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Genoa summit & poverty issue

By Sultan Ahmed, DAWN, Thursday 26 July 2001; 04 Jamadi-ul-Awwal 1422

The Group of Eight, consisting of leading industrial states of the world, has pledged at their tumultuous annual summit to draw the poor nations into the world economy and make globalization work.

After meeting in the ancient port city of Genoa in Italy for three days, while facing excessively violent demonstrations which resulted in the death of a demonstrator and injuries to over 300, the G-8 leaders, including President George Bush of the US, promised free and open debate with their citizens and decisive action to combat poverty, particularly in Africa. The demonstrators who eventually swelled to 100,000 came from the western world led by organizations such as Drop the Debt and other pro-poor movements, and not from the developing countries who are currently the victims of globalization or the World Trade Organisation's edicts.

After facing anti-globalization demonstrations and the escalating popular demand for writing off the heavy debt of the poor countries for the last two years in cities as varied as Seattle in the US (against WTO in November, 1999) and Washington and Prague (against IMF and the World Bank policies) the G-8 leaders said we are determined to make globalization work for all our citizens and especially the world's poor as the final statement from the summit stated.

The leaders of globalization said: Drawing the poorest countries into the global economy is the surest way to address their fundamental aspirations.

While the demonstrators have time and again driven home the need for the rich states to help the poor nations and the poor of the world as a whole, the leaders have not indicated how they intend to help the poor countries or allay their fears, and within what time frame. The promise of aid to the poor is largely in generalities or in rhetoric, which is far from reassuring to the debt-laden countries facing acute problems of poverty.

The resolve of the G-8 is to help the poorest or the least developed countries of Africa plagued by heavy debt on one side and AIDS on the other side along with tuberculosis and malaria. No hope has been held out to countries like Pakistan which are marginally above the very poor or drifting towards the status of the very poor due to increasing poverty and a host of social problems.

While responding to the call to help the poor countries the G-8 leaders are also concerned with the slowdown in the US economy along with that of East Asia and Europe. The US however is optimistic and is confident of recovering from a sharp slow down despite the cautious note of Alan Greenspan, chairman of the Federal Reserve. But the Japanese are protesting against the over-optimism and lack of determination of the western states to avoid a global recession.

The summit lacked a sense of crisis over the existing crises, including the turmoil in the world economy brought on by simultaneous declines in share prices due to adjustment in the US information technology sector, says Nihon Keizai Shimbun.

The G-8 leaders are also upset by the volatility of world oil prices and the OPEC's new move to cut output so as to insure oil prices stay above 25 dollars a barrel after they have gone under 23 dollars. But if the high oil prices which the OPEC wants to maintain between 22 to 28 dollars a barrel hurt the industrial states they hurt far more the developing countries like Pakistan with their heavy external debt and acute balance of payment problems.

The G-8 leaders have also voiced the hope that some of the fears of the poor countries in respect of globalization can be eliminated through the new round of global trade negotiations to be launched by the World Trade Organisation meeting in Doha, Qatar in November this year. But with only a few months to go for the meeting, the developing countries do not seem to be getting their act together and formulating their final stand vis-a-vis the West, particularly the reactionary policies of the US under George Bush with his penchant for unilateralism.

Following the convulsions in Genoa which led to heavy destruction in the city and arrest of over 100 demonstrators, the G-8 leaders are planning smaller future summits. But British prime minister Tony Blair argued that world leaders should not bow to violence by abandoning this type of summit. He said, like George Bush, the summit was discussing the very issues some of these people are protesting about: environment, globalization, Africa. But Canada which is to host the summit next year has said it would hold the summit at a remote Rocky Mountain town and welcome only 80 delegates in all about 10 each from the eight summit countries.

The summit in all has been able to get pledges for 1.3 billion dollars for the fight against AIDS after the US had added 100 million dollars more to its earlier 200 million dollars. But Kofi Annan, UN secretary-general, who is holding a special UN session later to mobilize the world to fight AIDS, says the real need is for 7 to 10 billion dollars.

The rich states are being urged to make far larger contributions before AIDS becomes more of a threat for them as well. The issue is also the very high prices of the anti-AIDS drugs produced in the West which the developing countries and anti-AIDS groups want to be reduced. But President Bush is not in favour of any move to reduce the profits of US pharmaceutical firms. Methods of procuring the drugs is also an issue as the UN wants them to be bought cheap.

Charity organization Oxfam and other global NGOs argued the G-8 did nothing meaningful on debt relief. They did not even make a total estimate of the debt burden of all the developing countries and how they could be reduced. Instead they tend to leave it to the IMF and the World Bank to find solutions. But the World Bank president James Wolfensohn argues it is not enough to write off the debt of the least developed countries. That should be supplemented by additional aid to speed up development of those countries. Such assistance is not forthcoming in adequate measure for long.

What is the recent U.S. history in helping the developing countries? Its external aid which was 0.8 per cent of its GDP in 1960s has been falling as America got richer, and has now come down to a nominal 0.1 per cent of its GDP. Compared to this richest country in the world, which became far richer in the 1990s, little Denmark gives one per cent of GDP as external aid followed by Norway 0.9 per cent, Netherlands 0.8 per cent, Sweden and tiny Luxembourg 0.7 per cent.

Writing in the Economist London on the steadily dwindling US aid under the headline what is good for the poor is good for America, Jeffrey Sachs, Director of the Centre for International Development and professor of economics at Harvard University, says the US gained two per cent of its GDP through the peace dividend by cutting its defence expenditure following the end of the cold war. And instead of using a part of its large savings for helping the poor countries it has been cutting down its external aid. And he says for all the talk of helping the poorest countries of Africa, the US is now spending only one-sixth of its aid in helping 48 least developed African states.