TOPICS: G8 makes mockery of debt relief

World leaders are preparing for the millennium summit in New York next month, described by the UN as a “once-in-a-generation opportunity to take bold decisions.’’ Yet the current draft outcome repeats what was agreed on aid and debt last month in Gleneagles. The reality of that G8 deal has emerged and is likely to condemn the summit to be an expensive failure.

The G8 agreed to increase aid from rich countries by $48 billion a year by 2010. When Tony Blair announced this to the parliament, he said “in addition we agreed to cancel 100 per cent of the multilateral debts’’ of the most indebted countries. He also stated that aid would come with no conditions attached. These were big claims which can now be shown to be false.

The British finance minister Gordon Brown made the admission that the aid increase includes money put aside for debt relief. So the funds rich countries devote to writing off poor countries’ debts will be counted as aid. Russia’s increase in “aid’’ will consist entirely of write-offs. A third of France’s aid budget consists of money for debt relief. The debt deal is not “in addition’’ to the aid increase, as Blair claimed.

Far from representing a “100 per cent’’ debt write-off, the deal applies initially to only 18 countries, which will save $1 billion a year in debt-service payments. Recently leaked World Bank documents show that the G8 agreed only three years worth of debt relief for these countries.

The government’s claim that debt relief will free up resources for health and education is also a deception. The deal explicitly says that those countries receiving debt relief will have their aid cut by the same amount. And this leads to the third false claim.

Blair’s assertion that aid will come with no conditions is contradicted by Hilary Benn, UK development secretary, who said that “around half’’ of World Bank aid programmes have privatisation conditions.

Four rich-country representatives to the IMF board want more conditions to debt relief. This will be a key topic for discussion at the IMF’s annual meeting the week after the millennium summit. The British government opposes new conditions but continues to support overall conditionality.

This makes a mockery of Brown and Blair’s claim that poor countries are now free to decide their own policies. It is true that the G8 communique stated that “developing countries need to decide, plan and sequence their economic policies to fit with their own development strategies.’’ Yet it also stated that “African countries need to build a much stronger investment climate’’ and increase “integration into the global economy.’’ Christian Aid estimates that Africa has lost $272 billion from being forced to promote trade liberalisation as the price for receiving World Bank loans and debt relief. The draft outcome of the millennium summit says nothing about abolishing these conditions and contains little to address Africa’s poverty. — The Guardian