G8 Fiction and Fact - 2004 Intro to G8 Failures
ewok | 07.06.2005 01:49 | G8 2005 | Globalisation | Social Struggles
Copy of 50 years is Enough G8 Briefing pre 2004 Summit:
http://www.50years.org/factsheets/g8_fiction-fact.html
http://www.50years.org/factsheets/g8_fiction-fact.html
G8 (Fiction and) Fact Sheet
Each year the Group of Eight (G8), comprised of the leaders of the eight richest countries (the U.S., the U.K., France, Germany, Canada, Japan, Italy, and Russia), meet to agree on their course of action on major global issues, with a particular focus on economic issues. Initially formed in 1975 to discuss the oil crisis, the G8 wield considerable political and economic power,over international institutions, controlling 48% of the votes at the International Monetary Fund (IMF)and 46% of the votes at the World Bank. In addition, the G8 countries include four of the five veto-holding members of the United Nations Security Council and, in 2000, controlled over 2/3 of the global economy. The G8 has become one of the most important international policy-making bodies, with officials and ministers from G8 countries meeting regularly throughout the year outside of the annual summits.
However, the G8 maintains fierce secrecy and limited public documentation, releasing only a single communiqué after each summit. Despite its considerable power and influence, the G8 is an informal club with no official designation and is not accountable to anyone. The G8 has often expressed concern for the poor, reiterating such sentiments as this, released at one of the first meetings in Tokyo; “We are deeply concerned about the millions of people still living in conditions of absolute poverty”1. However, they repeatedly take actions that exacerbate those conditions.
The G8 has perennially pledged support to World Bank and IMF policies, and to free trade agreements that do not alleviate poverty but instead have proved to increase profits for corporations, especially in G8 countries. They have reneged on their promises to fund the Global Fund to fight AIDS, Tuberculosis, and Malaria, exacerbating the existing global health crisis. They have failed to direct the IMF and World Bank towards effective debt relief in place of the current state of international indebtedness, which forces
impoverished countries to divert valuable resources into debt service payments instead of into investment in poverty eradication and essential services such as health, shelter, food security, education, safe water, etc. In short, the G8 has done little for the welfare of the global community, especially the most vulnerable members who bear the brunt of poverty and suffering.
The following is a series of reality checks on statements made by the G8, and a grim illustration of the G8’s failure to meet the needs of the disenfranchised global community.
G8 Fiction:
“We re-affirm our support of sound regulatory regimes that encourage and promote market dynamism and foster fair and effective competition among market participants. In order to support the beneficial process of globalisation, we aim in particular to enhance international cooperation and to foster a sound level playing field.” - Fostering Growth and Promoting a Responsible Market Economy-A G8 Declaration (Evian 2003)
Fact:
The playing field is far from level. The international trading system operates on a double standard in which developed countries employ protectionist trade policies while developing countries are forced to open their markets. The cost of developed countries’ import barriers against goods coming from developing countries amounts to around $100 billion per year, which is twice as much as they receive in aid2. The problem is particularly apparent in agriculture, in which G8 countries provide heavy subsidies to domestic farmers. Total subsidies to domestic farmers in developed countries add up to more than $1 billion per day. Small farmers from developing countries are unable to compete and are effectively eliminated from competing on the world market; and, due to cheap agricultural goods flooding countries in the Global South, these small farmers cannot compete in domestic markets either.
Instead of encouraging fair market practices and competition, the G8 countries fail to follow the free-trade policies they impose upon developing countries through institutions they essentially control including the IMF, the World Bank, and the World Trade Organization (WTO), increasing poverty and inequality between the global North and South.
G8 Fiction:
“…(P)rogress has continued in the implementation of the [Heavily-Indebted Poor Countries (HIPC)] initiative. Twenty-six of the world’s poorest countries are now benefiting from debt relief, totaling more than $60 billion committed in nominal terms.” - Chair’s Summary, Evian Summit 2003
Fact:
The G8 concedes that debt relief is a vital step in alleviating poverty in developing countries, and supports the HIPC initiative as a way for heavily-indebted countries to attain “debt sustainability”. Some progress has been made; however, most HIPC countries’ debt is still unsustainable, even by the World Bank and IMF’s standards. Of the 26 countries now approaching completion of HIPC, 6 are graduating for the second time. Uganda, one of those six, currently has debts totaling over 200% of the debt-to-export ratio3.
The HIPC initiative does not guarantee that heavily-indebted countries will receive full debt cancellation. Furthermore, the HIPC initiative offers too little debt reduction, for too few countries, and with too many conditions. The IMF boasts that $31 billion has been given in debt relief through HIPC4. However, external debt in Africa alone stands at $333 billion5. The HIPC initiative fails to adequately address the issue of crushing debt, but instead holds countries more tightly to structural adjustment and austerity policies, remains inaccessible and non-transparent, and does not commit creditors to the debt relief process6. In fact, the World Bank itself admitted to the HIPC initiative’s failures in a 2002 report citing that, according to their own criteria, 31 of the 42 HIPC countries are failing to achieve debt sustainability. The World Bank’s own HIPC review gave the grim view that “(t)he external debt sustainability outlook for most of the 20 countries in the interim period has worsened”7.
The G8 countries have the power within the World Bank and the IMF to make definitive debt cancellation using principles of accountability, civil society participation, and creditor compliance the top priority of the ostensibly development-oriented multilateral institutions. Comprehensive debt cancellation requires only the collective strokes of their pens and need not have any negative impact on borrowing countries. The G8 has often called for increased debt relief – the G7 had announced that they would provide 100% debt cancellation for all HIPC countries – but the rhetoric of debt relief doesn’t match up with the reality of unsustainable debt8.
G8 Fiction:
“We reiterate our commitment to fight against AIDS as well as Tuberculosis and Malaria as agreed in Okinawa…We reaffirm our support for the Global Fund to fight AIDS, Tuberculosis, and Malaria.” -Health-A G8 Action Plan (Evian 2003)
Fact:
The G8 claims to support the fight against AIDS, Tuberculosis, and Malaria, and endorses the Global Fund as the biggest private/public international organization dedicated to providing money to developing countries in the fight against these diseases. However, the G8, collectively and individually, has not fulfilled its promises to provide money for the fund. Currently, the donations to the Global Fund are $1.6 billion per year, a mere 20 percent of the amount needed9. The Global Fund has announced that it needs $3.5 billion for the 2005 budget, of which only $900 million has been pledged so far.
AIDS killed more than 3 million people in 2003, and an estimated 5 million more contracted HIV10. The World Bank estimates that economic growth in half of African countries is falling by up to 1.2% as a direct result of HIV/AIDS. The World Bank also estimates that if the HIV/AIDS epidemic is left untreated in Africa, where the epidemic has hit hardest, a complete economic collapse will occur in three generations11.
The G8 needs to provide sufficient support to the Global Fund by giving at least $10 billion per year for the adequate treatment of these diseases12. Furthermore, the G8 needs to call for the complete cancellation of debt owed by African countries to the IMF and World Bank. African countries are spending $15 billion in debt service payments, while an estimated $10 billion is needed to fight AIDS13. Valuable resources are being poured into already-wealthy international financial institutions in the form of debt servicing instead of being invested in fighting AIDS, the worst health crisis in human history.
G8 Fiction:
“The most effective poverty reduction strategy is to maintain a strong, dynamic, open and growing global economy.” - Final Communique, Genoa Summit 2002
Fact:
According to the United Nations Development Program, 54 countries actually got poorer over the course of the 1990s, a period of unprecedented growth for developed countries including those in the G814. The G8 has committed itself to achieving the Millennium Development Goals (MDGs), including halving poverty by 2015. However, by enforcing free trade policies for impoverished countries which demand them to open up to heavy foreign investment, these goals cannot be met. In Africa, foreign investment has been concentrated in mining and oil, creating few jobs and linkages to the wider economy. Child death rates and maternal mortality are increasing in this region, and almost half the continent is living on less that $1 a day. If current trends continue, sub-Sahara Africa will become even poorer in the next 15 years and fail to meet any of the MDGs15.
Increased poverty is directly linked to unfair trade policies of wealthy countries, particularly those in the G8. They impose high tariffs on poor exporters, preventing impoverished countries from competing in the global economy. Developed countries’ large domestic agriculture subsidies further debilitate poor economies, allowing subsidized food imports from G8 countries to undersell farmers in the Global South, even in their own domestic markets. Reforming these unfair practices would result in benefits “worth 20 times as much as aid to low-income countries, and could help kick-start failing African economies”16.
If the G8 is serious about its commitment to eradicating poverty, it needs to re-evaluate its trade policies and implement progressive and effective social policies that address the needs of developing countries. The G8 also needs to end its support for the World Bank and IMF’s policies of structural adjustment (now manifested in so-called “Poverty Reduction Strategy Papers”), which emphasize the liberalization of trade and investment and the privatization of public industries and services in developing countries.
These mandates have not succeeded in ending any country’s debt problems, nor do they alleviate poverty. They often lead to mass lay-offs, displacement, and the denial of access to services including healthcare and education. Latin America in particular stands out as the region that most aggressively pursued these liberalization and privatization policies while experiencing the worst long-term economic failure (as measured by per capita income growth) in more than a quarter century including the years of the Great Depression17.
1 http://www.g7.utoronto.ca/summit/1979tokyo/communique.html
2 http://www.maketradefair.com/en/index.php?file=26032002105641.htm
3 http://www.eurodad.org/uploadstore/cms/docs/eurodad_debtsustainability_hipcreview/pdf
4 http://www.imf.org/external/np/exr/facts/hipc.htm
5 http://www.globalnetwork4justice.org/story.php?c_id=107
6 http://www.jubileeplus.org/
7 http://www.worldbank.org/hipc/hipc-review/hipc-review.html
8 http://www.jubileeplus.org/
9 http://www.aidspan.org/gfo/archives/newsletter/GFO-Issue-21.htm
10 http://www.unaids.org/Unaids/EN/Resources/Publications/Corporate+publications/
AIDS+epidemic+update+-+December+2003.asp
11 http://econ.worldbank.org/view.php?type=5&id=30343
12 www.actionaid.org/ourpriorities/downloads/halfwaythere.pdf
13 G8 TALKING POINTS
14 http://www.undp.org/dpa/pressrelease/releases/2003/may/29may03.html
15 www.actionaid.org/ourpriorities/downloads/halfwaythere.pdf
16 www.actionaid.org/ourpriorities/downloads/halfwaythere.pdf
17 G8 TALKING POINTS
Updated June 2004, in preparation for the G8 summit held on Sea Island, Georgia, US.
Each year the Group of Eight (G8), comprised of the leaders of the eight richest countries (the U.S., the U.K., France, Germany, Canada, Japan, Italy, and Russia), meet to agree on their course of action on major global issues, with a particular focus on economic issues. Initially formed in 1975 to discuss the oil crisis, the G8 wield considerable political and economic power,over international institutions, controlling 48% of the votes at the International Monetary Fund (IMF)and 46% of the votes at the World Bank. In addition, the G8 countries include four of the five veto-holding members of the United Nations Security Council and, in 2000, controlled over 2/3 of the global economy. The G8 has become one of the most important international policy-making bodies, with officials and ministers from G8 countries meeting regularly throughout the year outside of the annual summits.
However, the G8 maintains fierce secrecy and limited public documentation, releasing only a single communiqué after each summit. Despite its considerable power and influence, the G8 is an informal club with no official designation and is not accountable to anyone. The G8 has often expressed concern for the poor, reiterating such sentiments as this, released at one of the first meetings in Tokyo; “We are deeply concerned about the millions of people still living in conditions of absolute poverty”1. However, they repeatedly take actions that exacerbate those conditions.
The G8 has perennially pledged support to World Bank and IMF policies, and to free trade agreements that do not alleviate poverty but instead have proved to increase profits for corporations, especially in G8 countries. They have reneged on their promises to fund the Global Fund to fight AIDS, Tuberculosis, and Malaria, exacerbating the existing global health crisis. They have failed to direct the IMF and World Bank towards effective debt relief in place of the current state of international indebtedness, which forces
impoverished countries to divert valuable resources into debt service payments instead of into investment in poverty eradication and essential services such as health, shelter, food security, education, safe water, etc. In short, the G8 has done little for the welfare of the global community, especially the most vulnerable members who bear the brunt of poverty and suffering.
The following is a series of reality checks on statements made by the G8, and a grim illustration of the G8’s failure to meet the needs of the disenfranchised global community.
G8 Fiction:
“We re-affirm our support of sound regulatory regimes that encourage and promote market dynamism and foster fair and effective competition among market participants. In order to support the beneficial process of globalisation, we aim in particular to enhance international cooperation and to foster a sound level playing field.” - Fostering Growth and Promoting a Responsible Market Economy-A G8 Declaration (Evian 2003)
Fact:
The playing field is far from level. The international trading system operates on a double standard in which developed countries employ protectionist trade policies while developing countries are forced to open their markets. The cost of developed countries’ import barriers against goods coming from developing countries amounts to around $100 billion per year, which is twice as much as they receive in aid2. The problem is particularly apparent in agriculture, in which G8 countries provide heavy subsidies to domestic farmers. Total subsidies to domestic farmers in developed countries add up to more than $1 billion per day. Small farmers from developing countries are unable to compete and are effectively eliminated from competing on the world market; and, due to cheap agricultural goods flooding countries in the Global South, these small farmers cannot compete in domestic markets either.
Instead of encouraging fair market practices and competition, the G8 countries fail to follow the free-trade policies they impose upon developing countries through institutions they essentially control including the IMF, the World Bank, and the World Trade Organization (WTO), increasing poverty and inequality between the global North and South.
G8 Fiction:
“…(P)rogress has continued in the implementation of the [Heavily-Indebted Poor Countries (HIPC)] initiative. Twenty-six of the world’s poorest countries are now benefiting from debt relief, totaling more than $60 billion committed in nominal terms.” - Chair’s Summary, Evian Summit 2003
Fact:
The G8 concedes that debt relief is a vital step in alleviating poverty in developing countries, and supports the HIPC initiative as a way for heavily-indebted countries to attain “debt sustainability”. Some progress has been made; however, most HIPC countries’ debt is still unsustainable, even by the World Bank and IMF’s standards. Of the 26 countries now approaching completion of HIPC, 6 are graduating for the second time. Uganda, one of those six, currently has debts totaling over 200% of the debt-to-export ratio3.
The HIPC initiative does not guarantee that heavily-indebted countries will receive full debt cancellation. Furthermore, the HIPC initiative offers too little debt reduction, for too few countries, and with too many conditions. The IMF boasts that $31 billion has been given in debt relief through HIPC4. However, external debt in Africa alone stands at $333 billion5. The HIPC initiative fails to adequately address the issue of crushing debt, but instead holds countries more tightly to structural adjustment and austerity policies, remains inaccessible and non-transparent, and does not commit creditors to the debt relief process6. In fact, the World Bank itself admitted to the HIPC initiative’s failures in a 2002 report citing that, according to their own criteria, 31 of the 42 HIPC countries are failing to achieve debt sustainability. The World Bank’s own HIPC review gave the grim view that “(t)he external debt sustainability outlook for most of the 20 countries in the interim period has worsened”7.
The G8 countries have the power within the World Bank and the IMF to make definitive debt cancellation using principles of accountability, civil society participation, and creditor compliance the top priority of the ostensibly development-oriented multilateral institutions. Comprehensive debt cancellation requires only the collective strokes of their pens and need not have any negative impact on borrowing countries. The G8 has often called for increased debt relief – the G7 had announced that they would provide 100% debt cancellation for all HIPC countries – but the rhetoric of debt relief doesn’t match up with the reality of unsustainable debt8.
G8 Fiction:
“We reiterate our commitment to fight against AIDS as well as Tuberculosis and Malaria as agreed in Okinawa…We reaffirm our support for the Global Fund to fight AIDS, Tuberculosis, and Malaria.” -Health-A G8 Action Plan (Evian 2003)
Fact:
The G8 claims to support the fight against AIDS, Tuberculosis, and Malaria, and endorses the Global Fund as the biggest private/public international organization dedicated to providing money to developing countries in the fight against these diseases. However, the G8, collectively and individually, has not fulfilled its promises to provide money for the fund. Currently, the donations to the Global Fund are $1.6 billion per year, a mere 20 percent of the amount needed9. The Global Fund has announced that it needs $3.5 billion for the 2005 budget, of which only $900 million has been pledged so far.
AIDS killed more than 3 million people in 2003, and an estimated 5 million more contracted HIV10. The World Bank estimates that economic growth in half of African countries is falling by up to 1.2% as a direct result of HIV/AIDS. The World Bank also estimates that if the HIV/AIDS epidemic is left untreated in Africa, where the epidemic has hit hardest, a complete economic collapse will occur in three generations11.
The G8 needs to provide sufficient support to the Global Fund by giving at least $10 billion per year for the adequate treatment of these diseases12. Furthermore, the G8 needs to call for the complete cancellation of debt owed by African countries to the IMF and World Bank. African countries are spending $15 billion in debt service payments, while an estimated $10 billion is needed to fight AIDS13. Valuable resources are being poured into already-wealthy international financial institutions in the form of debt servicing instead of being invested in fighting AIDS, the worst health crisis in human history.
G8 Fiction:
“The most effective poverty reduction strategy is to maintain a strong, dynamic, open and growing global economy.” - Final Communique, Genoa Summit 2002
Fact:
According to the United Nations Development Program, 54 countries actually got poorer over the course of the 1990s, a period of unprecedented growth for developed countries including those in the G814. The G8 has committed itself to achieving the Millennium Development Goals (MDGs), including halving poverty by 2015. However, by enforcing free trade policies for impoverished countries which demand them to open up to heavy foreign investment, these goals cannot be met. In Africa, foreign investment has been concentrated in mining and oil, creating few jobs and linkages to the wider economy. Child death rates and maternal mortality are increasing in this region, and almost half the continent is living on less that $1 a day. If current trends continue, sub-Sahara Africa will become even poorer in the next 15 years and fail to meet any of the MDGs15.
Increased poverty is directly linked to unfair trade policies of wealthy countries, particularly those in the G8. They impose high tariffs on poor exporters, preventing impoverished countries from competing in the global economy. Developed countries’ large domestic agriculture subsidies further debilitate poor economies, allowing subsidized food imports from G8 countries to undersell farmers in the Global South, even in their own domestic markets. Reforming these unfair practices would result in benefits “worth 20 times as much as aid to low-income countries, and could help kick-start failing African economies”16.
If the G8 is serious about its commitment to eradicating poverty, it needs to re-evaluate its trade policies and implement progressive and effective social policies that address the needs of developing countries. The G8 also needs to end its support for the World Bank and IMF’s policies of structural adjustment (now manifested in so-called “Poverty Reduction Strategy Papers”), which emphasize the liberalization of trade and investment and the privatization of public industries and services in developing countries.
These mandates have not succeeded in ending any country’s debt problems, nor do they alleviate poverty. They often lead to mass lay-offs, displacement, and the denial of access to services including healthcare and education. Latin America in particular stands out as the region that most aggressively pursued these liberalization and privatization policies while experiencing the worst long-term economic failure (as measured by per capita income growth) in more than a quarter century including the years of the Great Depression17.
1
http://www.g7.utoronto.ca/summit/1979tokyo/communique.html 2
http://www.maketradefair.com/en/index.php?file=26032002105641.htm 3
http://www.eurodad.org/uploadstore/cms/docs/eurodad_debtsustainability_hipcreview/pdf 4
http://www.imf.org/external/np/exr/facts/hipc.htm 5
http://www.globalnetwork4justice.org/story.php?c_id=107 6
http://www.jubileeplus.org/ 7
http://www.worldbank.org/hipc/hipc-review/hipc-review.html 8
http://www.jubileeplus.org/ 9
http://www.aidspan.org/gfo/archives/newsletter/GFO-Issue-21.htm 10
http://www.unaids.org/Unaids/EN/Resources/Publications/Corporate+publications/ AIDS+epidemic+update+-+December+2003.asp
11
http://econ.worldbank.org/view.php?type=5&id=30343 12 www.actionaid.org/ourpriorities/downloads/halfwaythere.pdf
13 G8 TALKING POINTS
14
http://www.undp.org/dpa/pressrelease/releases/2003/may/29may03.html 15 www.actionaid.org/ourpriorities/downloads/halfwaythere.pdf
16 www.actionaid.org/ourpriorities/downloads/halfwaythere.pdf
17 G8 TALKING POINTS
Updated June 2004, in preparation for the G8 summit held on Sea Island, Georgia, US.
ewok