The President left this morning for a nine-day trip to Europe.
Q: Where is he going?
The G-8 meetings are Wednesday, Thursday, and Friday. There will actually be three groups of leaders meeting:
- G-8 leaders: Canada, France, Germany, Italy, Japan, Russia, U.K., USA
- G-8 + 5, where the + 5 are large developing economies: Brazil, China, India, Mexico, and South Africa
- G-8 + some key African leaders: Algeria, Egypt, Nigeria, Senegal, and South Africa.
Quiz: Name all the leaders in each group. (Answer is at the bottom.)
The themes of the G-8 meeting are Growth and Responsibility. As part of the lead-up to this meeting, the President rolled out four major initiatives last week:
- tightening economic sanctions against the Sudan and imposing additional sanctions, to address the ongoing genocide in Darfur;
- a proposed doubling of the American $15 B spending commitment for PEPFAR, the President’s Emergency Plan For AIDS Relief; (We’re actually up to $18 B in spending for ’08.)
- a new climate change framework; and
- a new Africa Financial Sector Initiative and a new Africa Educational Initiative.
In addition the President re-emphasized some long-standing principles in a major international development speech to the U.S. Global Leadership Council last Thursday. Here they are, in the President’s words.
Trade is the best way to help poor countries develop their economies and improve the lives of their people. When I took office, America had free trade agreements with three countries. Today we have free trade agreements in force with 14 countries, most of which are in the developing world. Three weeks ago, my administration and Congress agreed on a new trade policy that will be applied to free trade agreements with Peru, Colombia, Panama and South Korea.
(T)he United States also seeks to open markets to the Doha round of trade negotiations. Doha represents a once-in-a-generation opportunity to help millions in the developing world rise from poverty and despair. If you’re interested in helping the poor people, you ought to be for trade and opening up markets for their goods and services. And the Doha round gives us an opportunity to do just that.
We put forward bold proposals to help conclude a successful Doha round. And at the G8 summit next week, I’m going to urge other nations to do the same. A successful Doha round will benefit all our countries and it’s going to transform the world.
Here’s some quantification of the President’s point about trade being the best way to help poor countries and their citizens:
- Full liberalization of global merchandise trade would be worth about $140 billion per year to developing countries, nearly double last year’s combined G7 development assistance of $75 billion.
- World Bank studies say that in the 1990s, per capita real income grew 3X faster for developing countries that lowered trade barriers than for those that did not. Also, economic growth is on average 1.2 to 2.6 percentage points higher after a country dismantles its trade and investment barriers and opens its economy.
- Another World Bank study estimates that a successful Doha round could lift tens of millions of people out of poverty.
- About 70% of the duties on goods that developing countries pay go to other developing countries. (So poor countries are restricting trade with each other, and hurting both sides.)
On debt relief:
Building progress and prosperity to struggling nations requires lifting the burden of debt from the poorest countries. That makes sense. It doesn’t take a Ph.D. in economics to figure out, if you’re paying a lot of money on interest, you’re not having enough money to support your own people. In the past, many poor nations borrowed money, and they couldn’t repay the debt. And their interest payments were huge. And, therefore, they didn’t have the opportunity to invest in education and health care. So the administration, my administration worked with G8 nations to ease the debt burden. We’re not the first administration to figure this out. My predecessor did the same thing, because it’s the right policy for the United States of America.
Two years ago at Gleneagles, the G8 nations agreed to support a multilateral debt relief agreement that freed poor countries of up to $60 billion in debt. This year, we built on that progress, when the Inter-American Development Bank approved another debt relief initiative for some of the poorest nations in our neighborhood, in our own hemisphere. This initiative will cancel $3.4 billion owed by five countries: Bolivia, Guyana, Haiti, Honduras, and Nicaragua. And that represents more than 12 percent of their combined GDP, an average of nearly $110 for every man, woman, and child in these countries. And this money is now free to help these nations invest in improving their lives of citizens. It makes sense to forgive debt. If you’re interested in helping the poor, it makes sense for the developed world to forgive the debt. And that’s what the United States will continue to do.
On the Millennium Challenge Account:
The United States is helping developing nations build these and other free institutions through what we call the Millennium Challenge Account. Under this program, America makes a compact with developing nations. We give aid, and in return they agree to implement democratic reforms, to fight corruption, to invest in their people — particularly in health and education — and to promote economic freedom. Seems like a fair deal, doesn’t it — taxpayers’ money from the United States in return for the habits and procedures necessary for a solid society to develop. We don’t want to give aid to a country where the leaders steal the money. We expect there to be accountability for U.S. money and that’s the principle behind the Millennium Challenge Account. Eleven nations have compacts in place worth nearly $3 billion. And now 14 additional nations are eligible to negotiate compacts with the Millennium Challenge Corporation, headed by Ambassador Danilovich.
Answers to the quiz:
G8: Canada – Harper; France – Sarkozy; Germany – Merkel; Italy – Prodi; Japan – Abe; Russia – Putin; U.K. – Blair; USA – Bush.
+5: Brazil “Lula” da Silva; China – Hu; India – Singh; Mexico – Calderon Hinerosa; South Africa – Mbeki
Africa: Algeria – Bouteflika; Mubarak – Egypt; Nigeria – Yar-Adua (President-elect); Senegal – Wade; South Africa – Mbeki