|
|
|
|
| No.233 | 28 June 2005 | Essential Information on an Essential Issue |
 Over the last month, the international community has seen unprecedented moves to help end poverty in the world’s poorest countries — both in cancelling the debt burden of some developing nations, and a renewed commitment to deliver more and better aid to where it is needed. These efforts will be brought to a focus over the coming week with huge Live Aid-style concerts in 8 countries … all aiming to put pressure on the world's richest leaders gathering at the G8 Summit in Gleneagles in Scotland. In this special issue, The Jobs Letter looks at how these countries became impoverished, what conditions they are being required to meet in order to qualify for relief, the effect trade barriers and Western agricultural subsidies have on poor countries, and the coming G8 summit, the Alternative8 summit and what people are saying about it all.
LAST Letter
NEXT Letter  Download this issue as a PDF file
Index to Features
LAST Diary
NEXT Diary
|
 |
DEBTS WRITTEN-OFF FOR SOME OF THE WORLD'S POOREST
Perhaps reflecting the situation faced by the wealthy finance ministers, United States Treasury Secretary John Snow says the rich countries have grown impatient with endless cycles of "borrow and forgive". In turn, the ministers agreed it is better to write-off, once and for all, debts that they recognise will never be paid. The African experience of borrowing has been quite another story. Since the second half of the 20th century, many African countries' were loaned enormous sums of money. On paper, these loans were for development projects, often for infrastructure. But in the vast majority of cases, projects were not well thought through and accountability was not only negligent, but often fraudulent and little of the money was ever used for the purpose it was lent. Instead, corrupt government officials, including the heads of states, siphoned-off immense amounts and amassed incredible personal fortunes. Professor John Stremlau of the University of Witwatersrand says a good example was Mobutu Sese Seko of Zaire (now the Democratic Republic of the Congo). Mobutu pocketed his country's development loans rather than spend it on the public works. All the while, the US turned a blind eye because Mobutu served a strategic purpose: he removed the likelihood of an elected communist regime becoming established in the resource-rich country. During Mobutu's 22-year reign, Zaire received $9.3 billion in foreign aid, primarily from the World Bank and the IMF. The UN Conference on Trade and Development estimated that nearly $18 billion was wrongly taken out of Zaire during the Mobutu years. Many African leaders now believe that the IMF and World Bank "loans" were a means of the West buying influence during the Cold War when the West and the Soviet Union were vying for influence in Africa. Similar arrangements were in place, using IMF and World Bank billions, with many clearly corrupt governments including Suharto in Indonesia, Marcos in the Philippines and Moi in Kenya. Source _ BBC News UK edition, 11 June 2005, "G8 reaches deal for world's poor" New Zealand Herald, 14 June 2005, "Past aid became debt curse for Africa" Reuters; Guardian Weekly, 14 June 2005, "A truckload of nonsense" by George Monbiot; New Zealand Herald, 14 June 2005, "Aid funds risk ending up in Swiss bank accounts" by Hamish McRae; Source _ The Guardian Weekly, 17 _ 23 June 2005, "G7 cancels poorest nations' debt" by staff reporters; The Guardian Weekly, 17 _ 23 June 2005, "It's high noon for the West" by Larry Elliot; The Guardian Weekly, 17 _ 23 June 2005, "Better to aim high or not at all" by Andrew Rawnsley; Jublilee Debt Campagin, 11 June 2005, "Campaigners force step forward on debt; Make Poverty History website;
EUROPEAN AID TO REACH 0.7% The European Union ministers surprised and delighted aid agencies around the world last
month when they agreed to double their current aid commitments to developing nations. All member
states which joined the EU before 2002 have committed to reach a target of spending 0.51% of their GDP
on foreign aid by 2010, rising to 0.7% by 2015. Hilary Benn, British Development Secretary says
the commitment "sends a powerful message to the world."
The 0.7% target was set in 1970 by the UN but only four countries — Denmark, Sweden, the Netherlands and Luxembourg — have met it (and some of these intend to exceed 0.7%). Six others — Finland, Belgium, Spain, France, Germany and Britain — have now promised to. Countries who joined the EU since 2002 have longer to reach much lower targets. If all 25 EU member states meet their pledges, EU collective aid to developing countries will rise from $40 billion this year to $80 billion in 2010.
Former US Deputy Secretary of Defence Paul Wolfowitz, who has recently been appointed head of the World Bank, is now urging the Bush Administration to help fund a big push for Africa. Wolfowitz regards Africa as "on-the-move" and "full of real partners with whom the West could work". He is preparing proposals for next week's G8 summit that include extra aid to combat malaria, create better infrastructure, and boost lending for small and medium-sized businesses. Wolfowitz believes that Africa could absorb more aid without the cash being swallowed up in corruption. He appears to be philosophical about some of the problems associated with aid pointing out that if donors knew that 25% of every dollar was being stolen, but that the other 75% was being spent on education or treating AIDS patients, then it wouldn't be right to pull the plug and leave the dying, the needy and the illiterate with nothing. In the long-run, Wolfowitz believes, "Corruption is something that doesn't survive the light of day very well." Source - Guardian, 20 June 2005, "Wolfowitz urges extra aid after trip to Africa" by Patrick Wintour; UN News, 25 May 2005, "European Union doubles aid for world's poor"; Guardian Weekly 17-23 June 2005, "It's high noon for the West" by Larry Elliot.
 Washington has increased its aid commitment by about half but has, so far, refused to follow
the European lead and double its aid to Africa. In order to keep the development momentum going,
British finance minister Gordon Brown is appealing to the oil-producing states of the Middle East to
donate some of their oil wealth to Africa. Brown says oil producing countries such as Saudi Arabia, the
United Arab Emirates and Kuwait could help. Brown: "I would like to see the countries that have done well
out of the rise in the oil price being willing to make a contribution also to the new development agenda,
and particularly to debt relief and to international aid."
Klein argues that 70% of Nigerians still live on less than $1 a day while Shell Oil is still making superprofits. And Equatorial Guinea, which has a major oil deal with ExxonMobil, is getting a mere 12% of the oil revenues in the first year of its contract — a share so low, Klein says, it would have been scandalous even at the height of colonial oil pillage. Klein says what keeps Africa poor is not a lack of political will but the tremendous profitability of the current arrangement. The poorest continent on earth is also the world's most profitable investment destination. According to the World Bank's 2003 Global Development Finance report, Africa offered the highest returns on foreign direct investment of any region in the world. Klein: "Africa is poor because its investors and its creditors are so unspeakably rich." Source - The Times, 05 June 2005, "Brown wants oil countries to donate cash for Africa" by David Smith; The Nation, 27 June 2005 issue, "A noose, not a bracelet" by Naomi Klein.
SPOTLIGHT NOW ON FAIR TRADEA systemic advantage all wealthy countries hold over impoverished ones is their agricultural subsidies. Subsidies paid to rich countries' farm producers allow them to sell their goods for less than it costs to produce them. They are therefore able to undercut the prices of goods imported from less developed countries. This arrangement also allows them to sell their artificially cheap goods into developing countries, which results in stifling local development. No poor countries subsidise their farm producers … but all G7 countries can and do subsidise theirs. Nicky Oppenheimer, chairman of the De Beers Group: "It is more politically expedient to pour aid into Africa than for Europe and America to cut farm subsidies, which enable their own farmers to dump their produce in Africa and impoverish African producers. While those subsidies and tariffs remain in place, the campaign to lift Africa out of poverty will remain mired in hypocrisy."
European farm subsidies — the Common Agricultural Policy or CAP — was instituted at a time when the memory of post-War food shortages were vivid in Europe and agriculture was a key element in the continent's recovery. But Tony Blair insists times have changed and he will be putting the elimination of the EU CAP on the table at the G8 summit. And Blair will use Britain's presidency of the European Union, which begins next month, to argue that the CAP is a wasteful anachronism. Blair: "It does not reflect the economic priorities of the European Union in the 21st century. We have made it clear that the Commission's budget should be fundamentally reviewed with a view to removing these distortions."
 The Confederation of British Industry is among those who are backing the call to reform
farm subsidies. Director-general Sir Digby Jones: "Africa needs more money, but if it's not linked to
ending European agricultural subsidies, it's blatant hypocrisy. The way to build lasting economic
growth, healthcare and education is for Europe to end the CAP. Stopping trade-distorting subsidies will
allow African products to be exported and stop European goods being sold more cheaply in Africa."
The figures. CAP subsidies swallow up more than 40% of the EU budget for the benefit of 5% of its population. Other European industries — mining, manufacturing and textiles — have been exposed to the rigours of the markets for many years. European taxpayers currently provide their farmers with $30 billion in subsidies each year. And the OECD estimates that the resulting inflated food prices due to CAP pushes the cost to European consumers up to $70 billion per year.
THE FINE PRINT …These conditions may sound reasonable, but the recent experience for Uganda — one of those qualifying for debt relief — has been that it had had to sell most of its state-owned companies. UK-based ActionAid has called on the G8 to announce that developing nations will no longer be required to privatise their infrastructure. But there has been little reported in the media about this and it seems unlikely to gain traction at the G8 summit. Source - The Independent, 19 June 2005, "Why millions of Africans have a stake in the outcome of Europe's farm row" by Angela Merkel; Guardian, 19 June 2005, "How Europe cheats Africa" by Heather Stewart; Guardian, 19 June 2005, "Blair vows to break up CAP for Africa's sake; Reuters, 14 June 2005, "Wolfowitz says cuts in agriculture subsidies needed" by Lesley Wroughton"; ActionAid International website "Taking action: G8: Cautious welcome for debt relief package.
Frozen chicken: African countries have seen a dramatic rise in imports of cheap frozen chicken parts from the EU. Since European poultry farmers are able to feed their birds on subsidised grain, they can undercut local producers by half. Having their markets forced open to subsidised imports has devastated the developing poultry industry in countries such as Ghana and Senegal. Maize: In many parts of Africa maize is the staple diet, often ground into meal to make porridge. Subsistence farmers as well as larger operators used to sell their excess production to local poultry producers. But that market has collapsed due to the decline of the domestic chicken industry. Tomatoes: Since African countries were forced to dismantle tariffs protecting local growers, they have been unable to compete with European farmers, who receive export subsidies. Canned tomatoes and tomato paste from Europe have prevented processors in West Africa getting on their feet. The resulting slump in demand for domestic products has resulted in African tomato production falling by two-thirds.
LIVE 8 CONCERTS Sir Bob Geldof and U2's Bono and others have thrown their celebrity weight behind the
eradication of poverty in impoverished nations. To push the point, they are organising eight free concerts on
2 July, just prior to the G8 summit.
TV2 will be carrying a live broadcast of the Live 8 concerts beginning early on Sunday morning (3 July) from 2 am to 12 noon. The concerts will be coming from London's Hyde Park, the Circus Maximus in Rome, beneath the Eiffel Tower in Paris, the Pottsdamer Platz in Berlin and from the steps of the Museum of Art in Philadelphia. There will also be concerts held in Tokyo, Toronto and Johannesburg. Artists scheduled to perform include U2, Coldplay, Mariah Carey, Elton John, Paul McCartney, Madonna, Will Smith, Bon Jovi, Stevie Wonder, Maroon 5, Andrea Bocelli, Duran Duran and Stereophonics. The Live 8 organisers expect more than a billion people around the world to watch the live broadcasts. Ironically, the concerts fall on the same day long-time poverty campaigners — Jubilee groups, Make Poverty History, the ONE campaign, ActionAid and others — have called for supporters to converge on Edinburgh to show support for the end of poverty to the G8 leaders.  The G8 Alternative Summit, also being held in Edinburgh, will begin on 3 July. Organisers
say 5,000 leading human rights campaigners and environmental thinkers from all parts of the world
will "battle" the strategies and ideas coming out of the G8 summit. Among those addressing the
alternative summit are Ken Wiwa, son of the murdered Nigerian novelist Ken Saro-Wiwa; Moazem Begg,
former prisoner at Guantanamo Bay; Craig Murray, former UK ambassador to Uzbekistan; Willie
Madisha, president of the South African trade union federation and former UN weapons inspector Scott Ritter.
BEYOND PHILANTHROPY …
Monbiot says anyone with a grasp of development politics who had read and understood the ministers' statement on debt-relief could see that the conditions it contains — enforced liberalisation and privatisation — are as onerous as the debts it relieves. Geldof has praised the debt relief as "a victory for the millions of people in the campaigns around the world" and Bono pronounced it "a little piece of history". But Monbiot says: "Like many of those who have been trying to highlight the harm done by such conditions — especially the African campaigners I know — I feel betrayed by these statements. Bono and Geldof have made our job more difficult." Monbiot: "I understand the game they're playing. They believe that praising the world's most powerful men is more persuasive than criticising them. The problem is that in doing so they turn the political campaign developed by the global justice movement into a philanthropic one. They urge the G8 leaders to do more to help the poor. But they say nothing about ceasing to do harm. Listen to these men — Bush, Blair and their two bards — and you could forget that the rich nations had played any role in Africa's accumulation of debt, or accumulation of weapons, or loss of resources, or collapse in public services, or concentration of wealth and power by unaccountable leaders. Listen to them and you would imagine that the G8 was conceived as a project to help the world's poor." "Geldof and Bono's campaign for philanthropy portrays the enemies of the poor as their saviours. The good these two remarkable men have done is in danger of being outweighed by the harm." Source - Guardian, 21 June 2005, "Bards of the powerful" by George Monbiot.
|
