The privatization programs forced on impoverished countries as a condition for debt relief would be unthinkable for G-7 countries, according to the Canadian Finance Minister. Paul Martin emphasized that excessive privatization would be dangerous for any government, let alone those that are struggling with problems of widespread poverty, when he spoke with a group of civil society representatives in Montreal just prior to the G-20 meetings last month.

Although he stuck to the premise that poverty can only be effectively addressed by economic growth, the Finance Minister was candid in his opinion that there are far too many conditions attached to the HIPC Initiative debt relief program, to be implemented at an unrealistic pace.

In Canada, the previous government was defeated largely because it had pushed ahead with premature privatization, Martin said. The Conservative Party lost almost all its seats in parliament, and has essentially evaporated as a political force in Canada.

A strong believer in the market system himself, Martin is proud of the "structural adjustment" program for Canada for which he has been responsible over the last six years. The Canadian health care system has been cut to the bone, while spending on education has shriveled. Documents obtained by the Halifax Initiative demonstrate how closely the IMF and Department of Finance cooperated in deciding where government spending would be cut, including reducing unemployment insurance benefits and benefits for the elderly, and cutting funding for public transportation and for cultural agencies like the National Film Board of Canada.

His comments on debt relief conditionality do not come from someone who has been converted. Martin is an experienced politician who recognizes that the kind of privatization being forced on these countries would, in his words, bring down any G-7 government that tried the same thing.

The October meeting was arranged by the Halifax Initiative Coalition so that Southern activists would have an opportunity to speak about their concerns to Martin. Others from Europe and North America were also present, but invited mainly as observers. Most found it a positive and frank discussion, on issues ranging from the need for cheap generic drugs for AIDS victims in Africa to offshore tax havens. Although Canadian organizations have been meeting Martin regularly for years, this was an opportunity for us to take the back seat to Southern partners in this kind of informal discussion.

The problems associated with debt relief conditionality have been a central focus for Canadian activists in our discussions with Martin and the Department of Finance. The wholesale privatization of oil and mining operations, for example, are examples of how the debt crisis, which is at heart a social crisis, is being used as a tool for the exploitation of natural resources by multinational companies.

One area where we got immediate support from Martin was on the privatization of water. He agreed that the Canadian government would oppose this kind of conditionality, but his acceptance of market system assumptions of social benefit prevent a broader critique.

Conditionality attached to debt relief has brought several serious problems: further empowering of the IMF to pass judgment on impoverished countries' social spending, and installing the IMF as a permanent fixture in these countries; slowing down debt relief to an extent our Finance Minister calls "nuts;" and forcing affected countries to hand over their resources - including cheap labour - to corporations for exploitation.

At the core, though, conditionality arose out of the failure of the international financial institutions and creditor nations to take responsibility for their role in creating the debt crisis in the first place.

When the Canadian Finance Minister has no hesitation in criticizing conditionality as he has, it is a good step forward, especially given the failure of the G-7 leaders to reign in the IMF and its scorched earth

approach to privatization. The question now is whether it will make any difference at the IMF or the U.S. Treasury.

Derek MacCuish is a program coordinator at the Social Justice Committee, Montreal (www.s-j-c.net). The Social Justice Committee is a member of the Halifax Initiative Coalition.