Views from the South on "North-South" Issues and South-North Peoples' Alternatives
Views from the South on "North-South" Issues and South-North Peoples' Alternatives
A Dutch translation can be found on Globalinfo
The nature and causes of the deepening poverty and economic, social and environmental stresses in the world, and the proposed solutions can be dealt with under key headings reflecting and responding to the main focuses in the international debates and the most common solutions being proposed. Within each of these areas of focus it will be evident that the
The main focus of this paper will be on the situation within the 49 Least Developed Countries (LDCs) and international policy responses to the increasingly evident and deep problems within these countries. The current terminology of 'Least Developed' and 'Developing' to categorise the countries of Africa will be used in this paper although with strong reservations as to their full accuracy and analytical utility, particularly since many so-called 'developing' countries are stagnating or even regressing on a number of fronts. Furthermore, artificial divisions are being created in international policy and practice, and potential differences and even tensions being fostered between least developed and so-called developing countries, Yet the majority of the latter contain large sectors of serious poverty and other problems within their populations, and their governments are struggling under very much the same international pressures and national problems as their least developed counterparts although their domestic resources and capacities may be marginally better.
Many of the causative factors of poverty and crisis are internal to these countries and these have to be dealt with, most fundamentally, by and between their governments and peoples. But it is essential that it be recognised internationally that there are complex interactions between internal and external factors and forces. As this paper will demonstrate, it is
1. "Market Access" or Effective Trade Roles and Rights
In a world system in which international trade has expanded by more than 30%, between 1994 and1999 since the Uruguay Round, the combined share of global trade of the broad band of 'developing' countries has gone down from almost 50% to under 44%; within which that of Africa as a whole has declined from 8% to less than 2%, while for the LDCs this is now less than 0.5%. In a comparative global overview it is striking that
1.1 A common proposal from UN agencies and from non-governmental organisations is that the weaker trading countries must be given improved "market access" into the economies of the richest countries. The governments of developing countries, especially in Africa, have long been arguing for this, and this even found its way into the final agreements that emerged from the UN World Summit on Sustainable Development in 2002. What this holds out in practice is indicated in the EU's much trumpeted unilateral offer of apparently duty-free and quota-free access for all the exports of all LDCs into the European market. (1) The EU parliament has welcomed this so-called Everything But Arms (EBA) offer (2), but this proposal has various qualifications and limitations, in that improved access for some key LDC exports (bananas , sugar and rice) (3) will only be introduced gradually between 2006 and the later part of 2009, and until then will continue to be under quota constraints and pricing pressures. What is more, in relation to these and other products, the EU, like the US and other richer countries, still jealously defend 'safeguard' provisions to ensure that their producers will be protected against "import surges" from LDC producers/countries; even though their total combined exports amount, for example, to less than 1% of EU imports. This latest manifestation of long-established and wider protectionism within the EU, the US and other industrialised countries is a major challenge to all activists genuinely concerned about inequities and poverty in the world.
1.2 It must also be noted that during the years between 2001 and 2009, this improved access or what used to be called 'trade preferences' for LDCs will undergo a wider "erosion" through the continuing trade liberalisation that is taking place globally. This is precisely the argument by EU officials against continued trade preferences into the EU market for the African Caribbean and Pacific (ACP) countries. The European Commission's officials, in the context of EU-ACP negotiations over the future of the Lome Convention, frequently point to the limited future for special market access for such countries. What this 'erosion' means is that the LDCs have, in fact, been given a very narrow window of opportunity by the EU. Even before 2006, and certainly before 2009, stronger exporters from other countries will be moving rapidly towards the same market access; many confronting LDCs with heavy competition in the same areas of export interest to them. Washington's own unilateral 'trade access' offer to African countries, the so-called African Growth and Opportunities Act (AGOA) is similarly narrowly confined in both in substance and timeframes.
1.3 Even more significantly, the EU is putting increasing pressure upon the ACP countries to provide the EU with "reciprocal" trade access into their markets under the terms proposed in the new Cotonou Agreement that is replacing the old Lome Convention. The 40 LDCs amongst the 77 ACP have apparently been given the option of continued preferential treatment (as in 1.1 and 1.2 above?), but it is quite clear that the major thrust from the EU side is towards reciprocal trade liberalisation within so-called Regional Economic Partnership Agreements (REPAs). If these are to be based upon exisiting or emerging regions between the ACP countries themselves, such as the Southern African Development Community (SADC), these inter-regional (eg EU-SADC) reciprocal free trade agreements will include LDCs as well as non-LDC 'developing' countries. (4) It is proposed by the EU that this 'reciprocity' will begin to come into effect from 2008. From that date the increasing competitive pressures from EU exporters into these regions/countries will be a further counter-effect against their hypothetical gains that are expected from the EBA - for some from 2001 and for others between 2006-2009. Most significantly of all, both the EU and the US are including in their 'trade access' offers to such countries a host of political ('good governance') and other economic conditionalities or quid pro quos. These include investment rights and guarantees, stringent intellectual property rights and full access to government procurement in such countries for Northern 'global' corporations, as well as privatisation of state assets and the public sectors generally in such countries, again to the inevitable benefit of Northern corporations.
1.4 Over and above the targeted use of quotas and tariff barriers by Northern governments, there are other major trade impediments into the markets of the richer countries. These are the technical barriers to trade (TBTs) which confront LDC and other developing country exporters with more covert but very difficult non-tariff barriers (NTBs). These include, for example, Sanitary and Phytosanitary Standards (SPSSs) which can certainly be justified, in and of themselves, and within the context of the demanding standards of richer economies. But they impose further heavy technical and economic burdens on lesser developed countries. They also require - not coincidentally - that these countries import yet further products and technologies from the industrialised countries in order to satisfy their demands on product packaging and production measures (PPPMs). Even more significantly, such standards are often manipulated by the companies and governments of the richer countries as disguised protectionist devices in terms of the needs and demands of special domestic interests. It is estimated that these and the other restrictions in rich countries cost developing countries around $US 100 billion a year, which is twice what they receive in 'aid' (see 3. below). In response to the technical and economic problems that these barriers raise for weaker economies, and the political challenges that are posed, the standard answer is to offer them 'increased technical assistance' (but see 2. below).
1.5 In addition to all the above, however, there is an even more fundamental misconception or fallacy in the proposed reliance upon the (highly exaggerated) gains predicted from 'improved market access' as a response to the economic problems of the weaker developing countries. It is essential that progressive analysts and particularly the 'fair trade' activists in the North understand that trade reforms by their governments may improve the returns that developing countries get from their exports, but this does not deal with the more fundamental problem. This is that most of these countries actually have little capacity to take advantage of whatever greater 'trade opportunities' may eventually emerge. Their deficiencies include poor transport and marketing infrastructures, the lack of appropriate technology, production inputs, equipment, land, and other productive assets and credit facilities for small, medium and even larger producers. Trade barriers are certainly a problem, but the greater and more serious problems of LDCs, as well as most non-LDC 'developing' countries in Africa, lie in their own export limitations, the limited range, low-volume and non-competitive character of their "supply capacities". Trade can provide outlets and even 'stimulus' to producers, but it is not trade but production that is primary because effective trade reflects and requires prior levels and forms of productive capacities. Once again, the common answer from the Northern governmental agencies and even UN agencies is that this fundamental dilemma can be solved with more technical assistance.
2. "Technical Assistance" or Independent Policy Rights!
The standard interpretation by international agencies, such as the IMF and World Bank, the WTO and the International Trade Center (ITC), and even UNCTAD to some degree, is that the limited capacity of LDCs and other developing countries to take advantage of global trade liberalisation can be dealt with by ensuring that they are provided with better 'market information' and by training them in greater 'marketing skills'. This is not incorrect as far as it goes, but it is a very superficial and certainly an insufficient response to their problems. The European Commission, similarly, has long been engaged in various programmes of technical assistance to the ACP countries, above all within the framework of the Lome Convention. But, like the major international agencies, they largely miss the main problems:
2.1 The first mistake is the assumption that the solution to the low levels of external trade of such economies is simply to encourage and assist them to produce more, or more efficiently, what they have always produced - pursuing their so-called Comparative Advantage. This is what the World Bank and other neo-classical trade theorists have long advised and insisted upon. The effect has been to aggravate the over-supply of the commodities produced and exported by countries in Africa, Asia, Latin America and the Caribbean into the markets of the richest countries. The resultant depression of prices has contributed further to the catastrophically deteriorating terms of trade between the highly industrialised economies and the weakly-industrialised or non-industrialised economies; and between the costs of high-tech services and manufactured imports by the latter, on the one hand, and their returns on basic commodity exports on the other. The widening price gap between commodities (other than fuel) and manufactured goods, in the years between 1979 and 1994, caused a 52% decline in international terms of trade, amounting to lost earnings of an average US $ 20 billion per annum for developing countries. (5) This was accentuated between 1994 and 1999 by the declining share of agricultural trade to a mere 12% of global trade, as against the 77% share of manufactured goods. It also reflects the vast expansion of trade in services. During the 1990s, this reached 20% of all international trade, to a value of US $ 1.35 trillion annually, and this is overwhelmingly dominated by more industrialised economies, where services now constitute up to 70% of their GDPs [WTO, LDCs Sub-committee, 20/4/01].
2.2 The real answer to the so-called 'supply capacities' of the LDCs lies in dealing with their production and services incapacities which are structural in nature. On the one hand, LDCs, and indeed most countries in Africa, are characterised by a heavy dependence on one or two commodity exports. More than fifty developing countries depend on only three or four commodities for 50% of their export earnings; which, for seventeen countries in Africa, amongst these, account for 75% or more of their export earnings. This commodity export dependence makes their entire economies very vulnerable to shifts - and manipulations - in international commodity markets over which they have no control or even influence. The basic solution, obviously, is to diversify their economies and thus their potential exports. But the fuller challenge is also to reconceive the nature and role of trade in their economies. The paradox is that although low in the context of the global economy, trade plays an exaggerated role within the economies of most developing countries. The trade-to-GDP ratio in Sub-Saharan Africa increased from 38% to 43% between 1989 and 2000 - due, in part, to the decline of domestic agricultural and industrial production under conditions of economic liberalisation in those years. For LDCs, the trade to GDP ratio is 50% [UNCTAD, 2001]. In contrast, the ratio of trade to GDP in the more industrialised OECD countries now stands at an average of only 20% [World Bank, WDR 2000]. In many African countries the commercialised production sectors of their economies are both small and excessively extroverted and with very limited internal backward and forward linkages. Yet such countries are routinely accused of being 'insufficiently integrated' into the global economy by the governments of the richest countries, and by the IMF, World Bank and other promoters of neo-liberal policies. But the increase of external trade by weaker economies is not a self-evident sine qua non. If not re-evaluated in terms of its role in national economies, restructured in its substance, means and methods, and redirected in terms of its orientations, increased external trade of weaker economies could simply reinforce existing dependence on current exports and established markets, and continued extreme vulnerability to external shocks. The alternative is not economic autarchy but the transformation of what are extroverted and shallow 'trading economies' towards nationally integrated and effective multi-faceted production economies. In addition to changes in national trade-and-production strategies, regional cross-border trade and other economic cooperation relations between countries in close proximity and at closer levels of development, and sharing many other common needs and aims, are recognised to be an important intermediate trade-and-production strategy for developing economies, especially in Africa. This actually entails increased intra-regional trade and a reduced role for international trade.
2.3 In so far as such external trade is judged necessary, it should be based upon different volumes and a wider range, or specific types of possible exports and a wider range of export markets. There are, however, major internal, intra-regional and international counter-pressures on countries entering into multi-national regional development arrangements (6), and such strategies will not be possible without complex and sustained inter-governmental negotiations and national accommodations within such regional development (plus trade) groupings. However, the policies of European governments, the Commission and the Lome Convention have reflected and reinforced an excessive ACP focus - and dependence - on European markets, and now through the Regional Economic Partnership Agreements being promoted through the Cotonou Treaty.. But it must be added that responsibility for this also lies with ACP governments which cling to the perceived guarantees in the status quo and are reluctant to try venturing down new paths or even implementing more independent and appropriate programmes while still using Lome or Cotonou supports. Yet, many such governments do recognise that they urgently need to improve the range and quality, and not just the quantity, of their exports. That entails more advanced levels and forms of production. Processing or beneficiation of their commodities would provide much greater value-added to their products with many benefits to their domestic economies, above all employment creation. However, the paradox is that if countries do manage to move higher up the ladder of economic performance, and out of the LDC category - which is claimed to be the aim of all - they would, like the other 'developing countries' in Africa and elsewhere, face prohibitive tariff peaks against their products which can be hundreds of times greater than the tariffs that the industrialised countries set on each others exports. Even more inimical to the development and diversification of African economies are the soaring tariff escalations in the most industrialised economies which rise directly in step with the degree of processing or manufacture of developing country agricultural, mineral, and other commodity exports. This is the most blatant expression of the highly self-serving protectionism within the industrialised countries which also actively militates against even the most basic of industrialisation in developing countries.
2.4 Furthermore, if the less developed countries are to move into higher levels and forms of production, that cannot happen without strategic state support to small and medium domestic producers ... and to even larger. Such transformative local/national/regional sustainable trade-and-production strategies are only possible through the combined role of governmental and parastatal agencies, national trusts, local community and other accountable public agencies. Such complex, and of necessity planned and negotiated, economic strategies cannot be driven by the self-selected and self-interested business operations of corporations, whether domestic or foreign. The prevailing insistence on the efficiency and sufficiency of 'market forces' is self-serving propaganda by private sector interests and it has to be explicitly challenged by all progressive forces. In addition to the growing social imbalances and blatant inequities created by the free market system, pro-market propaganda minimises or ignores the inefficiencies and waste, the environmental damage and social costs of 'market' processes; and it sweeps under the carpet the built-in instabilities and failures of 'the market'. Furthermore, current free market propaganda ignores the fact that, historically and currently, both in the highly industrialised and the more recent industrialising economies, national economic growth and development - and 'private' enterprise per se - have needed governmental supports, protections and strategic interventions. In this light, what is now required is the formal recognition of the need and right, the policy space - and the means - for less industrialised countries to be able to use their own judicious tariff policies, targeted production, transport and export subsidies, and other instruments, in ways that are necessary for their own effective and sustainable economic and social development needs. The most serious impediment for LDCs and other 'developing' countries is that they are hoping, and expected, to improve their production and productive capacities in this neo-liberal era - in which they are barred from using the targeted governmental policy instruments and practical supports that all economies have hitherto enjoyed and many still employ (see 6. below). The challenge to the EU and other highly industrialised countries and the international institutions they dominate, above all the WTO, is whether they are prepared to accept the repeated proposal from poorer countries (7), that they be allowed to use tariff measures and other state supports such as production diversification instruments and their own type of "non-actionable" subsidies (which are allowed to the most developed countries) (8) for their own development. This requires fundamental changes not only in national policies but in current international liberalisation and free market rules, above all within and through the WTO, which are restricting and even prohibiting alternative developmental policy options.
2.5 In addition to all the above, a most fundamental problems with the 'technical assistance' offered to the LDCs and other 'developing' countries, especially in Africa, are not only that this has been totally inadequate or not forthcoming, but that it has simply been wrong in content and intention. The promise of technical aid and 'capacity building' by international agencies, used and backed up by Northern governments, is a common device employed to deflect criticisms of the status quo by developing countries and persuade them to accept policies that they oppose. As has often been pointed out by seasoned observers and analysts of the tricks-of-the-trade in the IMF, the World Bank and the WTO, such offers are a standard inducement and misleading reassurance to Africans to get them to accept proposals contrary to their own judgments. In this way, "African countries have lost many opportunities to negotiate better trade-offs [in the WTO] through premature acceptance of offers of technical assistance [whereas] such assistance should only be accepted after substantive matters have been satisfactorily resolved" (9). In the Doha Ministerial Conference of the WTO, for example, such 'capacity building' offers were, once again, used to brush aside the criticisms by developing countries, ignoring the fact that many countries pointed out that they had objections in principle to the nature and implications of the new issues being promoted by the major powers. The problem of developing countries was not merely one of lack of capacity to understand or negotiate the issues. But the technical advice and capacity building provided simply endorses and reinforces the existing system. Thus, training on the complexities of WTO agreements is done by the WTO itself, with some assistance from the ITC and UNCTAD, does not provide critical insights and alternatives but is simply designed to 'help' such governments to 'understand' and fully implement the legal terms. The long-awaited joint Integrated Framework (IF) of technical assistance by a range of international agencies that has - very belatedly - been set up, is based on the assumption that what these countries need is more 'integration into the global economy'; whereas it is precisely the current nature of that global economy and the proposed terms of that integration that are the most fundamental problem. And it is these that have to be challenged and changed (see also 9 below).
3. "Financial Aid" as a Political Device or Human Obligation?
As with technical assistance, the financial assistance provided by the rich industrialised countries to LDCs and other 'developing' countries is totally inadequate to their needs, frequently misconceived, misapplied, and above all invariably conditional, controlled and controlling. Even in mere quantitative terms, so-called Overseas Development Assistance (ODA) declined sharply during the hey-day of the neo-liberal 1990s. Between 1992 and 2000 ODA of the OECD was reduced from US $ 55 billion to US $ 39 billion, with the US, Canada, Italy and Germany reducing their ODA by 30%. The share of total ODA going to Sub-Saharan Africa declined from 37% to 27% [UNCTAD 2000] and is now back to the levels of the early 1970s. The European Commission itself acknowledges that, whereas ODA was of the order of US $32 per person in 1990, this had gone down to US $19 per person by 1998. Against this background:
3.1 The agreed UN target, frequently endorsed by international agencies, governments and non-governmental agencies, is for the OECD countries to contribute 0.7% of their GDPs to developing countries, and 0.15% specifically to LDCs. Very few OECD countries are anywhere near this target with the average standing at only 0.22%; although there are half a dozen countries that have made the effort and should be acknowledged. (10) However, even the much heralded big power promises to increase aid that emerged from the UN Conference on Financing for Development in early 2002 will only result in 0.39% of the EU's GDP and 0.15% of the United States'. More importantly, however, it must be recognised that even the 0.7% level has always been a minimal gesture from the rich economies to the poor and is even more inadequate in the context of the vast and growing disparities in income between the industrialised countries, on the one hand, and the LDCs and weaker 'developing' countries, on the other. As the UNDP has demonstrated in its Human Development Reports over the past decade, the disparities of income between the poorest 20% and the richest 20% of the world's population has worsened from 1:61 to 1:84 during the decade of the 1990s. With average annual per capita income in the LDCs standing at a mere US $287, and that in the industrialised countries at an average of US $ 27,402, the income gap is of the order of nearly 1:100. It is encumbent on Northern NGOs to expose this outrageous disparity and challenge the legitimacy of even the established (but unfulfilled) 0.7% promise, rather than uncritically promoting it.
3.2 The notorious conditionalities of blatantly self-serving 'tied aid' of previous years have, under intensive scrutiny and criticism - both in the recipient countries as well as by Northern NGOs, especially in Europe - been replaced by more subtle methods. However, 'donor' governments continue to direct major proportions of so-called 'overseas' aid into their own national economies and companies. For example, a considerable part of such aid and 'grants' actually go towards Export Credit Guarantee and Investment Guarantee schemes to support and promote exporters and investors in the 'donor' countries. The EU Parliament seems to recognise the seriousness of this in recommending that, not only should such 'aid' be increased, but "at least 50% should be spent in the LDCs themselves". This reflects something of the real nature and direction of 'aid flows. (11)
3.3 In terms other than the quantitative, there are many problems with the EC's procedures and processes of disbursing aid, which entail inordinate delays and actually place additional bureaucratic and technical burdens on the over-stretched, under-equipped recipients. More importantly, this aid continues to be attached to a host of complex conditionalities, some of which are justifiable technical requirements of accountability and reporting. But others go much further to set, directly and indirectly, much more questionable economic policy demands and political conditionalities (see 1.3 above, and also 8 and 9 below). These supposedly 'technical' requirements are integral to the fuller picture of "the reality of aid" as analysed by independent European researchers. (12)
3.4 Aid is rarely, if ever, entirely disinterested. It is always utilised tactically by the donors, however indirectly, and it is inherently more advantageous to the aid provider. Even where it is - hypothetically - given with the best of intentions, aid reflects and reinforces the objective power relations, the hard realities - and political psychology - of dependence in the recipients. Aid can only be justified if it is conceived and shaped as a short term transitional measure to overcome specific hurdles or reach specific targets; and if it is explicitly designed to change the nature of the relationships and end the very need for aid. There is an unfortunate tendency, even among those sympathetic to LDCs and the 'developing' countries, to view aid as a long-term or indefinite relationship and as a self-evident 'good'. It is seldom this - in practice or in principle and this must be taken on board by all well-meaning supporters of the poorer parts of the world. However, it must also be noted that a different and crude counter-argument to the manifest problems intrinsic to 'aid' - namely, the view of neo-liberal theorists and enthusiastically taken up by self-serving rich governments that 'trade is better than aid' - is both ineffective (as in 1. above and 6. below) and is basically designed to promote their own trade and other agendas.
3.5 In contrast to either of these views, the more fundamental issue about financial transfers from the rich to the poor is that it should be neither 'well-meaning charity' nor 'misdirected pandering'. So-called aid is about the redistribution or return of historic and continuing transfers of wealth and resources from the South to the North. Such transfers have to be accepted as the obligation of the enriched countries to the impoverished, as well as a profound human necessity and forward-looking strategic responsibility of all of humanity in a highly interdependent and increasingly socially and environmentally unstable world. This strategic and moral obligation exists because
4. "Investment Flows" Economic Gains, or Systemic Dangers?
The irony is that one of the solutions to poverty most commonly promoted by Northern governments and the international institutions they dominate actually reinforces this system by proposing increased reliance of the poor on investment from the accumulated resources of the rich. The assumption, even amongst some progressive analysts and NGOs, and within UNCTAD itself, is that although foreign investors are, of course, motivated by their own business interests, the 'marginalisation' of poorer countries from such investment flows is even worse and is a major part of their crises. As the UNCTAD 2000 report on LDCs points out, foreign direct investment (FDI) in the 48 LDCs in the world declined by some 30% during the 1990s to a mere 1.4% of the total FDI going to all the developing countries. The whole of Africa, which includes 34 of the current 49 LDCs, receives less than 5% of all FDI to developing countries, and most of that goes to a half a dozen, mainly oil producing countries. (13) The EU parliamentary position (14) supports the EC offer of 'incentives' to encourage European investors, but there are a number of questionable features and effects of FDI:
4.1 Northern governments, including the EU, routinely include such incentives within their 'aid programmes' and portray this as a part of its assistance to LDCs and the ACP in general, and this inflates the apparent 'aid' on offer. On the one hand, it should be clearly recognised that such incentives are internal to the EU and are a matter between the EC/European governments and European capital - and between them and the citizens of Europe since it is public money that is so used. On the other hand, the overwhelming gains of foreign investment accrue to the investors and the main costs to the 'host' countries receiving FDI. UNCTAD points out that although very little FDI goes to African countries - less than 1% of global FDI flows - that which does, routinely receives profit returns of almost 30% pa which is very much higher than profit rates even in the 'emerging' economies in Asia or within the EU itself.
4.2 UNCTAD also points out that 27 of the 48 LDCs during the 1990s introduced extensive liberalisation of capital transfers under IMF/WB structural adjustment programmes (SAPs) in order to facilitate repatriation of foreign companies' corporate profits and thereby encourage greater investment flows. However, contrary to IMF/WB prescriptions and promises, financial liberalisation, while demanded as an essential pre-condition, is simply not sufficient to attract capital to poor countries - other than into extremely profitable mineral and oil extraction enclaves. To attract any investment beyond crude resource extraction, LDC governments have to compete with each other and other developing countries to lure foreign investors with an ever-increasing array of generous tax incentives, infrastructural facilities and subsidised utilities, and many other financial incentives. Other inducements required by foreign investors result in a 'race to the bottom' in lowered wages and worsening labour conditions, and virtual carte blanche on environmental pollution and other abuses.
4.3 The further problem is that, even if some LDC and other developing country governments were to be committed - or compelled by their populations - to try to set terms and conditions on FDI in order to prevent such abuses, and to try to guarantee at least some developmental gains to their economies and people, these are now being constrained by the terms of the WTO Agreement on Trade Related Investment Measures (TRIMs). This controversial agreement effectively prohibits performance requirements such as local content inputs to production, foreign exchange earnings from exports, reinvestment of a proportion of profits, the transfer of management skills, technology and labour training. These are alleged to create 'distortions' in the 'international competitiveness'of transnational corporations and can result in damaging actions in the WTO against countries that attempt to place such requirements on international investors.
4.4 The EC has been a major proponent of TRIMs in the WTO and EU member states are also directly involved, within the OECD and/or the WTO in trying to create a so-called Multilateral Agreement on Investment that will expand even further the freedoms and 'rights' of foreign investors to operate freely everywhere in the world. The EU is also behind the drive within the WTO to force all countries to open up their government procurement sectors to international business competition. If such agreements were to become part of the international economic regime, it would make it ever more difficult for weaker governments to use public tenders, as with other such public policy instruments, as part of their national development strategies. (15) These are part of the fuller implications of the role of foreign investment and the rights of capital in countries that are being encouraged to look to international capital to solve their problems.
4.5 The most fundamental problem about dependence on international capital flows is that these are now taking place within the context of extensively deregulated financial markets and inadequately monitored banking and other financial organisations, utilising powerful technological instruments and under conditions of escalating and astronomical global financial transactions. The inter-linkages are becoming more complex - and clearer - between purportedly 'productive' FDI ventures, mergers and acquisitions as a one of the main forms of so-called FDI, stock-market trading and portfolio investment and speculative currency operations. And their exploitative and destabilising effects are becoming increasingly dangerous. This is the systemic context within which to assess the very advisability of relying in any significant way on international capital flows in the fight against poverty. The difficult challenge for weaker countries is, of course, how to mobilise more diverse - and mainly internal - financial and other development resources. At the very minimum this would entail slowing down or stopping the longstanding net outflow of financial resources from these countries (16) including through onerous debt payments.
5. "Debt Relief" or Total Cancellation or Repudiation?
Thirty of the 49 LDCs are HIPCs, the so-called Heavily Indebted Poor Countries. The external indebtedness of the countries of Sub-Saharan Africa has trebled over the past decade, despite combined average debt payments of US $20 billion annually throughout these years. But even with 'debt relief ' such countries still spent nearly 20% of their meager export earnings on servicing their external debts. Of the HIPCs, 18 will still in the coming years be spending more on debt servicing than on health or education which are crucial to dealing with poverty and disempowerment, as well as national economic development. It is now widely recognised that this situation is financially unsustainable and a serious impediment to dealing with their dire social, environmental and economic problems. Recently the European Commission announced that it would be canceling all the debts, amounting to some US $ 54 million, of 40 ACP countries linked to the European Development Fund (EDF) under Lome. This apparently generous offer, like many similar, actually poses a number of important questions and challenges:
5.1 The first is that many such offers are made for maximum political 'effect' with little real gain for the recipients of such relief. There is much exaggeration of the real sums involved and much deliberate conflation of terms - such as 'relief', 'reduction', 'write-offs' and 'cancellation' - in order to convey the impression that more is being achieved than is in fact the case. The EC offer, for example, is a very limited relief on some of the ACPs' debt to multilateral EC financial programmes, but it must be kept in mind that this does not deal with the bilateral debts that most such countries have with individual EU member states, and even more-so their huge debts with the International Financial Institutions (IFIs) and banks. European NGOs and progressive analysts must challenge their respective home governments on the bilateral debts of developing countries but also acting on their obligation and power to push the IMF and World Bank to full cancellation of all these countries' multilateral debt.
5.2 In so-far-as some of the EU member states have undertaken some unilateral debt relief (17), this, too, is utilised for self-serving political ends, and depicted as carrying 'costs' to them, as well as requiring 'new resources'. There may well be costs to creditor governments and some will indeed have to forgo some income. The alternative would be the morally untenable argument that government coffers in the rich countries should continue to receive such inflows - even though these are minuscule within their overall revenues but huge within the revenues of debtor governments. In fact, the 'costs' to the creditors are largely a myth. Many of the so-called costs or losses would actually be incurred by banks and other private and public financial agencies, such as the Export Credit Guarantee Board (ECGB) in the UK. For commercial banks, this would be further income foregone rather than real losses since most have already been fully reimbursed , often many times over for the loans they provided. The real 'costs' continue to fall heavily upon the poorest people and countries of the world. Nothing short of rapid, total and unconditional cancellation of all bilateral and multilateral debts can be acceptable, and it is this that should be supported by EU parliamentarians as well as European civil society organisations.
5.3 On the vexed question of conditionalities, the first point is that these cannot be left in the hands of those that have helped to create the crisis - creditor governments and multilateral agencies alike. It has to be the people of the countries concerned who are empowered to ensure that they have greater future control over their governments on these issues. The main problem, however, is that the European Commission, the Paris Club of government lenders, the UN, the IFIs, the EU parliament - and even Africa's own New Partnership for Africa's Development (NEPAD) - link debt relief to a continuation of the structural adjustment conditionalities of the IMF and World Bank. Yet these very SAPs have been the over-riding factors in the deteriorating economic situation of countries under their sway. And they have been used as levers to maintain and deepen the external financial dependence and subordination of indebted governments to external policy controls. This is the aim of the so-called HIPC (SAP) conditionalities, and this is why they are not acceptable to debt campaigners in these countries and worldwide.
5.4 In the context of discussions on how to end poverty, it is important to note further that HIPC debt relief is now also linked to and conditional upon such countries drawing up so-called Poverty Reduction Strategy Papers (PRSPs). This latest strategy by the IMF/World Bank is apparently commendably - if belatedly - focused on poverty. The PRSPs are also ostensibly intended to be drawn up through processes of broad consultation within these countries, and with 'national ownership' of the outcome. However, apart from many questionable features in the process of the formulation of PRSPs, which are not inclusive and genuinely consultative, the most significant point is that the whole exercise will actually result in the radical extension of ultimate IMF/WB policy control. Under the so-called PRSPs IMF and WB oversight will be extended from macro-economic and related economic policies to include every aspect of the domestic socio-economic and social policies and programmes of poor countries that are indebted to them and desperately need 'debt relief'.
5.5 Most fundamentally of all, however, the entire conceptualisation - and myth - of indebtedness of the HIPCs to the IFIs, of debtor governments to creditor governments has to be interrogated and exposed. The net financial flows are, and have long been, from the debtors to the creditors, from the poor to the rich, from the South to the North. And, as campaigners in these countries calculate the many forms of South-North resource transfers, and the manifold costs imposed upon their countries, peoples, and environments, over many years, they justifiably ask "who owes whom?" With the Jubilee South slogan "Don't Owe! Won't Pay", campaigns are developing for debt repudiation by the 'debtors' and even for reparations due from the 'creditors'. These are radical but legitimate positions if no other definitive resolution to their debt enslavement is forthcoming. The struggles towards such positions are largely internal matters between the peoples and governments of the respective 'debtor' countries; working towards a potential joint position and action by them all. But, at the very least, progressive EU parliamentarians should be aware of this; and civil society campaigners in Europe and throughout the world should give their active support to their counterparts in the South, as asked for.
6. "Poverty Alleviation" or "Reduction" or Elimination!
As the UN holds its third international conference focused on LDCs, greater public attention is focused (and, hopefully, not just briefly) on the dire and deteriorating situation in these 49 countries. The gap between the most and least 'developed' countries in the world is widening. The high income countries have 14% of the world's population but enjoy 75% of global GDP. Average income in the most industrialised countries is US $ 22,924.00 per annum but in the broad band of developing countries per capita income is US $ 951.00 However taking Sub-Sarahan Africa alone, the figure falls to US $ 520 and for the LDCs it is a mere US $ 279 per capita per annum. UNDP global monitoring reveals that 1.3 billion people in the world subsist on less than the equivalent of US $1 per day, that this figure is increasing by 20 million a year, and that 70% of the most impoverished are female. Any discussions on this critical situation, any development initiatives to respond to it have to include critical engagement with the following issues:
6.1 The key framework of mainstream debate is that all international and national agencies must concert their efforts to halve global poverty by the year 2015, including reducing infant mortality rates by two thirds, and maternal mortality rates by three quarters. This is the agreed consensus within the UN Millennium Development Goals, and many developing country governments and non-governmental organisations throughout the world support these commendable aims. This position may be well-intentioned but, like many others, is unfortunately, marked by further confusion of apparently similar concepts and aims that have differing implications for the policy makers ..... but moreso for the poverty-stricken subjects of the strategy. It is important to be quite clear whether the aim and therefore content of development initiatives are towards simple poverty alleviation, some reduction, or effective elimination? And, if not the latter, how is this to be justified to those hundreds of millions of people who are thereby expected to remain in dire poverty for another fifteen years beyond 2015 ... another generation .... another century?
6.2 If the aim is to tackle the most significant bases of poverty within LDCs and other poor countries, this must start from the fact that in most LDCs up to 80% of their populations live in the rural areas. This is still above 40% even in the stronger 'developing' countries in Africa. These populations depend on agriculture for their livelihoods, for family security, community stability and cultural sustenance and much more. In this context, supporting the development of small and medium agricultural production with extension, transport and distribution services is the essential base for tackling rural poverty. However, even if technically well designed, such government instruments are not sufficient without effective political decisions towards resource transfers, above all with respect to land and water resources. The EU Parliamentary resolution on LDCs seems to recognise this. However, this fundamental change is not happening and will not happen under IMF/WB insistence on 'market processes' and 'private enterprise', and even the proposed commercialisation of communal lands and privatisation of water provision. (18)
6.3 Another impediment to the development of small-scale agricultural production in poorer countries is that they have great difficulty in producing competitively for international markets (as in 1 above). Most seriously, they are faced with insupportable competition from subsidised agricultural exports from the EU, the US and other industrialised economies, although the methods and forms of the respective government supports differ. However, taken together such support amounts to about one billion US dollars a day which enable their producers and exporters to dump their products on developing country markets at 30% less than their real costs. Such dumping also affects middle and larger agricultural producers - and agricultural workers - even in relatively 'stronger' economies such as Kenya and Zimbabwe, and even 'middle-income' South Africa. Subsidised developed country exports also confront them all with unfair competition even in their exports into third markets. If EU parliamentarians and other concerned people in Europe are to be really supportive in tackling poverty in LDCs and elsewhere, this has to start by dealing resolutely with such destructive and costly policies.
6.4 The World Bank solution for weak agricultural production and low rural incomes is to 'encourage' countries under their programmes to increase and diversify their cash crop exports. This is also ostensibly designed to increase national foreign exchange earnings but the main purpose of this, amongst other things, is for governments to pay off foreign debts. This cash crop production includes the traditional tropical commodities but also new high-value/low volume specialised crops such a cut flowers and luxury fruits and vegetables for the rich consumer markets of the North. The Bank gives the same advice to dozens of client countries and thus helps to ensure downward pressures on prices through increased market competition. This is another form of subsidisation by the South to the consumption patterns and standards of living in the North. This redirection and commercialisation of small-scale agriculture is also adversely affecting the role and status of many rural women as larger, more aggressive (largely male) businessmen move in on the relatively more profitable cash crop sector - and valuable rural land and water - displacing 'womens' food production.
6.5 This points to the most serious effect of this World Bank approach to agricultural production in these countries. It is directing the rural poor away from domestic food crop production and explicitly advising these countries to import cheaper food staples .... .produced by large-scale agri-business in the most highly industrialised countries! This is another form of resource transfer from the South to the North and places additional pressures on the external balance of payments of poor countries. It is also seriously exacerbating the food insecurity of families and communities and the external food dependency of such economies. This highly undesirable and financially unsustainable situation is even worse than originally anticipated during the Uruguay Round. Thus the failure of the dominant WTO members to implement the undertakings, made then, to provide support to Net Food Importing Developing Countries (NFIDCs) is all the more reprehensible. Powerful industrialised economies are contributing to the the food crises in the South, as governments in the North fight to defend their respective agricultural interests in the current negotiations on the Agreement on Agriculture (AoA) in the WTO. The challenge to non-governmental analysts and activists in the highly industrialised economies is to pressurise their governments to accept the call from the Africa group at the WTO that the terms of the AoA must be based on the fundamentally important need and right of all people and countries to food security.
7. "Labour and Social Development" and Human Rights!
A complementary set of proposals to tackle poverty, in both rural and urban populations, focuses on more specific social problems and the necessary counter measures in LDCs and other poor countries. On any of the key human development indicators, the situation in African LDCs and even so-called developing countries is appalling; with infant mortality at an average of 107 per 1000 (compared to 4 or 5 in the richest countries), life expectancy at 51 years and falling (compared to 78 and rising in the richest countries), and literacy at a mere 48% (and lower for women). The Millennium Development Goals endorse the need for increased resources for educational and health programmes, especially for girls and women. This is correct of course. But it poses a number of questions:
7.1 The first point is that the provision of such services has to be viewed, and responded to both as a development imperative for these countries and as part of the fundamental human rights of their populations. This stands in clear contrast to the World Bank approach which evaluates such services for their contribution to 'the improvement of human capital' to attract and make foreign investment more productive. Similarly, the EU position in the WTO of 'improving working conditions' also does not explicitly commit to promoting labour rights, whereas the EU parliament explicitly calls for full recognition and implementation of all the ILO conventions. Furthermore, the major governments in the WTO actively defend Trade Related Investment Measures (TRIMs) in the WTO which actually discourages, and even prevents, governments from including improved labour rights and conditions in foreign investment agreements.
7.2 With respect to the provision of essential social services, the fact is that after a period of marked improvement in health, education, life expectancy and other social indicators in the first decades after independence in most of the countries of Africa, these achievements have not only been denied and covered up but seriously undermined under IMF macro-economic constraints on government expenditure and World Bank advice on fee payment or "cost recovery" by governments for education and health services. The inevitable result has been reduced access to such services for the poor, with dramatically adverse effects on all social indicators, particularly for women in health care and for girls in access to education.
7.3 The further tragic irony is that, just as the World Bank is coming round to (tacitly) recognising and (apparently) modifying such mistaken policies, new threats are facing the public provision of such social services, as well as water and sanitation, public housing, and energy supplies, public transport and much else. Commercialisation and privatisation under the IMF/WB has already adversely affected access of the poor to these services, and this will be reinforced if the current negotiations in the WTO on the General Agreement on Trade in Services (GATS) compel member countries to 'open up' all such sectors to the operations of giant transnational service corporations. The extended GATS would place severe constraints on public policy and government regulation in these spheres within all countries so as not to 'unnecessarily' prejudice the interests and rights of global service corporations. Such global corporate competition would also place severe pressures on public services, impelling them towards increasing corporatisation and eventual privatisation. Concerned citizens organisations have to challenge their governments on their support for services liberalisation and privatisation through the WTO. This would also be part of an important defence of (surviving) public social services in the industrialised countries as well.
7.4 Equally importantly, concerned activists throughout the world have to question the role of their governments in the creation of the WTO Agreement on Trade Related Intellectual Property Rights (TRIPS). As is now widely recognised, TRIPS, amongst many other questionable functions, prioritises the 'patent' rights of giant pharmaceutical corporations against the health needs of poor countries and the many millions suffering and dying under preventable diseases. The most dramatic crisis facing LDCs and the whole of Africa is the spreading HIV/AIDS pandemic. The European Commission supports the idea of a "tiered medicines pricing system" for countries at different levels of development and with different degrees of health crises. At issue here, however, is not only the question of cost and the reduction of their charges on drugs by the giant pharmaceuticals because they are offering this essentially to 'look good' while still holding onto their markets. The more fundamental principle is the right of developing country governments to source such necessary drug imports from other developing countries (such as India, Thailand or Brazil), or to have them produced within their own countries under compulsory licensing, without the fear of overt and covert actions being taken against them by powerful governments.
7.5 A related and very fundamental concern has to be how TRIPS actually aggravates the 'educational deficit' and the yawning technological chasm that exists, and is widening, between the high technology industrialised and even 'post-industrial' societies, on the one hand, and largely pre-industrial low technology societies on the other hand. With the increasing commercialisation and private appropriation of science and technology in the richest countries and control by the biggest corporations, access for poor and weak countries to the resources of human knowledge is becoming increasingly expensive and difficult ... despite the much-vaunted claims about the blessings of the latest information and communication technology. Such access is not just a question of technological 'networking' for the 'fulfillment of individual potentials'. It has been through technological 'borrowings' that all societies have always developed. But the flexible 'permissive' approach of earlier centuries is being replaced in the 21st century by a tight corporate control and a ruthless possessiveness or protectionism which is in direct contradiction with the claims about the supposedly liberalised 'open' global market economy.
8. "Good Governance" or Real Democracy and Human Rights?
In addition to the economic conditionalities of trade and investment liberalisation, services commercialisation and generalised privatisation, the political conditionalities set by the EU and other powerful governments include - apparently sound - demands for evidence of 'good governance' and respect for democracy and human rights in countries receiving their aid. The EU parliament, like many well-intentioned European NGOs, supports greater institutional capacity building, legality and accountability of LDC as with other Third World governments. To its credit the EU Parliamentary Resolution on LDCs also notes that such efforts should "reinforce the autonomy" of such countries. This is a commendable observation, but the real aim should be to enable the people and governments of such countries not only to defend but even more basically to 'regain' from external institutions and governments their own national political and human rights. This raises a number of further issues.
8.1 The first is that the current interpretation of the characteristics and essential components of 'good governance' include not only legal and technical qualities of transparency and reliability; but an assumption that 'reliability' and governmental 'soundness' include tight monetarist fiscal policies, reduction of the expenditure, responsibilities and very role of government, as well as economic policy and financial support to the private sector and a commitment to create "market economies' in their countries. It is precisely these neo-liberal economic prescriptions in the IMF/WB macro-economic packages that have contributed to the economic deterioration and social crises in countries under their sway. (19)
8.2 In so far as Northern governments focus on more precisely defined governmental issues within these countries, the emphasis is always almost entirely on the failings and abuses of the political/governing elites. These and other internal factors, such as the general weakness in, or active suppression of independent civil society forces in most of these countries, certainly do demand urgent attention and energetic counter-efforts. But government abuses are both a problem in themselves and an effect of other factors and forces. European, US and other powerful governments fail to acknowledge and explicitly take on board the role of powerful external forces, above all, within their own societies - economic and political, private and public. These include the role of European, and other governments, but above all the US, in colluding with or even creating such regimes in furtherance of their own geo-political and geo-economic interests... which they then blame of the failures of the elites (which are real) and the political weaknesses of the people of Africa, who are the multiple victims of abuses by their elites and foreign interference.
8.3 Equally significantly, when the IMF and World Bank rail against corruption in the governments under their sway, they not only ignore the role of outside governments, transnational corporations and banks in encouraging or conniving with such corruption; they also fail to see that their own policies are doing the same. EU governments, directly or through the IMF/WB, insist that governments pursue rapid and sweeping privatisation of their state enterprises or public utilities. The resultant intensified interaction between public and private interests and the conflation of political power/responsibilities with outside economic interests, and with business aspirants within government ranks, is generating greater levels of corruption and abuse of public office than ever before in these countries.
8.4 Furthermore , with regard to such external proposals to create 'good governance' in these countries, it is precisely external policy impositions that have contributed towards the governmental crises, the weakening and, in fact, the de-legitimisation of government in many such countries. The ideological prejudices of the IMF/WB against the role of the state in these countries has for decades blinded them to the necessity of that role, to the justifiable aims and even achievements of state-led development in many of these countries. This ideological prejudice has pre-empted and prevented serious attention and efforts towards the development of appropriate policies to deal also with the weaknesses and mistakes within state-driven development models. In their zeal to discipline governments, to reduce their spending and entire role, these international social engineers have helped to create externally dependent governments less and less responsive or responsible to their own populations, and have in the process actively undermined real democracy.
8.5 Most of the above critical observations apply equally to the proposal that peace and stability in these countries is an essential pre-condition to effectively tackling poverty. This is not incorrect, or course, but it is very superficial and fails to focus on the complex interaction of internal and external factors that create social tensions, conflicts, civil and inter-state wars, war-lordism, and even 'collapsed' states. The EU Parliamentary Resolution on LDCs is correct to call for the EU and other governments to stop the legal and illegal sale of arms to these countries. But the more profound and useful observation it makes is that "causes of armed conflicts can be economic inequality and conflicts of interest at local, regional and international levels and.... conflict prevention must be defined in such a way as to find solutions to these structural causes". Economic crises are the major underpinning to social tensions and instability. Social conflict and violence are both an effect as well as a cause of economic crises.
9. "Marginalisation" or "Integration" or Equitable Participation in a Different and Sustainable Global System?
As has been evident throughout the foregoing analyses of the various proposals for tackling the growing poverty and dramatically widening inequalities in the world, there are many international factors and forces which are contributing directly to these problems and which are countering efforts and possibilities for dealing with them. The role in this of key international institutions such as the IMF, World Bank and the WTO has also been repeatedly referred to. It has also been evident that the EU member states, separately and together, are a major global force in shaping the policies and roles of these multilateral institutions in countries under their controls. The increasing unilateralism and neo-imperialism of the US government is an evidently greater danger but the failure of European and other governments to unite against highly tendentious and extremely dangerous policies is a challenge to progressive activists in all these countries.
The EU, on behalf of the members states, has also been a central player in the creation of WTO agreements and the rules and regulations that provide the legal framework for corporate-serving 'globalisation'; that is, the opening up and corporate penetration of all economies and all economic sectors throughout the world. The EU has been a major force, through its member governments and transnational corporations, in the creation of a global economic system that is producing an unprecedented concentration of wealth for a tiny minority and deepening of poverty for the great majority of humanity. And to cap it all, it is the EU that is now the most active and energetic force pushing the world towards a complex new WTO 'round' of further liberalisations and intensified globalisation.
Ignoring the repeated demands of the majority of 'developing' countries for a "review, repair and reform" of the WTO and its agreements, and ignoring worldwide civil society calls for "No New Round" of the WTO and a "Turn Around" of the world system, European governments and the Commission are using every possible political tactic to get such a new round underway. This includes tried and tested pressures and persuasions, direct and indirect, bilateral and multilateral, to divide and weaken the resistance of developing countries to the EU's aims in and through the WTO. This was clearly evident in the blatant attempt by the EU Trade Commissioner, in conjunction with the US Trade Representative (USTR) and the WTO Secretariat, in Libreville in November 2000, to manipulate African trade ministers into giving an official collective endorsement of the drive towards a full new multi-sectoral round of negotiations. Although that bid failed, a similar endeavour can be anticipated during the UN Conference on LDCs, utilising the even greater economic dependence and political weaknesses of the LDCs in order to gain their 'support' for a new round.
A 'multi-sectoral' round is important for the EU in order to promote its general economic interests and to contrive tactical trade-offs in defence of specific internal interests - particularly its indefensible agricultural policies. Both the EU and the US are also driving a major thrust on behalf of their service corporations to expand and deepen the opening up of all service sectors throughout the world. The EU and the US have the negotiating skills, political leverage and vast human and financial resources to do this. But the developing countries, and particularly the LDCs, are in no position to cope with yet another such extremely challenging process, especially as they still struggle to cope with the effects of the existing system. Nor have they achieved enough cohesion or tactical alliances amongst themselves to resist the united might of Europe, and the political leverage that the EU can exert against them because of their economic and financial dependence on European 'partnership' under Cotonou. (20) Above all, the LDCs, the developing countries - and the world - do not need an extension of the deregulated market globalisation that is intensifying poverty and social polarisation, instability, insecurity and conflict throughout the world.
The response of globalist theorists and apologists - in the face of the manifest failure of the liberalised global economy to deliver the promised benefits to the whole world - is to argue that the problem of weaker economies is that they are 'marginalised' from the trade and investment flows of the global economy and that what they need is to be 'more fully integrated' into the global system. In fact, the real problem is quite to the contrary. This is that such countries have been compelled to 'integrate' into the global economy through precipitate and sweeping opening up of their national trade, production and service sectors. In Africa this also means a reinforcement of the extreme extroversion of their trade and production to global markets where the so-called 'level playing field' intrinsically favours the strong/er players. This is why it is not mere 'integration' but the nature and terms of their participation in the global economy that is more significant. But, in the final analysis, the challenge has to go further. It is the very fundamentals, the systemic logic of the currently dominant 'free market', 'free trade' globalised system that have to be challenged and changed towards more balanced, equitable and sustainable alternatives. The role in this of analysts and activists in both North and South is to support the poor and oppressed throughout the world which is intrinsically in the interests of the whole of humanity, our cooperation in and for our common planetary home.
1. "Unilateral" because the EU has 'jumped the gun' with this offer while it is ostensibly still engaged in a prolonged process of negotiations with the LDCs and all the other ACP countries on the future of Lome Convention preferences and other special relationships (see 1.2 and 1.3 below)