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The UN Secretary General’s recommendations to achieve the Millenium Development Goals (MDGs) is meant to set the stage for more neo-liberal reforms for developing countries
By Joseph Yu
IBON Features - Ten years to go before the set year of 2015 for achieving the targets under the Millennium Development Goals (MDGs), yet progress remains slow. The UN’s Commission on Sustainable Development, for example, recently declared that the global community is “not on track” to meet MDG targets for safe water and adequate sanitation and called for “efforts to be scaled up.”
The World Bank and the International Monetary Fund (IMF) have also released a report admitting that the MDGs would not be achieved unless reforms to achieve stronger economic growth were accelerated.
This pessimism towards meeting the MDGs is not meant to spur rich donor countries to increase development assistance to underdeveloped countries, but to set the stage for the prescription of further neo-liberal reforms as the means to achieve rapid economic growth and consequently, poverty reduction. This is the context against which UN Secretary-General Kofi Annan’s proposals to meet the challenges of development should be appreciated.
The reform recommendations are contained in his report, In Larger Freedom: Towards Development, Security and Human Rights for All, which lays the groundwork for decisions at an upcoming summit of world leaders in New York on September 2005. The summit is intended to review progress in achieving the targets set under the Millennium Declaration in 2000.
The “Freedom from Want” section of the report contains Annan’s recommendations for achieving development and meeting the MDGs. Key proposals include:
Each developing country with extreme poverty should, by 2006, adopt and begin to implement a national development strategy;
Developed countries should establish a timetable to meet the target of 0.7% of gross national income for official development assistance no later than 2015;
The Doha round of trade negotiations should fulfill its development promise and be completed no later than 2006;
Debt sustainability should be redefined as the level of debt that allows a country to achieve the MDGs and to reach 2015 without an increase in debt ratios.
These proposals are clearly intended to continue the spread of neo-liberal reforms in South countries, in order to advance the corporate-led globalization agenda of the developed countries.
The proposal for a national development strategy, for example, echoes the Poverty Strategy Reduction Papers (PSRP) required by international financial institutions (IFIs) from countries seeking debt relief. PSRPs are a formal requirement for countries seeking assistance under the Highly Indebted Poor Countries (HIPC) initiative or access to World Bank concessional lending. In fact, Annan says that countries which already have a PSRP do not have to draft a new strategy, but merely align their existing strategies “with a 10-year framework of policies and investments consistent with achievement of the Millennium Development Goals.”
But critics see PSRPs as being repackaged structural adjustment programs (SAPs). Since these Papers must be approved by the Board of Directors of the IMF and the World Bank, these IFIs can influence their content. SAPs prescribe neo-liberal policy reforms that have led to increasing poverty in South countries, as well as global resource inequality, while creating opportunities for transnational corporations.
These reforms commonly include privatization of state-owned utilities such as water and electricity, opening new investment opportunities for First World providers. SAPs also require the removal of tariffs on agricultural exports, leading to widespread dumping of agricultural products in South countries.
The call for developed countries to set a timetable for meeting the 0.7% of GNI directed towards official development assistance (ODA) has been an advocacy of many civil society organizations. It is also a vital indicator of the success towards achievement of MDG 8: developing a global partnership for development.
But Goal 8 itself is hampered by the post-Washington Consensus prescriptions perpetuated by the IMF-World Bank.
Thus, while the Millennium Declaration resolves “…to create an environment– at the national and global levels alike– which is conducive to development and to the elimination of poverty,” it states immediately afterwards that the success of this resolution depends on good governance and transparency within each country and at the international level.
“Good governance” for donors means, generally, public accountability and transparency, the rule of law, democratic performance, decentralization, judicial reform, social safety nets, lean state regulation, civil society participation in development and overall respect for human rights. In practice, however, donors have focused on “good governance” in the technical management of government resources and effective implementation of (often donor-directed) macro-economic and anti-poverty sector policies.
Thus, this recommendation is followed by a call for the completion of the Doha round of trade talks by 2006, saying that an “open and equitable” trading system can be a powerful driver of economic growth.
But developing country governments actually oppose another round of negotiations that would extract more liberalization commitments from them. The comprehensive new round would expand the existing WTO agreements, as well as cover areas such as investment, competition policy, government procurement and trade facilitation, among others.
North countries such as the US and EU are using these new issues to further ease the entry of their corporations into South markets. For example, under investment issues, the EU is pushing for the inclusion into the WTO Agreements new trade rules that would provide foreign investors new rights to ease entry into developing country markets and to operate more freely. The EU is also advocating a new agreement under competition policy that would restrict domestic laws or practices in developing countries that favor local firms on the ground that these are inconsistent with free competition.
Annan adds that, to build “trade competitiveness,” national MDG strategies “need to emphasize investments in agricultural productivity, trade-related infrastructure and competitive export industries, particularly for the least developed countries.” This links development once again to an export-oriented model, in which underdeveloped countries must produce for foreign markets even at the expense of their self-reliance in agriculture, even as they become dependent on First World suppliers for basic necessities.
Annan also says in his report that in order to meet the redefinition of “debt sustainability” he proposes, most HIPC countries will require “exclusively grant-based finance” and “100% debt cancellation” while others will require “significantly more debt reduction than has yet been on offer.”
But civil society groups have been campaigning to point out the delays the countries under the HIPC initiative face in getting benefits from the program, the meager size of the benefits, the conditions attached to them, the constricted list of eligible countries, and the fact that the IMF and WB are not forced to take any loss but instead get paid dollar-for-dollar out of donor-supplied trust funds.
The Militarization of Aid
Under its “Freedom from Fear” section, Annan also calls for UN member-nations to reach an agreement on a comprehensive convention against terrorism based on a clear and agreed definition, as part of a broader strategy to prevent catastrophic terrorism.
But the active promotion of the US and its allies of the post-September 11 anti-terrorist global security agenda risks donors shaping their development cooperation priorities through the lens of the “war on terror.” This trend is already apparent in the increasing militarization of aid.
For example, InterPress Service (IPS) reported that, “Credits for foreign militaries to buy US weapons and equipment would increase by some 700 million dollars to nearly five billion dollars, the highest total in well over a decade” with Israel and Egypt being the biggest bilateral recipients. Of the nearly $3 billion earmarked for Israel, most is for military credits.
This militaristic aid will come “largely at the expense of humanitarian and development assistance,” according to IPS, which also noted that recent US aid spending was following similar patterns to aid spending during the Cold War between America and the former USSR.
The European Union is linking aid to fighting terrorism as well, with European ministers warning countries that their relations with the economically powerful bloc will suffer if they fail to cooperate in the fight against terrorism. An EU official was quoted as saying, “aid and trade could be affected if the fight against terrorism was considered insufficient”, leading to accusations of “compromising the neutrality, impartiality and independence of humanitarian assistance”.
As the Reality of Aid project puts it, MDGs are an expression of commitment to economic social and cultural rights and define a set of steps to enable these rights to be realized. But efforts to achieve them must be founded on strategies that empower and recognize the rights of all people, including the poor.
Thus, donors must comply with their obligation to increase ODA, while improving the quality of their aid for poverty reduction and achieving debt cancellation for the poorest countries.
Promoting “an open, rule-based trading and financial system,” cooperation with the private sector and competition in the global economy risks poverty alleviation goals being overwhelmed by corporate and donor national interests.
IFIs such as the IMF and the WB should also not retain their monopoly in prescribing policy advice for reform or their gatekeeper role in aid resource transfers. Aid should support governments, representative institutions and legislatures in formulating independent national poverty reduction strategies. IBON Features
IBON Features is a media service of IBON Foundation, an independent economic policy and research institution. When reprinting this feature, please credit IBON Features and give the byline when applicable