Introduction

“So, after the sound and fury of Gleneagles, what are we left with?  Have there been any decisive policy changes that will ultimately lead most of Africa out of poverty?  One must say, reluctantly given the well-meaning intentions, that there were not (1).”  That criticism comes, not from a group of anti-poverty activists, but from the August/September 2005 cover story in African Business … and it says a lot about the gap between African reality and G8 rhetoric.  In this article, we provide an overview of three key areas of industrialized world (in)action: debt relief, trade and support for health systems.  We conclude with a few brief observations about the future role of the G8. 

 

Debt relief

Most countries in sub-Saharan Africa remain crippled by external debt burdens, despite years of domestic austerity imposed in order to satisfy creditors.  The $15 billion a year that Africa spends on debt servicing is four times what it spends on health and education, “the building blocks of the AIDS response” according to UNAIDS executive director Peter Piot (2).  Between 1970 and 2002, African countries have borrowed $540 billion from foreign sources, paid back $550 billion (in principal and interest), but still owe $295 billion, according to the United Nations Conference on Trade and Development (3, UNCTAD 2004: 19). 

Over the past nine years, the industrialized world has grudgingly committed a total of $58 billion to partial cancellation of the debts of up to 38 countries, 32 of them in Africa, under the enhanced Heavily Indebted Poor Countries (HIPC) initiative. Although this initiative has freed up funds for public spending on health and education in several countries (4), it has also been widely criticized for making debt relief conditional on adopting a variety of market-oriented economic policies that have only a tenuous relation to poverty reduction (5,6) and may even worsen health conditions.  Debt relief is often also used simply to pay off other creditors.  For example, between 2002 and 2005 almost two-thirds of the revenue freed by debt relief for Zambia went to reduce debts owed to other creditors leaving only a third for investing in poverty-reducing programs including health and education (7, Table 2:37).

According to one estimate, half the debts of the HIPCs will remain unpaid and uncancelled even if all countries receive the full amount of debt relief for which they are eligible (8).  And because of the way a “sustainable” debt load is defined for purposes of HIPC – a criterion based on anticipated future export earnings on which the G7 insisted (8) – two African countries (Malawi and Mozambique) have actually seen increases in their debt service costs, while Uganda and Senegal have seen reductions of less than 25 percent (9, p. 148).  Thus, the Gleneagles Summit (10) commitment to an additional $40 - $56 billion in multilateral debt cancellation is a welcome and overdue next step.

However, the commitment applies only to countries that reach their "completion point” in the HIPC initiative.  Many countries that are not desperate enough to be eligible nevertheless require substantial debt relief if they are to have any chance to reach the Millennium Development Goals (MDGs) endorsed by the United Nations General Assembly in 2000 (11). 

Perhaps of most immediate concern are the conditions that may be attached to debt cancellation.   For example, a separate partial debt cancellation deal for oil-rich Nigeria requires acceptance of “intensive surveillance of its economy by the International Monetary Fund” (12), whose priorities may or may not be related to the country’s ability to meet the basic needs of its people.  Belgium’s IMF representative (with the support of Norway, Switzerland and the Netherlands) is seeking similarly “strict controls” over the economic policies of the 18 countries now eligible for full debt cancellation under the G8 plan (13).  The World Bank has expressed concern that the G8 debt cancellation announcement “offered no mechanism for suspending debt relief if a debtor country deviated from economic and social reforms” prescribed by it and the IMF (14) … and historically, the priorities incorporated into those “reforms” have little or nothing to do with improving population health (15-18).

Since countries reaching the “completion point” (18, so far) have all complied with the requirements imposed by the IMF and World Bank in order to qualify for debt relief, addition of new conditions implies that these institutions are not prepared to give up control over the economic and social policies of recipient countries, opting instead for an even more aggressive agenda of forced integration into the global economy.  Finally, the Gleneagles Summit continued a long-standing refusal to address the question of whether ‘odious debts’ incurred by highly repressive or larcenous governments (e.g. those of Zaire under Mobutu, Kenya under Moi, South Africa pre-1994 and Nigeria pre-2002) should be regarded as uncollectible under international law (19,20).

 

Trade

A less visible but equally destructive failure involves trade.  The G8 insist that “drawing the poorest countries into the global economy is the surest way to address their fundamental aspirations” (21).  Development policy protagonists who disagree about much else agree on the need for improved market access for developing country exports: industrialized countries must lower trade barriers (14,22,23).  We nonetheless attach three cautions to this basic conclusion.  First, economic growth through raw commodity export has proved a dead-end for many developing countries, as well as a source of internal conflict over control of the resource exports (e.g. oil, gold, diamonds, other minerals).  The escalating tariffs many G8 countries retain on manufactured or value-added goods are particularly egregious in keeping such countries underdeveloped within a “primary commodity trap.”  This applies to agricultural products as well.  Second, national policies must ensure that historical gender, ethnic, cultural or class biases within developing countries that do increase their exports do not allow the benefits of export-led growth to accumulate in the hands of a few elite groups or companies.  Third, some small poor countries are net food importers, as production and export subsidies (eventually) decline in rich world exporting nations, compensatory payments will need to be made to poor food importers if they are unable to achieve domestic food self-sufficiency.  Two years have elapsed since industrialized country intransigence on this point led to the collapse of trade talks at Cancún.  Yet the G8 had nothing specific to offer beyond a vague promise to reduce or eliminate such subsidies “by a credible end date” (9). 

The irony is bitter because many developing countries have destroyed domestic industries, such as textiles and clothing in Zambia (24) and poultry in Ghana (25), by lowering trade barriers and accepting the resulting social dislocations as the price of global integration.  A recent study applied standard econometric modeling to the counterfactual:  What would economic growth have been in sub-Saharan Africa over the past 20 years had its countries not been forced to liberalize their economies by the IFIs and conditions attached to aid (26,27).  Based on results from a sample of 22 African countries, the study implies costs of roughly $272 billion – about the same amount the continent received in aid during this time.  According to Christian Aid, the organization that commissioned the study: “Effectively, this aid did no more than compensate African countries for the losses they sustained by meeting the conditions that were attached to the aid they received” (26, p. 2).

Recognition is growing among development policy specialists that developing countries need stronger “special and differential treatment” (SDT) provisions under trade treaties (28).  The UK Commission for Africa recommended a “development test” whereby a dispute over a developing country’s abrogation of trade treaty commitments could be screened to determine whether it was justified by domestic development goals: “This test would focus on the likely net effects of not implementing WTO rules in favour of more development orientated trade policy, and on negative spillovers, and would allow greater discussion of development concerns, rather than merely the implementation of the rule of law” (22, pp. 280-1). 

The G8 itself, as we noted earlier, claimed at Gleneagles that developing countries must “decide, plan and sequence their economic policies to fit with their own development strategies,” for which purpose easing trade treaty obligations and increasing their domestic policy flexibilities are essential.  Yet no reference was made to this need in the documents emerging from the Summit apart from a rather bland and arguably contradictory acknowledgement in the G8 Communiqué on Trade that there must be “appropriate flexibility” for least developed countries to “sequence their overall economic reforms in line with their country-led development programmes and their international obligations” (9).  G8 members are also reportedly reluctant to support strengthening special and differential treatment provisions in World Trade Organization negotiations (29).

 

Health systems 

African health systems are in crisis and in many countries are too weakened and fragmented to enable the scaling-up of potentially effective interventions (30).  This is illustrated by the fact that coverage with the 6 basic vaccines of childhood has stagnated in almost every region of the world since 1990, with Africa at a dismal 50 -60% (31), and is placed in stark relief by the urgent need to respond to the HIV/AIDS epidemic by providing treatment and care – much more complex operations than vaccination.

In the context of declining national health budgets, health sector reforms and the advent of “public-private partnerships” the past ten years has seen a massive growth of global programmes focused on specific diseases.  The largest of these – the Global Fund to Fight AIDS, Tuberculosis and Malaria (GFATM) and the Global Alliance on Vaccines and Immunisation (GAVI) – have billion dollar budgets and are major sources of health financing in the poorest countries.  Hence, perhaps the single most conspicuous failure of the G8 with respect to health system strengthening is the lack of new money for the GFATM, after it was hailed by the G8 in 2001 with rhetoric about “a quantum leap in the fight against infectious diseases.”  GFATM estimates that it will need US $7.1 billion in 2006 and 2007 to fund new proposals and continuations of existing work (32), against pledges of US $1.45 billion as of July 2005 (33) – and this $7.1 billion is considerably less than the annual budget recommended for the Fund by the Commission on Macroeconomics and Health (34).  The G8 said nothing at Gleneagles about this funding gap beyond a vague promise to “work to meet the financing needs for HIV/AIDS, including through the replenishment this year of the Global Fund” (10).

Many global programs are centred around providing funds for specific technical interventions such as new drugs and vaccines. The GFATM, for example, targets 49% of its expenditure on drugs and commodities, such as ARVs and new anti-malarials, but only 20% on human resources and training (35).  In the long term, countries themselves will be expected to pay for these inputs, resulting in a massive burden of recurrent expenditure on national budgets – without any corresponding long-term donor commitments.   Hence, above and beyond expanded support for programs like GFATM, there is a need – not addressed at Gleneagles – for mutli-year budget support for core health ministry programs.   Finally, the proliferation of funds and donor agencies is increasingly criticized for the competing reporting and staffing demands it places on recipient countries (36, 37).

The Gleneagles commitment to work towards the UN AIDS goal of ‘Three Ones’ – one national AIDS implementation agency, one national policy, one monitoring framework – is a positive sign, if honoured.  Yet it is substantially less ambitious than the recommendation of the UK Commission for Africa report that a “‘Fourth One,’ a single pooled fund, should also be pursued” (38, p. 198) for AIDS funding.  This strategy, if applied more broadly to health development assistance, might begin to decouple aid from the strategic, economic or ideological interests of the donor country and allow greater recipient country control of aid, with disbursements allocated more by health need and local health system requirements.  Even under the best of circumstances, though, disease-specific initiatives reinforce the notion that diseases are unfortunate, random occurrences, and allow us to turn a blind eye to the global political and economic conditions that underlie the desperate poverty and ill-health that is so widespread in Africa (39).

 

What to expect from the G8?

Can, or should, the G8 play a leadership role in development and global health?  It originated after a series of economic crises in the 1970s as an effort to restore the profitability of private investment by coordinating macroeconomic policy (40) – what political scientist Stephen Gill calls “part of an attempt to institutionalize a new form of transnational capitalist hegemony, and to reinforce the power of certain social forces within an emergent transnational civil society” (41, p. 131).  Against this background, perhaps the single most disturbing statement from Gleneagles was:  “Further progress in Africa depends above all on its own leaders and its own people” (10).

This can be read as a welcome retreat from paternalism, including the paternalism embodied in the celebrity-backed concert series leading up to the Summit.  As African Business pointed out, the biggest gainers from that exercise were aging rockers “whose careers were raised from the dead” (1).  On the other hand, the Gleneagles statement about “further progress” abdicates responsibility for the damaging legacy of colonialism (22,38), and for subsequent obstacles to improving population health in the developing world created by market-oriented economic policies promoted by the G8.  Those policies were backed up both by conditions attached to loans from the World Bank and IMF, and by the ‘softer’ conditionality of creating an investor-friendly environment in an era of hypermobile capital (5,15,23,42,43).   Gleneagles may set a precedent in terms of the G8’s debt and aid promises, which demand critical evaluation and careful monitoring – especially since $12.3 billion of commitments under the existing enhanced HIPC initiative remain unfunded (9, p. 146).  Even if the G8 live up to the new commitments, and can bring the needed pressure to bear on private sector creditors and non-G8 members, in too many other areas Gleneagles continues past years’ pattern of Fatal Indifference (23).  

 

Ronald Labonte [Corresponding Author], Canada Research Chair, Contemporary Globalization/Health Equity, Institute of Population Health, University of Ottawa, 1 Stewart Street, Ottawa, Ontario K1N 6N5, Tel. +1 (613) 562 5800 x 2288  Fax  +1 (613) 562 5659, rlabonte@uottawa.ca

Ted Schrecker, Scientist, Department of Epidemiology and Community Medicine, Institute of Population Health, University of Ottawa, 1 Stewart Street, Ottawa, Ontario K1N 6N5, Tel. +1 (613) 562 5800 x 2289  Fax  +1 (613) 562 5659, tschreck@uottawa.ca

David Sanders, Director, School of Public Health, University of the Western Cape, Private Bag X17, Bellville, 7535, South Africa, Tel. +27 21 959 2809   Fax +27 21 959 2872, lmartin@uwc.ac.za

Based on a paper presented at the Global Forum for Health Research, Mumbai, India, September 12-16, 2005.

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