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Part III (I2D2 Proposal) of this “A Biden B2B Doctrine for Economic Empowerment” series is a solution of forming an “Institute of International Debt and Development” (the so-called “I2D2”), initially proposed in 1988 by James Robinson III, then-chairman of the American Express. I have been pushing it since 1988, but the policy and decision-makers of the United States, the Philippines, and other countries have refused to touch it.
III. SUGGESTED LONG-TERM SOLUTION
1.0 California is the sixth-biggest economy globally if its economy stands on its own and not part of the American economy. The Golden State and the other states that join them have the financial resources and the talents to make operational the I2D2 proposal.
2.0 I tried to entice the Philippine government from 1988 to 2004 to support the I2D2 proposal of Mr. Robinson III, as described in this series in several articles published in mabuhayradio.com. In my articles referenced in this link, I suggested paying off the Philippines’ foreign debts by accepting I2D2. I submitted a complete I2D2 proposal to both former Presidents Corazon C. Aquino and Fidel V. Ramos, but they did not bother to reply to Mr. Robinson’s or my letters. While Mr. Robinson has lost interest in the I2D2 idea, I have taken up the cudgels for him and his supporters to press on and pursue it.
3.0 The financially unsustainable pension fund entities of many states — if merged into one consortium — have enough resources to take over the I2D2 idea and make it operational. They can acquire debts of developing countries or the Third World from bilateral-and-multi-lateral and commercial lenders. I2D2 can achieve the said debtor countries’ remaining debts for probably 10- to 50 percent of the loans’ dollar (face) value. Since the I2D2 will be paid in the local currency (for the interest and capital), they can then use it to launch projects described in the Mission Statement of the I2D2. In short, the I2D2 idea can be the economic equivalent of a “breeder nuclear reactor” that generates its fuel.
Why the Need for an “I2D2” In Addition to the IMF and World Bank
On Sept. 25, 2007, I wrote the article, “How to Prevent the Philippines from Becoming an ‘IOUgoslavia,‘” the Asian version of Yugoslavia.
1. The matter of the Philippines’ foreign debts and the Third World is beyond “debt management.”
2. The World Bank (WB) and the International Monetary Fund (IMF) tried solutions after solutions. They tried the Baker Plan. They created the Brady bonds, named for former U.S. Treasury Sec. Nicholas Brady, the repackaged version that was offered to emerging nations by banks in the 1980s. They became “tradable” after the United States government guaranteed a portion of their principal and interest. The WB and IMF touted a few years back their formula to solve Mexico’s economic problems, and again the plan did not work. Following the disruption to the financial markets triggered in mid-1997 by the “Asian crisis,” the economic weakness and difficulties spread to other regions in 1998.
3. On Sept. 29, 1999, then-President Bill Clinton pledged in a speech at the IMF’s annual meeting an initiative to forgive all the debt owed the United States by 36 of the world’s poorest countries. President Clinton lamented that “unsustainable debt is helping to keep too many poor countries and poor people in poverty.” He said that the United States could not in good conscience ask impoverished nations to choose between making interest payments on their debt or investing in their children’s education.
4. Hilton L. Root, a senior fellow, and head of the global studies at the Milken Institute, an economic think tank based in Santa Monica, California, echoed leading experts’ opinions. He said, “Debt relief alone will do little to alter the plight of the world’s most impoverished nations. A successful turnaround requires civil service capacity, budgetary supervision, and political accountability. Unless the plan for debt relief leads to fundamental reform of these Third-World states, redemption simply will be the source of empty self-congratulations among the world’s rich and a tax holiday for kleptocrats.” (Root’s article appeared in the Los Angeles Times, Dec. 23, 1999, issue.)
(Part IV A Biden B2B Doctrine for Economic Empowerment: The I2D2 Proposal coming up next)