General Press Releases
G8: Massive shortfall exposed in Gleneagles deal

5 July 2005

The G8 summit in Gleneagles is set to fall well short of the response needed to tackle global poverty when it reports on Friday, campaigners have revealed.


Anti-poverty campaigns group War on Want has today released calculations showing that the money on the table at the G8 will provide under 5% of the debt relief and less than 20% of the aid needed to meet the objectives of the Make Poverty History (MPH) campaign. Worse still, the G8 countries have hardened their stance on trade, which threatens to wipe out any financial gains made by developing countries in other areas.

In place of the annual $125bn in new money demanded by MPH (see below) if G8 countries are to meet the UN aid target of 0.7% GNI (gross national income), the G8 are offering just $25bn for Africa – and much of it money already pledged. In place of the $45bn which would be released by 100% cancellation of the poorest countries’ debts, the G8 are offering just over $1bn in cancelled debt service payments – a fraction of what is required.

John Hilary, Director of Campaigns and Policy at War on Want, said: “The paltry deal on the table at Gleneagles is an insult to poor people the world over. G8 governments have failed to listen to the 225,000 protestors who came out onto the streets of Edinburgh to call for a response to the crisis of global poverty. If this is the best they can come up with, the G8 clearly has nothing to offer the world’s poor.”

Aid
Currently, across the G8 countries, aid levels stand at $56.7bn – just 0.21% of their collective GNI. MPH campaigners are calling on the G8 to reach the 0.7% target they signed up to in 1970 by 2010 at the latest, which would require an extra $125bn just on current figures (i.e. without factoring in projected GNI growth rates for the next five years). Yet the summit deal is set to pledge only $25bn, less than a fifth of what is needed to meet the target.

The MPH coalition has also called on the UK government to make up its part of the aid shortfall by providing an extra £2bn in the present year. This is equivalent to 1.5% of the $230bn by which the UK economy has grown since 2000.

Debt
The G8 deal announced at the finance ministers’ meeting last month provides debt relief to 18 countries in a package totalling $40bn, with the possibility of further countries being included in future. The $40bn package translates into just over $1bn in saved debt repayments which these

countries will no longer have to make to the IMF, World Bank and African Development Bank each year. Yet this is well short of the $45.7bn which would be released if the G8 included all 62 poor countries which need 100% debt cancellation to meet the Millennium Development Goals.

In addition, the countries in line for debt cancellation are required to have ‘qualified’ by virtue of meeting harmful economic conditions under the Heavily Indebted Poor Country (HIPC) process, which includes sweeping programmes of trade liberalisation and privatisation. These programmes have in turn been shown to cause increased poverty – undermining the positive potential of debt cancellation.

Trade
The G8 members of the World Trade Organisation (WTO) have responded to the MPH coalition’s call for trade justice by hardening their positions against it. The EU and USA have launched a new assault on the industrial and services sectors of developing countries at the WTO, attempting to force open these ‘emerging markets’ for the benefit of their own corporations – even as they concede that this will lead to large-scale bankruptcies, mass unemployment and widespread poverty in the South. At the same time, the EU and USA have hardened their stance on eliminating the agricultural subsidies which undermine the livelihoods of farmers in the developing world. The UN has calculated that trade subsidies cost developing countries between $125 and $310bn a year in lost sales and lower prices for their goods.

Military expenditure
By comparison with the above, the G8’s military expenditure rose dramatically last year – the sixth year in a row to see an increase. World military spending topped $1,000bn ($1 trillion) during 2004, with G8 countries responsible for the vast majority, according to figures released by the Stockholm International Peace Research Institute last month. US military expenditure alone accounted for almost half the global total, at $455bn.

1) War on Want is a member of Make Poverty History.
2) John Hilary, Director of Campaigns and Policy at War on Want, is Chair of the Trade Justice Movement policy group – and will speak at the MPH press conference on Wednesday 6 July at 10:30 am in Gleneagles.
3) For media information and interviews call John Coventry on 07905 397 084.
4) War on Want has spokespeople in Edinburgh, Gleneagles and London. Email  waronwant@gmail.com for details.