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Financial Post, July 18, 1981


By Patricia Anderson

The summit won't be the beginning--and certainly not the end--of the struggle to give North/South issues the prominence and the muscle they need if the gap between rich and poor is to stop widening.

Indeed, when the summiteers issue their end-of-session communiqué from the relative opulence of the National Arts Centre main stage, simple recognition of the place of the South in the future of the industrialized world could satisfy many.

But even if the expectations are low for specific solutions in Ottawa to the hammered state of the North/South relationship, expect an avalanche of noise about the South's problems and the possible economic and political solutions to emerge from a slew of upcoming gatherings including, of course, the meeting of 25 heads of governments in Mexico this fall.

Indeed, last year at Venice, each of the leaders asked an official to work on a consensus report on North/South problems. So when they sit down in Montebello to discuss the issue, the seven will have a working document to hash out.

It's an enormous discussion, but the North/South is really not an item separate from the hot economic and political issues on the agenda.

"Development is not only a question of finance," French External Relations Minister Claude Cheysson told Le Monde recently. "It also means the integration of the Third World's economy, thus giving the markets a sense of security, providing for secure access to capital and to technology. We must go from the case-by-case type of action which until now has characterized North/South relations, to a world economic order."

Some of the flashpoints:

Aid:Last year, net financial flows--the North's aid plus loans from the private sector--to the Third World weren't enough to cover the South's debt service bill to the North (Organization for Economic Co-operation & Development figures). Aid from the North--at US$26.7 billion last year--was only 0.37% of its combined GNP. Although that's far less than the 0.7% of GNP target set for 1990 by Ottawa, signs are there is an upward trend in aid.

Trade: The South wants access to the rich markets of the industrialized world and successive waves of protectionism--Canada's included--have not given it to them. But, on the other side, most of the world's fastest growing economies, as well as the oil-surplus countries, count themselves as part of the South--good markets for the North. Industrialized economies, in their excitement to export to the South, are doing bloody battle with each other subsidizing export finance even on leaky national budgets. Notwithstanding a solemn "determination to avoid a harmful export-credit race" pledged last year in Venice, the Seven Summit nations are among the worst offenders.

East/West: The Americans, who see world events through an East/West kaleidoscope, would rather concentrate on East/West turbulence than North/South problems. Indeed, the issue of increased European trade with the Soviet bloc was put on the summit agenda in February.

A senior administration official said last week that the U.S. was concerned about the North/South dialogue--and pointed to President Ronald Reagan's interest in a mini-Marshall Plan for the Caribbean Basin as proof. But White House officials say, echoing many others perhaps, that they aren't sure there is a generally accepted definition of the "North/South dialogue."

Canadian officials, on the other hand, claim there is such a definition and the U.S. is simply not yet committed to playing a major role. The Canadians say the dialogue is a generally accepted concept developed by the South, which includes many of those issues contained in the call for a new economic order. It is a process whereby all the issues are on the table for discussion by everyone involved--an attempt to head off divide-and-conquer tactics by the North. A senior Ottawa summit advance man (they're called "Sherpas") likens the process to that of labor negotiations, where all the issues are on the table at the same time.

Energy: The World Bank's proposed energy affiliate would lend support for the Third World to exploit its own energy sources--often using U.S., British, French, even Canadian firms. But the Americans, and to some extent the British, aren't sure the World Bank is the best conduit.

The World Bank and its helpmate in development affairs, the International Monetary Fund, will have to be assigned clear roles before they can proceed.

The Third World nations charge the IMF particularly with interfering unnecessarily and unacceptably in their political affairs when the stern-faced bankers arrive in tropical capitals with promises of financial rescue, laced with strict conditions. They also want to see voting shares changed to reflect the changes in economic reality since the IMF's establishment 30 years ago. And that would shift power to Opec--key players for the South.

This information is provided by the Financial Post.
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Revised: June 3, 1995

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