Hopes dashed for Africa

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Just when it seemed world leaders would have to answer to world public opinion — the other superpower — the Gleneagles G8 summit was engulfed by the tragedy of bombs exploding in London transit. Public attention was diverted away from the Aid-to-Africa package agreed to in Scotland. Despite the headlines about aid being doubled by 2010, the reality is that hopes of global justice campaigners for a breakthrough by the G8 were dashed.

On the issues vital to its future — debt, aid and trade justice, Africa was betrayed.

On the very important question of debt, what the heads of government agreed to was no more than what G8 Finance Ministers had worked out in London a month previous to Gleneagles: forgiveness, over time, of debt owed by some 18 countries to international financial institutions (IFIs) — notably the Washington-based World Bank and International Monetary Fund (IMF) — provided the poor states open their doors to corporate investment, deregulate and privatize.

The noble act is to recognize what Live 8 was about: ending the crisis in Africa. Step one is to eliminate debt servicing charges by forgiving all loans immediately. But the G8 said not all loans, and not to all nations, and not now. And, then, under the “investment climate” initiative (a corporate-backed idea, are you surprised?) wants the Africans to sell off their public sector companies, and natural resources, which is a sure way of perpetuating debt payments forever to foreign companies.

Global justice campaigners want rich countries to lend to poor countries. Jubilee 2000 and others have pointed out this cannot happen when the payments by the poor on existing debts are greater than new loans. But a main issue has been the “conditionality” of loans. Forgiving some debt and making debt forgiveness contingent on ruinous conditions is an ignoble arrangement.Worse, because of debt forgiveness, the IFIs will recalculate the amount of aid money to the poor countries, and then reduce it. Poor countries will pay some part of debt forgiveness by losing loans.

Cynics in finance ministries agreed to make good to the IFIs, the money the IFIs would have had trouble collecting from the 18 poorest of nations, including 14 in Africa, on condition the poor countries agreed to guarantee profitable business for corporations, mainly G8-based, naturally.By simply agreeing to value the gold stock of the IMF at market prices, and increasing the amount of automatic, unconditional drawings by a similar amount, say eight fold, to African nations, on what are common resources, at least significant new money would have been made available. (In passing, it should be noted that a good portion of the world's gold stock was mined in South Africa by slave labour or indentured workers, and it would be simple justice for some of the proceeds of that exploitation to be returned to Africa.)

The Canadian Finance Minister lobbied hard against the idea of using IMF gold to make new money available for Africa, a proposal of the British Chancellor, Gordon Brown.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. Any new money, even over five years, would be welcome (should the promises be met, what with changes in government, recessions, budgetary changes, etc.) but the crisis is today. The amounts involved are a few days spending by the Pentagon.

As for trade justice, Africa was asked to wait for the WTO. What the G8 are pushing for in the world talks will significantly raise African development costs. A major part of the WTO agenda is about securing intellectual property rights so that everybody pays more for DVDs, CDs, computer software, patent drugs and other monopoly rights. The real dollar costs to Africa of enshrining such measures will offset any estimated gains from trade. Every G8 leader managed to overlook the negative impact on Africa of what they champion at home.

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