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G20: Where Is the Money, and Who Is the Moneylender

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Analysis by Sanjay Suri

3 Apr 09 | IPS

It seemed like a lot of money at the time. The leaders of the group of eight richest countries, the G8, met in Gleneagles in Scotland and announced 50 billion dollars in new aid, half of that for Africa and half for the rest of the world.

That was 2005, the word ‘recession’ was buried in a dictionary somewhere, governments and companies were on a high, with many of the financial figures inflated by financial jugglery that no one then had seen through, and by a debt that would repay itself because how could this club of wealth and power ever go wrong.

The trouble with money is that ideas of it may or may not be real, or all real. But when you have to pay, money then begins to feel more real. Neither Africa nor the other half saw even a decent fraction of those 50 billion dollars. The British government, pushed along by a public show of larger morality provoked by rock stars Bob Geldof and Bono made the right announcements.

In the weeks and months that followed, the British, to be fair, kept their part of the commitment, as interpreted by the government. The other players in the band went silent.

And if in the days of wealth the rich could not deliver 50 billion, who in hard times will deliver a trillion? If they can find that trillion, or the 1.1 trillion, that is.

“There is such a spin on figures about,” Kumi Naidoo, co-chair of the Global Call to Action Against Poverty (GCAP) alliance, and one of the most seasoned campaigners for development for the poor, told IPS. “In Gleneagles the rich countries counted debt cancellation as a part of the aid money figures. Aid money is counted in all sorts of manipulative ways.”

But one way or the other aid only declined after that. That 2005 G8 meeting had committed a significantly smaller amount, and “after that there was a drop in aid from countries such as Italy and Canada,” says Naidoo.

This time the trillion dollars plus is not being spoken of as an aid package. But it has been accompanied by a good deal of rhetoric that it is intended to help poor and struggling economies. Considering that there isn’t an economy that is not struggling, that money is for everyone.

But there is a pledge that about 250 billion dollars that the International Monetary Fund can in a sense just create through an increase in its special drawing rights (SDRs) will help the poorer countries get support for trade. GCAP is not reassured by the pledge.

“There is an over-reliance again on using the IMF and the World Bank as delivery figures, and we know that in the past they have messed up badly,” said Naidoo. “And in any case, while this money has been promised for trade facilitation, very few developing countries have the export credit facilities in place that can enable them to take advantage of this. This will mostly benefit the North rather than the South.”

And on the fundamental issue that could do something to reduce the imbalance, there is no commitment at all: to see that the Doha round of trade negotiations becomes the Doha development round, as originally agreed. This is the current round of negotiations for a single world trade agreement that was launched in Qatar capital Doha in November 1991, but remains deadlocked because leading developing countries are blocking the push from the U.S. and the EU to drop tariffs, while they make no commitment to dropping subsidies.

“The EU and the U.S. and countries like Japan are acting in their self- interest,” said Naidoo. “They have completely violated the Doha development round. Unless the trade system is fair, industries across many developing countries could simply go down.”

Many campaigners are worried that the G20 declaration makes no commitment to fair distribution of the additional money said to have been made available.

“We welcome the 1.1 trillion dollars for global economic recovery,” Duncan Green, Oxfam spokesperson, said in a statement. “But we must ensure that poor countries get their fair share – that Uganda benefits as well as Ukraine.”

Oxfam too expressed concern that IMF has been named the distributor of the new money. “We have deep concerns about how central the IMF has become in this crisis,” said Green. “The fund has been given a blank cheque but its reform remains no more than a promise.

“We hope that the old world of G8 meetings where developing countries were just invited for a photo opportunity is dead. Gordon Brown’s new world order must be one that works for 192 countries not just eight or 20.”


Written by Editors

3 April 2009 at 4:21 pm

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  1. […] G-20: Where Is the Money, and Who Is the Moneylender (3 Apr 09) […]

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