Developed world's lack of focus regarding development agenda

The first such Summit was held in Rambouillet, France in 1975. It was attended at that time by leaders of the five largest economies in the world -- the United States, Japan, Germany, France and the United Kingdom. The leaders of the time wanted to remove themselves from the immediate pressures at home and spend a day or two discussion -- informally and face to face -- the important issues confronting the world.

The leaders at that time met in the shadow of a world economy characterised by stagnation and high inflation, a situation which subsequently led to the coining of a new word "stagflation." The leaders were greatly concerned with the need to jump-start the economies of Germany and Japan and reflate them in order to pull the world out of recession. One has to agree that they had some success in this experiment in Keynesinanism on a global scale. Their successor in the 1980s, through the Lourve and Plaza accords, continued their interest in economics. They attempted to deal with the wild gyrations on the foreign exchangers that had by then become disruptive. In this, they met with some modest success.

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In principle, over nearly thirty years, these leaders focussed on matters that were not capable of easy resolution through the established international organisations.

In recent times, the cosy group has grown to include Canada, Italy and Russia and for the purpose of brevity calls itself G-8. This year in Evian, they were joined by the President of the European commission, the president of the European council and several heads of developing nations. The idea behind the expansion in attendance was probably to focus more on important issues facing the developing world. Sadly, to the disappointment of most analysts, the attention appears to have been paid more on body language and their psychological meanings rather than important economic issues.

We are constantly being reminded that the problems of Africa and the Least Developed Countries are complex. It is also sometimes hinted that they are 'insoluble'. Yes, it is difficult, but now is the hour for the developed world to step forward and have the courage to take bold action. We need to bear in mind that about a billion people are living on less than $ 1 a day and that 50 million people go to bed hungry every night.

The developing world expected that this time in Evian the leaders would be able to seriously consider a simple life-saving but costless political act. Oxfam has drawn the attention of the world to an important aspect. Very correctly they have pointed out that the G-8 should have decided to end the subsidies that they dole out to farmers in the developed world. Several economists have pointed out that these agricultural subsidies are crippling the lower end of the developing world.

The United States, for example, will pay out $ 182.8 billion to American farmers in the next decade, while poorer nations can hardly afford to pay anything to theirs. This is particularly true of Africa. Yet, Africa's agricultural products are expected to compete against those from the developed world. Farm products from the poorer world can never catch up.

The cannot add the value of subsidy needed just to get to the same starting place as the products from developed countries. This criticism is not only aimed at the United States but also against the European Union and their Common Agricultural Policy that lavishes more the $ 40 billion on its farmers each year.

It is true that under the Everything But Arms formula the EU has permitted LDCs to export their products into the EU on a duty-free and quota-free basis, but the holding back of facilities for export of sugar is hurting some of the poorer African economies. This, for example is affecting Mozambique and is roughly costing them about $ 100 million a year in lost exports -- a considerable amount for a developing country.

The presence of the developing world leaders led some to believe that for a change, after Iraq and Afghanistan, the developed world leaders would focus on this detrimental question of subsidies, so that developing countries meeting later this year in Cancun could have some encouragement. They have been sorely disappointed.

We should not forget that as a consequence of the anti-globalization protests that took place in Seattle in 1999, developing nations were led to believe that developed nations would find a framework to reduce agricultural subsidies substantially in the next few years. This was all supposed to be put into writing in Cancun, Mexico, in September.

Regrettably, the timetables put in place at Doha for finding ways to dismantle the developed world's discriminatory subsidies are being allowed to fall apart. The G-8 made no progress in trade issues at all. This is disappointing, given the fact that the French had tried to take a positive step earlier this year Mr Chirac at that time astonished the leaders of poor countries when he reversed a long standing French position and offered to ditch export guarantees. This minor bit of accounting was indeed a important step, given the fact that Europeans actually pay export guarantees to their farmers as an extra fee to help them push their products on to other countries. It would be worthwhile to note here that the Americans have yet to even consider such a move.

Lack of any effort in Evian significantly reduces the chance for any meaningful agreement in Cancun.

One is tempted in this context to wonder why developed countries do not follow the example set by New Zealand. That country has shifted from a heavily subsidised agricultural sector to one which pays for itself. Their farming sector has, as a result, never been stronger. Johann Hari writing in the 'Independent' published from London has wisely suggested that 'American and European farmers would be better off (and have a clearer conscience) if they imitated their New Zealand cousins and became a proper, professional industry.'

The G-8 Summit dealt with may political issues but neglected some economic aspects that are worrying the rest of the world. The challenges being faced by the global economy, the slowing down of growth, serious imbalances in the economic markets in Europe, the USA and the Far East were not addressed effectively. The Evian Summit offered little in the way of co-ordinated action with regard to such areas.

However, some aspects of the social agenda were tackled (HIV/Aids) and for that the meeting was a step forward. One might not agree with some of the decisions adopted by the leaders regarding economic elements in their agenda, but the fact that they sat down and discussed issues was noteworthy. Chancellor Schroder's comment towards the end of the meeting was interesting. It signified a new beginning when he mentioned that "it was clear that the past has not disappeared, but it is behind us." There is hope for the poorer developing nations in such a scenario.

One can only hope that the coming months will see greater effort towards compromise among G-8 countries on issues like cheaper medicines for the developing world and progress on improving water supplies in resource-starved countries. The Summit has seen repetitions of already diluted commitments given at previous Summits, but the more important thing is that the Summit has taken place despite the poisonous clouds lingering from the Iraq crisis. In this, we must thank God for small mercies.

I cannot conclude however without raising an important question -- as to whether the time is right to bring China into a Group of Nine. One needs to remember that China exports more manufactured goods than Canada, Italy or Russia. It has started a space programme to put a man on the moon. Its biotechnology research is also superb. If one values China's economy using the purchasing power parity approach, the 'it is already easily the biggest economy outside the United States' China has exhibited great maturity and responsibility in recent years on a number of wide-ranging issues ranging from trade to terror. It has also shown great leadership on resolving the North Korean crisis. China from all senses of the term is far too important to leave out in the cold.

Muhammad Zamir is a former Secretary and Ambassador.