No. 29 — July 28, 2000


Weekly Review

--- by Marc Castellano

High-level representatives of developing nations gathered in Tokyo July 20 to express their concerns to counterparts from the developed world. Held on the eve of the summit of the heads of the Group of Seven industrial nations plus Russia, the first meeting of its kind was organized by Prime Minister Yoshiro Mori to assure emerging economies that their voices would be heard at the global forum of the world's most powerful countries. Initiatives to reduce poverty and to expand development assistance were among the major issues discussed.

Leaders from Algeria, Nigeria, South Africa and Thailand spoke for the Group of 77, an economic interest group established in 1964 that now represents 133 developing nations. South African President Thado Mbeki wore a second hat as the chairman of the Non-Aligned Movement, an organization of 113 countries, most of them poor, that were outside both the American and the Soviet sphere during the Cold War. Representing the G-7 were Mr. Mori, British Prime Minister Tony Blair, Canadian Prime Minister Jean Chretien, French President Jacques Chirac and Italian Prime Minister Guiliano Amato. President Clinton and German Chancellor Gerhard Schroeder traveled directly to Okinawa for the summit and did not attend the meeting.

Secretary of the Treasury Lawrence Summers stood in for President Clinton at the G-77/G-7 confab. Mr. Summers expressed concern for the many people living without a central health-care system, basic literacy or the opportunity to benefit from modern technology. He also reiterated the U.S. government's commitment to help the developing world reduce poverty and fight infectious diseases. A day ahead of the meeting, Washington had announced plans to provide $1 billion annually in loans to as many as 24 sub-Saharan African nations to finance the purchase of U.S.-made drugs to treat ailments associated with AIDS (acquired immunodeficiency syndrome). Developing nations are home to about 95 percent of the individuals infected with the HIV (human immunodeficiency virus) precursor, with sub-Saharan Africa shouldering a disproportionate share of this devastating problem.

For its part, Tokyo already had released the details of an $18 billion aid package that will be used to help developing countries, mainly in Asia, gain increased access to information technology as well as fight infectious diseases (see JEI Report No. 28B, July 21, 2000). The landmark initiative was introduced in connection with the Okinawan summit to underline Tokyo's commitment to address developing-nation issues, a key agenda item.

At the G-77/G-7 session, the developing-country leaders criticized the G-7 nations as too slow to provide debt relief, to invest in emerging economies and to transfer the IT knowledge that is vital to growth in the Third World. They also said that although rich and poor countries agree on the causes of poverty and the debt problem, well-off economies simply have not done enough to help. Officials representing the G-77 suggested, for example, that the G-7 governments recruit retired engineers to form an international corps to facilitate the development process.

Zeroing in on the debt issue, the developing-country participants asked the G-7 to expand a program designed to assist some 40 nations classified as "highly indebted poor countries." At last year's summit in Cologne, the leaders agreed in principle to cancel debts worth about $70 billion owed by the world's poorest nations (see JEI Report No. 24B, June 25, 1999). The plan, dubbed the enhanced HIPC Initiative, promised faster, broader and deeper debt relief for countries in dire need. Last September, definitive monetary pledges were secured. Implementation was to begin shortly thereafter. However, a number of interrelated factors — including financing problems, disagreement over what conditions, if any, should be applied to debt-relief programs and questions regarding possible misuse of funds — has kept the initiative from getting off the ground (see JEI Report No. 18A, May 5, 2000).

After the presummit meeting, Nigerian President Olusegun Obasanjo told reporters that the world should work together to tackle problems like the economic divide between the industrialized North and the developing economies of the South as well as the "digital divide" — the gap between nations that have benefited from the proliferation of information technology and those that have not. Mr. Obasanjo also mentioned that while he would have preferred to have met with all seven summit participants, he welcomed the G-77/G-7 meeting as an opportunity to start a dialogue between rich and poor countries. Algerian President Abdelaziz Bouteflika, who also heads the Organization of African Unity, indicated that he was both encouraged and impressed by the open-mindedness of the industrial nations' leaders.

A roundtable discussion on IT and development, an issue that Tokyo has been keen to bring to the forefront of the global agenda, followed the meeting. Joining G-77 officials were the heads of the World Bank, the World Health Organization and the United Nations Development Program as well as such business notables as Sony Corp. President Nobuyuki Idei and Cisco Systems, Inc. President John Chambers.

Mr. Clinton and company frustrated the hopes of the developing world at the Okinawan summit by making little progress on the debt-relief issue. Although they promised to speed up the loan-cancellation process, no specific measures were proposed. Instead, the G-7 leaders indicated that debt-forgiveness conditions would not be loosened. They also urged poor countries to end destructive military conflicts that are delaying efforts to reduce poverty and debt.

Critics charged that economically advanced nations are shirking their obligations. U.N. Secretary General Kofi Annan expressed disappointment at the G-7's inability to make good on its promises, saying that the delays in the debt-relief plan have had a profoundly negative impact on the lives of the world's poor. Jubilee 2000, a nongovernmental anti-poverty coalition that has spearheaded the drive to cancel Third World loan repayments, called for stronger action by the G-7 and accused the group of squandering a chance to advance the write-off effort.

Although the inaugural meeting between leaders of the developing and industrialized worlds did not yield any breakthroughs, it provided a useful — and unprecedented — discussion forum. Japan likely will receive kudos for assuming a leadership role in efforts to bridge the North-South divide.

The views expressed in this report are those of the author
and do not necessarily represent those of the Japan Economic Institute

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