There was a time, some decades ago, when analysts could write of "aid as imperialism". Today, when official aid is all but defunct, it is more correct to describe the current tendency of debt-forgiveness as imperialism. There is much that is appalling about imperialism today – the dastardly occupation of Iraq which has brutalised the entire society, is but one particularly telling example. But the militaristic and resource-grabbing aspects of imperialism may be distracting from other deep and continuing features which are also doing great damage to countries across the world.

What is even more obscene is when imperialism is not naked in its violence, but disguised as charity and empathy for the oppressed, and when the rest of the world is made to applaud the benevolent concern expressed by the great powers. This is what has been happening around the recent G-8 Summit meeting, which made it a point to continue despite the London bombings, in order to push through what it claimed was a "historic" and "unprecedented" debt relief package for some of the poorest countries of the world.

This was accompanied by a concert extravaganza of the trendiest "feel-good" pop stars around, such as Bob Geldof and Bono, to provide entertainment to accompany the good deed, as well as a media blitz supported by almost the entire world's press and television. So much so that even otherwise well-informed and progressive people in the developing world were fooled into thinking that, for a change, the leaders of the core capitalist countries were actually thinking about doing some good for people desperately in need of it.

Unfortunately, a more cynical perspective is actually the correct one. The G-8 debt relief deal is actually a paltry and niggardly reduction of a small part of a debt that has grown to gigantic proportions more because of adding on unpaid interest than because of any recent flows of fresh resources. And this pathetic amount is being traded for yet more major concession made by the debtor countries, in terms of sweeping and extensive privatisation of public services and utilities, which is about all that is left for governments to sell in these countries, as well as large increases in indirect taxes which fall disproportionately on the poor.

Consider the main elements of this "generous" deal. To begin with, only 18 countries are to "benefit" from the G8's so-called generosity. They are all countries that have been through this before – most recently through the highly publicised HIPC initiative (for heavily indebted poor countries) launched in 1996. The HIPC initiative, which was greeted with similar if less musical fanfare, has since failed utterly, either in relieving the burden of debt or improving conditions in the countries concerned. Estimates by UNCTAD suggest that the 27 HIPC beneficiary countries, for example, will be making bigger debt repayments in 2005 than in 2003.

Even for these 18 countries, the debt relief is very partial and is nowhere near complete cancellation. It mainly concerns only some bilateral debt and the debt held by the World Bank and the African Development Bank, which amounts to a very small proportion of the total debt of the concerned countries. The British proposal only intended to take over repayments between now and 2015.

The total financial burden on the G-8 of the entire operation would amount to some $2 billion a year, which should be compared to the estimated $350 billion annually devoted by the G8 to farming subsidies or the $700 billion spent by the G-8 on military expenditure. The annual amount spent by all these G-8 countries put together for the announced cancellation is less than half of the amount the US government spends every month on its continued illegal occupation of Iraq. Even this trivial amount for the US would be financed through the US development aid budget, reducing aid provided elsewhere and not involving any additional resources.

It is true that the current deal is an improvement on the HIPC initiative in that what has been agreed upon is a real cancellation that would bear on the principal of the debt, rather than simply a financial contribution towards the debt service paid to multilateral institutions. But even so, the announced cancellations would not even amount to a complete cancellation of debt for these 18 countries, who would still have to deal with a large amount of multilateral debt.

What do the recipient countries have to provide in return for this munificence which will not even be noticed in the budgets of the governments of rich countries? The answer is that they will have to further sell their natural resources, their public assets, and deprive their people of the basic conditions of a decent life, in order to advance the profiteering by large corporations from the G-8 countries and elsewhere.

The G8 decision represents a continuation of the HIPC initiative, which insisted upon the imposition and intensification of heavily neoliberal policies that have already ravaged poor debtor countries. Consuder some of the main elements of the conditionalities:

• privatisation of natural resources and of strategic economic sectors to the benefit of large multinational corporations;

• higher cost of health care and education, directly affecting the access of the poor to these basic socio-economic rights;

• increases in VAT, a regressive tax, which means increased costs and lower real incomes of ordinary people;

• free flow of capital, which leads to great volatility of exchange rates and capital flight by the elite;

• lower tariff protection, which leads to thousands of small and middle producers losing their livelihoods because they cannot compete with imported goods.

It is not hard to see that this is a deal designed to further the economic interests of imperialism, which has once again been sold across the world as a huge concession made to the world's poor. In the words of the poet, "After such knowledge, what forgiveness?"

July 28, 2005.