HURRICANE MITCH: France pushes for debt relief

FRANCE AND Germany threw their weight behind the campaign to relieve debt repayments for Central American countries devastated by Hurricane Mitch yesterday, giving new momentum to the move belatedly backed by Britain.

In the clearest statement of support yet from a Western political leader, the French prime minister, Lionel Jospin, said: "The French government plans a multilateral initiative to call on all creditor nations of these four countries to speed up debt relief and put in place a moratorium for the coming years."

Mr Jospin's stand was backed cautiously by Joschka Fischer, the new German foreign minister, who raised the issue at a meeting of European foreign ministers in Brussels. And, after the weekend turnaround in British policy, Robin Cook, the Foreign Secretary, also called on the international community to consider some debt cancellation measures.

The hurricane killed an estimated 11,000 people and left another 13,000 missing and feared dead. The international response has been criticised by aid agencies and the affected countries as slow and inadequate. According to Jubilee 2000, the broad coalition of churches and pressure groups which has championed debt relief, Nicaragua and Honduras together are saddled with commitments of pounds 1.3m per day in debt service. In 1996, for example, Honduran spending on debt was $564m a year, compared with $240m per annum on health and education.

The scale of destruction wreaked by Mitch has driven debt relief to the top of the political agenda, but there is little evidence of acoordinated plan among policymakers.

Mr Jospin said yesterday that Paris was planning its own action which would swap debt into reconstruction projects.

Britain's idea, advanced by Gordon Brown, the Chancellor, marks a change for the Government, which earlier this year advised ministers not to sign a pledge on debt organised by Jubilee 2000. But it may not be as generous as other suggestions being canvassed.

Under the proposal, the International Monetary Fund would extend to the affected countries a programme already in existence for nations hit by war. Mr Cook said yesterday: "Gordon Brown and the Government are leading in urging (the IMF and World Bank) to create parallels to the arrangements already in place in countries affected by conflicts."

But Mr Brown's idea would involve a moratorium on interest payments, rather than debt cancellation. Nor is there any timescale for the proposals.