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Reflections on the Gleneagles 2005 G8 Summit
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| “We remind the leaders of the world’s richest and most powerful nations that in truth, the North owes the South. The accumulation of wealth in the North has been largely at the expense of the South – our land, our minerals, our forests and waters, our labour, our communities, our economies, our cultures, our governments, our lives.” |
-- Jubilee South’s Response
to the G8 Debt Proposal |
Contents
- The Battle of the Spin Doctors
- Debt Write-Off Inadequate
- Damaging Conditions Remain
- Nigeria Deal Sets Precedents
- “Good Governance”
- Reparations, Not Charity
- 0.7% Aid Target Not Endorsed
- HIV/AIDS and Malaria
- Trade
- The Road Ahead
- Letter to Prime Minister Martin: The need for leadership on unconditional debt cancellation (23/06/05)
Overshadowed by the London bombings, the Gleneagles G8 Summit achieved little to advance the goal of “making poverty history”. The biggest achievement was a pledge to raise an extra US$50 billion a year in development assistance by 2010 of which US$25 billion would go to Africa. But too little was done to write off illegitimate debts or remove the harsh conditions attached to debt relief or to reform the international trading system. As a result more wealth will continue to be transferred from the impoverished to the affluent than will return in the form of aid.
About four-fifths of the promised increase in Official Development Assistance (ODA) will come from members of the European Union as pledged prior to the Summit. The only country to actually make a substantial new undertaking at Gleneagles was Japan which promised to increase its aid by US$10 billion in aggregate over the next five years. Neither Canada nor the US made any substantial new pledges.
If the G8 leaders keep their promises total development assistance in 2010 could reach US$130 billion which is about half of the US$250 billion that would be provided were all donors to meet the international target of devoting 0.7% of their Gross National Income (GNI) to ODA.
While reporting on Gleneagles has focused on the quantity of aid, little attention has been given to its quality. Too much aid is tied to procurement of food or medicines or paying consultants from within the donor countries. Moreover, in the case of Canada and the United States, a substantial portion is dedicated to reconstruction projects in Afghanistan and Iraq rather than going to areas such as Sub-Saharan Africa.
Gerry Barr, President of the Canadian Council on International Cooperation and co-chair of the Canadian Make Poverty History campaign, summed it up when he said “They took some positive steps, especially with the doubling of aid to Africa, but a comprehensive package on aid, debt and trade eluded them.”
The debt remission deal ratified by the G8 Summit applies to just 18 of the 62 countries needing 100% debt cancellation to meet the MDG goals of halting the HIV/AIDS pandemic and halving the incidence of extreme poverty, hunger and lack of safe drinking water. More importantly, as stated by Lidy Nacpil, international coordinator of Jubilee South, “The conditions attached to debt cancellation will exacerbate poverty rather than end it.”
Not only did the G8 ignore calls for more just trade but its talk of a “balanced” outcome to negotiations within the World Trade Organization (WTO) implies that developing countries will have to continue opening up their economies to competition from industrial powers before they can hope to win any concessions on issues such as subsidies to Northern agribusiness which are driving Southern farmers into destitution.
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The Battle of the Spin Doctors |
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After the final G8 communiqués were issued the spin doctors were hard at work. News media paid more attention to what the politicians and rock stars said than to spokespeople for the Global Call to Action Against Poverty or to African voices.
Prime Minister Tony Blair called the outcome “very substantial progress” while acknowledging that anti-poverty campaigners will demand more. “It isn't the end of poverty in Africa, but it is the hope that it can be ended," the summit host said.
Kumi Naidoo, chair of the Global Call to Action Against Poverty said “the G8 has listened but their response is not a roar but a whisper.” He called the debt deal “a small, belated step.” He also said “While this aid increase is a step forward, it is far from the historic deal that millions around the world have been demanding… The promise to deliver by 2010 is like waiting 5 years before responding to the tsunami.”
However, it was not Naidoo’s sober words but louder voices of the rock stars who grabbed the media’s attention. Live 8 promoter Bob Geldoff had effusive praise for the G8 calling the summit a “qualified triumph”. Geldof ranked the aid commitments at “ten out of ten” and the debt promises at “eight out of ten”.
Irish rocker Bono said “a mountain has been climbed only to reveal higher peaks”, adding that saving 600,000 children from death from malaria is an achievement as is a commitment to near universal access to medicines to treat HIV/AIDS.
British NGOs were much more critical. Christian Aid said: "This will not make poverty history. It is a vastly disappointing result. Millions of campaigners all over the world have been led to the top of the mountain, shown the view, and now we are being frogmarched down again."
African civil society voices were largely not reported. One exception was Mulima Kufekisa, the head of Zambia's justice and peace commission, who said: "This is not the historic breakthrough the global campaign was looking for. This was a chance to set Africa on an irreversible path of growth and development. Instead, the G8 have agreed to come up with additional aid but in five years' time. There are still too many countries saddled with unpayable debts."
Moreover, civil society groups from several Southern African countries
meeting in Mali issued their own declaration calling the G8 an illegitimate
institution and saying that its “promises of charity do not
address in any way the profound causes of growing poverty and inequality,
that is to say neo-liberal policies.” And KAIROS’ partner
AWEPON was one of many African groups who signed onto the summit
critique and statement, “Disappointed
but Resolute”.
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Debt Write-Off Inadequate |
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As expected, the G8 leaders ratified the debt relief proposal recommended by their Finance Ministers on June 11 unchanged. Thus they pledged to write off only US$40 billion worth of debts owed to three multilateral financial institutions by the 18 Heavily Indebted Poor Countries (HIPCs) that have reached their completion points. Another 9 HIPCs might possibly qualifying for the same treatment within 18 months if they adhere to stringent conditions laid down by the IMF and the World Bank. Another 11 HIPCs are potentially eligible but unlikely to qualify in the foreseeable future.
Hence, one of the major missed opportunities at the Gleneagles Summit was Canada’s failure to champion the “equity of treatment” principle, which is supposedly one of the pillars of Canadian debt remission policy. According to this principle debt write-offs should be extended to impoverished countries that do not qualify for the HIPC initiative but still need debt remission to meet poverty reduction goals. The $40 billion to be cancelled by this agreement represents less than 10% of the amount required by the 62 countries needing 100% cancellation in order to meet the Millennium Development Goals. The plan does not include any middle-income countries that are also heavily indebted and home to the majority of the world’s poor.
The G8 promise will save the 18 countries about US$1 billion in annual debt service payments. This falls far short of the US$45.7 billion a year that would be released were all 62 countries included in the debt write-off.
The G8 and other donors will reimburse the World Bank and the African Development Bank out of scarce foreign aid funds. A better option would be to use the World Bank’s own loan loss reserves and retained earnings to pay the costs of debt relief. While the 18 countries are eligible to apply to the World Bank’s International Development Association for future loans, they will first have to meet the Bank’s conditions.
The G8 continues to ignore the fact that many of these debts are “odious”, that is they were contracted by dictatorial regimes and not used for the benefit of the people. Odious debts are one form of illegitimate debts which also include those that are “unpayable” because payment would come at the expense of meeting essential human needs for nutrition, health care, education, water or sanitation services.
Before the Summit Archbishop Njongonkulu Ndungane of South Africa said clearly: "Our objective is a clean slate - a total cancellation of odious and unpayable debts owed by African countries." But in the end only 14 out of 53 African countries have been promised remission of debts owed to international financial institutions.
The day before the G8 Summit convened in Scotland, the 53 members of the African Union had unanimously adopted a resolution calling for 100% debt cancellation for all African countries. The African heads of government thus agreed with civil society concerning the inadequacy of the G8 Finance Ministers’ offer-- but to no avail.
Seven African leaders from Algeria, Ethiopia, Ghana, Nigeria, Senegal, South Africa and Tanzania met with the G8 heads. Afterwards Nigerian President Olusegun Obasanjo, who is also the current chair of the African Union, evaluated the outcome with the following observation "All of this does not change the world tomorrow, it is a beginning, not an end."
A collective statement by nineteen African civil society groups,
including the African Women’s Economic Policy Network, a KAIROS
partner, expressed disappointment with the overall result of the
Summit and vowed to “intensify our campaign for total and
unconditional debt write-offs for all of Africa, failing which debt
repudiation becomes the logical conclusion for African governments.”
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Damaging Conditions Remain |
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While the quantity of debt remission is inadequate, more damaging still are the conditions attached, both for the 18 countries that will receive debt cancellation and for the 20 other HIPCs that might eventually qualify after undergoing at least six years of IMF- and World Bank-dictated Structural Adjustment Programs. These SAPs are themselves a cause of poverty as they impose strict fiscal austerity, high interest rates, unilateral trade liberalization and privatization of essential services.
SAPs have led to closed health centres and empty classrooms and the sale of public services to foreign, private investors. Having seen the devastating effects of SAPs over the last 20 years African Jubilee South concludes that “the costs of Structural Adjustment Programs and creditor- imposed conditionality far outweigh the amount of debt to be cancelled.”
While some commentators claim the International Financial Institutions are lessening the conditions attached to loans and debt relief packages, recent research shows the opposite is true. For example, a recent EURODAD study found that Benin has moved from having 58 conditions in its first Poverty Reduction Strategy Credits to 130 conditions in its second PRSC.
Even though the British government has released a discussion paper
questioning the wisdom of some aspects of trade liberalization and
privatization, no such critique is found anywhere in any G8 communiqué.
A survey of actual World Bank Poverty Reduction Support Credits
by the Irish debt remission campaign found that “eleven out
of thirteen countries [had] privatization conditions … and
the two exceptions, Tanzania and Uganda, have already undergone
extensive privatization programs pushed by the Bank.”
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Nigeria Deal Sets Precedents |
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The June 11 G8 Finance Ministers communiqué singled out just one country for special attention, promising “a fair and sustainable solution to Nigeria’s debt problems within the Paris Club.” Africa’s most populous country received special attention after staking out a tough bargaining position by paying only about half of what it owed to the 19 bilateral creditors who constitute the Paris Club. In March the Nigerian Parliament passed a resolution demanding that the government stop all payments on its external debts.
In the interim between the June 11 Finance Ministers’ meeting and the Gleneagles Summit, Nigeria reached an agreement in principle with Paris Club members. The deal would involve writing off about US$17 billion of Nigeria’s debts to other governments. However, the 67% reduction comes with some new, precedent-setting conditions. Nigeria first has to pay back some US$6 billion in arrears and also buy back another US$8.25 billion of its own debt from creditors. The ultimate cost of the latter transaction is not clear. However, it is certain that in the short-term Nigeria will have to pay out a substantial sum before annual debt service savings start to accrue.
The most important aspect of the deal is that Nigeria will have to adhere to IMF conditions by signing a new kind of agreement known as a Policy Support Instrument. What is unique, and disturbing, about this deal is that Nigeria will have to adhere to IMF conditions even though it will not have any loans outstanding from the Fund! The board of the IMF is expected to agree to the establishment of this new instrument at a meeting in July.
While the Nigerian Jubilee debt campaign welcomes the freeing up of an additional US$1 billion a year for new social spending, it protests the lack of recognition that Nigeria’s debts are largely illegitimate and tainted with corruption. Nigeria’s former military dictator, Sani Abacha, reportedly stole more money from the national treasury during his five year rule from 1993 to 1998 than Nigeria received in aid from 1980 through 2000. Yet the Paris Club never acknowledges that the debts to be written off are odious in the first instance and thus not legitimately owed by the Nigerian people.
Instead of recognizing that many debts are indeed odious, the Paris Club continues to pretend that it only assesses debtors’ ability to pay. In fact, when the Paris Club agreed to write off 80% of Iraqi debt borrowed from its members by the Saddam Hussein regime, it was responding to US pressure to cancel odious debts. Then US Undersecretary for Defence, Paul Wolfowitz, insisted that the people of Iraq should not have to pay back loans contracted by Saddam Hussein “to buy weapons and build palaces”. But in neither the case of Nigeria nor that of other African countries such as the Democratic Republic of the Congo (the former Zaire once ruled by the kleptocrat dictator Mobutu Sese Seko) does the Paris Club or the G8 or Paul Wolfowitz in his new role as World Bank President recognize that the debts in question are odious and illegitimate.
Rather than recognize the illegitimacy of past debts built up through
corrupt practices, the issue of corruption is used as justification
for increasingly tight monitoring of countries receiving debt remission
or new loans. Thus Nigeria has to meet another condition - the establishment
of a new committee to monitor how it spends the savings on debt
service payments that will result from the deal. In another unprecedented
move two international NGOs, Oxfam and Action Aid, will have representatives
on that committee.
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“Good Governance” |
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The G8 promises to support African governments through debt relief and new aid only if they commit themselves to promoting “good governance”. The demand for “good governance” might sound reasonable were it not for the fact that it also involves economic policies that serve the interests of foreign corporations at the expense of African peoples. When Prime Minister Tony Blair visited the White House to seal a deal that paved the way for the G8’s June 11 debt remission plan, President Bush reportedly said “we’re not interested in supporting [governments] that [don’t] have open economies and open markets.”
As Senegalese analyst Demba Moussa Dembale has observed, “The
emphasis on ‘good governance’ and especially on ‘corruption’
tends to mislead world public opinion. It puts responsibility for
the failure of Structural Adjustment Programs and their disastrous
effects on the shoulders of ‘corrupt’ [and] ‘inefficient’
states. This is consistent with the IMF and World Bank’s attempts
to mask their overwhelming responsibility in the abject poverty
affecting most of the developing world.”
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Reparations, not Charity |
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On the eve of the G8 Summit the media were filled with debates on the effectiveness of Official Development Assistance (ODA). Particular attention was given to two studies released by the International Monetary Fund reportedly showing how billions of dollars of aid to Africa had not led to economic growth, and thus implicitly casting doubt on the value of future development assistance.
In reply two economists from the United Nations Conference on Trade and Development (UNCTAD) sent a letter to the Financial Times explaining that the reason why aid, by itself, is not sufficient to stimulate economic growth in Africa is because ODA inflows have been counteracted by a larger drain of wealth due to falling terms of trade and capital outflows in the form of debt servicing and profit remittances.
The UNCTAD reply gave intellectual weight to a point made more
bluntly by many Africans: rather than view ODA as an act of charity
it should be seen as reparations for past exploitation. Increasingly,
Southern peoples recognize that, far from being debtors, they are
creditors of huge historical, social and ecological debts owed by
the North after centuries of exploitation of their natural resources
and labour. Egyptian scholar Samir Amin, speaking at an alternative
forum in Edinburgh, declared “We don't want aid for imperialism,
we want reparations for the people of Africa, Asia and Latin America....
The only reason they are talking about cancelling debt now is because
the debt has served its purpose by forcing through neo-liberalism.”
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0.7% Aid Target Not Endorsed |
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The Canadian Make Poverty History campaign placed special emphasis on trying to persuade Prime Minister Martin to finally agree to increase Canadian ODA to 0.7% of GDI by 2015. But Martin refused to make any such announcement at Gleneagles despite the fact that four European members of the G8 - Britain, France, Germany and Italy – have all pledged to meet the 0.7% target by 2015 or earlier. Instead Martin just repeated past pledges to double ODA from 2001 to 2010 and to double Canadian assistance to Africa between 2003-04 and 2008-09.
At the Gleneagles Summit Prime Minister Blair emphasized how the G8 promise to double aid to Africa from around US$25 billion a year in 2004 to US$50 billion a year by 2010 fulfilled one goal set out in his Commission for Africa. In fact this pledge was the weaker of two scenarios laid out in the Commission for Africa report. The stronger recommendation was for US$25 billion extra by 2008 rising to $50 billion extra after a review of what the initial increase achieved.
Blair carefully chose his words in pointing to another delicately-worded line in an official communiqué that says “the OECD estimates that official development assistance from the G8 and other donors to all developing countries will increase by around US$50 billion a year by 2010, compared to 2004.” [emphasis added] Other sources put the additional aid at US$48 billion as summit officials, or sherpas as they are known, acknowledged the G8 had fallen $2bn short of finding $50 billion in extra aid. Hence Blair took pains to say that the US$50 estimate came from the OECD, and presumably includes assumptions about future aid from non-G8 donors.
Duncan Cameron writing in rable.ca reminds us that nominal additions to future ODA budgets are not worth as much as they seem: “The aid package is better than nothing, but less than the G8 pretend. Forget the doubling idea; the G8 did not double aid, they just said they did. In finance, to measure what amount is at stake, you estimate the present value of future resources. Simply put, $100 today is worth considerably more than $100 over five years.”
The Canadian Make Poverty History campaign says the G8 leaders’ declaration of US$50 billion in new aid by 2010 falls far short of the $180 billion in additional aid the UN says is needed by that year to achieve the Millennium Development Goals. Campaign co-chair Gerry Barr said “We’re disappointed in Canada’s performance. Prime Minister Martin clearly does not share the urgency felt by other G8 leaders, or by Canadians and their Parliamentarians.” Over 135,000 Canadians have written the Prime Minister urging he commit to achieve 0.7% of national income in aid by 2015. Parliament unanimously called on the government to do what France and the UK pledged prior to Gleneagles: to reach 0.5% by 2010 and 0.7% by 2015.
British NGOs say US$50 billion extra by 2010 would take global
aid levels to $130 billion annually, or 0.36% of GNI, half of the
UN target of 0.7%. It would mean approximately $14 billion extra
in 2006. Estimates suggest that between now and 2010 this would
save the lives of 5 million children but would fail to save 50 million
more.
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HIV/AIDS and Malaria |
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The most encouraging promises made at Gleneagles involve G8 pledges to do more to combat AIDS, malaria and other diseases. The official communiqué pledges to work with UN agencies to “implement a package for HIV prevention, treatment and care, with the aim of as close as possible to universal access to treatment for all those who need it by 2010.” [emphasis added] It also promises to make sure AIDS orphans have proper support and to meet the financing needs of the Global Fund for HIV/AIDS, TB and Malaria. It promises to scale up action against malaria to reach 85% of the vulnerable populations with interventions that will save 600,000 children’s lives by 2015.
UK government sources cited in The Guardian say some countries were concerned by the $22 billion price tag attached to this promise. It remains to be seen how much of the new aid promised goes towards meeting this target. At Gleneagles Canada reiterated a pledge made in the 2005 budget to devote “an additional C$342 million to fight diseases that mainly afflict Africa.”
Similarly, the US repeated its promise of “a new US$1.2 billion malaria initiative.” Columbia University economist Jeffrey Sachs calls this a “small program backed by big spin” noting how the amount “is less than one day of Pentagon spending.” He calls US$1.2 billion over five years “paltry” when US$3 billion a year is needed to fight malaria in Africa.
Next September the Global Fund for AIDS, TB and Malaria will hold
a replenishment conference that will be a test of whether the G8
is serious about keeping these promises.
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Trade |
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Perhaps the least understood and most dangerous of all the pledges made at Gleneagles are those relating to the World Trade Organization’s Doha round of trade negotiations, which is also misleadingly referred to as the “Doha Development Agenda”.
The Third World Network Africa, a KAIROS partner, advises that: “African and other developing countries face the prospect that the current imbalances of the international trade regime - which has wreaked havoc on their economies and their peoples - will not be addressed; and that indeed these will be worsened.”
One study by Christian Aid estimates that premature trade liberalization has cost least developed countries, the majority of which are in Africa, some US$13.6 billion a year over the last 20 years in diminished resources for productive investment.
Developing countries have every reason to be wary of promises in Gleneagles G8 communiqués to work towards an “ambitious and balanced” outcome to the Doha round.
In fact the word “balanced” is a reference to requiring developing countries to make concessions on a range of issues if they expect to gain anything from WTO negotiations. For example, the G8 communiqué refers to “expanded trade in services” which means that developing countries may be forced to allow foreign corporations more opportunities to invest in such areas as water, health care and education services in return for any reductions in Northern countries agricultural subsidies.
The G8 promise of “appropriate flexibility” to allow least developed countries to “sequence their overall economic reforms” means only that they will be given more time to open their markets to competition from larger and more powerful countries and not that they have the option of pursuing alternative, self-reliant models of development.
The language in the Africa communiqué on developing countries’ “need to decide, plan and sequence their economic policies to fit with their own development strategies” does not mean that they will be free from outside pressures to adopt neo-liberal policies. It is naïve in the extreme to deduce, as Bob Geldof did, that this means that “enforced liberalization must end.”
On the contrary all the evidence is that World Trade Organization negotiations and IMF and World Bank SAPs continue to force open developing country markets, often without reciprocal treatment, let alone the “special and differential treatment” that is supposed to be accorded to developing countries. The Third World Network Africa says “Developed countries are aggressively aiming for deeper reduction of agricultural tariffs in all developing countries, which would worsen the profound and adverse impacts on the lives of millions of peoples that have already resulted from earlier rounds of forced liberalisation, particularly in the context of the World Bank and IMF imposed conditionality.”
A Guardian editorial (July 9) observes how “There
was also a step backwards in the language used by the G8, restricting
special treatment on trade access to only the poorest and least
well-off countries - which includes much of Africa - but snubbing
the larger developing nations of China, Brazil and India. The G8
would have done well to remember that India alone has more of the
world's poor than the whole continent of Africa. At this rate, with
trade talks in Geneva already deadlocked, the crucial December meeting
of the World Trade Organization is shaping up to be a rerun of the
Cancun trade talks that ended in such acrimony.”
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The Road Ahead |
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The limited results of the Summit will fuel a debate that has taken place among civil society groups ever since the 1999 Köln G7 Summit concerning whether lobbying the G8 or trying to delegitimize it is the way to proceed.
Many global justice groups protested in Edinburgh against the occupation of Iraq. Yet Tony Blair kept the issue off the agenda even after the bombings in London prompted knowledgeable observers, such as Robert Fisk, to identify the bombings as retribution for the invasion and occupation of Iraq. Geldof reportedly told musicians not to criticize President Bush during the American Live 8 concert with the admonition: "Please remember, absolutely no ranting and raving about Bush or Blair and the Iraq war."
Yet many in the global justice movement insist that the invasion of Iraq and the causes of global poverty are both rooted in the same imperial agenda. The amount of money the US spends each year in Iraq, around US$80 billion, is more than it has spent on aid for all of Africa from 1960 to the present. Jubilee South calls the amount of debt relief promised by the G8, US$40 billion, “shameful” when compared to annual military budgets for the year 2004: US$400 billion for the US alone and US$191.4 billion for 6 other G8 countries (excluding Russia).
Focus on the Global South director Walden Bello told a rally in Edinburgh: “The G8 is not part of the solution. It is part of the problem. Let me ask, can we really feel the pain of our brothers and sisters in Africa suffering poverty without at the same time feeling the pain of our brothers and sisters in Iraq suffering from a horrible foreign occupation? For is not pain indivisible? Is not justice indivisible? Is not solidarity indivisible?”
One challenge for anti-poverty campaigners in the North in the wake of Gleneagles will be to balance the emphasis on increasing the quantity of ODA with more attention to the quality of the aid delivered. Can one uncritically demand that the US increase its ODA commitment while ignoring how the money is spent? To cite one particularly egregious example, USAID is financing the private consultants overseeing the dismantling of Iraq’s state-owned enterprises and identifying collaborators to implement what the Wall Street Journal calls “sweeping plans to remake Iraq’s economy in the US’s image.”
An important challenge will be to listen to the voices of our Southern partners who may well have very different interpretations of the outcome of Gleneagles than the lessons drawn by Northern campaigners. One opportunity for listening to these voices will occur at a September meeting of debt campaigners in Havana co-convened by Jubilee South, KAIROS and the Southern Peoples Ecological Debt Creditors Alliance among others.
Next September’s replenishment conference for the Global Fund for AIDS, TB and Malaria will be a test of whether the G8 is serious about keeping these promises.
The Special United Nations General Assembly in September charged with assessing progress towards meeting the Millennium Development Goals will be another test.
Equally important will be the late September annual meetings of
the World Bank and the IMF where the G8’s debt remission proposals
are likely to be ratified. The Bank and Fund meetings are also supposed
to have a debate on conditionality. While the IFIs themselves will
not want a vigorous public debate on the economic model underlying
their conditions, it will be an opportunity for civil society to
expose the contradiction between these conditions and the G8’s
claim that developing countries should “decide, plan and sequence
their economic policies to fit with their own development strategies.”
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