LONDON: It will be this year’s first international test of commitment by the world’s richest countries towards helping poorer nations. When finance ministers from the G7 wealthiest countries meet in Ottawa on Feb 8-9, development aid will be a key issue on the agenda.

But optimism that a major aid effort would be launched to cut world poverty in half by 2015 has been effectively scuppered by the US refusal to accept the need for a huge cash injection for the poorest countries.

In the aftermath of the Sept 11 terrorist attacks on Washington and New York, there is little sign of a burst of generosity from President George W Bush’s administration. The US stance is at odds with its G7 partners who accept the urgent need for increased aid, despite an economic slowdown that is putting pressure on government budgets worldwide.

The differences have led to “undignified squabbling over policy and penny-pinching over aid (which) do not augur well for the prospect of building a new compact with the developing world,” as London’s Financial Times editorialised.

In Ottawa, US Treasury Secretary Paul O’Neill is expected to make it clear to his fellow G7 finance ministers that the aid path is not one the US intends to follow. He already underlined this position at last November’s World Bank-IMF meetings.

“The world has spent an enormous amount in the name of development without much success,” O’Neill said.

The US position is a rejection of calls by both British Chancellor Gordon Brown and UN Secretary-General Kofi Annan to double aid flows - an annual $50 billion increase - to developing countries to achieve the UN goal of halving global poverty by 2015.

The US and Europe have also disagreed while negotiating a draft agreement for the UN Conference for Financing and Development, scheduled for March 18-22 in Monterrey, Mexico. The US argues that the UN aid target of 0.7 per cent of GNP, set in 1969, is outdated. Currently, the budget for Official Development Assistance (ODA) from all government donors is some $50 billion a year.

“Throughout all the negotiations to reach a draft text for Mexico the only issue on which the US and the EU totally differed was on the 0.7 per cent target for ODA,” said Belen Vazquez, from the NGO ActionAid. “The US has never endorsed the target therefore it is completely irrelevant to their aid policy.”

Instead of increasing aid, the US wants the conference to focus on how poor countries can improve their economic performance through freer markets.

The discord over aid policy comes when the need for action is paramount. A recent World Bank study highlights the staggering increase in global inequality. Research by senior World Bank economist Branko Milanovic, published on Jan 18 in the Economic Journal, says the world’s richest 50 million people earn as much as the poorest three billion. Americans are still better off in money terms than two-thirds of the world’s population.

The US aims to convince finance ministers in Ottawa that a G7 aid policy needs to be performance-related. Washington insists that development assistance be focussed on measurable results as a pre-condition for increasing aid.

“It seems the US will only tolerate multilateralism a la carte and development, global distribution and the interests of the poor are now off the menu,” says Henry Northover of the British-based Catholic Agency for Overseas Development.

In opposition to the US, Britain has taken the lead in advocating increased aid. Britain’s priority is Africa, described by Prime Minister Tony Blair as “a scar on the conscience of the world”. In a January visit to the continent, British Foreign Minister Jack Straw said: “Africa matters. It matters if you want to produce a stable world. You can’t have four continents going forward and one going backwards.”

If the UN targets set in 2000 are to be met the poorest countries require a substantial injection of increased aid. With the US unwilling to increase aid, prospects of a major new aid initiative emanating from Ottawa are bleak. —Gemini News