Global Policy Forum

By Thalif Deen

When more than 50 world political leaders and finance ministers from rich nations gathered in Mexico in March last year, they solemnly pledged to substantially increase their official development assistance (ODA) to the world's poorer nations. But 19 months later, the promises of increased aid held out at the International Conference on Financing for Development (FfD) in Monterrey, Mexico, have failed to materialise.

''There is a clear indication that counter-terrorism measures have subsumed the spirit of Monterrey and dashed hopes for international cooperation on financing for development,'' Saradha Iyer of the Malaysia-based Third World Network, told IPS. ''And the prospects for the equitable and sustainable development of the South are bleak,'' she added.

Last year, a glimmer of hope appeared when ODA from rich nations to the poor rose to 57 billion dollars, up from 52 billion dollars in 2001. But the news of a five-billion-dollar increase brought little rejoicing to delegates, senior U.N. officials and representatives of non-governmental organisations (NGOs) at a high-level ministerial meeting on FfD in New York last week. ''This increase was totally overshadowed by two other haunting statistics,'' Iyer said -- the 800 billion dollars spent on military budgets worldwide in 2002, and the 200-billion-dollar net transfer of financial resources from the South to the North.

According to a study by the U.N. Conference on Trade and Development (UNCTAD), the flow of net resources was the largest ever from the world's poorer nations to the rich. According to Iyer, the money, which could have been used to promote investment in health, education and infrastructure in the developing world, has instead ''perversely been channelled to the North, either because of debt servicing arrangements, asymmetries and imbalances in the trade system or because of inappropriate liberalisation and privatisation measures imposed upon them by the international financial and trading system''.

''The implications of these global trends are grave,'' she warned, pointing out that the FfD meeting in New York ''raised the spectre of gloom and doom for the realisation of the U.N.'s Millennium Development Goals (MDGs)''. The goals, endorsed by a special session of the U.N. General Assembly in September 2000, call for the world's nations to slash global poverty and hunger in half by 2015. They also call for a global partnership for development.

''The fact that the poor subsidise the rich, to the tune of nearly 200 billion dollars per year, tells us just how seriously the G-8 (the world's industrial nations and Russia) is taking its commitments to the poor,'' says Raj Patel of the U.S.-based Food First/Institute for Food and Development Policy. ''Instead of redistributing wealth -- wealth often appropriated from poor countries through colonialism -- the international financial system legitimises and encourages the expropriation of the poor,'' Patel told IPS.

Worse yet, he said, is that it has been going on for years. ''The hypocrisy of the rhetoric of 'financing for development' cannot, ultimately, stand up to the facts.'' One can only hope, he said, that with the publication of the UNCTAD study, citizens of conscience in rich countries will turn to their governments to demand justice for the peoples of the Third World.

But Mark Malloch Brown, chair of the U.N. Development Group and head of the U.N. Development Programme (UNDP), remains sceptical despite new commitments made by rich nations for an additional 16 billion dollars by 2006. This includes new aid arrangements, including some five billion dollars proposed by the United States as part of its Millennium Challenge Account.

Malloch Brown estimates that if the MDGs are taken into account, the shortfall in ODA would be as high as 100 billion dollars a year -- ''even assuming developing countries raise domestic resources, pursue good macroeconomic policies and tackle corruption.'' - ''Today, the world is more unequal, and more insecure, than ever: we live in a world of six billion people, one billion of whom own 80 percent of global wealth, while another billion struggle to survive on less than a dollar a day,'' he said.

U.N. Secretary-General Kofi Annan was equally pessimistic about the deteriorating state of the Third World economy -- rising external debts, declining foreign direct investments and distortions in international trade characterised by subsidies and tariff barriers protecting farmers and exporters in rich nations. Annan also pointed out that funds that could be promoting investment and growth in developing countries, or building schools and hospitals, or supporting other steps towards achieving the MDGs, are instead being transferred abroad.

''If what we say about financing for development is not to ring hollow, if financing for development means anything, we must reverse this negative balance sheet and fix the system so that all countries, and all people, especially the poorest, can benefit.''

Although the world's 22 rich countries were mandated by the General Assembly to provide 0.7 percent of their gross national product (GNP) as ODA to developing nations, only five countries have met this target, according to a new U.N. report on FfD. Three of them, Luxemburg, Norway and Sweden, have also pledged to reach the 1.0 percent target by 2005-2006. The other two, Denmark and the Netherlands, have not.

Of the countries that have not reached the U.N. target, Belgium and Finland have pledged to reach 0.7 percent by 2010, Ireland by 2007 and France by 2012. Britain, on the other hand, has pledged to meet only 0.4 percent, and that too by 2005-2006. The other European Union (EU) countries -- Austria, Germany, Greece, Italy, Portugal and Spain - have not made any promises on the 0.7 percent target. The remaining six rich nations outside the EU -- Australia, Canada, Switzerland, the United States, New Zealand and Japan -- have provided no time-frames to reach the 0.7 percent target, and no goals for interim targets either.

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