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Jubilee Research @ nef                                                                   28^th June 2005

HIGH HOPES AND SMALL CONCESSIONS
Can ‘Make Poverty History’ really make poverty history?
By Susanna Mitchell

Over 400 organisations are now working together on the Make Poverty History (MPH) campaign, the UK component of  GCAAP, the Global Call to Action Against Poverty. This international coalition of faith groups, charities, NGOs and trades unions have united to demand concrete measures to tackle global poverty ‘once and for all’, as they put it, in 2005. Specifically, they are calling upon the world’s richest nations to deliver trade justice, debt cancellation, more and better aid, and transparent and accountable poverty reduction policies.

An enormous amount of time, money, energy and goodwill is being put into this international effort. The coalition’s emblem is a white circle, and on July 1^st buildings from Soweto to Tbilisi will be wrapped in white bands, and supporters all over the world will wear the same symbol to mark their participation in International White Band Day. Marches, rallies and G8 Embassy actions are also planned on a global scale, and Live8 concerts have been arranged in Paris, Rome, Berlin, Philadelphia and London to attract more attention to the issues at stake. The fact that the UK is hosting the G8 summit meeting in July in Gleneagles, and will also hold the Presidency of the EU for the second half of the year, has given a particularly high profile to MPH campaigning in the UK, and a huge rally will be held in Edinburgh on July 2^nd before the G8 meetings the following week, to impress the national leaders with the extent of public demand. Overall, the movement has attracted a great deal of publicity, civil society has been widely mobilised, and hopes and expectations are running high. This makes the next two weeks a critically important time.

However, as the GCAAP mandate specifically states, the coalition is ‘not asking the impossible; in fact we are only asking for leaders to honour the commitments they have already made’. It is certainly to be hoped that these demands will be met, and met as soon as possible. But we must remember the limited objectives of the campaign compared with the scale of the undertaking to ‘make poverty history’. While debt cancellation, fairer trade regulations, and the delivery of pledged aid would certainly do much to alleviate poverty, we must not forget that it is only a first, though essential, step on a much longer journey. The existence of unsustainable debt burdens, trade injustice and aid dependency are the results of a global economic system and a financial architecture precisely designed to favour the wealthy, and to ensure the survival of the existing structure of rich country dominance. If we are really and definitively to ‘make poverty history’ we will have seriously to address this imbalance of power, and reverse the present flow of wealth from South to North by reforming the global economy in a way that prevents the current gross misallocation of resources.

Such a project would entail much more fundamental changes than those currently demanded by the MPH coalition. In the first place, the World Bank, the IMF and the WTO would have to give way to alternative impartial and genuinely democratic international organisations that give proper weight to the voices of those who are currently exploited and under-represented.[i] It would also require the institution of appropriate measures to calm the currency volatility that has been so damaging to the developing world, and the introduction of fair international trading regulations that recognise the need of developing countries to protect their economies, and do not discourage the expansion of their internal domestic markets in favour of pushing ever more commodity exports onto already flooded world markets. Crucially, such a global system must give national governments the autonomy to control their own policy decisions according to their development needs, in particular allowing them to resist inappropriate liberalisation policies.

Establishing these long-term aims does not mean that the pursuit of more limited objectives within the current paradigm is a pointless exercise. To the contrary, every move in the right direction must be welcomed by all those concerned with social justice. However, if the underlying causes of the present situation are not addressed, resources will not be properly redistributed, and economic and political power will continue to rest in the hands of the wealthy. Poverty may be alleviated, but ultimately the poor will still be ‘always with us’.

The present plight of sub-Saharan Africa (including its debt burden) is largely the result of a global economic system skewed against the poorest countries, and global decision-making structures which deny them a say in how their resulting economic crises are addressed. Worse, these structures have been abused to prevent the debt crisis from being resolved in order to maintain aid dependency and thus policy control over developing countries. This dependency has been compounded by the failure of developed country governments to deliver more than a fraction of the aid they promised 35 years ago, and still more by their exploitation of the dependency they have created to impose inappropriate and ineffective policies on most developing countries for the last 25 years. It is therefore unlikely that the situation will improve substantially within the present economic framework in the long term. It is critically important that campaigners realise this, and do not allow limited short-term concessions to divert their attention from the long-term agenda.

It is also vital that the concessions they do win are not perceived to be more generous than is actually the case. As the media swallow the government’s hype about the relatively small concessions which are on the table, it is imperative that the organisations and celebrities backing the campaign do not succumb to the temptation to claim victory and exaggerate the likely benefits. The G8’s recent debt offer, for example, has been flagged up to the public as a ‘historic breakthrough’ representing a ‘victory for millions’, and providing ‘100% debt cancellation’.  In fact, the proposal is severely limited and hardly begins to answer even the long-standing demands of the campaigning NGOs. Nor does it in any way deal with the underlying factors that have led to the unsustainable debt burdens it purports to address.[ii]

Such misguided hype is profoundly damaging. Between half and two-thirds of the 62 countries unable to meet their MDGs without complete debt cancellation will be left out of the current deal entirely, and even the countries covered by the proposal will not see their net assistance flows significantly increased, as they are subject to a parallel dollar-for-dollar reduction of aid in line with the debt-service they save.[iii] Even if aid were not reduced, the 6p per person per week by which debt-service will be reduced in the countries which will benefit immediately, which account for just one-fifth of the population of low-income countries, cannot realistically be expected to bring about the transformation of fortunes which is so desperately needed.

If the general public is persuaded that such limited measures will transform the lives of the poor, it seems inevitable that their failure to do so will generate serious disillusion, and intensify the perception that further action would merely be ‘throwing good money after bad’. This sort of hype – for example around the original HIPC Initiative in 1995, which would ‘reduce debt to a sustainable level’, and the offer of ‘$100bn of debt cancellation’ at the 1999 G8 Summit in Cologne (of which less than one-third has been delivered six years later) – has contributed substantially to the situation in which we now find ourselves.

By wrongly convincing the wider public that debt cancellation has been substantially achieved, allowing such hype to go unchallenged plays into the hands of the G8 governments, who have no real interest in freeing developing economies from aid dependency and thus restoring autonomy to their governments. If MPH campaigners go along with such efforts to placate their constituency rather than to resolve the problems at which their campaign is addressed, the movement will be in danger of being hijacked by the very establishment it exists to criticise. There is nothing wrong in itself about the UK Chancellor wearing a white wrist band – but if the public becomes convinced that a real and lasting solution has emerged from the debt deal he has been so influential in brokering, the impetus of the whole movement will be lost, and we are likely to see little more movement on debt relief for many years to come.

It is much to be hoped that the inadequate debt deal, and the harmful publicity surrounding it, will not prove to be an outcome typical of the GCAAP campaign – but at the moment the signs do not look promising. On the aid front, the coalition is calling for the rich countries to make good their 35-year-old pledge to give 0.7% of their income to developing countries. However, despite the reiteration of this commitment at the Millennium Summit in 2000, official development assistance (ODA), which fell from 0.33 % to 0.22% of donor countries’ national income between 1990 and 2001, had only crept back to 0.25% in 2004. At this rate of progress, the developed countries as a whole would not fulfil their promise until 2049, 79 years after it was made. At present, only five relatively small economies (the Netherlands, Luxembourg, Norway, Denmark and Sweden) have put up their 0.7%, and the richest country – the US – remains the worst offender, with its foreign aid budget standing at a shameful 0.16% of its vast national income. Even in the UK, much as the government likes to parade its concern and claim ‘leadership’ in the battle to increase global ODA, the actual level of aid makes fairly dismal reading. In eight years in power, the government has narrowed the shortfall from its 0.7% pledge by less than one-third, and it plans to take another eight years to raise the extra 31p per £100 of income it will take to finish the job.[iv]

If the developed countries were to make good their 0.7% pledge, this would raise an extra $140bn per annum. This puts the debt cancellation deal (worth around $15bn in present value terms, not the $40bn widely quoted) into perspective. Setting aside the fact that at least part of this debt would not have been paid anyway, the total value of the deal is equivalent to the aid shortfall for about 5½ weeks.

While it is only a temporary fix, additional aid of this order of magnitude could make a real difference to progress towards the MDGs (Millennium Development Goals).[v] As things stand, however, there is no prospect whatever that this will take place. There seems little chance of the 0.7% pledge being fulfilled even in 2015 (the target date for the MDGs), let alone in every year until then. Again, however, promises to fulfil a 35-year-old promise in another 8 or 10 years are presented with a flourish – not least in the UK, where the recommendations of the Prime Minister’s Commission for Africa Report provide some useful rhetoric to distract the public from the absence of real action. Meanwhile the UK Chancellor’s International Financing Facility (itself a way of rephasing aid rather than increasing it, and full of the ‘conditionalities’ that the government simultaneously claims to repudiate), though turned down by the US and becoming gradually more irrelevant, still serves as a useful diversion when discussing the paucity of rich country aid.

As far as trade justice goes, the GCAAP Global Week of Action in April was enthusiastically supported, and was hailed as a remarkable demonstration of public outrage – as indeed it was. Unfortunately, zeal is no substitute for action, and there seems little prospect of real movement on this front either. Though generally recognised as disgraceful, the unfair system that allows rich countries to go on subsidising their own exports and protecting their own markets, while forbidding poor countries to do the same, continues virtually unabated, under the supervision of the IMF, World Bank and WTO; and the autonomy of developing countries to regulate, or even tax, foreign investment in order to benefit their development and protect their environment continues to be eroded.

Overall, it seems unlikely that the outcome of the G8 meetings will make any substantial contribution to correcting these more fundamental problems, and it is imperative that campaigners retain the enthusiasm, energy and credibility to fight for these demands into the future. While in one sense any gesture towards alleviating poverty must be seen as a great achievement in the present political climate, these small concessions must not be popularly misconstrued as ‘mission completed’ triumphs, or interpreted as having attained the far more ambitious aim of ‘making poverty history’. Should this happen, the triumphs will not just be limited, but also short-lived.

Nonetheless, the enthusiasm of the coalition so far has been impressive and infectious. It has raised the profile of the whole issue of global poverty and global economic injustice, and brought public pressure for change to bear on heads of government of the rich world. If it manages to avoid manipulation, to cling to its demands in the face of disappointment rather than saving face with spurious claims of victory, and eventually to extend its mandate to include the fundamental changes in the global economy which are really needed, making poverty history may indeed one day become a real possibility.

[ii] See ‘G8 Debt Relief Proposals : a first step in the right direction and a long way to go’  on the Jubilee Research website at http://www.jubileeresearch.org/latest/debtrelief0605.htm

[iii] See EURODAD briefing paper Devilish Details:Implications of the G7 Debt Deal, 14^th June 2005, p6.

[iv] There is no reason whatever for this lethal inhuman delay. The industrialised countries are rich far beyond their needs, and beyond all historical precedent. For example, on average, across the total UK population, some 47% of household expenditure is now classified as ‘discretionary’ and is worth some £380 billion, and a high percentage of consumers (77% in total) report that ‘there are no material comforts missing from their life’. The leisure market alone is now estimated to be worth some £80 billion, and as much is spent on leisure goods and services (17% of household spending) as on food and non-alcoholic drinks. By contrast, the recently announced debt proposals equates to an expenditure of only 1.5 pence per head of the population of the developed countries

[v] The Millennium Development Goals are a set of eight goals with quantifiable targets designed to reduce poverty, hunger, illiteracy and preventable disease by 2015. (The first of these is to halve the number of people living on less than $1a day, and to halve those living in hunger). Most of the world’s countries have pledged to support these goals, as have the IMF and the World Bank, but more assistance from the rich economies is desperately needed  At the moment few countries are on track to meet the MDGs, and the findings of the 2003 Human Development Report suggest that sub-Saharan Africa may not do so for well over another century.