A Loan Forgiveness Program to Fight Terrorism

Before the collapse of the world banking system I had this theory on one way the United States and others could counter terrorism. In some ways this theory seems simplistic but let me give it a go: member governments of the G-8 plus China could get together and offer to erase the debts of developing countries in return for peace, order and good government (POG).

The donors would define what they meant by POG. Recipient governments would be given a tick-box of progressive actions they could pursue: they would be allowed to improve health systems, develop employment and welfare programs and repair infrastructure. They couldn't create "make-work" projects, especially those politically-oriented ones. Fulfillment of the criteria would be adjudged over an extended period and loan forgiveness occurring progressively over a fixed period, say twenty years.

There are excellent reasons for such a program: poverty in developing countries poses the greatest terrorist threat. There are other benefits to loan forgiveness as well: the more stable these countries are you can bet the less illegal immigration - I was once an illegal immigrant myself - there would be, therefore relieving pressure on limited resources.

It would still be feasible but when the citizens in the developed countries are facing record unemployment themselves, it would not be politically palatable to be bailing out poorer countries. Another thing: since capitalism has been seen to fail, developing countries may want to consider reckless socialist alternatives. And why shouldn't they? The Americans, British, Irish, French and other governments are falling over themselves socializing their banking systems. Poor Milton Friedman must be turning over in his grave. And let's not forget that these poorer countries are feeling the impact of a crisis not of their making. What I fear will happen is this: developed countries will prefer the optics of cutting foreign aid and developing countries will be further squeezed. But a structured loan forgiveness program is the way to go.

Just a thought.