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"Then [Jeffrey] Sachs and I, with my friend Bobby Shriver hit the road like some kind of surreal crossover act. A rock star, a Kennedy, and a noted economist crisscrossing the globe, like the Partridge Family on psychotropic drugs." -- Bono |
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"Then [Jeffrey] Sachs and I, with my friend Bobby Shriver hit the road like some kind of surreal crossover act. A rock star, a Kennedy, and a noted economist crisscrossing the globe, like the Partridge Family on psychotropic drugs." -- Bono |
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Book Excerpt: The Debt Threat: How Debt Is Destroying The Developing World (pt. 2)reprinted with permission of Harper Collins
Harper Collins,
June 30, 2005
[Ed. note: HarperCollins has been kind enough to let @U2 post the first chapter of Noreena Hertz's The Debt Threat: How Debt Is Destroying The Developing World. We're posting it because it is the most in-depth, engrossing and inspiring report of Bono's work with Jubilee 2000 we've seen. We're posting it now because we figure debt cancellation will be one of the major topics at Live 8. Here's a link for ordering the book]
[continued from part one...] Selling the idea of canceling debt to Clinton wasn't hard. The president had just come back from the G8 meeting of the richest developed nations in Cologne, where debt relief had been high on the agenda. He had already pledged to contribute to funding the IMF's and World Bank's debt relief efforts, and also to increase the amount of American debt that would be canceled. But canceling all the debts owed to the United States was another matter. Could the United States really afford it? It was up to Summers to convince the president. "I remember a frantic weekend in which Larry, Gene [Sperling, who'd facilitated the first meeting with Summers], and Gene's niece, who he was minding, had come in on the Saturday to do the numbers and try to make it happen," recounts Bono. "Busy, busy people coming in on a Saturday to get shouted at and reasoned with. Trying to work out what it'd actually cost to cancel these debts. The extent to which they could be written down so that we could meet the 100 percent cancellation objective." (For, given that there was no real possibility of their ever being repaid in full, these debts could be discounted so as to reflect a realistic market value.) "And we did it," says Summers with a smile. "In the last thirty-six hours we worked out that we could afford to do this." By writing down the value of their loans by approximately 90 percent, the real cost to the United States of canceling the $6 billion debts owed would amount to only around $600 million. On September 29, 1999, in a speech at the World Bank, with Summers's numbers in his back pocket, President Clinton announced that the United States would cancel 100 percent of the $6 billion debt owed it by the world's poorest thirty-three countries -- the first country in the world to make such a huge commitment. Bono was in France when he heard the news of Clinton's announcement. "I got a phone call from Bobby and it felt like, you know, just the biggest thing ever. We had been working so hard, I was jumping up and down. It was a real breakthrough. One hundred percent, no nonsense, no games. The United States was stepping out in front. Okay, it was only thirty-three countries [Jubilee had been calling for the cancellation of the debts of fifty-two poor countries], but it was a clear melody, a clear-cut idea." It seemed as though they were on track. But when Bono started to hear the critics say that Clinton was only doing this because he knew it wouldn't get past Congress, that Congress would never fund the scheme, he was reminded of just how complicated his mission was -- because in the United States, it is Congress and not the administration that holds the purse strings. And Congress was controlled by the Republicans. If the money to fund Clinton's 100 percent debt cancellation pledge, as well as meet the commitment he had made at Cologne to contribute to bailing out the IMF and World Bank -- $545 million in the first instance -- was to be found, it was Republicans who were going to have to vote for that amount to be released. Getting $545 million allocated to what was essentially foreign aid was, in a Republican-controlled Congress, never going to be easy. Giving money to poor countries doesn't tend to poll well for American politicians. "It was very hard even for people who wanted to be for this, to be for this," explains Sandberg. "Debt relief for Africa? The United States just doesn't do this." It was time to get the Terminator involved. Bobby Shriver, who had done such a majestic job in getting the bankers, liberals, and cognoscenti on board, wasn't the man when it came to bringing the Republicans around to his side: his Kennedy lineage got in the way. His sister Maria, however, was married to someone who helped him get over that problem. Arnold Schwarzenegger, the movie star and Bobby's brother-in-law, was already, five years before becoming governor of California, moving in Republican circles. "Bono and I explained the idea to Arnold," remembers Bobby, "and Arnold thought about it and said, 'I know a guy who might help you. A friend of mine who's the congressman from Columbus, Ohio, John Kasich.'" Kasich, whom Schwarzenegger knew through the Arnold Classic Body Building Contest, which is held in Columbus each year, was, at the time, the chairman of the Budget Committee in the House of Representatives, a very influential position. He was no nambypamby liberal. "John was a hard, right-wing guy," says Shriver, "and someone who was very smart. Not book smart like Larry. But, you know, street smart. Smarter than most people in Congress. And he got what we were talking about. He had traveled overseas and could see that people did not like Americans. This was before 9/11. And he didn't like that. And he saw that canceling their debts for what, in his view, was a relatively small amount of money was a way to say to people, 'Look, we're not just a bunch of pricks flying B1 bombers over your country.'" Kasich came on board, and his support was key. Not only did he bring with him other important members of the Republican leadership including House Speaker Dennis Hastert and House Majority Leader Dick Armey, but also lower-profile but equally essential Republican politicians from both House and Senate. And, in November 1999, two months after Clinton's historic pledge, Congress agreed to appropriate $110 million. Although this was a start, the $110 million was far less than the $545 million the campaigners had been after. This would cover only the first year of America's own debt cancellation schedule, and it didn't cover any financing for the participation of the regional development banks in the debt cancellation initiative; nor provide for the IMF and World Bank, the poor world's major creditors, to cancel any of their debts. If the Cologne international initiative was not to crumble, an additional $435 million had to be found. "I called Bono," recalls Sandberg, "and said, 'If you want to help get this through, you've got to come back to town.' We needed him. Bono could get in to see any member of Congress, and we needed to rally support. He said that he was recording his new album and making a documentary, and couldn't come to town over the next few weeks because they were filming. And I said if you can't come now it'll be too late. Two days later, he was here. And once he landed in D.C., he was a machine. He went around from member to member telling them that they could change the world if they got behind us. He would get up early in the morning, and would walk the halls and work it all day. And then we would have dinner late at night and he would still bring a member of Congress or some staffer. He was tireless. And when you think of the combination of a rock star who can get in to see anyone and someone who knows as much as some staffer who works on it full-time and can speak with the kind of passion that he speaks with, well, the world had never seen anything like it." But although politicians from every end of the political spectrum were falling under the Bono spell, one key man continued to hold out. Sonny Callahan, the libertarian conservative congressman from Alabama, was chairman of the Foreign Operations Subcommittee of the House Appropriations Committee, and he held the checkbook. It was up to him to recommend how much money to allocate to debt cancellation. And Callahan wasn't having any of it. He believed that the additional monies being asked for "would encourage the World Bank and others to continue to make bad loans and leave poor countries to have to borrow and get into debt all over again." As far as Callahan was concerned, debt cancellation was "money down a rathole." Shriver got his feelers out and tried to influence Callahan through an old fishing friend, but to no avail. And, in June 2000, Callahan's committee recommended to the House of Representatives that Congress fund only $69 million of debt relief that year, even less than Congress had agreed to in November, a sixth of what the campaigners had been gunning for, and an amount, effectively, that meant Clinton would have to renege on both what he had pledged at Cologne and the 100 percent debt cancellation he had announced at the World Bank in September. "We had basically failed," says Shriver. "With the committee reporting that, it was basically over. It's almost never the case that Congress overrides a committee recommendation." There was one last avenue available. If they could stage, and then win, what is colloquially known as a "floor fight" in Congress, a challenge on the floor of the full House of Representatives against what the committee had recommended, the recommendation could be stopped from going through. But to win that fight they would need even more Republicans on board. And they would need to work fast -- the House and Senate would make their decision on how much to appropriate for debt relief by the beginning of the new fiscal year, October 1. With less than four months to go, the campaigning shifted up to an even higher gear. "John Kasich [Arnold Schwarzenegger's friend, the Republican chairman of the National Budget Committee] took the lead and agreed to launch the fight. But we needed to ensure that when he got up and said, 'We're not going to accept the committee's recommendation,' others would get up and say, "John is right -- I agree with him. Let's not accept these recommendations, let's do the full $435 million,'" Shriver recalls. "So we met with Jim Leach from Iowa. We met with Clinton's staff. We started calling everybody who could help challenge Callahan's recommendation. And then we called them back again and again. We got Volcker to call them; we got the president to call them. We were like animals; we would not leave them alone." Bono flew from Europe to Washington eight times that summer. "He came back and forth like a tired old dog," says Shriver. "I would do the red-eye from Los Angeles, meeting him there [in Washington]. We were pretty bedraggled. It had become beyond a full-time thing for the both of us. And when we weren't meeting face-to-face, we were back on the phone and writing to people and having conference calls, and asking people to write stuff, and finding out names of newspaper editors in key states, and then placing articles in papers." "It was kind of like the theater of the absurd," remembers Bono, who was supposed to be delivering a new album, All That You Can't Leave Behind, while all this was going on. "There were even times that Bobby used to hide outside meetings that I would have with Republicans. I would go in and he would hide, stay outside. He'd say, 'I'm a Kennedy. You don't need me around here.' He would have flown from L.A. and be hiding outside." The Bono-Shriver commitment, tenacity, and good humor encouraged their allies to try harder too. Kasich pulled his considerable weight. "He was soundly determined," Shriver says. "And he's one of those fellows who when he gets very determined you know you really don't want to cross him. People knew that he would just, to put it bluntly, f--k them if they didn't go along with him." So they did. Larry Summers went all out for them too. "He went to those meetings at a time of hostility that is hard to imagine," remembers Bono. "This was after the Monica Lewinsky affair, when there was a terrible stink in the city, and he batted for us." Professor Jeffrey Sachs hosted a prominent conference on debt cancellation in Washington and Gene Sperling played an integral part. "He was always on the phone, always with great ideas of how to get things done," recounts Shriver. Democratic congresswomen Maxine Waters and Nancy Pelosi did their bit to rally support, as did Republican congressmen Spencer Bachus and Jim Leach, Republican senator Orrin Hatch (whom Shriver had got on board early on), AFL-CIO president John Sweeney, Ray Offenheiser of Oxfam America, and Jim McDonald of Bread for the World. The U.S. affiliate of the Jubilee campaign did a lot of legwork on Capitol Hill to educate congresspeople and their staff, producing form letters for their supporters to send to their representatives, and providing e-mail addresses of swing senators and representatives that campaigners could send out. And big business was brought on board-Goldman Sachs, Motorola, Bechtel, Caterpillar, and Merck all signed an open statement calling for the full $435 million to be found. But if the congressional floor fight was to succeed, they'd need yet more support. Various key Republicans were still holding out, and Callahan needed to be, at the very least, out of the way. It was time to call upon Jesus. And it was Eunice Shriver who had his number. She was pals with the Reverend Billy Graham, the TV evangelist with a virtual congregation of hundreds of millions. Graham agreed to make a video for Bono and Bobby that they then sent around to recalcitrant members of Congress, a two-minute, no-bells-no-whistles video in which he asked them to support Bono's Jubilee cause. Jesse Helms, the notoriously conservative, hugely influential Republican senator from North Carolina and chairman of the Senate Committee on Foreign Relations, a man who symbolized opposition to foreign aid of any sort, wasn't sent a video -- he was, after all, Graham's own senator, and knew him well. But Graham's office played an important part in enabling what became a critical meeting between Bono and Helms -- they vouched for Shriver. And with this endorsement, Helms agreed to the meeting. "Bono connected with him in a spiritual way," recounts Shriver. "The two talked about the vast gulf between Africa's misery and America's prosperity. About the Bible, children, and so forth. And Helms was very moved by Bono's sincerity and evident knowledge. Not only in terms of the Scripture, but in terms of the financing. He said he would come on board." Helms's support was what Bono had been waiting for. His entry into the fold gave permission to all those politicians who were in his anti-foreign aid camp to stop opposing debt cancellation. What's more, the very public way in which Helms joined the team, with stories of the hard man of American politics in tears during his meeting with Bono doing the rounds, meant that the final laggards -- people like Phil Gramm from Texas, who might have opposed any challenge to the committee's recommendation -- could now safely be counted upon not to do so. Sonny Callahan was the last holdout. "It was a story Harry Belafonte told me that made me go for Sonny's bishop," recounts Bono. "Harry Belafonte said that he remembered being with Martin Luther King and a group of Dr. King's key supporters when Bobby Kennedy was made attorney general. The team around Dr. King was very depressed, because at the time Bobby was known to be quite reactionary on civil rights. They saw it as a very black day for the civil rights movement, and they were all bitching about Bobby Kennedy, about what a hopeless case it was. And Dr. King told them to stop bitching and said, 'Look, there must be one redeeming thing about this guy -- give me one redeeming thing.' And they said: 'Look, I'm telling you, Martin, there's nothing redeeming about him. He's an Irish racist.' And Dr. King closed the meeting and said: 'Come back when you've got one redeeming thing.' And when they met again two weeks later they said, 'We've found something.' 'What?' said King. 'His bishop. He's very close to his bishop. He's a religious guy and he really listens to his bishop.' So they went and met with the bishop. And then Harry tells me, in this incredible voice that he has, 'When Bobby Kennedy lay in a pool of his own blood in Los Angeles, there was no greater friend to the civil rights movement.' "He moved. Any man can move one hundred and eighty degrees. Harry had told me this as a sort of way of steering my way, and I have used the story many times as a guide. But in the case of Sonny I used it literally. "There were priests in the pulpit. Priests and pastors sermonizing on debt relief on Sundays, telling their congregations to tell Callahan to take care of this, including my own bishop. Eventually I gave in," concedes Callahan. "What else could I have done?" When the floor fight finally did take place in early September and Kasich got up as planned and voiced his objections, Callahan didn't stand in the way. Members from both sides of the aisle, in a rare moment of bipartisanship, voted to override the committee's recommendations. And on October 25, 2000, Congress agreed to provide $435 million for debt relief, the entire amount the campaigners had hoped for. The Herculean efforts of Bono and Shriver are a beacon to what the civic community can achieve and leave us with a permanent hope that we can get politicians to act. But did the great American gesture inspired by Bono and Shriver actually resolve the developing world's debt crisis? Did the Cologne initiative that they had been backing ever provide the world's poorest countries the opportunity to make a "fresh start"? Were the IMF and World Bank loans ever canceled? Was the $435 million the start of a renewed commitment on the part of the United States and other countries to funding development? Or were the difficulties in securing it a warning of how hard it would continue to be to raise money domestically for foreign aid? And what about less poor but still highly indebted countries like Brazil or Turkey or Pakistan, which were not included in the debt cancellation program? How likely is it that emerging markets such as these, if their debts continue to build up, will also reach crisis point and be forced to call a default? And how destabilizing to the world economy would such a scenario be? With what political consequences? And how about the two issues that most threaten the stability of our future -- the environment and terrorism? How connected are they to the debt story? Is debt an issue that should be of concern just to financiers, number crunchers, and churchgoers? Or should defusing the debt threat be of utmost importance to us all? But first, how on earth had most of the developing world at the end of the millennium ever get into a situation where it was so visibly drowning in debt? How had debt, surely a positive instrument for development, ended up becoming the cause of so much desperation and despair? What had gone so dreadfully wrong? © Harper Collins/Hertz, 2005.
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