Global Policy Forum

By Ian Black and Charlotte Denny

The European Union is to wipe out hundreds of millions of dollars owed to it by some of the world's poorest countries, a move debt campaigners said demonstrated that the deal struck two years ago by western lenders was inadequate.

As global leaders met in Brussels to discuss the worsening economic situation of the world's 49 least developed countries (LDCs), the European commission president, Romano Prodi, announced that the EU had decided to cancel all outstanding debts arising from its trade accords with former colonies of member states.

The LDCs still owe billions to the World Bank and IMF despite a programme of debt cancellation agreed by the Group of Seven leading world economies in Cologne in June 1999.

Debt campaigners said the loans given under the now defunct Lomé conventions could be worth $100m-200m. "Even though the amounts are comparatively small, it shows that the West realizes it needs to go beyond the Cologne initiative on debt," said Lucy Matthew, a spokeswoman for lobby group Drop the Debt. "The European Union is a comparatively small fish in the loans stakes. The International Monetary Fund and the World Bank are the really big sharks."

Kofi Annan, the UN secretary general, urged rich countries to do more to help the world's poorest ones. At the start of the third UN gathering to discuss LDCs, Mr. Annan insisted that the "fortunate" must open their markets to give the poor a fair chance to compete in a global economy that has marginalized them.

The countries classified as the globe's least developed have a population of more than 600m, mostly in sub-Saharan Africa. "For all too many, life is a continuous struggle against hunger, malnutrition, polluted drinking water, infectious disease, ignorance, oppression and violent conflict," Mr. Annan said.

Since the first LDC conference was held in 1981, only one country, Botswana, has graduated from the category, and now it is crippled by an Aids epidemic.

The World Bank president, James Wolfensohn, underlined the need to eliminate corruption by strengthening legal and judicial systems. Regional conflict was another roadblock to development, he said.

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