- The Washington Times - Sunday, August 22, 2004

The world’s poorest countries are in severe danger of failing to meet ambitious economic and development goals set for the next decade, according to a new report from the World Bank and International Monetary Fund.

The report, issued last month, said developing countries are not getting the economic aid they need, blaming contradictory economic policies on trade and aid in the world’s industrial countries.

“The report’s overall assessment is a somber one,” said Zia Qureshi, the lead author of the survey.

“Business as usual will not do,” he said. “All parties must scale up their actions significantly and swiftly.”

Activists hope that the report’s findings will influence deliberations when finance ministers of the Group of Seven, the world’s leading industrial powers, meet in Washington on Oct. 1, said Marie Clarke, national coordinator of Jubilee USA Network.

The United States and the other G-7 countries have the most powerful voices on the board of directors at the IMF and World Bank.

The United Nations in 2000 adopted a set of “millennium development goals” (MDGs) — eight broad benchmarks for developing countries to achieve by 2015. The goals include poverty reduction, improved health, gender equality, better education and environmental sustainability.

Strong growth in Asia, especially in India and China, makes it likely that the target for decreasing world poverty by half will be met. However, many individual countries will miss the income target.

In sub-Saharan Africa, poverty levels rose in the past decade. Only 15 percent to 20 percent of the developing countries are on track to meet the goal of reducing child mortality by two-thirds.

Access to clean water and basic sanitation also are limited, and the number of people infected with HIV/AIDS in the developing countries also remains very high, the report found.

Adotei Akwei, advocacy director for Amnesty International Africa, said the detailed assessment of the recent report “exposes a bleak picture.”

The World Bank and IMF “are beginning to realize that remedies need to be taken,” he said.

World Bank Managing Director Shengman Zhang said the report was a “landmark” in the monitoring of global progress and a centerpiece in the discussion of how to aid developing countries.

The report is the first in a series of annual reports assessing the implementation of the policies and actions for achieving the MDGs, adopted in the wake of the 2000 U.N. Millennium Summit in New York.

Mrs. Clarke said helping the developing countries goes beyond monitoring progress.

“The World Bank and the IMF have not taken very seriously their role,” she said.

She said many African governments spend more paying interest on past debts than they receive in development aid, new loans or investment. This year, African countries will send about $15 billion in debt service to the World Bank, the IMF and wealthy creditor nations.

Mrs. Clarke said, “We are calling for a 100 percent debt relief, and we believe they can do that from their own resources.”

As the G-7 meeting approaches, debt analysts say there is a growing recognition in the United States that it is necessary to address the debt burden faced by poor nations.

“We are definitely looking at ways to have a much more sustainable level of debt relief,” said Tony Fratto, deputy assistant secretary for public affairs at the Treasury Department.

“We think that the change should be fairly significant.”

Contrary to the charges made by debt-relief activists, Mr. Fratto contended that poor countries receive more money than they pay because of a 10-year grace period on the money they receive through the World Bank.

Mr. Fratto said the bank’s efforts represent the largest lending facility for poor countries in the world. He said to bring money into the poor countries in the form of grants is “equally important” to relieving debts. However, he agreed that paying debts and receiving aid can counteract each other.

Although the report outlines deteriorating conditions in a number of developing countries, Mr. Qureshi said the survey also tells an “encouraging story.”

Many poorer countries have improved their policies greatly. As a consequence, he said, the international community faces a “great opportunity to accelerate development.”

The adoption of the millennium goals and the subsequent summit of rich and poor countries in Monterrey, Mexico, in 2002 have “created a powerful global compact for development,” Mr. Qureshi said

The so-called “Monterrey consensus” addressed problems related to achieving the MDGs and established new terms of partnership among the different players.

Among the recommendations given were to further promote freer international trade through the World Trade Organization and to ensure that its benefits flow to the developing countries.

President Bush used the Monterrey gathering to inaugurate a major change in U.S. foreign-aid policy, saying the United States was prepared to greatly expand its foreign aid, but only for countries that had adopted the political, legal and market reforms needs to use the money effectively.

Sam Stratman, spokesman of the House International Relations Committee, called the 2015 development goals “very important” because they present a “set of standards for the first time.”

He said the United States has embraced the goals and is the largest supporter of anti-AIDS programs in the world, pledging $2.4 billion this year.

Njoki Njoroge Njehu is the director of the 50 Years Is Enough Network, a coalition of about 200 organizations pushing for radical reform of global financial institutions such as the IMF and World Bank.

She said the United Nations’ millennium goals are not ambitious enough.

“The MDGs are far too short of what needs to happen to fight poverty in the world,” she said. She said policy-makers should “talk about eliminating or eradicating” poverty instead of aiming just to cut it in half.

“If they had set the goal of eliminating or eradicating [global poverty], perhaps they could have gotten to 50 or 70 percent,” Miss Njehu said.

The report urges the developed countries to speed up the development partnership established in the Monterrey summit.

“Aid remains far too inadequate relative to what is needed and can be effectively used by developing countries,” Mr. Qureshi said.

After the Monterrey conference, donors have made additional commitments of $18.5 billion per year by 2006. But the report argues that developing countries could efficiently handle much more aid, up to $30 billion a year.

As low-income countries improve their economic and social policies, they will be able to use $50 billion annually — a figure estimated to be necessary for progress toward the MDGs.

Mr. Bush and Congress earlier this year established the Millennium Challenge Corp., designed to channel U.S. aid dollars to developing countries that have adopted strong economic and governance programs.

The corporation will give out $1.2 billion in aid in 2005, compared with $600 million in the previous fiscal year.

Despite this effort, development activists say the United States and other industrial powers have consistently failed to reach their agreed aid pledges.

A 1992 U.N. summit in Rio de Janeiro set an aid target for developed countries of 0.7 percent of gross domestic product (GDP). In 2003, however, U.S. development aid totaled $15.79 billion — 0.14 percent of its GDP.

Trade protectionism and other barriers in the industrial world present an even greater obstacle.

The report noted that the money from official aid programs “is undermined by five times as much protection to domestic agricultural producers” in the world’s wealthier countries.

The report calls for the complete elimination of tariffs on manufactured products and agricultural-export subsidies. In agriculture, a 26 percent tariff by the Organization for Economic Cooperation and Development countries is particularly hurtful to the developing countries. The report calls for a reduction of this tariff to no more than 10 percent.

Mr. Akwei said subsidies are one of the major impediments to growth in the developing countries.

Although the U.S. government has promoted trade with Africa through the Africa Growth and Opportunity Act, U.S. agricultural policies strongly subsidize American farmers and make it more difficult for African agricultural producers to compete.

Larry Goodwin, associate director of the Africa Faith and Justice Network, said subsidized farmers in wealthy countries often sell their goods in Africa at lower prices than local farmers in Africa can offer.

“Priority should be given to local production if you want to help,” he said.

“On the one hand, the U.S. is always [pushing] a free-trade line, but if they continue to subsidize U.S. farmers … to the extent that it’s creating a barrier to other farmers in the world, that’s not fair.”

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