Fears of global recession head G8 agenda

Fears that the global economy may be heading towards its first recession in a decade topped the agenda at the G8 summit yesterday…

Fears that the global economy may be heading towards its first recession in a decade topped the agenda at the G8 summit yesterday.

Issues such as global climate change and poverty in developing countries were pushed aside as G8 leaders sought to find a cure for the unexpected and rapid slowdown in the world economy since they met in Japan a year ago.

Attempts were being made yesterday to bridge the few outstanding points between the US and the EU over the agenda for a new round of trade liberalisation talks which could start in Qatar in November.

All the leaders agree that breaking down trade barriers and opening up markets would boost global growth, and aim to use this weekend's talks to complete the business that was abandoned in Seattle among the riots of December, 1999.

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The US President, Mr Bush, used his first appearance at the summit to urge Europe and Japan to do more to boost their flagging economies.

The US is irked that while it has cut interest rates six times since the start of the year, the European central bank has only eased monetary policy once.

EU leaders responded by blaming the boom-bust cycle in the US for the problems in the global economy during the past year, and said it was the US's responsibility to sort out the problems it had caused.

The British Prime Minister, Mr Blair, said there should be two priorities for the global economy - starting a new round of trade talks and keeping up the momentum for economic reform in Europe.

Confidence was rising yesterday that the G8 may provide a key political push for the trade talks. Many of the developing nations, opposed to starting a new round in Seattle, have been won over - albeit reluctantly - to a new round, with only India among the leading developing states still resisting pressure to go along with fresh talks.

Both Mr Blair and Mr Bush rounded on the protesters, saying it was vital for the poorest countries to have better access to western markets.

Mr Blair plans to build on the start yesterday of a new $1.25 billion UN global health fund with a five-point modernisation plan for Africa this autumn linking trade, aid, investment, conflict resolution and the fight against AIDS to combat poverty in the world's poorest continent.

With debt campaigners criticising the fund as "inadequate" and "a gimmick", Downing Street officials said the prime minister would be visiting Africa within the next six months to show his backing for the new generation of modern African leaders.

The fund was officially started by the UN Secretary-General, Mr Kofi Annan, in Genoa, but fell well short of the $10 billion a year he said would be necessary to cope with the AIDS epidemic when he first floated the idea of a new financial initiative earlier in the year.

Privately, Britain agrees that the fund will not be enough to remedy the crisis, which extends beyond a shortage of cheap drugs to a lack of basic health systems.

However, it believes the focus on AIDS and the other preventable diseases, such as malaria and TB, can be used as a catalyst for other measures that will help end Africa's economic marginalisation.