Making Ends Meet
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The G8 summit failed to come up with the debt-relief package for which non-government organisations and aid groups were hoping, involving a 100 per cent cancellation of multilateral debt owed by the Highly Indebted Poor Countries (HIPC). Here is a guest essay, written while the summit was still underway, by the New Economics Foundation (NEF) in the United Kingdom. |
Promises, Promises: The G8 and Debt Relief
by David Boyle
If the G8 succeeds in brokering massive debt cancellation on the scale that is envisaged, it will -- as NEF pointed out last year -- be as a result of the conundrum of Iraq debt.
Nobody could seriously believe that the people of Iraq should be saddled with the debts run up by Saddam Hussein, and yet that is precisely the proposition that we are expected to believe about the indebted countries of Africa and other parts of the world.
[The Progress Report notes -- at the summit, no consensus was obtained to forgive debts of Iraq or any other country, no matter how impoverished.]
Fingers crossed, but the tension between these two propositions might yet bear fruit on the heavily-fortified Sea Island near Savannah, Georgia. NEF could also take some of the credit, though only some, for the shift in agenda of the G8 meetings. When The Other Economic Summit (TOES) was launched in 1984, the poor and the environment never even made their way onto the agenda.
By meeting every year and challenging the G7 and then G8, and their right to speak for the economic future of the earth, slowly but surely these items began to appear. The promises made were never kept, but -- once again -- there was a political tension that was emerging as a result.
When one part of the G8 club has so undermined the peace of the world, and been so ineffective in their pursuit of the so-called War on terror, that they have to meet in a virtual fortress in the Atlantic, then something has to give.
We may not see massive debt cancellation this time, even so, but in the end we will -- at least for the poorest. There will come a time when a country like Tanzania, even under HIPC paying 11 per cent of their annual budget to the rich north in debt repayments, will be set free.
But when that happens, debt will remain on the global agenda. For example, at least 20 per cent of the UK annual expenditure now goes on debt -- and in the USA that looks set to be considerably more. Whenever we buy from or use the services of a small business, at least a quarter of the price and often more covers the debt payments to the bank. Global businesses are now forced to indebt themselves just as a way of fighting off corporate raiders who regard a debt-free balance sheet as an asset that must be grabbed.
The trouble is that debt is the driver of everything that happens in the world, under old economics. It provides us with the cash we use in circulation. We are expected to indebt ourselves -- almost to the extent of indentured slavery -- just to provide ourselves with a roof. We are forced to 'grow' just to pay the interest on the debts we have gathered.
It is time that the world recognized debt in a more global way, and paid it a little more attention. It is the key to understanding the modern world.
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