Generosity to tsunami-hit countries has fine print

Generosity to tsunami-hit countries has fine print

Agencies, Tokyo/Ottawa

The billions of dollars promised by world leaders after Asia's
devastating tsunamis may seem like unparalleled generosity but
recipient countries should beware there is also fine print.

As governments race to top one another by offering the biggest
package, much of the "aid" will arrive in the form of loans that
will need to be paid back, contracts for donor countries'
companies or, many fear, will not come at all.

"I see no good reason to give loans. They're poor, we're rich,
they need the money and I don't see why we need to ask for it
back over the next 10 or 20 years," said David Roodman, a
research fellow at the Center for Global Development in
Washington.

"It serves to inflate the amount that's being given," he said.
Ahead of Tuesday's tsunami aid conference in Geneva, Australia
has climbed to number one on the donors list by announcing the
biggest pledge in its history: one billion Australian dollars,
equivalent to US$762 million.

But Australia would slip to second or third place if taken
into account that half of its pledge is in interest-free loans to
Indonesia.

Conspicuously, Australia is the only major country to go on
record opposing any moratorium on debt repayments by tsunami-hit
countries, let alone debt forgiveness.

"Indonesia already owes Australia $1 billion in debt. Is
increasing that amount by half going to benefit the Indonesian
people?" said Tim O'Connor of the Australian watchdog Aid Watch.

Prime Minister John Howard is channeling the full package
bilaterally to Indonesia, a neighbor with which Australia has
long had tense relations and whose isolated Aceh province was
devastated by the giant waves on Dec. 26.

"The interest (of the package) is in our government rather
than the Acehnese people. The interest is to shore up our
relationship with Indonesia and bring our governments closer
together," he said.

Germany has also promised a massive package, totaling 500
million euros ($668 million). But in announcing the hefty sum
last week, Chancellor Gerhard Schroeder gave few details on the
shape of the aid from the Eurozone's biggest but worst-performing
economy.

Schroeder suggested it could include debt reduction and
measures taken with other members of the European Union and Group
of Seven major economies.

One of the biggest surprises in the tsunami aid sweepstakes
has been Japan, which has promised $500 million.

Japanese Finance Minister Sadakazu Tanigaki said on Tuesday
that his country would provide an extra US$40 million through its
trust funds at the Asian Development Bank and the World Bank to
help with reconstruction in tsunami-hit nations.

In recent years, Japan has been the only major donor to
disburse a majority of its aid through loans, taking advantage of
super-low domestic interest rates which let Tokyo offer huge sums
with a minimum burden to itself.

In a sign of its goal to be Asia's key player, Japan has taken
pains to stress that its contribution will be in direct grants,
which Prime Minister Junichiro Koizumi began doling out on
Thursday at an emergency summit in Jakarta.

The United States has pledged $350 million to tsunami relief,
but like Germany will still need to figure out how to find the
money in its budget and in what form it will take.

According to the US Agency for International Development, just
under $88 million of the pledged money had been committed as of
Monday.

The figure does not include spending by the US military, which
has launched major operations to reach isolated tsunami
survivors, meaning that for post-crisis bragging rights
Washington could claim its financial contribution to be higher.

Pentagon spokesman Lt. Comm. Greg Hicks said last week the
military was spending $5-$6 million a day on the tsunami crisis.

But his figure included $5.6 million -- nearly all of it -- to
pay for the personnel and equipment already part of the U.S.
military.

President George W. Bush pledged on Monday that the United
States was committed to its aid. However, U.S. aid is some of the
most politically tied, with laws requiring that the taxpayer
money buy only U.S. products.

Theoretically, aid workers bringing clean water to Aceh
through U.S. government money could be forced to import a more
expensive purifier from the United States even if other options
were available.

According to 2003 statistics by the Organization for Economic
Cooperation and Development, none of the aid from Britain and
Ireland and less than 5 percent from Belgium, Japan, Norway and
Switzerland had such political strings attached.

In 1996, the last year the United States reported its figure,
72 percent of its aid came with such political obligations. The
only country with a higher figure was Italy at 92 percent.

Roodman said his think tank had calculated that the four
countries worst hit by the tsunamis -- Indonesia, India, Sri
Lanka and Thailand -- paid $1.8 billion in tariffs to the United
States a year -- or five times what Washington has pledged in
tsunami relief.

"The point is, it's good to remember that aid isn't the only
way to help," he said.

Meanwhile, Canadian Prime Minister Paul Martin on Monday said
in Ottawa that Canada would give up to C$425 million (US$350
million) over five years to help countries hit by last month's
disastrous earthquake and tsunami.

The announcement means that Ottawa -- which came under fire
from domestic critics for reacting too slowly in the immediate
aftermath of the disaster -- is set to become one of the top five
governmental donors to the region.

Martin said in a statement that the package comprised C$265
million in humanitarian and rehabilitation assistance and C$160
million to rebuild damaged property. Some of the aid will come in
the form of debt relief.