The carnival that became a riot chose the right target

Our financial support for the Third World should be much more generous than it is at present

"THE G8 meeting is coming up soon - time for a riot." Shrewd thinking by the lobby groups demanding cancellation of Third World debt. In fairness I should substitute "demo" for riot; I don't believe the main sponsors of the Carnival Against Capitalism, which erupted in the City of London on Friday, wanted the day to end in violence with 50 people taken to hospital and 15 arrests. All the same their protest was well-timed.

For the strange dynamic of the meeting of the leaders of the seven largest industrialised nations of the world, plus Russia, is that, despite months of careful preparation on a whole host of subjects and the writing of draft communiques, the presidents and prime ministers always end up by spending most of their time discussing the latest international events or whatever is shoved under their noses. Kosovo is the event, and debt reduction is what protesters - last year and this - have forced them to contemplate.

Good tactics too was the decision by the lobby groups to use the most advanced products of the very global capitalism against which their protests are directed - the Internet and the mobile phone. Young demonstrators, often students, have easy access to the Internet, if not through their own computers, then by means of Internet cafes and college facilities. The organisers' website (www.june18.org) provided information on where and when protesters should assemble in central London, and it provided a map.

The campaign is also international. For this purpose, the Internet is ideal. It takes no sides. Nor is using it for arranging marches and demonstrations in any way sinister, as the police seem to believe. It just happens to be as good at creating international solidarity as it is for buying and selling shares, or purchasing cheap airline tickets. As for the mobile phone, it provides demonstrators with a communications network as good as that used by the police.

Serious in intent as Friday's event may have been, there were many anarchic and even hilarious features. Two militant pro-cycling groups were present - Reclaim the Streets and Critical Mass. It began with massed ranks of cyclists bringing the traffic to a halt. During the good humoured phase, it was like Glastonbury come to the City. Lloyds Bank was invaded by protesters covered in "blood", claiming to have been shot by arms dealers.

When crowds began jeering in front of "morally and politically incorrect" institutions, workers in the City responded by waving their gold Amex cards from the windows; by tearing up pounds 5 notes before letting the pieces flutter down to the street below, and by pointing to their expensive Rolex watches.

This was a stand-off, but debt relief itself is always a transaction. It is not really a gift made by the rich countries to the poor, but rather a series of carefully calculated concessions by both sides. It has to be like this, if only because many millions of dollars borrowed from the West have been wasted by corrupt rulers.

So the basis of the deal is this. We, the First World nations, will write off a chunk of your debt - which is probably never going to be repaid anyway - if you, the poor countries, will play by our rules, which are the policies and regulations of global capitalism. You must keep the proceeds of debt relief (such as interest saved) in special accounts so that we can monitor how you use them; your economic policy must reflect what the International Monetary Fund advises, and you must be ready to open up your markets according to the rules devised by the World Trade Organisation.

The figures announced by the world leaders in Cologne were eye catching. The total package amounts to $100bn of "faster, deeper, broader, debt relief". This comprises $50bn in debt written off; a further $39bn for countries qualifying for debt relief, plus an additional $20bn in overseas development aid. Some 35 countries will now qualify, compared with 29 countries previously.

What does it mean in practice? Mozambique may be as good an example as any: instead of paying $98m a year in debt servicing charges, it will now have to find $73m.

It is - as the leaders of the campaign for cancelling Third World debt admitted when they heard the news - a substantial step forward. Their instant, and probably correct judgement, was that it represented about half of what they'd hoped to achieve.

What would be a reasonable outcome? Let us start with the nature of capitalism itself at the end of the 20th century. With its emphasis upon reducing or removing all barriers to trade, even trying to stop governments from favouring national suppliers, and with its emphasis upon lean efficiency in the use and payment of labour, it is at once an effective creator of wealth and a cause of ever expanding disparities between rich and poor; between the well-educated and the ignorant; between the beneficiaries of the revolution in information technology, and those without means of participating, and between, finally, the First World and the Third World.

This is why redistribution of wealth should be a feature of the international trading system. This has traditionally taken the form of aid, with a target of a modest 0.7 per cent of the national wealth of the rich countries set by the United Nations. Only the Scandinavian states, the Netherlands and Canada come close to this target. The UK's ratio is a mean looking 0.3 per cent and the US spends less than a miserly 0.1 per cent.

Debt relief can be used creatively if it allows increased resources to be focused on anti-poverty programmes such as health and education. It is not a species of neo-colonialism to insist that Third World countries account for how they use the money saved. Aid and the resources of international institutions, such as the World Bank and the IMF, can also be applied imaginatively so that there is more focus on supporting small-scale economic developments as well as financing large scale public works, too many of which in the past have turned out to be misconceived.

However, I think that the basis deal will always be this. The more you, the Third World, engage in Western style capitalism and democracy, the more help we, the First World, will provide. But our support should be on a much more generous scale than it is at present.