USA Offers Brazil Debt Pardon for Environmental Investment in Amazon

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WORLDWIDE FOREST/BIODIVERSITY CAMPAIGN NEWS

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11/1/99

OVERVIEW & COMMENTARY

The U.S. may pardon some 650 million dollars of Brazil's debt if the

money is invested in the protection of the Amazon. Though a small

amount of Brazil's total foreign debt, it sets an important

precedent. Clearly maintenance of this huge Planetary ecosystem

engine is worth this and many billions more. Establishing mechanisms

to transfer funds from countries that benefit from rainforest's

existence to developing tropical countries will be a prerequisite for

sustaining rainforests. Canceling debt is a start, after which

annual revenue flows must be established to compensate governments

for not industrially developing rainforests.

g.b.

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Title: USA offers debt pardon for environmental investment

Source: BBC Monitoring Americas - Economic

Text of report by Brazilian newspaper `Correio Brasiliense'

Date: October 27, 1999

The United States can pardon 650m dollars in debt if the money is

invested in the protection of the Amazon. The United States is

offering the exchange of 650m dollars of Brazil's foreign debt for

investments in the environment. This type of debt reduction became

possible after the approval of a law last year in the US Congress and

is already in effect for some Latin American countries. The idea is

favoured by the Ministry for the Environment, but still has not been

evaluated by the government's economic team.

The 650m dollars are related to USAID debt, the US agency for

technical cooperation and development aid. The money would be

invested in projects of the Pilot Programme for the Protection of

Tropical Forests, the PPG-7. "But there is no official position of

the government so far," explains the secretary of the coordinating

office of the Amazon, Mary Helena Allegretti.

The funds freed by the pardoning of the debt would have to be

invested in "research and training of technical experts in the

environment", explained Janice Weber, the representative of the

United States at the meeting of the PPG-7 that is being held until

Friday [5th November] at the Tennis Academy. The meeting is

discussing a thorough restructuring of the programme, which was

created in 1991 as a partnership among the seven richest countries of

the world (G-7), the World Bank, and the Brazilian government.

Of a total of 338m dollars allocated by the PPG-7 for the programme,

about 280m dollars have already been contracted. Of these, 85m

dollars have already been used in hundreds of initiatives for the

promotion of sustainable development. Among the projects with the

greatest success are the 130 "demonstration" projects - small

experiments in sustainable development - in the Amazon and the

demarcation of 22m ha in Indian areas (another 22m ha are being

demarcated for the Javari Indians).

But the complications in the transfer of money - which has to comply

with bureaucratic requirements of the World Bank and the governments

of the donating countries - are delaying by up to two years the

realization of some projects. To make the PPG-7 more agile, the

Brazilian government is proposing that the Secretariat of the

Coordinating Office of the Amazon become a kind of "manager" of the

programme.

Another proposal is that the funds be used with greater "flexibility"

by Brazil in emergency situation, such as forest fires and in

activities that are not considered by the PPG-7, such as

environmental education and the fight against deforestation.

The donating countries (Germany, the European Union, Great Britain,

the United States, Japan, Italy, the Netherlands, France and Canada)

also want Brazil to take on with greater perseverance the

coordination of the hundreds of projects and the various financing

mechanisms of the PPG-7. On the other hand, they are reticent to give

more autonomy to the Brazilian government in administering the money

in a more flexible manner. "About 80 per cent of the funds of the

PPG- 7 come from European contributors and it is therefore natural

that we have to monitor it in some fashion; this does not mean an

interference in public policies of Brazil," explains Rolf Thiemans,

ambassador of the European Union

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