Global Policy Forum

Mark Malloch-Brown, head of development, talks to Oliver Morgan

Let's pat ourselves on the back - Britain is the Third World's best friend. It was Tony Blair who set the UK up as a caring 'beacon' to the world. It was Robin Cook who launched a new ethical era in foreign policy to bias international affairs less toward the interests of the developed nations. And Gordon Brown and Clare Short last year pushed for a $60 billion Third World debt relief package, with $640 million from the UK, in time for the new millennium. Our man at the United Nations, Mark Malloch-Brown, head of the organisation's development programme (which oversees aid programmes to the world's poor), has taken the interests of the developing world very much to heart.

The international financial diplomat and former vice-president of the World Bank does have doubts about whether the developed world is getting the treatment of the undeveloped one right. For a man with extensive experience of the global financial system - Malloch-Brown worked closely with James Wolfensohn at the World Bank before taking up his UN post last autumn - the mismatch between advertised intention and delivery is worrying.

For a start, the bank account of the UN Development Programme (UNDP) is not as healthy as it might be. Its main business has involved administering the UN's aid budget - made up of contributions from member nations - to Third World countries. 'Aid funding has been declining since the cold war and has fallen consistently since then,' says Malloch-Brown, pointing to the drop from $1.2bn to $800m this year. But beyond budgetary problems, there are wider concerns.

The core issue is that of rapid globalisation. 'We have to step back and see that the whole world has changed,' he says. 'In 1989, for example, 2 billion out of the 5 billion people in the world lived in democracies. Now 4 billion more than 5 billion live in market economies. The opening-up of former state economies, encouraging private sectors and capital, means the tectonic plates, even in Asia and Africa, are shifting.'

There will, he says, be huge changes in the relationships between developed and developing nations, and the latter must see the benefits. 'Beyond that, communications are transforming the world. The Internet will drive huge economic and political changes in these countries.'

However, progress is slow, Malloch-Brown goes on: 9 per cent of the world lives in sub-Saharan Africa, but only 0.1 per cent of the world's Internet connections are there. Malloch-Brown says: 'We have to change from the old view - when it was a case of aid versus investment - to see both as vital parts of economic development.'

For it all to work, however, developed nations need to do more than preach the gospel of free trade and democracy. The North's inability to see the world's problems from others' perspectives is reflected in debt relief. Programmes of debt relief do not make the needs of indebted nations paramount, Malloch-Brown says.

This problem affects all developed nation policies on Third World debt - including the latest moves led by Brown to relieve debt for 41 countries in the Heavily Indebted Poor Countries initiative (HIPC), set up in 1996. Last year's 'HIPC 2' deal turned on developed nations' increasing payments into a trust fund, which would boost the debt relief effort. But many of the countries involved used aid budgets to fund their contributions to it.

Malloch-Brown says: 'There is a terrible temptation in developed countries to raid aid budgets to pay for debt relief. Many people argue that HIPC debt relief is relieving countries which can use the money they would have used to reduce debt to spend on public services. That's worthwhile. 'However,' he says, 'the debt was not really being fully serviced in the first place. Aid now being diverted in lending countries is fully servicing the debt.' This means that when aid is used for debt relief developing countries end up with even less to spend on services.

There is, he says, another problem. 'Countries are looking to get better value for the aid pound by targeting special issues and projects. So it is very easy to raise money for Aids or big infrastructure projects. But, more important, lower-profile things such as job creation, education and healthcare get pushed down the agenda.' In addition to the wrong types of programmes, money is going to the wrong places. 'Most of the special projects money - about $1bn of it - goes to Latin America. This does not help us drive forward in the most troubled areas, Africa and Asia.'

So is the UN up to dealing with these ills?

'We need to be a kind of McKinsey for the developing world: advising on the issues people have to address, reforming the public sector, and developing a new form of governance in developing countries,' Malloch-Brown says. If he is looking to get his message across to the people in Downing Street, he could not have put it better. The UN - the McKinsey of the 21st Century.

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