No, really, cancel Haiti's debt

Over at the Center for Global Development's blog, David Roodman argues that calls to cancel Haiti's debt (currently around $1.25 billion) are misguided.

The question is whether to go further than debt service suspension, to drop Haiti's debt outright, as non-governmental organizations, members of Congress, and others have demanded. Actually, the practical question for citizens, officials, politicians, campaigners, and other players is whether to push for that. On a few days' reflection, I say no. I would go so far as to describe such pressure as harmful.

Why? For starters, the benefits of debt relief over the next few years, however done, will be tiny.... IDB debt is already costing Haiti nothing. Roughly half the remaining debt service is payable to Taiwan and Venezuela, which may be less susceptible to campaigning from western officials and non-governmental organizations (NGOs). In play then, is perhaps as little as $25 million over the next three years.

He includes this image to illustrate the point:

Roodman ultimately argues not that it wouldn't be a good thing to cancel Haiti's debt, but that it is unwise to advocate for it: The world should focus on grant-making on a massive scale, rather than debt forgiveness on a rather small one. He writes:

I fear that calls to cancel Haiti's debt are the old shoes of political activism. They make superficial sense. They feel good. But they will hardly help Haiti recover from the quake. And in a crisis, if you're not helping, you're in the way. I hope that the politicians and activists responding with vigor and sincerity to this crisis will act also with the gravity it demands.

To a certain extent, I agree with him. I can't imagine anyone expecting Haiti's government to repay any time soon, nor will it be able to do so. Massive donations will benefit Haiti much more than small-scale debt forgiveness. Still, I think debt forgiveness is a worthy goal.

For one, Roodman's fear that international governments and institutions might neglect aid for debt relief seems misplaced. For instance, Christine Lagarde, finance minister of France, arranged not just for the Paris Club to rush its debt-forgiveness program, but also for France to up its donation to the country. Institutions and governments are likeliest to take dramatic measures to help Haiti now, rather than three years from now, when the country will still be in a horrible spot but international interest will have waned. The opportunity in this crisis exists now.

This is precisely the point the New York Times' editorial made today: "Three weeks after Haiti's earthquake, the search for survivors has been called off, the TV crews are trickling home, and the celebrity telethon is over -- usual signs that the floodwaters of compassion will be ebbing soon."

Furthermore, I think Roodman underplays the impact of debt payments on Haitian government spending. Sure, aid and remittances will dwarf debt payments next year. But why should the country have to worry about them at all -- ever, even 10 years from now, when Haiti will likely be stable and poor?

I made another chart from data from Haiti's budget. (The Port-au-Prince government, it turns out, posts its budget documents online.) Last year, it shows, Haiti spent around $37 million servicing its debt. (I looked up the numbers in Haitian Gourdes, and performed a current-day currency conversion -- note that the currency has cratered recently.) That's more than the government spent, say, on agriculture -- despite the fact that a massive proportion of Haitians are subsistence farmers. It's more than it spent on its ministry of tourism, despite the fact that tourists once posed the best way for Haiti to bolster its economy in the short term. Had Haiti not had to repay external debt, it could have boosted its education budget by nearly a third.

Haiti's debts remain significant. Moreover, it has garnered new ones, including a $100 million emergency loan from the IMF -- which comes with strings attached, including, for instance, a requirement to freeze government-employee pay. The country's debt has been a millstone around its neck for too long. It has a horrible history of economically encumbering the country. Why, with the outpouring still ongoing, though not for long, let that legacy remain?


Al Shabaab's Alabaman jihadist

 Until recently counter-terrorism officials weren't worried about jihadi pundits having much of an influence in the United States itself, where they believed that a higher degree of Muslim-American assimiliation, social mobility and economic well-being would act against such influences. It turns out however, that this isn't always the case.

In an article in New York Times Magazine, Pulitzer Prize winning journalist Andrea Eliot profiles the captivating transformation of an all-American boy from Alabama, Omar Hammami, who is now fighting with Al Shabaab in Somalia.

Despite the name he acquired from his father, an immigrant from Syria, Hammami was every bit as Alabaman as his mother, a warm, plain-spoken woman who sprinkles her conversation with blandishments like "sugar" and "darlin'." Brought up a Southern Baptist, Omar went to Bible camp as a boy and sang "Away in a Manger" on Christmas Eve. As a teenager, his passions veered between Shakespeare and Kurt Cobain, soccer and Nintendo. In the thick of his adolescence, he was fearless, raucously funny, rebellious, contrarian. "It felt cool just to be with him," his best friend at the time, Trey Gunter, said recently. "You knew he was going to be a leader."

A decade later, Hammami has fulfilled that promise in the most unimaginable way. Some 8,500 miles from Alabama, on the eastern edge of Africa, he has become a key figure in one of the world's most ruthless Islamist insurgencies. That guerrilla army, known as the Shabab, is fighting to overthrow the fragile American-backed Somali government. The rebels are known for beheading political enemies, chopping off the hands of thieves and stoning women accused of adultery. With help from Al Qaeda, they have managed to turn Somalia into an ever more popular destination for jihadis from around the world.

And there are some downright chilling portions of the article:

In a recent propaganda video viewed by thousands on YouTube, he is shown leading a platoon of gun-toting rebels as a soundtrack of jihadi rap plays in the background.

He is identified by his nom de guerre, Abu Mansoor Al-Amriki, "the American," and speaks to the camera with a cool, almost eerie confidence. "We're waiting for the enemy to come," Hammami whispers, a smile crossing his face. Later he vows, "We're going to kill all of them."

Getting native-born Americans to join the jihadist cause is a coup for groups like al Qaeda or al Shabaab. An American jihadi can increase a group's legitimacy, add appeal to radicalizing youth in Western countries and can teach foreign jihadis about American culture. Having an American passport also allows for freer travel.

Although Omar Hammami isn't the first American to reach the higher echelons of a radical Islamic organization (California native Adam Gadahn is a top spokesman for al Qaeda), Eliot's article is a uniquely in-depth look into the details of such a metamorphosis. It's definitely worth a full read.

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