HOPES FOR DEBT RELIEF DASHED AT G-8 SUMMIT

It became apparent at the Summit of the Group of 7 industrialized countries that no new initiatives were forthcoming from the Group to speed up the debt reduction process in the highly indebted poor countries.

Nago, Japan, 23 Jul 2000 (IPS) -- Hopes for radical steps toward genuine debt relief for the world’s poorest countries were dashed at the G-8 Summit here Friday, when rich nations said they would stick by the current debt easing scheme that has been criticised as being a tortuous process.

In a joint statement, the Group of Seven rich countries — United States, Japan, France, Britain, Germany, Canada and Italy— said new efforts were required to fully implement its pledge last year to write off the $100 billion of poor countries’ debt. (Russia makes it the Group of Eight, but it only participates in the political discussions of the annual meeting.)

Briefing reporters, Japanese officials said long discussions were held on debt relief, with all leaders of the debtor countries noting the importance of promoting poverty reduction in the 41 Highly Indebted Poor Countries (HIPCs).

But the G-7 said that while it stood by its commitment made in Cologne last year and wanted to speed up its implementation, poor countries should also undertake policies in order to meet the conditions for qualifying for debt relief to ensure resources go to fighting poverty.

The G-7 also said nine countries had already qualified for debt reduction, accounting for $11.9 billion written off as of this month, although it added this amount would go over $15 billion within the year.

But this is too far behind the $100 billion target of debt to be erased and does not address the problems of the current debt reduction scheme, activists say. For them, Friday’s meeting showed that the G-7 came with no new initiatives to speed up the debt reduction process.

“We have made every effort to push the G-7 leaders to understand the urgency for promoting debt relief, but they have failed to deliver,” said Neville Gabriel of South Africa, who represents African countries in Jubilee 2000, the non-government organisation spearheading the call for total debt relief.

“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.

A report from G-7 finance ministers was presented to the leaders before they met Friday afternoon. The document urged strict compliance with the HIPC initiative under the joint implementation committee by the World Bank and the International Monetary Fund and urged the committee to provide regular information on the status of the individual countries.

Based on the report, discussions led by Japanese Prime Minister Yoshiro Mori focused on effective implementation of the Cologne initiative and endorsed the need to send a clear message that poor countries involved in internal conflicts will not be eligible for debt relief.

Thirteen of the 40 HIPCs are involved in internal conflict and are not receiving debt relief, a condition that activists are opposed to.

The world’s most indebted states owe Western countries $260 billion, and the club of rich countries promised last year to write off $100 billion of this amount.

Asked where progress has been made in Okinawa, a Japanese official said the G-7 hailed the discussion in Tokyo Thursday where rich nations’ leaders met with representatives from developing countries who said it was time to match nice words with real deeds.

The same Japanese official added that 11 new countries would reach the decision points for debt-relief eligibility under IMF conditions by the end of the year.

Jubilee wants total and immediate debt cancellation for the world’s poorest developing countries to be made in Okinawa, rather than the current mode of relief that it says is inadequate.

“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 to do his utmost to bring about speedy decision during the 21-23 July 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. In December, Britain announced the cancellation of all bilateral debt owed by the world’s 41 poorest countries.

On Thursday evening, Blair participated in a meeting held in Tokyo between Mori and the leaders of Canada, Italy and France, and leaders from developing countries. There, Mori promised developing countries the summit would work toward the speedy enactment of the Cologne initiative taken by G-7 leaders.

South African President Thabo Mbeki and Nigerian President Olusegun Obasanjo and Algerian President Abdelaziz Bouteflika, representing the South with 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 said what he wanted was “words that matched with action”.  Bouteflika called for concrete policies and said a timetable to implement the policies was essential.

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

Even before Friday’s summit, activists pointed out that the biggest obstacle to a new way of debt relief is disagreement among the seven rich nations that have varied interests in the issue.

While Britain 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 in to a quick cancellation of its aid loans.

Italy has passed a new bill in its Parliament calling for debt relief to more countries than the designated HIPCs.

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. Several G-7 members also hold key influence in the Fund.

Jubilee 2000 points 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 per person for health care compared to Japan which forks out $2,340 per person annually. Nigeria, not included in the debt cancellation programme, has an income of $300 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 this year and its budget for reducing poverty is a mere $360 million.

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 that Haiti remains excluded despite its debt of $1.1 billion in 1998, more than 25% 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 said.-SUNS4715