POLITICS
05/27/2011 09:49 EDT | Updated 07/27/2011 05:12 EDT

G8's Arab Spring Fund Won't Include Canadian Cash

(CBC) -- G8 nations are pledging $20 billion US to support countries that are transitioning to democracy in the Middle East and North Africa, but the promise will not include any new money from Canada.

The money would flow through multilateral banks, such as the European Investment Bank and the World Bank, to which Canada already makes a yearly commitment of billions of dollars every year.

CBC reporter Susan Lunn said from the Deauville summit that host country France has strongly pushed for the G8 to mobilize its support and financial aid for Egypt and Tunisia to protect early democratic reforms in both countries.

Canada agrees but says the money should flow through international monetary institutions.

"Canada has been increasing its commitment to those agencies," Lunn said. "They now pay more than $12 billion (Cdn) a year into those international agencies, like the World Bank, and that's how Canada is going to continue to support those two countries."

Stepped up support for lenders

Two years before the uprisings that rocked the Arab world, Canada upped its payments into three banks, including the African Development Bank, by $4.6 billion Cdn. Harper argues that multilateral lending institutions have the expertise required.

"That's the best way to get a coordinated international response," Harper told reporters late Thursday night.

CBC reporter Terry Milewski said it's important to note that the money is not a direct injection of cash but an investment in banks that provide loans.

"It's a business, not a gift," he said.

In contrast, U.S. President Barack Obama has offered a $2-billion US package of loan guarantees and direct debt forgiveness to Egypt, while France and Britain have pledged hundreds of millions for supporting both nascent democracies.

"So there is a clear difference between Canada's strategy and theirs," Milewski said.

Earlier this month, the World Bank and the African Development Bank pledged $500 million US each to support Tunisia's transition to democracy and economic reforms.

Money to improve governance

The financial institutions said the money was aimed at supporting Tunisia's "improving governance, transparency, the freedom of association law and also some of the efforts to create jobs and improve the employment system and focus on the lagging regions."

The International Monetary Fund has also said it is ready to lend up to $35 billion to oil-importing countries in the Middle East and North Africa, as part of its pledge to help the region meet goals on growth, stability, job creation and improving living standards.

The figure was included in a report on the region prepared for the G8 summit, which says the overall need in terms of external financing by Tunisia, Egypt and other non-oil producing countries in the region could be more than $160 billion over 2011-2013.