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Opinion: Fighting Poverty Needs More than Debt Relief

Even as G8 finance ministers celebrate their pivotal decision to write off the debts of the world's poorest countries, Deutsche Welle's Ute Schaeffer writes that the move alone isn't enough to combat poverty.

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Slashing of debts is hoped to contribute towards reducing poverty

"A historic decision," the "biggest debt relief program that the world has ever seen" and "a success for the world": Finance ministers of the world's leading industrialized nations and Russia (G8) were reaching for superlatives after Saturday's decision to write off debts of 38 countries in Africa and Latin America, amounting to a whopping $55 billion. Eighteen countries will immediately have their debt burdens cancelled, while 20 more are expected to profit from it later.

Tony Blair zu Schuldenerlass

Britain's Prime Minister Tony Blair, left, addresses global business leaders at Downing Street, London, Thursday June 9, 2005, ahead of the G8 summit.

The decision is a show of strength for the G8 and yet it can at best be only a small step to achieve the millennium development goals. At the same time, Tony Blair and the British presidency of the G8 have managed to defy the doomsayers and get the first part of their ambitious "Marshall Plan for Africa" on the road: canceling out debts for the world's most impoverished countries.

The right countries promoted

It is good and right that among the countries that are set to profit from the debt relief program are those who have stood out in past years for good governance and whose leaders ensured that development aid and debt relief have directly reached their people.

They invested in infrastructure and education and made efforts to improve the health situation in their countries and thus raised the living standards of their citizens. After all, debt relief does create new life opportunities if it's supported by the political elite -- in Africa that is the case in countries such as Mali, Benin, Senegal and particularly Mozambique, a showcase nation.

SOS Kinderdorf in Gambia

Orphaned children from The Gambia write on a blackboard in a school at the SOS Childrens village in Bakoteh, Gambia.

Elsewhere, such as in Uganda, four million more children go to school today thanks to prior initiatives to reduce debt; 31,000 new classrooms and 18,000 new teachers are in place in Tanzania and half a million children have been vaccinated against tetanus and diphtheria in Mozambique.

New demands on struggling European nations

Despite those staggering statistics, it all seems like a mere drop in the ocean when one takes a look at the huge goals that the United Nations set itself in its jubilee year in 2000, such as halving world poverty. The UN also wants to accelerate the education and development chances of the world's poorest by 2015 in spite of continuing population growth.

That means the goal has actually grown larger ever since it was declared -- and the current G8 decision also shows that world politics has set itself an ambitious and tight deadline despite floundering economic conditions in a row of rich donor nations. Whether it's France or Germany -- European economies are, first and foremost, battling their own weaknesses. In the face of dwindling finances, it's domestic politics and social problems that set the agenda and influence public opinion in these countries.

The recent G8 decision means that these countries will definitely face new demands in the coming years: Germany will be expected to shell out up to €150 million in the next three years and up to €950 million in the next ten. Although it will put a strain on the economy, it was a decision the German finance minister probably agreed to because it's unlikely that he will have to finance the implementation of the G8 goal after the snap federal election in Germany in September given that the ruling coalition looks set to lose to the conservative opposition.

Need to go beyond debt relief

But, debt relief isn't all when it comes to combating poverty. The recently declared Marshall Plan for Africa goes much beyond that -- it foresees a sharp increase in development aid up to 0.7 percent of GDP of the industrialized nations. Today, that share hovers at around 0.4 percent among European states.

Bio-Bananen aus fairem Handel im Supermarkt-Regal

The TransFair seal on bananas

But, most importantly -- and this is where the key for the reduction of poverty lies -- permanent development can only arise when the poorest countries also have access to the world's markets and when tea, coffee, cotton, sugar or corn can be sold worldwide without duties and other trade barriers. Skeptics go as far as to suggest that if the current round of Doha talks at the World Trade Organization fail to achieve a real opening of the markets, then the millennium goals of the UN are doomed.

So far, the millennium goals have helped to make it clear that battling poverty is a responsibility for all fields of politics, they've also managed to attract public interest in the topic, which slipped too often off the agenda of international institutions.

Even the G8 finance ministers know too well: fighting poverty counts just as much as drafting security measures and is thus not just a policy for the poor but also an important political goal for the donor nations.

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