Global Policy Forum

by Guy Verhofstadt *

While the world looks on to see how the battle with Iraq shapes up, other pressing issues have disappeared from the headlines. Does anyone still recall the heated controversy between the globalists and anti-globalists just a year ago? Has the issue of poverty fallen out of fashion?

Surely the question of the century was: How can we prevent a violent class struggle between the world's poorest and richest people?

Between two billion people are trying to survive every day in a fight against hunger and disease, while a half billion others have as their main concern trying to second-guess the plot of their favourite soap opera. Today, the difference in income between the two groups is, on average, 30:1. The problem is that this difference is not shrinking; it is growing.

Between these two extremes, there are around three billion people who have also benefited from globalisation. In the space of a single generation, these peoples _ especially in Asia _ have escaped from their daily struggle to ensure a roof over their head, clothes on their back and food in their stomach. They are evidence that globalisation, the free market and free trade are the best method _ indeed, the only proven method _ for driving off poverty.

But the very poorest two billion people are evidence that free trade and globalisation are not enough.

The people of the European Union should know that. Ever since the Union was founded, we have helped new member states throw off the shackles of poverty (and we will be trying to do the same this decade with all of central and eastern Europe). We have achieved this through free trade, intensive cooperation, financial support and, in particular, partnership with the countries in question.

So let's stop running from one mega-conference to the next in Monterrey, Rome or Johannesburg. We Europeans and Americans have to stop hassling each other about what it means to be an ``anti-globalist'' or a ``globalist'. What we need is a consensus on greater development and a consensus on having both Europeans and Americans make greater efforts _ including those efforts that are in their own interest.

Last year in Doha, Qatar developments at the World Trade Organisation took a very promising turn towards free trade and greater development. But we do not have to wait for the WTO. As Europeans, we can push forward with our own efforts.

We can make more free trade possible right now. One major step forward in this direction was the European ``Everything but Arms'' initiative of February 2001, which granted the 48 least developed countries duty- and quota-free access to the European market. But isn't it hypocritical that precisely those farm products which are critically important to many developing countries, such as bananas, rice and sugar, are to a large extent excluded from free access to our market until 2006 and 2009?

Is it not typical that a number of developing countries, which in terms of income barely rise above the ranks of the very poorest, remain excluded from this European measure? And is it not distressing that so far only a very few other wealthy trading powers have followed Europe's initiative?

Where, for instance, is the United States? For it seems to be increasingly absent from globalisation issues. In fact, it recently introduced import duties on steel and increased agricultural and textile subsidies.

We must do more. Agriculture is the key. In developing countries up to 70% of the population make their living from agriculture. In the rich North the figure is seldom more than 5%.

Billions of people depend on agriculture to survive, and yet the Organisation for Economic Cooperation and Development (OECD) countries still levy import duties on agricultural products averaging 40%. It just so happens that 40% was the average tariff on industrial goods applied in the middle of the last century, when there was virtually no free trade. The current average is 5%.

But there is more. Subsidies which at the time helped Europe to eliminate its own food shortage are today driving farmers in developing countries off their land.

Sugar produced in Europe costs twice as much as sugar produced in South Africa, but it is European sugar that is pushing out local sugar in that country. Imported European powdered milk has led to a one-third drop in milk production in Jamaica over the past five years. European fishermen receive so much support that they can take their modern fleets and clear out the increasingly depleted fishing grounds off the African coast.

Despite reforms, European farmers and agricultural firms are still subsidised, thereby driving their poorest competitors out of the market. Every year, Europe pays out 120 million euros (5.1 billion baht) in development aid to South Africa. But every year South Africa loses more than 100 million euros (4.3 billion baht) in potential export income due to the dumping of European sugar on its market.

We Europeans fight poverty with one hand, but stop it from disappearing with the other. We alleviate poverty, but we also perpetuate it.

Some poor countries are trying to escape rural poverty. For instance, they are investing in textile and clothing manufacturing. But trade in these products is also blocked by import duties levied by rich industrial countries. Western consumers as well as Asian and African workers pay the price.

The poorest countries need more money. Money can come from debt relief, provided that the proceeds are not spent on new limousines for the ruling elite.

The enhanced Debt Initiative for Heavily Indebted Poor Countries (HIPC), which links debt relief to a programme of poverty reduction and economic reforms, is a step in the right direction, but it can be expanded further to include more poor countries. This initiative could also be accelerated if it were linked to the efforts being made in favour of increased development aid. And why not bring together all multilateral, bilateral and private creditors within the HIPC fund and ensure a stronger link with the UN Millennium Human Development Goals?

Money can also come from an increase in development aid. In 1990, the rich West donated an average of $32 (1,400 baht) in aid for each African. Today, that amount has nearly halved, when it should have doubled.

There are conditions, however. We need greater cost efficiency in development aid, starting in the European Union. Credits are divided up among national budgets, which are subject to colonial-era reflexes and to the complaints of those who promote trade. Non-governmental organisations suffer from too much bureaucracy. Internal resources swallow up a large proportion of funds. Paternalism is often the hallmark of Western NGOs and development authorities. Sometimes, they even take over part of the government's role in poor countries, but it is the emancipation of these people that is critical to the achievement of development and prosperity.

That is why we must have the courage to give the poor countries a bigger voice. They urgently formulate their requests, but often they go unheard. My proposal for an international political authority structure based on continental cooperative links creates a democratic, multipolar form of consultation on a global scale, in which the voice of the poorer continents will carry more weight than before.

For our part, we in Europe should be able to develop more intensive cooperative links with the African Union. This effort should be based, among other things, on the New Partnership for Africa's Development, which contains all the components of the new development consensus.

World poverty demands a united approach. The line that must be followed, free trade, but not only free trade, has already been traced out for some time. The time has now come for action and intervention in those areas where the free market falls short.

As the American political theorist Benjamin Barber put it: ``If there cannot be equity of justice, there will be equity of injustice; if all cannot partake of plenty, impoverishment, both material and spiritual, will be the common lot. That is the hard lesson of interdependence.'' This is the challenge that we must meet. It is in our own interest.

*Guy Verhofstadt is the Belgian Prime Minister.

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