For the Paris Club, oil a double-edged sword

While Libya is restoring full diplomatic relations with the United States--and finally getting dropped from the State Department’s list of states funding terrorists--Algeria is arranging to pay off all of its outstanding debt ($8 billion) to the Paris Club sometime between June and November this year. Russia is also bargaining its way through full repayment of its $22 billion, and in April, Nigeria finalized the plan to pay off its $30 billion to the Paris Club. That’s $60 billion repaid in less than a month.

So props to Bono for all his hard work Unfortunately, these huge payoffs are not due to booms of  these countries’ economies, good governance or donor generosity: rather, they are about oil. All of these countries have huge reserves and--except for Russia, who still is the second oil exporter after Saudi Arabia--are members of OPEC. While high oil prices might not be good for democracy in unstable nations, they do wonders for foreign cash reserves with which to pay off nations as thirsty for oil--and for good deals for their companies--as those belonging to the Paris club. Now that they are debt-free, expect these countries to pay even less attention to Western rhetoric on democracy and human rights.