The burden of debt borne by the most heavily indebted and poorest countries in the world has been eased somewhat as a result of the agreement reached by the Group of Seven industrialised and richest ones over the weekend. The agreement is a welcome contribution to the alleviation of debtors' position as the millennium approaches. But it is disappointing that the relief did not go further. It wipes off some 71 billion dollars of debt burden (perhaps one third of the total owed) by reducing and cancelling existing commitments. Stiff conditions are still attached to the outstanding repayments, concerning market reforms and poverty alleviation, as development aid from the rich countries continues to decrease. And many of the debtor nations will still be repaying more in debt than they spend on health and education combined - an unacceptable and self-defeating policy profile.
The overall flow of money between the poorest and richest states remains heavily stacked against the most disadvantaged peoples in the world. These injustices are built into the structures of world trade, investment and ownership of resources which concentrate control and direction of policy among the richest states. Indebtedness happens when rich financial institutions in rich countries press rich rulers in poor ones to borrow in order to buy more arms or luxury goods from them; or to benefit from temporarily high prices for their primary goods; or to develop their economies so as to trade profitably on world markets dominated by the richest states; or to borrow from international aid institutions for development needs (all too often simply to catch up with interest payments on outstanding loans) in return for often unsustainable structural economic reforms.
It can readily be seen that the measure of debt relief agreed in Cologne, while welcome, will do too little to relieve poverty and encourage development in the light of the more general circumstances. As one of the organisers of Jubilee 2000, the campaigning group which lobbied the Cologne summit, put it, "we urge the leaders not to think their work is done". Pressure from public opinion will be a powerful force encouraging them go further. It is perfectly possible to do so, while allowing for controls on expenditures to ensure debt relief is not misappropriated. The suggestion that the least developed countries should cap debt repayments as a proportion of their overall budgets is a desirable goal.
Russia insists it is a fully functioning member of the group, making it the Group of Eight. But its economic and political weakness continually raise questions about whether it can sustain the obligations involved. Yesterday President Yeltsin made a determined effort to mend fences with Western leaders in Cologne after the tension that developed between them over Kosovo, following the agreement on troop deployments there. He secured some limited economic help for his state's beleaguered coffers and there was an important commitment to reopen the dialogue on strategic arms.
Aid for Russia and for the reconstruction of south-eastern Europe are likely in practice to compete with commitments to reduce the debt burden on the world's poorest states. This is a very unsatisfactory state of affairs. Both commitments are capable of being met if the political will is mobilised.