TCS Daily

Friends in France?

By Roger Bate - May 30, 2003 12:00 AM

Every year the heads of state of the world's wealthiest nations meet to debate issues of global import. It's ironic that this year's meeting is in France, since the French have done the most to undermine global agreements and growth, especially in the poorest nations.

The G-8 is an informal arrangement that is derived from a meeting of the then-five wealthiest countries (U.S., Japan, Germany, U.K., and France) in 1975. Canada and Italy joined in the 1980s and a couple of years ago the Russian Federation made it eight nations. The G-8 has no powers but given that its members constitute 60 percent of the global GDP, its discussions are important for the rest of the world. And this year it will set the tone for September's World Trade Organization ministerial meeting in Cancun, Mexico.

At the past two meetings, a European Union representative group (Greece this year) has been asked to join, as well as leaders of certain aspiring nations. And like these meetings in Kananaskis, Canada and Genoa, Italy, aspiring nation concerns were at the top of the agenda - along with combating terrorism - and remain so at this year's meeting in Evian.

An important reason for this is change in focus is pressure from un-elected non-governmental organizations (NGOs). As the French organizers explain, "Civil society stakeholders often play a deciding role in the development of certain international projects, since they form real forces of proposal and influence." But there are several other reasons the focus has shifted from concerns about growth in rich countries to the demands of the poorer nations.

Some are cynical - it's helpful for countries like France and Germany with failing economies and massive unemployment to deflect attention to those worse off. Furthermore, battles over issues that matter to rich countries (like immigration, financial privacy and water privatization) can be discussed with reference to poor nations, thereby avoiding difficult specific discussions closer to home.

Some involve enlightened self-interest - countries that are undemocratic (most of Africa, the Middle East and many in Asia) may pose dangers to the security of richer nations and they are unlikely to be good trading partners if they remain despotic and poor. Furthermore countries that have epidemics of diseases like SARS and AIDS could spread these problems overseas.

Add to these concerns the genuine desire on the part of many diplomats to help the impoverished world with aid, and a new global media that demands such actions, and you have the main reasons why focus has shifted in the new millennium.

The G-8 and Aspiring Nations

For most of the reasons outlined above, the French have been the keenest to push certain poor country issues, and after 20 years of focus on rich country problems, it was at the last French meeting that the parlous state of aspiring nation finance was discussed. At the Lyon meeting in 1996, the then G-7 launched the heavily indebted poor countries (HIPC) initiative. The aim was to cut the "unsustainable proportion of debt of some forty countries."

The hubris of the financial ministers was quite staggering. For years they had inadvisably lent billions of taxpayer dollars to corrupt and even despotic regimes, without demanding democratic changes and protection of property rights, contracts and the rule of law. Then at the drop of a hat, they wrote off many of the loans. At the German (Cologne) summit of 1999, this initiative was enhanced to provide faster relief to a larger number of countries with more generous debt forgiveness. In the end, the G-7 countries cancelled all the eligible debt owed to them by these countries.

Only the United States pushed for greater transparency in lending to ensure that wasted, counterproductive loans were not repeated. Non-governmental organizations, under the cover of the Jubilee Debt Reduction campaign, said that loans should be replaced by grants, specifically because the countries were incapable of repaying them.

At the Genoa summit in 2001, the Global Health Fund was established to combat the three major scourges affecting especially poor countries: AIDS, malaria and tuberculosis. And last year in Kananaskis, Canada the Africa Action Plan was promoted, which seeks to increase investment in and trade with Africa.

Evian 2003

The hosts of international meetings usually set the tone and the subject matter. And so it is this year. French President Jacques Chirac has raised four issues to be discussed: Terrorism, African development (especially access to drugs and potable water as well as debt reduction), corporate social responsibility and expanding the role of civil society groups in international discussions.

French discussions about combating terrorism will, no doubt, be treated with derision in America, but hopefully the French failure to rally global opinion against the war in Iraq will lead to a more placatory position in their negotiations in Evian.

Since the meeting is at the home of bottled water, a discussion of water privatization will be apt, and the U.S. and France are likely to make a rare agreement that privately owned water improves efficiency and should become more common in aspiring nations. But water privatization is likely to lead to serious disagreement with the NGOs attending. There is not one large non-business NGO that is in favor of privately owned water.

Discussions of access to drugs, drug pricing and patent attenuation are likely to be heated and lead to a continuing standoff between the U.S. and the rest of the group. Business trade associations, which were disgraceful in their fawning over politicians at the World Summit on Sustainable Development in Johannesburg, are likely to continue to commit business suicide by agreeing to expand definitions of corporate social responsibility that will harm profitability. It will be important that the more intelligent business leaders (the CEOs of some major corporations, rather than those working in the CSR departments) actually engage in these discussions.

It will be vital that the U.S. administration representatives continue to refuse non-democratically elected NGOs greater access to the meetings. There are enough left-wing activists in the French and German administrations; the G-8 does not need even more radical un-elected ones to take part.

Dr. Roger Bate is a TCS columnist.

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