Janet Bush: Poor nations beware - there are no free rides on the West's dollars-for-disasters carousel

The finance ministers of the G7, which groups the seven richest countries in the world, meet in London in less than a fortnight under the chairmanship of Gordon Brown, fresh from his mini-tour of Africa. Since the Boxing Day tsunami, the sound of governments bidding in a Dutch auction of generosity has grown to a roar and some kind of ground-breaking deal for the developing world is expected.

The finance ministers of the G7, which groups the seven richest countries in the world, meet in London in less than a fortnight under the chairmanship of Gordon Brown, fresh from his mini-tour of Africa. Since the Boxing Day tsunami, the sound of governments bidding in a Dutch auction of generosity has grown to a roar and some kind of ground-breaking deal for the developing world is expected.

So can we finally be confident that our governments are going to do the right thing? The answer, in all probability, is no, if the past is anything to go by. One hallmark of rich-nation behaviour is that impressive promises of help hardly ever translate fully into hard cash. Less than one third of the aid promised to Central America after Hurricane Mitch in 1998 was ever disbursed; post-Taliban Afghanistan got about two thirds; the people of Bam in Iran, devastated by an earthquake in 2003, less than half.

The behaviour of rich-country governments and the international financial institutions they dominate has often been beyond redemption. When Hurricane Mitch struck, killing thousands, the local IMF representative in Managua announced that Nicaragua would still be bound by existing IMF agreements, which included cutting public spending, raising the cost of public services and privatising state-owned firms. Both Nicaragua and Honduras were given a three-year moratorium on their debt payments by the Paris Club representing rich-country creditors; yet, astonishingly, the creditors charged interest on the money that would have been paid during that period and added it to the total debt. How do we know that the same won't apply to the debt moratorium announced for the countries hit by the tsunami?

Then there is the wheeze of using the misfortunes of the poor as a business opportunity. Testifying before Congress in 1995, Lawrence Summers, then of the Treasury Department (and now president of Harvard University), acknowledged that American corporations received $1.35 in procurement contracts for each dollar the US administration contributed to the World Bank and other multilateral development banks.

The IMF and World Bank have long defended and promoted the interests of the US, in particular. Professor Robert Hunter Wade of the London School of Economics has highlighted the story of Ethiopia to illustrate how this works. In the 1990s, an enhanced structural adjustment programme was drawn up for the country, with loans in exchange for promised economic reforms. A year into the programme, however, the IMF suddenly decided to withhold any further money. Behind its decision was the purchase by Ethiopian Airlines of four Boeing aircraft with a loan from an American bank on very tough terms it couldn't afford. When the airline failed to renegotiate terms, the Ethiopian government lent it the money. The US bank lost its lucrative deal and complained to the US Treasury. Soon after, the IMF suspended loans, arguing that Ethiopia had failed to meet some of its conditions. So, the IMF penalised one of the poorest countries in the world because an American bank had been done out of an attractive piece of business.

A cynic might respond by saying that this is just the typical behaviour of a superpower, but everyone seems to be at it. This week, it emerged that the European Commission was pressing ahead with a deal with Thailand under which it would desist from imposing tariffs against the tsunami-struck country's prawn fishing industry if it bought six A380 Airbus aircraft for £1.3bn.

IMF loans have long come with conditions attached, virtually always including privatisation. And these conditions are enforced. Zambia, for example, was asked to privatise its state electricity company and state bank in return for debt relief but the government withdrew this commitment in the face of popular and parliamentary opposition. The IMF promptly threatened to withdraw $1bn in debt relief and the privatisations were back on.

For all Gordon Brown's undoubted leadership on debt and development, Britain is certainly not blameless. The Department for International Development has made privatisation a condition of aid and awarded lucrative consultancy contracts to British firms. Since 1997, according to War on Want, more than $34m of Britain's aid budget has gone to the Adam Smith Institute, the Thatcherite think-tank, for this work. In response to criticism, the DfID is reviewing these policies but, in truth, Britain has never seriously challenged conditionality. Even in the case of an Iraq reduced to rubble and quotidian violence, debt cancellation came with the usual IMF programme and conditions attached.

No wonder that, as soon as developing countries establish a little economic independence, they flee as fast as they can from offers of "help". After the tsunami hit, India said that it didn't want outside help. In France, Le Monde complained that India was "fuelled by her desire to assure its supremacy in the Indian Ocean zone". What was the newspaper saying? Was it trying to defend French pretensions towards supremacy in the Indian Ocean? Or did it mean that France needed its foot in the door so that French companies could share in the spoils of reconstruction?

The double standards are breathtaking. Another IMF condition of debt relief for Zambia was that the country would not raise its budget deficit from 1.5 per cent of GDP to 3 per cent. And yet the IMF's major shareholder, the US, is running a deficit of some 5 per cent of GDP. Where is America's IMF structural adjustment programme? When the G7 inevitably unveils an extraordinary bout of collective generosity in two weeks' time, let us look at the fine print and see if, once again, the velvet glove covers an iron fist, clutching millions of dollar bills of private contracts for western corporations.

Europe's dreams fade as Mr Lisbon becomes Mrs Fudge

Europe - not just a continent but a wildly visionary project to build a dynamic and cohesive unit out of its nation states and so punch a greater collective weight in the world - came up against two jarring reality checks in the past few days.

The first was that the European Commission admitted what had been evident for years: that Europe's goal of becoming "the most competitive economy in the world by 2010" is a dead letter. A leaked draft internal commission document has, it seems, quietly dropped the 2010 goal and replaced it with three core goals: creating jobs, improving knowledge and innovation, and ensuring that Europe remains an attractive location for employment.

It is a comedown but, it is to hoped, a positive one in the long term. The rhetoric of the Lisbon Agenda was vainglorious; the mechanics of trying to get 15 and now 25 member states to agree on anything are grindingly difficult. Squabbling has raged even over what should have been easy matters such as a European Community patent. Two years on from when it was proposed, this natural accompaniment to Europe's single market has come to nothing.

The Commission is now suggesting a "Mr Lisbon" in each member state to encourage a more constructive approach. The second reality check suggests it is going to take more than that to give China a run for its money in the coming years.

Everyone knows the Growth and Stability Pact, supposed to enforce fiscal co-ordination and budget discipline in the euro area, is unworkable; but nobody knows what to do with it. Member states want to run their own tax and spending shows; quite right, these are the cornerstone of parliamentary democracies. But the Commission, also quite rightly, argues that an economic and monetary union must have a single fiscal policy.

When Gerhard Schröder, the German Chancellor, proposed a reform to the GSP last week, Jean-Claude Juncker, Prime Minister of Luxembourg, who holds the rotating presidency of the EU, was brutal in his dismissal: "He is not in charge of the European economy; he is not a head of state, either; he's just a head of government."

And there, in a nutshell, is Europe's dilemma. If you put the bureaucrats in charge, we no longer have a European democracy. If you give primacy to the 25 democratically elected governments, nothing gets done. Shall we call for Mr Compromise or Madame Fudge?