G8 lied about aid

[OsunkoyaIfayomi]

How the G8 lied to the world on aid

The truth about Gleneagles puts a cloud over the New York summit

Mark Curtis
Tuesday August 23, 2005
The Guardian


World leaders are now preparing for the millennium summit to be held
in New York next month, described by the UN as a "once-in-a-
generation opportunity to take bold decisions". Yet the current draft
outcome simply repeats what was agreed on aid and debt last month in
Gleneagles. The reality of that G8 deal has recently emerged - and is
likely to condemn the New York summit to be an expensive failure.

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The G8 agreed to increase aid from rich countries by $48bn a year by
2010. When Tony Blair announced this to parliament, he said that "in
addition ... we agreed to cancel 100% of the multilateral debts" of
the most indebted countries. He also stated that aid would come with
no conditions attached. These were big claims, all of which can now
be shown to be false.
First, in recent evidence to the Treasury committee, Gordon Brown
made the astonishing admission that the aid increase includes money
put aside for debt relief. So the funds rich countries devote to
writing off poor countries' debts will be counted as aid. Russia's
increase in "aid" will consist entirely of write-offs. A third of
France's aid budget consists of money for debt relief; much of this
will be simply a book-keeping exercise worth nothing on the ground
since many debts are not being serviced. The debt deal is not "in
addition" to the aid increase, as Blair claimed, but part of it.

Far from representing a "100%" debt write-off, the deal applies
initially to only 18 countries, which will save just $1bn a year in
debt-service payments. The 62 countries that need full debt
cancellation to reach UN poverty targets are paying 10 times more in
debt service. And recently leaked World Bank documents show that the
G8 agreed only three years' worth of debt relief for these 18
countries. They state that "countries will have no benefit from the
initiative" unless there is "full donor financing".

The deal also involves debts only to the International Monetary Fund,
the World Bank and the African Development Bank, whereas many
countries have debts to other organisations. It is a kick in the
teeth for the African Union, whose recent summit called for "full
debt cancellation for all African nations".

The government's claim that debt relief will free up resources for
health and education is also a deception. The deal explicitly says
that those countries receiving debt relief will have their aid cut by
the same amount. If, say, Senegal is forgiven $100m a year in debt
service, World Bank lending will be slashed by the same amount. That
sum will be retained in the World Bank pot for lending across all
poor countries, but only when they sign up to World Bank/IMF economic
policy conditions. And this leads to the third false claim.

Blair's assertion that aid will come with no conditions is
contradicted by Hilary Benn, his development secretary, who told a
parliamentary committee on July 19 that "around half" of World Bank
aid programmes have privatisation conditions. Recent research by the
NGO network Eurodad shows that conditions attached to World Bank aid
are rising. Benin, for example, now has to meet 130 conditions to
qualify for aid, compared with 58 in the previous agreement. Eleven
of 13 countries analysed have to promote privatisation to receive
World Bank loans, the two exceptions having already undergone
extensive privatisation programmes. Yet in the G8 press conference
Blair refuted the suggestion that privatisation would be a condition
for aid.

According to recently leaked documents, four rich-country
representatives to the IMF board want to add yet more conditions to
debt relief. This will be a key topic for discussion at the IMF's
annual meeting the week after the millennium summit. The British
government opposes new conditions but continues to support overall
conditionality.

This makes a mockery of Brown and Blair's claim that poor countries
are now free to decide their own policies. It is true that the G8
communique stated that "developing countries ... need to decide, plan
and sequence their economic policies to fit with their own
development strategies". Yet it also stated that "African countries
need to build a much stronger investment climate" and
increase "integration into the global economy" - code for promoting
free trade - and that aid resources would be focused on countries
meeting these objectives.

Poor countries are free to do what rich countries tell them. The cost
is huge. Christian Aid estimates that Africa has lost $272bn in the
past 20 years from being forced to promote trade liberalisation as
the price for receiving World Bank loans and debt relief. The draft
outcome of the millennium summit says nothing about abolishing these
conditions and contains little to address Africa's poverty. With only
a few weeks to go, massive pressure needs to be brought to bear.

· Mark Curtis is the author of Unpeople: Britain's Secret Human
Rights Abuses