Submission Brief to the Standing Committee on Foreign Affairs and International Trade, public hearing to invite input into the agenda for the 2002 G8 Summit
by Derek MacCuish on behalf of the Social Justice Committee
Montreal, 27 February 2002
The Social Justice Committee has worked since 1975 against Third World poverty and for the protection of human rights. So there are two aspects of the three main items on the G8 agenda that are of special interest to the Social Justice Committee:
- strengthening global economic growth, and
- the new partnership for Africa's development
The Social Justice Committee suggests that areas of particular concern include the continuing Third World debt crisis, and reform of the international financial institutions.
Perhaps the most glaring example of unequal economic relations has been the Third World debt situation, and this has justifiably been a main theme of recent G8 summits. We welcome the progress that has been made, and have no hesitation in praising the leadership Canada has shown, including the moratorium on debt service from countries classified as heavily indebted and poor.
The devil is in the details. Many countries are facing delays in moving to the completion point of the HIPC Initiative debt program because of the conditions imposed by the IMF and World Bank. These include cutting government spending, public sector layoffs, and the privatization of public services (for example water, electricity, telecommunications and transport) and of natural resources (for example oil, gas and mining).
In Africa, debt relief to Niger, Burkina Faso, Guinea–Bissau, Chad, Mali, Rwanda, Malawi and Benin, among other countries, is stalled because of the conditions attached by the World Bank and IMF. The same is true of Nicaragua and Honduras in Central America.
Problems with privatization is an issue in itself. Too often privatized utilities will end up supporting sectors that are profitable, to the expense of others. This means electricity, water, sewerage, and telecommunications services are provided and expanded in wealthier urban areas, but not in poor or rural communities.
In some places, it has lead to disaster. South Africa has been through the worst cholera outbreak in its history, with 150,000 infected and over 260 dead. The outbreak was sparked in large part when the new private owners of water supplies in KwaZulu Natal shut off the taps in poor rural communities, and residents began using unsafe sources of water.
As for the debt relief that does arrive once conditions are met, this is inadequate to achieve a real new beginning for impoverished indebted countries. Tanzania has just completed the HIPC Initiative process – joining a select group of only four countries that have completed the debt relief program since 1998. After debt relief, Tanzania will continue to have debt service obligations of almost US$100 million this year, increasing steadily to US$135 million five years from now.
About one third of Tanzania's payments will be to the World Bank, which has yet to cancel any debt out of its own resources, despite profits of over US$5 billion for the last three years. Again, Canada has shown leadership by canceling 100% of Tanzanian debt in November. Other countries are also moving to 100% cancellation.
Canada has asked other creditor countries to match its policy and provide a moratorium on debt service from impoverished countries, in anticipation of cancellation. The G8 could provide direction to the Bank and Fund to do likewise: provide a moratorium on debt service payments, with the goal of 100% cancellation.
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The new partnership with Africa.
The new focus on Africa, through NEPAD, is welcome. The continent needs support in its efforts, and increased financial assistance. We also welcome the recognition that country ownership is a necessary component of development assistance.
There are a host of issues that need to be tackled if initiatives like NEPAD are to be a success. My few minutes here have focused on the problems impoverished countries still face in trying to gain a level of ownership that might equate to real empowerment of affected people, especially as they relate to policies of the international financial institutions.
Any effort to ensure that globalization will bring substantial benefit to the impoverished and excluded will have to involve substantial reform of the financial institutions, especially the IMF and World Bank.
The Social Justice Committee recognizes the benefits that have arrived through efforts to build a stronger sense of "country ownership" in development policy and efforts to combat poverty. The Poverty Reduction Strategy Paper process that has been launched has contributed to a strengthening of civil society participation within countries, and hopefully will result in more effective anti–poverty strategies.
Unfortunately, the central elements of the Washington Consensus approach to structural adjustment, like fiscal austerity and privatization, remain intact and outside real influence by national governments, let alone civil society.
We would welcome recognition by the G8 that economic growth in itself is not sufficient given the challenges, and that the world has to move more aggressively to ensure equitable distribution of wealth and the benefits of production. Part of this effort would include radical reform of the financial institutions, so that their policies better strengthen true country ownership and capacity, and the empowerment of the poor.
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Finally, we would like to register two comment on aspects of Canadian citizen input on globalization. There is a need broader, ongoing processes of consultation with Canadians on the many, complicated issues associated with globalization. It is our hope that the work of this Committee will contribute to the beginning of regular formal dialogue and citizen input in this area.
Second, we hope the Committee will note our concern with violence that has become, unfortunately, associated with protests at events like the G8 summits. We regret that the police response to protest in Quebec City, involved excessive use of force and detention, and that police actions were not questioned by the government, but rather applauded.
Thank you.