What a Billion Dollars Can Buy — and Can’t
A billion here and a billion there — and soon you’re talking about some real money.
July 28, 2000
The same day that U.S. newspapers reported on the Export-Import Bank loans, they also ran a story on Senate Majority Leader Trent Lott and House Minority Leader Dick Gephardt’s homespun largesse. As a result, the U.S. Army will now receive $400 million in funding for an F-15 assembly line that it had slated for closure. And the Navy will receive $460 million more than it had requested for the building of amphibious assault ships. Apparently, the media failed in this case to put one and one together.
Of course, in light of the serious AIDS problem unfolding in Africa, the announcement by the U.S. government that it was making $1 billion available annually was welcome news. But at present, many African nations are already deep in debt to foreign countries, with half of Africa’s governments paying as much to service debt as they do to provide health and education. Further loans will only add to the amount that governments will need to pay in interest to Western governments — and curtail the domestic resources available to spend on AIDS programs.
Moreover, an integral part of the loans is the stipulation that African governments use the money to buy only U.S.-manufactured AIDS drugs. While pharmaceutical companies have agreed to sell these drugs to African nations at a substantial discount, the price of these drugs will still be about ten times as high as identical generic drugs manufactured in the developing world.
But, of course, U.S. manufacturers have fiercely resisted licensing their intellectual property to allow African countries to manufacture their own drugs. Thus, the involvement of the Export-Import Bank and a highly favorable outcome for U.S. pharmaceutical companies, who get to protect their patents — and their profits.
Instead of offering further loans that will in all likelihood have to be forgiven in the future — while still burdening African countries in the short-term with interest payments — the United States should have made a truly generous gesture and offered a grant in the same amount. Spending $1 billion dollars more than requested on defense expenditures only highlights the half-hearted nature of this self-serving U.S. initiative.