If you could improve the lives of hundreds of millions of the world's most destitute people with a program that might - just might - temporarily reduce the profits of the global gold industry, most people would probably think it is worth doing. Even most members of Congress. That's why it has been so disturbing to see gold producers strong-arm Congress and the White House into blocking just such a desperately needed measure.
Poor countries need debt relief. Some African governments spend three times as much on debt service as they do on health care. They could be using the money to train nurses, eliminate school fees and fight AIDS. More debt relief is needed, and a deal needs to be sealed at the summit of the Group of 8 industrial countries in July.
A real solution has been postponed because the wealthy countries can't agree on how to finance it. But Britain offered a good answer: have the International Monetary Fund sell about $12 billion of its gold reserves, which have a total market value of about $43 billion. That would cover debt owed the fund, which accounts for 30 percent of the interest payments owed over the next 5 to 10 years by the affected countries. The fund could sell more gold to cancel debts owed the World Bank and other banks.
This is the simplest and least painful solution. It would not require new contributions or hurt lending to middle-income countries, and it is the only one that has any hope of support from rich countries. But the United States has veto power over gold decisions in the monetary fund, so this idea needs approval from Congress - and the mining industry has blocked a vote. In January, a letter opposing the sale of I.M.F. gold was signed by 12 senators from Western states, including the Democratic leader, Senator Harry Reid of Nevada. The letter argued that the sale could drive down the price of gold. A similar letter was signed in March by 30 members of the House.
Because few lawmakers spend much time thinking about the I.M.F., the letters - sparked by lobbyists from the National Mining Association and gold mining companies - persuaded the leadership that the gold proposal would not pass, even before it came up for discussion. The Bush administration, apparently unwilling to take on a Congressional fight, began in April to oppose gold sales outright.
The gold industry is worried about a pricing hit that probably would never happen. In March, the monetary fund concluded that gold prices would not be affected, as it could sell the gold over several years while at the same time asking central banks to sell less. Gold-producing poor countries endorse I.M.F. gold sales. The president of the World Gold Council said recently that he would give them conditional support. Congress needs to debate the issue, not allow a special interest to deny help to hundreds of millions of poor people. President Bush should spend the political capital to push this good idea through the Republican-controlled Congress before the July summit.
