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News Release

Genoa G-8 Summit Should Commit $10 Billion a Year to Global Health Fund

July 12, 2001

Contact:    C. Fred Bergsten    (202) 328-9000

Washington, DC—A high level group of private experts from the G-8 countries recommends that the G-8 Summit at Genoa on July 20-22 adopt four major commitments:

  • Contribute $10 billion per year to fight HIV/AIDS, malaria, and tuberculosis in the world's poorest countries;
  • Enhance the effectiveness and inclusiveness of G-8 Summits by inviting leaders of the G-20 (list attached), whose Finance Ministers already meet regularly, to join them around future G-8 meetings;
  • Launch a comprehensive new round of global trade negotiations later this year; and
  • Reform economic sanctions against Iraq in return for firm action by Iraq to permit effective international inspection of its weapons programs.

Detailed explanations of these proposals, along with a number of others, can be found in the attached report of the G-8 Preparatory Conference. The Conference is a group of 22 leading independent experts, including former Secretary of State Henry Kissinger and former Federal Reserve Chairman Paul Volcker, which is in its second year of operation (list attached). Three members of the group have subsequently joined the governments of their countries: Robert Zoellick, now the US Trade Representative; Heizo Takenaka, Minister of Economic and Fiscal Policy of Japan; and Renato Ruggiero, Minister of Foreign Affairs of Italy. The group met in Genoa on July 1-2 to update its recommendations for 2001 and discussed them with the leadership of the host Italian government in Rome on July 4. It is sponsored by the Tokyo Foundation, organized by the Institute for International Economics (and co-chaired by its Director, C. Fred Bergsten) and hosted this year by the Istituto Affari Internazionali from Rome.

The new report urges action on four critical issues that both require new initiatives and are sufficiently close to achieving international consensus that strong leadership from the G-8 at Genoa could produce practical results and indeed dramatic progress. In addition, the recommended actions would provide a powerful and effective G-8 response to the antiglobalization activists that are diverting attention from the substantive agenda that is of crucial importance for many of the causes that those activists seek to represent.

Global Poverty

The G-8 should build on its debt relief initiatives of recent years to substantially broaden the attack on world poverty, particularly in the areas of health and education. To meet the goals set by the Millennium 2000 Summit, the most urgent requirement is full funding of a comprehensive global attack on the three deadly pandemics of HIV/AIDS, malaria, and tuberculosis. From HIV/AIDS alone, over 20 million Africans have already died and more than 100 million people will be infected by 2005. Thirteen million children have been orphaned by the disease.

The G-8 countries should therefore increase their funding for disease prevention and cure, sharply and immediately, and provide $10 billion in annual support by 2005. Coupled with firm commitments by the recipient countries to reform their health delivery systems, such financing will save millions of lives annually and avoid huge economic losses to the countries involved. Such assistance will cost the G-8 countries only about $10 from each of their citizens and one-twentieth of one percent of their GDPs per year.

Strengthening the G-8

The G-8 still represents about two-thirds of world economic output but accounts for less than 15 percent of world population. It should broaden participation in its activities in a systematic manner that goes beyond the ad hoc initiatives of recent host countries in inviting selected leaders from a few poorer countries to meet separately with them.

The G-8 should invite the Heads of State and Government of the G-20 (list attached), a group whose countries include half the world's population and already meet regularly at the Finance Ministers' level, to join them annually around their own summits. Such sessions would enhance both the effectiveness of the G-8 itself and the legitimacy of the entire system of global governance.

In addition, the G-8 must streamline its own procedures. It is impossible to return completely to the "Rambouillet model" of informal conversations of 25 years ago but the group's leaders must focus their agenda much more sharply. They must be willing to prioritize much more clearly among the many issues that they inevitably face, and to implement major substantive initiatives such as those suggested in the report, if they are to restore the group's essential role in the process of international cooperation and global economic progress.

World Trade

Severe disputes, notably between Europe and the United States but now also between China and Japan, threaten global trade. The rapid growth of regional initiatives, such as the proposed Free Trade Area of the Americas and East Asian Free Trade Area, could undermine the multilateral system. The results could be devastating for the world economy, especially the poorer countries that depend so heavily on trade, and for global security.

The G-8 should therefore commit to launch a new multilateral trade round at the Ministerial Conference of the World Trade Organization in November. To make that commitment credible, they should agree to a comprehensive agenda for the round that includes issues of greatest importance to the developing countries as well as to themselves. To be successful, the round must encompass the widest possible range of issues to permit tradeoffs that will enable all participants to realize their priority objectives. A successful round also requires the US Administration to receive Trade Promotion Authority from the Congress as soon as possible and requires full opening of G-8 markets to exports from the poorest countries.

To move the WTO toward universal membership, the G-8 should also work to speed the accession of Russia to the organization.

Iraq Sanctions

More than a decade after the Gulf War, Iraq represents the greatest global threat to the proliferation of nuclear weapons, and other weapons of mass destruction, and thus to world security. It is imperative to restore an effective international regime that controls its weapons development.

The G-8 should reach a consensus to ease the present economic sanctions against Iraq in the United Nations, which have limited impact and adversely affect much of its population, in return for firm action by Iraq to permit effective international inspection of all its weapons facilities. As a matter of prudence, comprehensive controls should be retained over Iraq's use of its oil revenues and arms imports. Renewed military actions should also be envisioned if necessary to enforce the inspection regime, if other means fail.

About the Institute

The Institute for International Economics is a private nonprofit research institution for the study and discussion of international economic policy. The Institute, directed by C. Fred Bergsten, provides fresh analyses of key economic, monetary, trade and investment issues and recommends practical policy approaches for strengthening public policy toward these important topics. The Institute receives funding from a large number of private foundations and corporations.

The Group of Eight (G-8) and the Group of Twenty (G-20)

G-8 Countries

GDP
(in billions of dollars)

 Population
(in millions)

  Canada

 605

30

  France

1,447

59

  Germany

2,150

82

  Italy

1,185

58

  Japan

3,790

126

  Russia

337

146

  United Kingdom

1,412

60

  United States

8,760

278

     
    Subtotal

19,686

839

    (Percentage of world)

(68)

(14)

     
Additional G-20 Countries    
  Argentina

340

37

  Australia

364

19

  Brazil

775

168

  China

960

1,300

  India

430

998

  Indonesia

95

207

  Mexico

425

97

  Saudia Arabia

130

20

  South Africa

115

42

  South Korea

320

47

  Turkey

190

64

 
  Subtotal

4,144

2,999

  (Percentage of world)

(14)

(50)

  Total, Full G-20

23,830

3,838

  (Percentage of world)

(82)

(64)