Revamping Davos

There was a whiff of Porto Alegre to this year's Davos meetings, but "equitable globalisation" is not philanthropy, writes Faiza Rady

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This week's World Economic Forum (WEF) in Davos, Switzerland, took everyone by surprise. Renowned as a rich white men's club and a chic marketplace for networking and clinching international trade deals, the WEF 2005 was revamped in the image of its nemesis the colourful anti-capitalist World Social Forum (WSF) meeting in Porto Alegre, Brazil.

Rubbing shoulders in pseudo plebeian town-hall style meetings, an estimated 2,200 representatives of the world's richest multi-nationals and some 20 world leaders and politicians addressed issues like "fighting poverty", "equitable globalisation", "climate change" and the "Middle East".

The WEF clearly needs a facelift. Rampant worldwide unemployment and global poverty, mushrooming anti-corporate globalisation protesters at every World Trade Organisation (WTO) meeting and vociferous alternative WSF forums at Porto Alegre are taking their toll. The bottom line is that world-wide demonstrations against neo-liberalism and its ills are bad for business. Hence the need for a new image.

Luminaries like Microsoft founder Bill Gates the world's richest man and George Soros dubbed the "socialist billionaire", added panache to the meeting. Soros gained notoriety in 1992 as the "man who broke the Bank of England". Irritated by the strength of the pound Sterling against the dollar, he speculated against the currency and eventually forced the bank to withdraw the pound from the European Exchange Rate Mechanism.

Besides hosting the haves and the have-mores, the WEF hosted Hollywood stars who provided a special glitz to the event. Socially conscious actresses and actors like Sharon Stone, Richard Gere, Angelina Jolie, and flamboyant rock stars Peter Gabriel and Bono -- all came to Davos as "do-gooders" for the global poor.

But it was Sharon Stone who outshone everybody by using her dramatic flair for fundraising. While Tanzanian president, Benjamin Mkapa addressed a symposium on "funding the war on poverty", Stone pledged $10,000 to fight malaria in Tanzania -- urging participants to reach into their well-stacked pockets "because people are dying today". By the end of the meeting, the organisers had gathered pledges for over $1 million.

Bill Gates, for his part, pledged $750 million to vaccinate children against deadly diseases. "Africa's poverty and the deaths of millions of people due to insufficient research into diseases of poverty are the most scandalous issues of our time," declared the multi- billionaire.

Flanked by Bono and Gates, British Prime Minister Tony Blair launched his own eloquent appeal for Africa -- a continent suddenly featuring high on the WEF agenda. Blasting other Northern leaders for forgetting about Africa, Blair described the continent's poverty as a "scar on the conscience of the world". Citing AIDS, which daily claims 6,000 lives in Africa, and other fatal diseases like malaria -- that kills 3,000 children daily -- in addition to other poverty-related diseases crippling African people and their economies, the British prime minister vowed that the UK would bankroll one sixth of a World Health Organisation appeal. "If what is happening in Africa today was happening in any other part of the world there would be such a scandal and clamour that governments would be falling over themselves to do something about this," fumed Blair.

The British prime minister's righteous charity-cum-aid appeal for the suffering sub-continent was not lost on African leaders. Sharing the podium with Blair, South African President Thabo Mbeki and Nigerian President Olusegun Obasanjo proceeded to set the record straight.

In tandem Mbeki and Obasanjo pointed out that external debt payments to Northern nations, the World Bank and its sister agency the International Monetary Fund (IMF) were, in fact, crippling African and other Southern economies.

The World Bank currently designates 33 of Africa's 44 nations as heavily indebted poor countries, with the remaining 11 countries closely following suit.

While African children are dying of malaria and other preventable diseases, African governments are spending four times more on debt interest payments than on healthcare. The debt is, in fact, what diverts resources from health and education and ultimately disempowers African governments.

In this context, President Obasanjo called for total debt cancellation, while Mbeki told the forum that Africans also needed to be freed from foreign intervention and allowed to manage their own affairs.

Many analysts believe that the debt burden was, in fact, imposed on the South. The debt really took off in the 1970s, when the World Bank and the IMF earnestly started bankrolling Southern countries like there was no tomorrow.

For the moneylenders the beauty of the debt cycle lies in its exponential growth. First, indebted countries are unable to meet tight payment schedules, which then force them to take out new loans and reschedule payments -- while paying accrued interests on servicing the debt. The external debt burden on sub-Saharan Africa has increased by an estimated 400 per cent since 1980 as a result of this vicious cycle. The debt thus spells big business to the World Bank/IMF and their corporate partners. In poverty-stricken sub-Saharan Africa, the debt amounts to $230 billion.

While generously disbursing loans, the international agencies went into the business of pushing and financing ill-conceived development schemes, exhibiting astounding failure rates of 65 to 70 per cent.

However, success or failure rates are besides the point. Capital return on the loans is where it's at. Besides milking debt servicing for all its worth, the WB and the IMF secured procurement as part of their loan conditionality. And procurement, like the debt, spells big bucks. According to Corporate Watch, a Washington-based trade watch dog, the US Treasury Department estimates that for every dollar the US contributes to international development banks, US corporations receive more than double the amount in bank- financed procurement contracts.

Given the profits at stake, is it conceivable that Northern countries cancel the debt, write off procurement and grant sovereignty to the South? Will Davos deliver? This is not in the cards, says economist Walden Bello of the Global South, a development NGO. "World Bank- sponsored macro-economic strategies, are ostensibly aimed at prioritising poverty reduction, but are actually the same old free-market programmes with cosmetic safety nets."