Britain Faces Resistance to African Aid Plan

British Finance Minister Gordon Brown, who toured Africa last month, wants to use a year-long leadership of the Group of Eight rich nations to secure commitments to pull Africa out of disease and poverty and ensure that the UN goal of halving world poverty by 2015 is met.

Brown is expected to address the issue when he hosts talks with industrial and emerging market nations later this week.

With the support of Prime Minister Tony Blair, Brown is advocating an International Finance Facility (IFF) in which G8 countries would pay up to an additional $100 billion (€77 billion) a year in development assistance between now and 2015. G8 countries would pay into the fund by issuing bonds using long-term commitments as collateral.

Britain has already pledged an extra $188.5 million a year to write off the debts of some 30 poor countries to the World Bank and the African Development Bank. Brown now wants other rich countries to follow suit.

He has also proposed writing off multilateral debt of the poorest nations using money raised by revaluing the International Monetary Fund's gold reserves at its current market price.

In return, poor nations would promise to step up the fight against corruption and thus ensure that the increased development aid would be used better.

Germany welcomes plan

European countries have largely welcomed Britain's proposals to help alleviate Third World poverty.

German Development Minister Heidemarie Wieczorek-Zeul said last week that in the face of the dramatic rise in AIDS in Africa, industrial nations had to provide support that was "permanent and sustainable."

Wieczorek-Zeul pointed out that increased financial aid to fight poverty would "really contribute" towards protecting more people from AIDS and offering them a new perspective.

In an interview with British newspaper The Guardian, Wieczorek-Zeul called the British proposal "worth supporting" and said rich industrial nations had to increase their development aid budgets.

At the same time Wieczorek-Zeul pointed out that debt relief couldn't be the only answer to solve African problems. "The decisive motor for development is free trade," the minister said, adding that subsidies for European and American products had to be dismantled in order to give African goods a fair chance.

Doubts remain

Other European nations including France and Italy have also signed up to Britain's proposal of writing off third-world debt.

However, doubts still persist. Paris is reportedly worried that governments with budget deficits will end up supporting other long-term projects so as to repay the billions borrowed.

"The IFF is a major lever but how do you pay the money back?" one French official told Reuters. "If it's from national budgets that stops flows of new money (in aid to Africa), or else it's revenues from an international tax."

France wants London and others to back President Jacques Chirac's proposal for an international tax on financial transactions or items such as airline tickets to ensure funding to fight AIDS and for long-term development aid.

US and Japan tough to convince

But the tougher task for Britain will be convincing rich nations such beyond Europe to come on board.

"Discussions continue with Japan, Canada and the US, who are looking at the options," a British treasury official told Reuters.

So far, Tokyo has shown little enthusiasm for the British proposal, while US President Bush is said to be too preoccupied with Iraq and a growing budget deficit to dwell on Africa.

Figures show the US spent just 0.15 percent of its gross national income on foreign aid in 2003, the lowest of the G7 countries.