U.S. Urges G8 Partners To Help Egypt Debt Swap

May 25, 2011
'A multi-creditor debt swap for job creation would provide Egypt with financial relief.'

The United States on Wednesday urged its G8 partners to help Egypt convert its debts into investments for jobs as part of efforts to boost the Arab nation's flagging economy and fledgling democracy.

The appeal came in a letter from US Secretary of State Hillary Clinton and Treasury Secretary Timothy Geithner, who also asked G8 countries to take other, more general economic steps to support "Arab Spring" democracy movements.

"The United States is committed to a debt swap for Egypt and we are asking our partners to join us in this initiative," according to a copy of the letter that elaborated on points US President Barack Obama made in a May 19 speech.

The letter was addressed to the ministers of the Group of Eight leading industrial economies -- Britain, Canada, France, Germany, Italy, Japan, Russia and the United States -- on the eve of a meeting in Deauville, France.

Host France has urged G8 members, many of them facing budget crises of their own, to offer billions in aid to support the post-revolutionary governments in Tunisia and Egypt, but officials said no precise sums will be pledged.

"A debt swap will enable Egypt to channel its debt payments toward underwriting swift, sustainable job creation," Clinton and Geithner said.

"A multi-creditor debt swap for job creation would provide Egypt with financial relief while also ensuring that critical investments are made to improve the lives of Egyptian people," they said.

The uprising that began on January 25 and led to president Hosni Mubarak's ouster in February paralyzed Egypt for almost three weeks, damaging its vital tourist industry and creating uncertainty over future foreign investment.

A US Treasury official told AFP the "proposed debt swap includes Obama's plan to relieve up to $1 billion in Egyptian debt," which he made in his speech last week to spur and reward democratic change in Arab countries.

The official, speaking on condition of anonymity, said Egypt owes the United States $3 billion, while the country's total external debt is around $35 billion.

In his multi-billion dollar plan for the Middle East and North Africa, which is modeled on the evolution of post-Soviet Eastern Europe, Obama also called for involving international organizations.

Clinton and Geithner reinforced the point in their letter to the Deauville summit.

The G8 should, they said, "lead efforts to reorient" the European Bank for Reconstruction and Development (EBRD) to back Arab democratic transitions, much the way it supported similar transitions in Central and Eastern Europe.

The letter urged the G8 summit "to support a mechanism that enables the EBRD to engage in the near-term to support private sector development in the region, as well as reforms that create conditions for successful entrepreneurship."

The cabinet secretaries also sought broad support for Obama's plan for a comprehensive Trade and Investment Partnership Initiative in the Middle East and North Africa.

"We ask members of the G8 and the EU to join the United States and other willing partners across the region to facilitate more trade within the region, as well as between the region and global markets," they said.

The letter also said Arab countries could find the same incentives for reform through participation in an integrated regional economy, much as Central and Eastern European countries were motivated by membership in the European Union.

Copyright by Agence France-Presse, 2011

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