At a meeting of the G8, the Bush administration agreed to cancel at least $40 billion in debt owed to international lenders by the world's 18 poorest countries, most of them in Africa

National Review, July 4, 2005

At a meeting of the G8, the Bush administration agreed to cancel at least $40 billion in debt owed to international lenders by the world's 18 poorest countries, most of them in Africa. In earlier negotiations with Britain, the United States had pressed to have the lenders write off the loans entirely; Britain argued that rich nations should repay the debts themselves.

The final deal struck by the world's eight wealthiest countries represented something of a compromise, but it leaned strongly toward Blair's position: The debts were canceled, but the United States and others agreed to compensate the World Bank and the African Development Bank for forfeiting interest on them. That means that these institutions will be able to continue their lending as before, without having to confront past mistakes. The Bush administration had the right instinct: Such lending has failed to help poor nations develop, and absent competent governance it will continue to fail. There is also of course the matter of rewarding bad behavior on the part of the debtors. The real issue here--the one no one is talking about--is that these countries are politically a mess. But confronting that problem would be much harder than throwing more money to the wind.