With President Bush at the table, the “spin masters” who put a victorious gloss on all his actions had little need to lower expectations concerning the outcome of the G-8 meeting in Scotland. Any agreement would be seen as a major achievement. The write-off of multilateral debt for the world’s poorest countries – thanks to Britain’s leadership – is nonetheless especially welcome.
Agreement by the G-8 to debt relief is a major event, but we should not be fooled by the seeming magnanimity of the gesture: much of the debt would not have been repaid in any case. More debt relief – encompassing more countries and more debt (including bilateral debt) – is needed. But debt relief should be viewed as just a start. As Britain itself has pointed out, developing countries need more assistance and a fairer international trade regime.
Perhaps not surprisingly, the IMF has tried to pour cold water on international enthusiasm for its generosity. New studies, it warns, suggest that aid does not in general lead to faster growth.
This came as a relief for the Bush administration, which claims to have given as much as its “budgetary processes” allow. The world’s richest country, which blithely gave its richest citizens a series of tax cuts worth hundreds of billions of dollars, now says that it simply can’t afford to spend much more on aid.