DEVELOPMENT: Debt Relief the Test of G-8 Summit Success

By Suvendrini Kakuchi Reprint | | Print |

Suvendrini Kakuchi

NAGO, Japan, Jul 21 2000 (IPS) - Genuine debt relief for the world’s poorest countries is at the forefront on the opening of the G-8 summit here, with developing countries and activists saying it will their yardstick of the powerful club’s sincerity.

“We are calling on the G-8 leaders to have a human face alongside being superpowers economically,” declared Charlotte Mwesigye Bagorogoza, who represents the Uganda Campaign of Jubilee 2000, the non-government organisation spearheading the call for total debt relief.

Jubliee wants total and immediate debt cancellation for 40 of the world’s poorest developing countries to be made in Okinawa, rather than the current mode of relief under which only nine countries have been recognised for debt relief.

“We are calling for this deal in order to stop rich countries from taking money from poor countries and this decision has to be taken right now,” said Ann Pettifor, co-founder of Jubilee 2000.

At noon Friday, Japanese Prime Minister Yoshiro Mori accepted a statement from Mwesigye and other representatives of Jubilee 2000 and promised he would do his utmost to bring about speedy decision during the Jul 21-23 summit.

British Prime Minister Tony Blair, who arrived Friday morning, told reporters that bringing relief to poor countries remains an important issue at the G-8 summit.

On Thursday evening, he had participated in a meeting held in Tokyo between Mori and the leaders of Canada, Italy and France, and leaders from developing countries.

In the meeting, Mori promised representatives of developing countries the summit would work toward the speedy enactment of the Cologne initiative taken by G-7 leaders. who announced a package of up to 100 billion U.S. dollars in debt relief by the end of this year for 40 of the world’s poorest countries.

South African President Thabo Mbeki and Nigerian President Olusegun Obasanjo and Algerian President Abdelaziz Bouteflika, representing the South and a population of more than 4 billion people called for debt cancellation.

They also sought collaboration from rich countries to improve health, education and social services in developing countries.

Obasanjo, at a press conference Thursday night, said what he wanted was “words that matched with action”.

Bouteflika called for concrete policies and said a timetable to implement the policies were essential.

The meeting between the G-8 and developing countries marked the first such gathering before such summits, which have traditionally being held for rich countries.

While activists had pushed for the meeting to be held in Okinawa, Japan decided on Tokyo. Still, Japanese government officials say, the time spent in listening to opinions from the South has illustrated the importance of reducing poverty.

The leaders of the richest countries in the world, now finally gathered in Okinawa are kicking-off their first meeting Friday afternoon with a discussion that includes debt relief.

Despite the pressure from activists and developing countries and Japan’s statements that the summit will focus on developing country concerns, expectations remain low.

Activists point out the biggest obstacle is disagreement among the seven big creditors that have varied interests in the issue.

While Britain, for example, is a leading sympathiser on the issue of debt relief, Japan, the world’s top donor, faces the biggest loss and thus remains reluctant to give into a quick cancellation of its aid loans.

Italy, pushed by the Pope linked to Jubilee, has also passed a new bill in its Parliament that calls for debt relief to more countries that the designated Highly Indebted Poor Countries.

But pressure from the International Monetary Fund, which controls multilateral funding and insists on loan repayment, provides another formidable barrier for a decision to be taken at the summit.

These problems, point out supporters, are behind the sorry state of the current debt relief programme where only nine countries are recieing debt relief.

Yet Jubilee, representing more than a hundred development grassroots organisations around the world, point out that if no new decision is taken in Okinawa, resentment would rise against rich countries that would be viewed as failing to protect the poor and reduce inequality in the world.

For example, Obasanjo pointed out in Tokyo that Nigeria spends 2.5 dollars per person for health care compared to Japan which forks out 2,340 dollars per person annually.

Nigeria, not included in the debt cancellation programme, has an income of 300 dollars per head and a debt-to-export ratio of over 250 percent.

The country is due to pay to creditors a total of 3.6 billion dollars this year and its budget for reducing poverty is a mere 360 million dollars.

Reports also clearly indicate how debt servicing has cut the health and education budgets of poor countries, leading to malnutrition and social problems such as drug trafficking.

The representative of Haiti Campaign, Camille Chalmers, told reporters Haiti remains excluded despite its debt of 1.1 billion dollars in 1998, more than 25 percent of its GNP.

“Nearly half of the debt was contracted under the cruel Duvalier dictatorship and is odious debt. Haiti is the poorest country in the Western Hemisphere,” he says.