G8 Summit 2007

Headlines of $60bn pledge miss caveats and concerns

The mainstream headlines spoke of success. G8 leaders reach $60bn Aids deal² the BBC reported. G8 leaders make $60B Africa pledge³, CNN wrote. Mainstream television headlines made similar notes.

However, behind these seemingly celebratory headlines, as many media outlets did this time reveal, the numbers contained fancy accounting, including dollars earmarked at previous G8 summits, for example.

Channel 4, a British mainstream media channel, noted that,

• Of the $60bn, half was pledged by the US in the previous week, spanning 5 years; $30bn was new
• When spread over 5 years, this $60bn amounts to $12bn a year
• The figure was not guaranteed; it was a pledge (many large pledges in the past have not been delivered, and have been added to follow-up pledges, thus creating an impression of massive quantities of aid).

Max Lawson, senior policy advisor at the NGO Oxfam noted that The headlines sound impressive but ultimately mean precious little⁴. Instead of delivering what they promised the G8 has tried to get the biggest possible headline number out of the smallest possible aid increase. The $60bn for HIV/AIDS, health, TB and malaria represents, at most, an extra $3bn of aid in 2010. This is welcome but falls $27bn short of what the G8 pledged in 2005. (Emphasis added) In addition, the $60bn on HIV included considerable amounts of money from existing spending levels

What if headlines had said G8 pledges additional $3bn? Even Channel 4’s summary headlines spoke only of the G8 $60bn pledge, not the spin that they noted in their reporting.

U2 star and anti poverty campaigner, Bono, described this G8’s African deal as deliberately vague and misleading, saying it was a compromise on top of another compromise (the 2005 G8 Gleneagles declaration).

As well as development activists, the World Bank has also criticized G8 pledges for not being delivered⁵.

Another IPS report contained an interview of the World Bank’s Chief Economist for Africa (see previous link) who made a number of important points, for example:

• That while there were increased funds for humanitarian aid but this does not mean funds for development, which is longer term.
• While corruption of African governments is often raised when discussing these issues, The question is less whether the African partners are delivering on their promises, but whether the wealthy industrial nations are honoring theirs, noting the improved steps many African countries are taking even though the G8 has been slow to deliver its side of the pledges.
• the G8 is short by an estimated 10 billion dollars in the disbursement of the development aid pledged in Gleneagles raising the concern that the new pledges will also be delivered slowly.

There was also disagreement on how to deliver aid⁶. The US, for example wants to continue bilateral arrangements (i.e. between itself and a recipient), while most others wanted a multilateral approach to avoid duplications. On the one hand, the US approach can be effective; it can concentrate on specific countries and bring pressure to ensure aid is not misdirected. However, as has been seen in global health issues⁷ in particular, this allows the donor to exert more pressure and conditions which may not always be for the benefit of the recipient. But even the aid delivery that Europe wants is not without problems. While in theory it may be a good approach, to date, regardless of bilateral or multilateral efforts, foreign aid has been manipulated and often benefits the donor more than the recipient⁸.

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Climate Change

The build-up to the meeting saw many discussions on climate change, from concerns about the US watering down draft texts on calls to action, to the impact China, India and the other emerging nations will have in opposing calls to impose targets on their emissions.

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Medicine Access Rights and Intellectual Property Rights

The presence of the so-called G5 helped limit the extent to which rich countries wanted to change the direction of intellectual property rights.

The G8 wanted to promote the idea of innovation, while protecting it (i.e. intellectual property rights). While most accept that this is important to encourage innovative developments, there has been criticism around the world, over the way in which multinational pharmaceutical companies have pushed for it aggressively even when World Trade Organization rules allow alternative production or acquisition of medicines for health emergency purposes (such as dealing with AIDS).

What the G5 managed to do was to push for the inclusion of the need to address public health in the balance between grave health emergencies and protection of patent rights of pharmaceutical companies.

Oxfam, mentioned earlier, also warned that an extremely aggressive approach to Intellectual Property rules could undermine the benefits of extra money by pushing up prices for essential medicines in the developing world and denying access to inexpensive generics.

Perhaps even more worrying is that the G8 has been attempting to shift intellectual property discussion to the OECD, which they control even more than the WTO²⁰ thus having dangerous implications for developing countries.

The rich countries have long been criticized for the unfair and heavy influence in the WTO. As the Doha Round of world trade talks showed, however, if developing countries act united, they can stand up to unfair demands. And so, the Doha Round stalled²¹.

What is also concerning here is that just as G8 leaders and their media present the view of almost being saviors for the world’s poor, they are using these tactics to undermine key issues that would promote the development of poorer countries. And without much mainstream media attention.

(To be fair, intellectual property rights is a big issue not just for pharmaceutical companies, but software companies like Microsoft, and the recording/entertainment industry, that face problems of piracy and music sharing, hence many other influential multinational companies are all together lobbying for stronger intellectual property rights enforcement the world over. The way this has been done however, is of immense concern, reflecting politics and power, rather than fairness and equality. For more details, see this site’s sections on global health issues²² and the Doha Round²³.)

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Farm Subsidies for the Rich Outweigh Any Aid

As was feared, discussion of rich country farm subsidies was not on the agenda, despite its enormous size.

Quoting a United Nations Human Development Report, IPS summarized this issue as follows:

Furthermore, as Godoy also notes, the systematic undermining of African economies, mostly be the rich G8 nations, has gone on to such effect that the if sub-Saharan Africa enjoyed today the same share of world exports as it did in 1980, the foreign exchange gain would represent about eight times the aid it received in 2003.

As a result, around the world, the rich country agriculture subsidies have been described as excessive, unfair, and even hypocritical, for it employs protectionism while requiring opening of markets for poorer countries. This has resulted in cheap agriculture products from rich countries being dumped onto poorer countries, increasing world hunger²⁵.

For sure, it is a very sensitive and difficult subject for many rich countries, but crucial for the poor.

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Finance: addressing damage of speculative hedge funds

Another issue that did not gain much media attention was the damaging effects of hedge funds in developing countries²⁶ and attempting to address them. Some G8 countries wanted to introduce a code of conduct on hedge funds, while (unsurprisingly, as the IPS rightly noted), the US and UK resisted, as most hedge funds operate there.

Why are hedge funds of concern? As IPS also summarized, hedge funds are highly risky and speculative operations. This means they

• Tend to destabilize international financial markets,
• Undermine growth in the real economy, and
• Have the potential to provoke a major crisis among banks and other private financial institutions.

Even hedge fund managers are beginning to admit that the present state of deregulation and lack of taxation upon the funds’ transactions is unacceptable, notes IPS. In an op-ed article in the London Financial Times, Nicolas Ferguson, chairman of investment group SVG, revealed that he and his peers paid less tax than a cleaning lady.

The G8’s declaration simply said they reaffirm the need to be vigilant which in diplomatic parlance means close to little.

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What is the point of these G8 meetings if they never deliver?

Year after year, as the G8 prepare to meet, campaigns appear in the media encouraging these leaders to act and save the world. And yet, year after year, these campaigners go away disappointed, noting the hypocrisy, double standards, and fancy accounting that the mainstream media headlines often report.

Promises from G8 leaders are rarely fulfilled and yet there is little accountability for these false hopes. So why do campaigners keep trying?

Some argue that we should not rely on governmental, top down delivery of such things. Instead, it should be left to free markets, and local/direct piecemeal actions, perhaps smaller in scope, and easier to measure, to get results and accountability. William Easterly for example, makes an excellent case in The White Man’s Burden; Why the West’s Efforts to Aid the Rest have Done So Much Ill and so Little Good, (Penguin Press, 2006).

Some critics of this government/top-down approach see this as a state versus free market approach. That would be too narrow a characterization, for it is really addressing more fundamental issues of power imbalance and abuse of free market systems, and also recognizing that markets often do not solve problems on their own; they need injection from other spheres of society (consider the enormous agricultural or fossil fuel subsidies in the rich countries, for example).

In addition, sometimes these views omit that some multinational companies have also often worked to the detriment of poor countries, just like rich country governments. Furthermore, rich country governments are (at least theoretically) accountable to their citizens, while multinational companies are not. Campaigning governments to be more mindful of the businesses that lobby them for various things is seen as one way to address these issues.

Some businesses may not be doing this on purpose, necessarily; the pressure of the market etc may result in such an outcome. Some overriding approach or framework that businesses may partake could help avoid misdirection, redundancy, inappropriateness, or wastage. Indeed, for climate change for example, many multinational businesses are actively encouraging governments to provide regulation so they know where they stand and so that they can all compete from a level playing.

Ultimately, it would seem the poorer countries need to help themselves. Perhaps aid increases, even if they happen, are doomed for failure, if the continue to come with unfair conditions attached. If poor countries can develop and trade amongst themselves, perhaps then they can withstand unfair demands of richer countries better. However, to do this, may require campaigning rich country governments to limit the damage they are causing and get them to help reign in the excesses of some multinational corporations that exploit developing countries.

Of course, in all this there will be companies and organizations and countries that genuinely want to help and so surely a multi-pronged approach is better than a top down only or a bottom down only approach.

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