said.

Japanese Prime Minister Junichoro Koizumi, whose government is one of the most generous aid donors so far, announced that $250-million of the $500-million in aid Tokyo has already pledged to the region will be funnelled to the UN in response to Annan’s appeal.

”I call on countries of the world to show solidarity in responding to the UN appeal to the maximum extent possible … and to swiftly put their respective pledges into practice,” Koizumi said.

US dissolves separate aid group

The US, which had been criticised for appearing again to sideline the UN as it ramped up its tsunami assistance, also uncharacteristically lined up behind Annan.

US Secretary of State Colin Powell told the summit that Washington is dissolving a ”core group” of nations it formed to expedite aid for tsunami victims outside the UN umbrella.

Powell said the group, initially formed with India, Japan and Australia and later enlarged to include Canada and The Netherlands, has ”served its purpose”.

”It will now fold itself into the broader coordination efforts of the UN as the entire international community works to support the nations who have suffered this tragedy,” he said.

Thursday’s meeting brought together leaders from 26 nations and international organisations, including the prime ministers of Australia, China and Japan, south-east Asian chiefs and representatives of the European Union, World Bank and International Monetary Fund.

While the conference did not focus on new aid pledges, the Asian Development Bank announced $350-million in additional grants and low-interest loans for stricken countries, and the European Union added â,¬350-million euros in assistance to â,¬100-million already promised.

While the Asian leaders appealed to the world community for help rebuilding their nations, they turned to one another in endorsing a regional project to set up a tsunami warning system for the Indian Ocean to avert a similar catastrophe in future.

Such a warning system exists in the Pacific, where tsunamis are more frequent, and experts say the same kind of alert network in the Indian Ocean could have saved tens of thousands of lives on December 26.

The world leaders attending the Jakarta summit were to travel to Sri Lanka later on Thursday for a first-hand view of the island where the tsunami killed more than 30 500 people, officials said. — Sapa-AFP, Sapa-AP

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