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| The 31st Gleneagles G-8 Summit as a Summit of World Capitalism: Is this the Solution? |
 PRINTABLE VERSION |
On June 10 and 11, 2005, the traditional meeting of G-8 finance ministers, took place in London. On June 11, they agreed to write off one hundred percent of the $ 40 billion in debt owed by 18 highly indebted poor countries to the World Bank, the International Monetary Fund, and the African Development Fund. The meeting also agreed that twenty more countries with an additional $ 15 billion in debt would be eligible for debt relief if they fought corruption, and eliminated impediments to private investment. It had been hosted by British Chancellor Gordon Brown. For these agreements to take effect, they must be approved by the lending institutions. Given the past, it is not certain that these agreements reached on debt relief will take effect. "In 2003 at the Evian summit, the advanced capitalist countries decided to waive $ 100 million of the debt burden on a handful of highly indebted countries that had swallowed their nasty IMF medicine. It never happened," says Mick Brooks. As Oxfam complained, "the World Bank and its board continue to fail to deliver on its mandate and its vision, most visibly on debt relief." As Mick Brooks has put it, "This is like complaining about a tiger failing to deliver on its mandate to vegetarianism."
Because the forthcoming Gleneagles summit meeting is what Mick Brooks calls "a real summit meeting of world capitalism," which serves only the interests of the advanced capitalist countries. As Mick Brooks puts it, "for the issues of debt, for trade, and for aid, the G-8 is not the solution. It is the problem."
One of the main issues expected to be discussed in the forthcoming summit is third world debt relief. Third world debt may be thought of as part of the broader process involved in the development of world capitalism, which is lopsided, and therefore only benefits the richer countries. Mick Brooks argues that "debt is one of the main levers for keeping poor people poor." To substantiate this claim his argument involves, he says, "interest repayment represents a huge continuous transfer to rich nations and an unbearable burden on underdeveloped countries." Zambia spends more on debt servicing than on education. Malawi remits one third of its government budget to rich countries. This amount is twice what is spent on its own people's health. Sao Tome and Principe's debt is nine times their National Income (NI). Congo-Brazzavile groans under an incredible debt burden of nearly two times its NI.
The advanced capitalist countries have been using such permanent institutions as the International Monetary Fund (IMF), and the World Bank, which are essentially owned by them as a means of benefiting themselves at the expense of the poorer countries. As Mick Brooks has put it, "The IMF and the Bank are institutions designed to suck the lifeblood out of poor people living in poor nations."
"Just like other capitalist firms, they aim to maximize shareholder value- and that means making sure the lenders get their money back with interest," says Mick Brooks. They operate under essentially "neo-liberal" principles in the belief that the market can solely, and by its own nature, bring property to nations that practice free market competition. The IMF imposes a standard blueprint called Structural Adjustment Programmes (SAPs) on the poorer countries it gives loans to. There are many stories telling how SAPs impoverished many poor countries upon which the IMF imposed the SAPs.
One example of where IMF Structural Adjustment Programmes aggravated the problem is in Kenya. Before IMF got involved in the country, the Kenya central bank oversaw all currency movement in and out of the country. Mick Brooks says, "SAPs have been a disaster for the countries they have been imposed on. Argentina experienced a catastrophic economic crisis in 2001, which had been caused by IMF-induced budget restrictions, which undercut the government's ability to sustain national infrastructure even in crucial areas such as health, education, and security. Many other South American countries faced similar economic problems, which are attributable to the IMF's standard blueprint that we know as SAPs. The current – as of 2005-trend towards "moderate" left-wing governments in the region and a growing concern with the development of a regional economic policy largely independent of big business pressures can be seen as a result, at least partially of this crisis.”
Is debt relief lasting way out of the poverty trap the indebted poorer countries find themselves in? Since the beginning of the HIPC programme- HIPC stands for Highly Indebted Poor Countries- beneficiary countries have used some of the money saved on debt repayments for social programmes. For example, in Benin, 54 percent of the money saved through debt relief has been spent on health, including on rural primary health care and HIV programmes. In Tanzania, debt relief enabled the government to abolish primary school fees, leading to a 66 percent increase in attendance. These statements may fool us into thinking that this question can be rightly answered in the affirmative. These only suggest that debt relief may help the poorer countries reduce the severity of the poverty they are plagued with to some extent, at least for some days ahead. The answer is not difficult. One does not need to be extremely perceptive to answer this question. "So long as the terms of trade continue to move against the poor countries and as long as world trade is rigged against them, then debt relief will give no lasting way out of the poverty they find themselves in," says Mick Brooks.
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Ajit Rai
I take a deep interest in development and underdevelopment as well as in politics, especially in its relation to economics. Currently, I am undertaking systematic research, and intend to theorize about Nepalese development and underdevelopment from a socio-philosophical approach.
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