Why The Gleneagles Summit is a Waste of Time and Money

Why The Gleneagles Summit is a Waste of Time and Money - at www.moneyweek.com - the best of the international financial media

In a couple of days time the G8 summit takes place in Gleneagles. The Group of Eight includes the world's leading industrial economies; the US, Japan, Germany, the UK and France and three also-rans: Canada, Italy and Russia. In addition to representatives from G8, a further 11 heads of state or government will participate in some of the meetings.

There will be the leaders of China, India, South Africa, Brazil, Mexico and half a dozen poor African states. If this wasn't enough Kofi Annan from the UN and Jose Manuel Barroso, president of the European Commission will also be there. And let's not forget the heads of the World Bank, IMF, WTO and the International Energy Agency and last but not least thousands of demonstrators.

The agenda could not be more ambitious including climate change, Africa, Iran and the Middle East. All sorted out in forty-eight hours of chat. I fear I'm not being too cynical in suggesting that this summit will be no different from the previous thirty in achieving nothing at great expense to us taxpayers. This bash in Gleneagles will cost us around £100m.

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The first G6 summit took place in Rambouillet, an elegant chateau not far from Paris in 1975. At that summit thirty years ago world leaders decided on the desirability of co-ordinated action and that financial stability was important. They agreed that the plight of poor countries demanded attention. They concluded that further discussions were required! As they have done virtually every year since. It is highly likely that the way officials begin to prepare the agenda and communiqu is to take down the agenda and communiqu for last year and blow off the dust.

It is an absolute fallacy that decisions vital for the running of the world economy are made in the conference rooms at these junkets. It is a myth sustained by preening politicians and their lackeys on the inside and by misguided demonstrators on the outside. In fact these summits are only remembered for either their lavish hospitality or the rioting.

But before I leave this subject I would like to say something about our well meaning yet alas misguided pop stars. Bob Geldof, on the subject of debt cancellation, asserted: "Tomorrow, 280 million people will wake up for the first time in their lives without owing you or me a penny from the burden of debt that has crippled them and their countries for so long." However, he fails to grasp the poorest in Africa subsist on food they grow themselves and by making whatever items they can sell. They don't pay taxes and so do not contribute to debt interest payments.

African nations' debts have been run up by their governments over the heads of their people. For every £1,000 of African debt and debt interest, Africa's elites have exported £1,450 of capital into overseas banks and investments. Debt cancellation is not a fresh start for millions of Africa's poor but it is better news for Daimler Chrysler the manufacturer of top of the range Mercedes saloons!

By Brian Durrant, for The Fleet Street Letter

Brian has contributed to MoneyWeek with his expertise in investment strategy, for example how to quadruple your dividend income and how to navigate through the stock market in the 2008 financial crisis. He’s also touched on personal finance such as the housing market and the UK economy.