Third World is given vague pledge on debt
Group of Seven summit: Leaders agree to work on increasing relief for poorest countries but skate over detail
Saturday 29 June 1996
But the two decisions, contained in the economic communique presented by President Jacques Chirac of France on behalf of the Group of Seven industrialised countries meeting at their annual summit in Lyon, were couched in general terms and skated over important points of disagreement.
The prominent place given to development aid and debt in the communique satisfied the desire of the host country, France, and Japan to focus attention on help for the least developed countries. Britain and the US were also satisfied by the emphasis on assistance linked to the development of free market economies and encouragement for private enterprise and the exercise of financial discipline, which accompanied every mention of aid.
The G7 also set out a series of proposals for reforming and rationalising UN organisations connected with foreign aid, including the appointment of a single under secretary-general to handle development. The move seemed intended to sideline a dispute between the US and European countries about whether the current UN secretary-general, Boutros Boutros-Ghali, should serve a second term.
A key point of discord in preparation for the summit, however, the question of whether the IMF should sell a small part of its gold reserves to fund additional debt relief, was referred to only obliquely - and immediately interpreted differently by several of the participants. The communique said only that "If needed, the IMF should consider optimising its reserves management" to help finance the debt relief programme.
A later paragraph said that the G7 welcomed the World Bank undertaking to commit $500m to increasing debt relief and would support and work together for an overall World Bank contribution of the order of $2bn.
The American treasury secretary, Robert Rubin, interpreted this as meaning that $2bn worth of gold reserves would be sold. The British Chancellor, Kenneth Clarke, also indicated that gold sales were likely. Germany - whose finance minister, Theo Waigel, failed to turn up for yesterday's meetings because his plane broke down - had stood out against any gold sales, and reportedly brought Italy and Japan over to its side. Britain and France had proposed a compromise solution under which the proceeds of the gold sales would be invested to ensure they retained their value.
Compromise was also the order of the day on the other big controversy that has dogged the economic half of the summit: the new US Helms-Burton law that punishes companies and individuals for trading with Cuba. The fact that the law applies not just to US concerns but foreign ones as well has prompted fierce condemnation and charges of extra-territorial interference from European and Canada.
Yesterday's communique pleased Washington by avoiding any specific mention either of the US or Helms-Burton, but issued what the EU officials described as a firm reprimand to the US.
Separately, Russia's long-standing hopes of joining the Group of Seven receded yesterday when President Chirac said the G7 was essentially an economic grouping "which is used to working together" and Russia's economy did not meet the requirements for membership. Mr Chirac was speaking soon after the arrival of the Russian prime minister, Viktor Chernomyrdin, to take part in the second part of the summit, which is devoted to political issues, including Bosnia.
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