G8 the problem, not the solution

Zion · Jun 7, 2005

What the world wants

Gleneagles is a lovely spot for a last supper. It certainly offers Tony Blair his last chance to play the world’s saviour. With his retirement plans a matter of record, he will not be chairing another G8 summit. Soon enough, he will be history. Only a dedicated optimist would say the same about poverty.
Still, there are few places more congenial than a deluxe Highland hotel if you want fine dining and a chance to discuss Africa’s hunger. Such irony will doubtless escape the world’s leaders, much as it escaped them in 2003, when they met in France. Jacques Chirac wanted to make an issue of the fact that two million people died annually for want of clean water. What better venue than Evian?

The history of the G8 as it nears its 30th birthday is rich in blackly comic moments. Perhaps the biggest joke is that some of the most powerful men on the planet convene annually for profound and serious discussions before failing utterly to do the things they have promised.

Blair has an “anti-poverty agenda”. Chirac had one of those in 2003. Blair wants to tackle third world debt? The G8 made that a priority in Cologne, in 1999. How about an “Action Plan for Africa”? That was Kananaskis, Canadian Rockies, 2002. Trade reform? They’ve been going on about that since the turn of the century. Even Blair has noticed a certain lack of resolve in the developed world. In 2002, he said: “It really is hypocrisy for us, the wealthy countries, to talk of our concern to alleviate the poverty of the developing world while we block their access to our markets.” That should have done the trick, shouldn’t it?

Climate change is another issue bothering Blair. In February a meeting was held in Exeter at his instigation. Did we mention black comedy? The conference heard that if present trends continue temperatures in – but where else? – sub-Saharan Africa could rise by 2˚C with rainfall declining by 10%. A continent already beset by water shortages, one dependent on agriculture, with 30 million souls suffering from HIV/Aids, will pay the price for the actions of – who else? – the G8. But never fear: the Bush White House stands proud in doubting that human beings have much to do with pollution. The world stifles and the US turns up the air-conditioning in the SUV.

As a matter of fact, the G8 nations produce 47% of the world’s greenhouse gases, the bulk from the US. As a matter of dismal truth, 30,000 children die each day in Africa. And as matter of astonishment, there is the statistic that proves poverty to be quite a nice little earner: for every £1 given to the developing world in aid, £13 wings its way back to lenders in the form of debt service payments.

If we are entitled to expect anything from the G8, we are entitled to expect an end to these brutal farces. Precedent shows, however, that what we expect and what we get are entirely different things. Blair and his Chancellor, Gordon Brown, can sound passionate on the subjects of poverty and pollution, but where the G8 is concerned inertia and bad faith are profound.

Take development aid. Prior to the summit, European Union ministers met in Brussels and promised to reach a United Nations target by devoting 0.7% of their national incomes to aid. Or rather, they promised to be doing so by 2015, only 45 years after the target was first set, and only after Germany, Italy and Portugal gave warning that their budgets were proving “difficult to balance”. The hope, nevertheless, was that the Brussels agreement would help Blair to put pressure on the US and Japan, historically the G8’s aid tightwads, at Gleneagles.

Keep hoping. America’s latest aid vehicle is called the Millennium Challenge Corporation. It was established by George W Bush in 2002 to disburse funds to governments with “sound” economic policies who can prove they are not crooked. In April, three years on, the corporation made its first grant , $110m to Madagascar. This, mark you, from a US that, in the words of the normally supportive Economist, has in the past “showered its official aid on countries that either did not greatly need it or did not much deserve it” – Israel, Egypt, Pakistan and so forth.

By one account, 30 very poor countries owe the World Bank and the African Development Bank $40 billion, a sum they will never be able to pay. The fact and its consequences trouble both Blair and Brown. They should be uppermost in the minds of the other G8 leaders. Taking action would certainly be popular with voters. Taking action is not what the G8 does.

Supposedly, the finance ministers have agreed in principle to forgive “up to” 100% of the debts owed to the International Monetary Fund (IMF) and the World Bank. America simply wants to write off the loans and forget them. Fine, but what about the future? In future, says the US, grants should be given, but less aid should also be given: ostensibly out of debt, the poor countries would be able to stand on their own feet.

Brown doesn’t see it that way. He knows that the need for aid will continue and wants “additional” funding for poor countries, paid for by the sale of IMF gold reserves. His point is that in simply writing off debt you do not increase the flow of funds to the third world. You might stop the absurdity of new loans being used to service old ones, but you would not make much of a dent in poverty. But the US doesn’t want to risk destabilising the gold market. Besides, as it turns out, goldmining companies have been lobbying senators to block any deal.

Speaking in Edinburgh on Friday, Brown laid out the four proposals on debt, aid and trade that Britain will take to Gleneagles. First, 100% debt relief. The government has agreed to take on 10% of the debt owed to the World Bank, but has yet to extract anything more than that agreement “in principle” from other rich countries. If past form is anything to go by, Africa need not celebrate just yet.

Secondly, there is Brown’s pet project, the international finance facility. If brought to fruition, this scheme to “front-load” development aid would, through the sale of bonds, double assistance and raise $50 billion. However, the Americans have said that this “doesn’t fit our budgetary process”. As things stand, the Chancellor will have to content himself with a smaller, though important, pilot project, backed by France, Sweden and the Gates Foundation, to fund a vaccination programme.

Thirdly, there is the scheme to increase direct aid to 0.7% of national income “agreed” in Brussels. Brown wants the G8 to achieve “wider international agreement” on this. The kindest thing you can say is that these lofty aspirations have been declared many times before.

Finally, there is trade, particularly agricultural protectionism . Brown wants an end to the export subsidies that few in Europe or America publicly support but which are employed on both sides of the Atlantic. “This is not a time for timidity,” said Brown in Edinburgh, “nor is it a time to fear reaching too high.”

Noble, ambitious rhetoric is all very well, but Brown knows how the G8 does its business. In Cologne in 1999, a promise was made to write off £100bn owed by the 42 poorest countries. Five years later, less than 20% of the proposed debt cancellation had gone ahead. The Chancellor might want to destroy trade barriers, but the fact is that the G8 nations are spending between $350bn and $450bn annually subsidising agribusiness while using trade barriers to blackmail developing countries into allowing advantages for multinationals.

The trouble for Blair is that the UK government is deeply implicated in all of this. According to the World Development Movement, British aid is being deployed to foist water privatisation on dirt-poor countries desperate for reliable supplies . Prices go up, the poor face disconnection, and companies feel entitled to demand subsidies from impoverished governments. Africa may be, as Blair said, a scar on the conscience of the world, but his policies are scarcely a balm.

Meanwhile, subsidised European produce is dumped on African markets . America’s subsidised cotton has helped to drag down prices and cripple sub-Saharan exports. When American food aid arrives, it tends to be of the unwelcome GM variety. In fact, the G8’s fine words on trade can take your breath away. At a previous summit they called on Africa to clamp down on illegal arms sales, apparently forgetting that 80% of the weapons sold to the developing world are supplied by G8 nations.

As for aid, the Heavily Indebted Poor Countries initiative, greeted with fanfare a few years back, is already being described by the World Bank as “failing”. But how was it to work? The rich chipped in a one-off $1bn for an Africa paying $15bn annually in debt payments. When half of African countries are spending more on debt than on health, when vastly more money is flowing out Western banks than is granted in aid, the pious words of the G8 are insulting, murderous, or both.

And who are these people, in any case? Conventionally, they are described as the world’s richest seven nations plus Russia. You could equally describe them as the richest northern hemisphere nations plus Japan. Does either arrangement suit the best interests of the world? Given their growth and populations, what bars China, India and Brazil ? Why are African nations to be treated as supplicants when being robbed blind by their supposed benefactors? Why bother with a G8 at all?

The American right likes to describe the UN as a failed institution. Clearly, the conservatives have not examined the G8’s record. For all the criticism, much of it thoroughly deserved, that has been heaped on the World Bank and the IMF, they at least have identifiable functions in aid and development. The G8 specialises in posturing.

Doesn’t Blair know as much? Or is he having one of his messianic fits? In preparation for the summit, he’s been engaged in a frenzy of shuttle diplomacy. Is he nervous or planning a theatrical coup? The aims for Gleneagles are action on Africa and on global warming. If we expect anything, it should be concrete progress. But take the first issue. Last December, this statement appeared in a London newspaper. “Only a growing share of world trade can ignite the poorest countries’ engines of growth … The easy answer is better access for developing-country products to richer-country markets, including our own. Except it isn’t an easy answer, because the sectors where the developing world has a natural comparative advantage – particularly agriculture and textiles – have been precisely the sectors that the rich countries have fought hardest to protect.” That was Peter Mandelson, Blair’s EU trade commissioner.

Climate change, then. As Chris Layton wrote recently in the journal Prospect: Blair “will need courage and a willingness to initiate action without American support … Blair’s hopes of using the G8 presidency to persuade the new Bush administration to come back into the fold and join the post-Kyoto phase of multilateral commitment have met brusque rejection. The White House is more scornful than ever of wimpish European climatologists.” So this Prime Minister, of all prime ministers, will proceed “without American support”?

Twenty years have passed since Live Aid. As Bob Geldof is the first to remind people, Africans are still dying for the price of half a stick of gum. Two million of them are dying of HIV/Aids each year and the planet is heating up . The truth is that the G8 is the problem, not the solution.

05 June 2005
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