Chancellor hails pledge on African aid

The chancellor has welcomed G7 agreement on moves to write off third world debt.

As Saturday's meeting of finance ministers continued, Gordon Brown said the deal would help some of the world's poorest nations - many of them in Africa.

The scheme would write off up to 100 per cent of the debts of the world's poorest countries, but the final details have yet to be agreed.

"London 2005 will in my view be seen as the 100 per cent debt relief summit," said Brown.

"It is the richest countries hearing the voices of the poor.

"It is the first time that as much as 100 per cent debt relief has ever been detailed in a G7 communique."

However, a deal on providing extra aid for third world nations looks a long way off.

The UK's plans for an International Finance Facility to help the world's poorest countries appeared to have been dealt a serious blow by the US before this weekend's meeting of G7 finance ministers in London even began.

Washington Treasury under-secretary John Taylor said the plan to raise money for loans through new international bonds would not get crucial American backing.

"Not only does the IFF not work for the US, we don't need the IFF," he said.

The Bush administration wants to see loans replaced by grants but faces criticism that this would quickly diminish the pool of international aid.

It remains to be seen whether enough countries will still back the idea to enable it to go ahead.

The summit was the first major event of Britain's G8 presidency this year, with the government having made the continent one of its two priority policy areas.

However the chancellor did receive backing from an unexpected quarter: his longtime political nemesis Peter Mandelson.

The new EU trade commissioner told an audience at the London School of Economics on Friday that 2005 "represents a once-in-a-generation chance for change".

"One can feel the gathering of international political will," he said. "This meeting of G7 finance ministers is a crucial milestone in mobilising aid and tackling debt."

"I am encouraged that European leaders are rallying behind proposals for new financing and debt relief initiatives," the former Cabinet minister added.

"With a coherent package of WTO, EU and G8 measures I believe that we can take the power of the global trade agenda and put it in the service of development."