The United States unexpectedly poured cold water on Friday over British hopes for a bold Group of Seven (G7) initiative to increase aid flows to the world’s poorest countries.
Despite attempts by British Chancellor Gordon Brown to woo Washington over fresh financial help for Africa, the US delegation to Saturday’s meeting of finance ministers in London bluntly rejected both of the chancellor’s principal ideas.
Germany, however, backed Brown and said it will propose slapping a Europe-wide tax on airline fuel as a way to finance increased help for the developing world.
Brown had made it clear earlier this week that he and ministers from other European countries will use this weekend’s meeting of the G7 leading economies to pressure the US to back a novel financing plan that would essentially bring forward aid flows in an attempt to meet the United Nations’s Millennium Development Goals by 2015.
Brown’s scheme, known as the international financing facility (IFF), would involve the selling of bonds on international markets, which would then be paid back out of future aid budgets. The chancellor hopes to raise up to $100-billion over the next decade.
But arriving in London, the US Treasury Undersecretary, John Taylor, was dismissive: ”Not only does the IFF not work for the US, we don’t need the IFF.”
He also said he was ”not convinced” by Brown’s other proposal — that the International Monetary Fund (IMF) revalue some of its huge gold reserves to today’s prices as a way of allowing some poor countries’ debts to be written off its balance sheet.
EU trade commissioner Peter Mandelson, speaking on BBC2’s Newsnight, said: ”It’s discouraging for all of us who support that proposal — which I do — but it doesn’t mean to say that’s the end of it. Just because the Americans choose not to sign up to it, it doesn’t mean the rest of us shouldn’t either.”
British Treasury officials said Taylor’s position is not new.
”We will continue working with the US administration to see how the IFF could be adapted to their needs,” the Treasury said.
Taylor stressed that the US government does not object to Britain and its European neighbours going ahead with the IFF if they want to.
But the US, while wanting to improve the debt and aid position of poor countries, feels its own approach — involving the complete write-off of poor countries’ debts to multilateral institutions and the use of development grants rather than loans — is the right way to go.
”That’s a proposal we could start with on Monday morning” Taylor said.
The hard-line American approach increases the chances that Brown’s IFF will eventually be what officials are privately calling a ”coalition of the willing”. But British sources say they hope the US can still be talked round.
Brown can at least console himself that support is growing within Europe. The German Finance Minister, Hans Eichel, told The Guardian newspaper on Friday that Germany is in principle in favour of both the IFF and the IMF gold sales plan.
But, reluctant to take on further debt, Eichel said he will propose that the IFF be backed by the airline fuel tax. Jet fuel is currently untaxed, much to the annoyance of environmentalists who say a tax regime could help curb global warming.
The US government is opposed to an airline fuel tax; the Treasury said it does not rule out the idea. — Guardian Unlimited Â