A group of small EU countries are seeking to water down some of the key proposals agreed last week by G8 leaders in Gleneagles, leaked documents have revealed.
The documents, which were obtained by the Jubilee Debt Campaign group, showed that Belgium was leading an initiative that would make it more difficult for 18 of the world’s poorest countries to be granted 100% debt relief.
But Britain on Friday warned its European partners that they face a ”moral” obligation to stand by commitments to cancel the debt of some of the world’s poorest countries.
”We are absolutely bullish in our belief that that there is no unravelling of the agreements entered into,” the Treasury minister, Ivan Lewis, told a meeting of EU finance ministers in Brussels.
Under the deal brokered by Tony Blair at last week’s G8 summit 18 of the world’s poorest countries on the HIPC list — highly indebted poor countries — which have met debt relief criteria in the past will have 100% of their debt cancelled. Debts to the World Bank and the African Development Bank will be funded by the G8 countries, while debts to the International Monetary Fund will be met from ”existing IMF resources”.
But Belgium, Austria and Luxembourg are arguing that the IMF should still exercise strict controls over the 18 countries by being given the right to approve key economic policies.
The proposal was made by Willy Kiekens, the Belgian representative on the IMF’s executive board, at a meeting on June 22 after G8 finance ministers had approved the 100% debt cancellation deal.
Calling for debt relief to be phased in over time, Mr Kiekens said it would enable the fund ”to continue having active policy dialogues with poor countries, monitor their policies closely and provide financial support in a phased manner and on condition of the implementation of adequate policies”.
Debt campaigners reacted furiously to the Belgian proposal — known as ”conditionality” — which could force the 18 countries to introduce structural reforms such as privatisation and liberalising trade policies.
Stephen Rand, co-chair of the Jubilee Debt Campaign, said: ”These proposals are in direct contradiction of what millions of campaigners and more importantly people who were poor were told by the G8.
”The response of the African delegates at the IMF [who placed their concerns on the record at the meeting] will be amplified around the world by the outrage, anger and disgust at the west that this betrayal will prompt if the G8 let it happen.”
Martin Powell, of the World Development Movement, said: ”The G8 controls the IMF, and nothing can pass there without their support. If this proposal goes ahead the G8 will be responsible for the greatest political betrayal in the history of their meetings. The one redeeming feature of an otherwise woefully inadequate debt deal will have been lost.”
Britain, which was widely praised for championing the debt initiative, made clear on Friday it would oppose any attempts to dilute the Gleneagles deal.
Lewis said in Brussels that Tony Blair and Gordon Brown, the chancellor, had shown ”moral leadership” which must not be undermined.
He added: ”It is our belief that nations signed up to commitments in good faith and we want to honour them. We reaffirm our commitment to act at the EU level and also on the agreement signed by the G8.” – Guardian Unlimited Â