Tackling Third World Poverty

Finally, Governments Commit Themselves to More Aid

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LONDON, MAR. 3, 2001 (Zenit.org).- One in four children in the world are afflicted by poverty, according to participants in a meeting here last Monday. The child-poverty conference was attended by representatives from the industrialized nations, as well as organizations active in poverty relief.

During the meeting, British Chancellor Gordon Brown announced a plan to create an international fund to help provide developing countries with cheap vaccines against diseases, the BBC reported Feb. 26. Brown also declared that a Jubilee Fund would be established to give 75 million children from Commonwealth countries access to primary education for the first time. The World Bank highlighted the need for such a fund, saying that at current rates, more than 100 million school-age children will still not be in primary education by 2015.

World Bank President James Wolfensohn, in his speech to the meeting, called on rich countries to open up their markets to developing country exports. «It is hypocritical to give debt relief with one hand, and then deny poor countries the ability to export their way out of poverty with the other,» he said. «Rich countries must open their markets and reduce their agricultural subsidies. The OECD [Organization for Economic Cooperation and Development] today spends more than $300 billion a year on agricultural subsidies, a total roughly equivalent to the entire GDP of sub-Saharan Africa.»

The managing director of the International Monetary Fund, Horst Köhler, declared at the conference that «widespread poverty in the midst of global prosperity is both unsustainable and morally unacceptable.» In the official text of his speech released by the IMF, Köhler stated that «world poverty is the paramount challenge of the 21st century.»

At the same time, the IMF head warned that as a result of his recent tour of Africa with the World Bank president, he is convinced that «any effort to reduce poverty must start with — and build upon — peace, democracy and good governance at home.» He affirmed that a lack of respect for the rule of law, armed conflict, mismanagement, and corruption represent fundamental obstacles to growth and development.

Köhler, however, also called upon the industrialized world to honor its obligation to help underdeveloped nations. The target of 0.7% of gross national product in overseas aid has not been met after more 30 years since the United Nations established this target. Köhler noted that bilateral aid flows from OECD countries fall short of this target by about $100 billion a year. Only Denmark, the Netherlands, Norway and Sweden have reached the 0.7% level. For most countries, bilateral aid flows have been declining over the past decade.

The Financial Times explained Feb. 26 that the most important aspect of Monday´s meeting was to bring together the IMF and World Bank, the United Nations and specialist agencies, together with the finance ministers from rich countries. Normally the finance ministers meet with IMF and World Bank officials, while the development matters are dealt with by other government ministries. In the past this has led to divisions in strategies on Third World issues.

Companies asked to help poor countries

Another initiative to help the Third World was launched by the Italian government last week. The Financial Times on Feb. 24 reported that the 1,000 largest companies in the world are to be invited to donate $500,000 each to a new trust fund that would help alleviate poverty in developing countries. The proposal was made by Italy to the Group of Seven leading industrial nations (G7).

The initiative is aimed at helping improve health care in developing countries, and will be discussed at the G7 summit in Genoa, hosted by Italy this July. If accepted, G7 governments would be committed to matching private-sector contributions, with the aim of raising a total of $1 billion for a trust fund that would be jointly managed by the World Bank and the World Health Organization.

According to Vincenzo Visco, Italy´s finance minister, the trust fund would ensure that «decisive action is taken to ensure that vaccines become more affordable in poor countries and [to] introduce widespread curative treatments.»

Europe lowers trade barriers

In an announcement made the same day as the London conference, European Union officials agreed to end all trade barriers with the poorer nations, and called upon other countries to follow its example. According to the Financial Times on Feb. 27, the initiative will provide full duty and quota free access to E.U. markets for the world´s 48 poorest countries.

Pascal Lamy, the E.U. trade commissioner, said the agreement marked the first time E.U. trade policy had been substantially modified in the interests of development. The eased access will commence for nearly all poor-country products from March 5. Arms are automatically excluded from the deal, and imports of sugar, rice and bananas will be fully liberalized only after several years.

Problems still exist

Although those present at the London conference were supportive of measures to help poor countries, critics still note that more concrete actions are needed. At the last G7 meeting of finance ministers, held in Palermo, Italy, rich nations refused to extend debt relief programs for the Third World, according a Feb. 17 Reuters report.

Campaigners for debt cancellation had called for G7 leaders to include new countries in the Heavily Indebted Poor Countries program. So far, 22 nations have benefited from the HPIC process and these will eventually see two-thirds of their debts written off.

«The G7 are on dangerous ground,´´ said Jamie Drummond, spokesman for Drop the Debt, the successor organization of the famous Jubilee 2000 campaign group which disbanded at the end of last year. Drop the Debt and other groups are pushing for the next G7 summit at Genoa to give a fresh boost to debt relief.

But the heads of the World Bank and the IMF recently ruled out the possibility of canceling the debt of the world´s poorest nations. Köhler and Wolfensohn told 12 African leaders that debt cancellation would leave their institutions without cash and unable to provide new loans, the Associated Press reported Feb. 24.

Many African governments say the continent will only develop if the billions of dollars of debt the countries have accumulated in their post-independence years is unconditionally canceled. Some of the poorest countries in sub-Saharan Africa spend 25% of their revenues servicing debt.

Leaders of the most populous Muslim nations are also asking for changes to their financial relationships with the developed world. Last Sunday, members of the D8 group of developing countries held a meeting in Cairo and they complained about the unfair terms of trade with the West, Reuters reported Feb. 25.

D8 members are Bangladesh, Egypt, Iran, Indonesia, Malaysia, Nigeria, Pakistan and Turkey. They have a combined population of 800 million, but only a 4% share in world trade.

«Open markets in today´s world are basically accessible for the products of advanced countries, while our exports … are faced every day with new protectionist procedures, overt or covert, that impede their access to the advanced countries markets,» declared Egyptian President Hosni Mubarak.

While some steps are being made to address the imbalances in trade and financial relations between rich and poor countries, much still remains to be done.

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