28 March - 3 April 2002
Issue No.579
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Al-Ahram Weekly Online 28 March - 3 April 2002 Issue No.579 |
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The sheep and the goats
Who exactly does aid help? Gamal Nkrumah writes, on the occasion of the Monterrey summit
So much for development funding. Summits there were a-plenty this month, often awash with presumptuous sermons about good house- keeping and condescending remarks about corruption and nepotism, supposedly peculiar to poor countries. But actual pledges of hard cash were in short supply. The main feature of such summits is the consensus that for Western aid to trickle out, the world's poorest nations must open their markets and institute Western-style political pluralism (a barely-veiled euphemism for toeing the Western line). Shabby, worn-out arguments are shamelessly rehashed, and the all too familiar habit of blaming the victims of an unjust global economic order is repeated again -- and again and again. The pious statements world leaders utter at these gatherings might make for juicy media sound bites -- but they resolutely fail to better the poor's sorry lot.
For a long time now, the absurd notion went around that all that mattered was economic deregulation coupled with good governance -- whatever that means. This myopia misses the point. Globally, three billion people eke out a miserable existence on less than $2 a day. They are poor essentially because their countries depend on the export of primary commodities whose prices have tumbled in the past few decades. They are poor because the trade liberalisation prescribed by the West has ruined their domestic industries and national development strategies. They are poor because the world economic system is designed to work against them. And blaming them will do nothing to lessen their anguish.
On Tuesday, 20 African leaders met in the Nigerian capital Abuja for an unprecedented summit on financing development in Africa. The Abuja meeting was hailed as a launch pad for the New Partnership for African Development (NEPAD), in which African countries, in partnership with Western donor nations, thrash out a blueprint for economic and political reform in the continent.
The main champions of NEPAD in Africa are South African President Thabo Mbeki and his Nigerian counterpart, Olusegun Obasanjo, two leaders who have won the qualified approval of Western powers thanks to their democratic credentials.
Elsewhere, over 50 world leaders congregated in the northern Mexican metropolis of Monterrey last week, ostensibly to brainstorm on prickly topics ranging from poverty eradication to development finance. The Monterrey summit focused almost exclusively on separating the sheep from the goats. The West promised handsome rewards to the sheep -- those developing countries in thrall to the economic dictates of the International Monetary Fund (IMF) and the World Bank. The intransigent goats, however, will, the West says, be disciplined and starved of development aid. The goats replied with outdated theories of imperialism and dependency and the discredited ideology of socialism -- to no avail.
They also fulminated furiously. Cuban leader Fidel Castro, with characteristic gusto, lashed out at the West's insistence on making aid to poor nations conditional on good governance. The Cuban leader warned that globalisation wasn't mitigating world poverty. He said that unbridled capitalism had globalised, above all things, injustice, inequality, and misery.
"You can't blame this tragedy on the poor countries," he thundered. "It wasn't they who conquered and looted entire continents for centuries, nor did they establish colonialism, nor did they reintroduce slavery, nor did they create modern imperialism," he added. "They were its victims."
Mostly, this went over US heads. US President George Bush in Monterrey stressed that poor countries must first undertake political, economic and legal reforms in order to qualify for Western aid. No mention was made of the disastrous impact of Western-prescribed trade liberalisation on domestic industries and national development strategies in the world's poorest countries.
Ossama Qassim
Castro's fury did reach some, however. "It is unconscionable of the US, the EU and Japan to spend hundreds of millions of dollars on maintaining marginal activities for the benefit of a few of their citizens, while devastating agricultural sectors that are central to peace and development in poor countries," said IMF Managing Director Horst Koehler. He urged wealthy, industrially- advanced nations to "open their markets and phase out trade-distorting subsidies in areas where developing countries have a comparative advantage." In response, Bush pledged to dish out an additional $5 billion a year in aid.
The US currently gives out some $11 billion a year in aid -- but most of this aid goes to a handful of countries with Israel receiving the lion's share. Poor countries do very badly.
As a whole, the US sets aside 0.33 per cent of its GDP for development aid. It has never committed to the 0.7 per cent agreed upon by the Organisation for Economic Cooperation and Development (OECD) in 1970. In fact, development aid as a percentage of the donor nations' gross domestic product (GDP) has plummeted. Worse, official development assistance (ODA) to poor countries is fast shrinking in absolute terms and has plunged from a 1992 peak of over $60 billion to $53 billion in 2000. Countries most dependent on ODA are systematically starved of private foreign investment and are among the most indebted nations. The debt of the poorest stands at a staggering $4.4 billion, equivalent to 12 per cent of their exports. The debt-to-GDP ratio of two of Africa's and the world's poorest nations, Mozambique and Sudan, is 210.8 per cent and 162.5 per cent respectively.
Poor countries believe the goal of halving world poverty cannot be achieved without raising development aid to $100 billion a year. Under such circumstances, Bush's five billion will not go far.
Regarding foreign direct investment, the picture is equally troubling. Western priorities were set out in a 16-page policy document, the "Monterrey Consensus," actually finalised in January in New York by a preparatory committee. It reflected the decisive input of the World Trade Organisation (WTO), the IMF and World Bank on aid flows.
The "Monterrey Consensus" failed to explore the possible consequences of excessive dependence by poor and developing nations on foreign direct investment (FDI), especially as it pertains to unemployment, balance of payment figures, income distribution and the environment. FDI tends to focus on capital intensive industries which lead to layoffs and unemployment, and on extractive and manufacturing industries banned in the West because they pollute the environment; exacerbate income inequalities; and often result in balance of payments deficits and accumulated debt.
Few at Monterrey could bring themselves to look at these issues honestly. "No-one in this world can feel comfortable and safe while so many are suffering and deprived," said United Nations Secretary-General Kofi Annan. But his remarks had the whiff of bombast. Annan strongly defended the "Monterrey Consensus," a document that endorses the discredited Heavily Indebted Poor Countries (HIPC) initiative for Western donors to support the world's poorest countries. Its axioms are the paradigms of neo-liberalism, namely free trade (for the US) and a reliance on FDI to promote economic growth. That this may induce staggering polarisation between the world's rich and poor is rarely considered.
An illustration of the vilest effects of all this neo-liberalism could be found in the condition of the summit's host, Mexico. At the Mexico Social Forum, a counter summit to Monterrey, delegates pointed out that for all the $80,207 billion in foreign investment Mexico has won since its free-trade agreement with the US and Canada, it suffers a huge trade deficit and rampant unemployment, while 70 million people live in poverty. Growth has hovered around nought per cent.
At Monterrey, Bush admitted that unchecked poverty can foster terrorism. Simplistic as his analysis may be (it was Europe's wealthy Germany that produced the notorious Bader-Meinhof group, for example), at least he recognised the link. But when it comes to doing anything about it, he falls very short. Some 170 countries were represented in Monterrey -- and it is safe to assume that far too many of them were treated like goats.
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