DEBT RELIEF: The meeting between Bush and Blair does not resolve difficulties over aid, write Chris Giles and Alan Beattie
Big differences still exist among rich countries on debt relief and aid to Africa even after President Bush and Tony Blairsaid in Washington on Tuesday that the US and Britain were close to a deal.
As the finance ministers of the Group of Seven leading industrialised nations prepare for a meeting in London this weekend, two opposing views have emerged on relieving debt which is owed to multilateral organisations. The G7 countries are also still following separate agendas on increasing development aid.
The Gleneagles G8 summit - the G7 plus Russia - on July 7th and 8th in Scotland threatens to be a damp squib or to end without agreement if common cause cannot be found at the meeting this weekend.
A Downing Street official privately admitted that the British government faced an uphill battle in securing agreement.
On debts owed to the World Bank and the African Development Bank, senior officials in two G7 countries have said that two views had emerged within the group of rich countries.
The US, Britain and Canada had largely resolved their differences and now supported immediate cancellation of debts owed.Under this plan, rich countries would compensate the two international organisations as the payments from heavily indebted African countries became due.
It is unlikely the US would need to seek congressional approval for these payments, debt campaigners said yesterday, because it planned to take advantage of unused disbursements already approved by Congress. However the lack of new money disappointed aid activists.
"This is redistribution from the poor to the poorest," said Gail Hurley of the European Network on Debt and Development.
Agreement on the cancellation of International Monetary Fund debts is more distant as Randal Quarles, the US assistant secretary for international affairs, repeated the US administration's opposition to gold sales to fund IMF debt relief on Tuesday.
The other camp within the G7, comprising France, Germany and Japan, seeks much more limited debt relief only if a heavily indebted African country was unable to sustain its debts to multilateral organisations.
According to Eurodad, a network of 48 non-governmental development organisations, this plan would provide temporary debt relief only to five countries: Mauritania, Mali, Niger, Ethiopia and Guyana.
Refusing to make any new pledges while meeting Mr Blair, Mr Bush said: "Over the past four years, we have tripled our assistance to sub-Sahara Africa."
Japan is committed to doubling its aid to Africa, although from a very low level.
Canada is in a similar position, although it devotes a considerably higher share of its national income to aid than either the US or Japan.
European governments have made a commitment to double aid by 2010, but doubts remain as to whether these commitments will be met, given the budgetary difficulties of many continental European economies.