Forgive us our debts…

The annual meetings of the governors of the Inter-American Development Bank (IDB) — not to be confused with the World Bank — this last weekend in Cancún, agreed to cancel 479 million dollars of Haiti’s 1.2 billion dollar debt.  This is very good news, of course.  The bank is a pool of funds from the region’s and wealthy nations treasuries used for development projects (including private businesses) and grants which, in theory, allow for regional growth:  the old “rising tide raises all boats” argument.

But something odd is going on in Cancún.  With both Latin America being a low (or non-existent) priority for the Obama Administration and the relative survival of most Latin economies during “la crisis” (or, rather, the not complete collapse), what should be a given — that a big bank making big loans should be properly capitalized (and the meeting is looking at increasing the share each nation puts into the bank’s capital reserves) is being fought by the United States Treasury:

… It has simply not been a top priority for the Obama administration with the many important domestic issues on the agenda. Moreover, moving forward another request with Congress, which ultimately has to authorize any capital increase commitment, is understandably not the Treasury’s favorite course of action. The fact that Latin America has weathered the crisis relatively well is another factor to consider. Throughout last year, this issue has been considered important but not urgent.

Speaking of not getting with the program as far as banking reforms are concerned, the IBD also dismissed the idea of more transparency (as even the World Bank has done this past year), arguing that

… it is time to focus not on what can be disclosed, but rather to set a policy in which the practice is to disclose and publish as a general rule, with a list of exceptions that are agreed by its board.

In other words, we’ll decide what we want to talk about, otherwise, don’t ask us.

More bizarre was the Bank’s President,  Luis Alberto Moreno, praising Felipe Calderón’s “War on Drugs” as some indication of Mexican economic stability. Moreno is a Colombian diplomat, and was making a point about his own country’s “progress” (at the cost of a lot of “false positives” and a false democracy) in a dissimilar war against somewhat similar exporters (the only thing in common is an appalling body count), but even then, it doesn’t make a lot of sense.

Somehow, the loss of 25 percent of the value of the Mexican Peso against the U.S. dollar, reflecting Mexico’s economic ties to the United States is — like the carnage on the border (and here in Sinaloa and Michoacan and elsewhere) — a sign of a robust economy.  Certainly, as Moreno pointed out, Mexican banks are secure, but it doesn’t mean the people are, or that a low inflation rate doesn’t mean the staples (food, water, cooking gas…) haven’t been priced out of reach of a goodly number of Mexicans, or that banking regulations passed in the 1990s — pre Calderón –mean stable banks which  somehow translates into eventual “success” in the “War on Drugs”.