HALIFAX (CP) - A Canadian-brokered deal has helped to free up billions of dollars in international aid to flow to the poorest of the world's poor, Finance Minister John Manley said Saturday.
Development aid dominated the final meetings of a two-day session of the G-7 finance ministers as they drafted the fiscal blueprint for their leaders' summit at month-end, Manley told reporters. Encouraging global economic growth while giving a hand-up to the world's poorest countries is the best way to fight terrorism, the minister explained at a closing news conference.
"If you want to live in a world of peace, we have to confront a world of need," said Manley, who is also deputy prime minister.
Capping the G-7 session - which drew several hundred protesters banging drums and waving banners - was the deal to replenish the International Development Association (IDA) fund.
The crowd, bearing such diverse signs as Long Live Palestine and Dissent is Not A Crime, scattered when heavily armed police threw several tear gas canisters.
Police dogs barked frantically as masked protesters approached the security line, taunting police officers. One protester was arrested while another was injured when two officers charged out of the police line.
But inside, the finance ministers focused on debt relief and aid programs to pass on to their leaders for the G-8 meeting June 26-27 in Kananaskis, on the eastern slopes of Alberta's Rocky Mountains.
Canadian officials were able to breach a gap that had developed between the United States and Europe over whether about $22 billion US in IDA should be distributed to the world's poorest states primarily as grants or as loans.
The resolution?
About 20 per cent will soon be granted without repayment for social programs such as health, clean water and education plans - a smaller percentage than the U.S. wanted but more than Europe proposed.
"This is a Canadian initiative," Manley said in French.
While the deal must still be approved by other donor countries - which number about 40 - the endorsement of the seven biggest industrialized states at this meeting means the money should soon begin to flow, officials said.
That includes about $700 million Cdn, or roughly four per cent of the total program, making Canada one of the biggest donors when measured as a percentage of its economy.
"This is a victory for poor nations around the world," said U.S. Secretary Paul O'Neill, who recently visited some of Africa's least developed states.
"By moving from loans to grants, we can prevent the poorest nations from building up suffocating debt and we can avoid the next generation of debt relief."
Improving aid to Africa, the continent home to 22 of the world's 26 most Heavily Indebted Poor Countries (HIPC), was important to discuss because it will be the centre-piece of the next leaders' summit, said Manley.
"We will put a blueprint together for the leaders to consider in Kananaskis."
The rookie finance minister, who has been in the job only two weeks, insisted there were no transition problems as he replaced former finance minister Paul Martin as chairman of the G-7 sessions.
"Ministers come and go and the work goes on," said Manley.
"I may look like a rookie to you, but I've got a little bit of experience."
Ministers also discussed ways to continue pressuring creditors to cut the debt of the world's most heavily indebted poor countries.
Debt relief goes hand in hand with development aid, said Manley.
"It's not simply enough to forgive debt if the poorest countries still do not have the revenues to sustain their own fiscal situation," said Manley.
"You don't create (economic) sustainability just by eliminating debt."
Manley used the session, which opened Friday, as a platform to launch an attack on the newest U.S. farm subsidy program, which will offer $190 billion over 10 years to American producers.
Manley said those subsidies will not only distort trade but may even encourage terrorism by making it uneconomical for countries like Afghanistan to switch to food crops from growing poppies used to make illegal drugs.
O'Neill responded by suggesting the farm subsidies were approved by the U.S. Congress - and not by him, Manley said Saturday.
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