Finally, a Break Through in Third World
Poverty
By JONATHAN
POWER
June 16, 1999
LONDON- Logjams that busy, but unthinking, beavers have
been building up for decades are now to be broken up. The
distance between inaction and action on dismantling the dams
that impede social progress in Third World countries has
been narrowed and the rivers of opportunity should be able
to run a little faster.
On Friday, President Bill Clinton makes [made] an
historic visit to the Geneva headquarters of the
International Labour Organisation, one of the oldest UN
bodies, established to bring unions, employers and
government into a closer working relationship. His speech in
favour of a convention aimed at eliminating the most
intolerable forms of child labour is, by any measure, an
important milestone.
On Saturday, the Group of 8, the world's leading
industrial nations together with Russia, open their heads of
government meeting in Cologne and debt relief for the
poorest nations is, after Kosovo, the most significant item
on the agenda.
There is no particular reason, other than good fortune,
why these two issues should have surfaced to the top of the
international agenda at the same time. If praise be given it
should probably go to the diligent, long-term activism of
numerous non-governmental, religious and union groups who
have been working on these issues for decades. Of course,
one should add in the change of government in Germany, which
has now dropped its country's long-standing hostility to
debt relief and, to finance it, the sale of surplus gold
held by the International Monetary Fund (IMF). Also Mr
Clinton knows that if he is to make progress on the new
trade bill so dear to his heart he has to dilute the
formidable opposition from those concerned with labour and
environmental standards.
Two intellectual somersaults had to be turned to bring
these major reforms up to the starting line.
First, it was necessary to repulse a long-standing
defense of Third World governments--that they possess the
sovereign right to do with government expenditure as they
see fit. It has taken a long time for opinion to change. But
now it is no longer tolerated that governments, if they want
aid or debt relief, can get away with saying, "We have a
sound macro-economic plan; economic growth will lift all
boats. Give us the money."Debt relief, it is now accepted
all round, must be tied directly to poverty reduction
schemes. In short, no financial liberation to spend more on
tanks, hotel development, cement subsidies or stadiums. The
relief that comes from debts being written off must be
channeled explicitly and precisely into such things as
girls' education, supplies of clean drinking water and
village health services.
The second bit of mental gymnastics has been to do away
with trade sanctions as a means of bludgeoning developing
countries to raise their labour standards. Now western
governments are pushing for an incentive-based approach,
instead of a punitive one. In May, European Union trade
ministers decided to offer tariff cuts to those developing
countries that agree to sign up to international standards
on child labour and environmental protection. Before, poor
families in the Third World has been "twice damned"--once
for being poor and again for finding that the route to
earning themselves out of poverty was being blocked by
high-principled souls in the western world who lobbied for
sanctions.
The EU in deciding to reverse this long-time logic has,
in effect, "twice saved" them. Poor countries gain a trade
preference and, moreover, they have an incentive to make
sure the benefit is passed down the line so that the
conditions of, say, child labourers are improved. Success on
that front will bring more preferences. More preferences
mean larger export markets and greater demand. That should
raise wages and working conditions.
Straight, unconvoluted, thinking looks as if it might
surmount the obstacles of past policies. Instead of Third
World ministers being consumed by the painstaking task of
negociating new deals to stay one step ahead of default they
can put their energies into poverty alleviation. Even the
poorest countries have enough resources, if carefully
deployed, to make a mark on the living conditions of those
in society's bottom layers.
The World Bank and the IMF instead of, as Harvard
economist Jeffrey Sachs says, spending their staff time on
"a perpetual motion machine" of sending out one mission
after another, number crunching debt relief, can hire
hands-on, locally-based, labour to make sure development
schemes are well run.
The only trouble with the decisions likely to be made in
Cologne this week-end is not that they don't point in the
right direction--they certainly do, at last--but they will
be, relative to the magnitude of the problem at hand, on the
modest side.
Instead of the IMF selling off 10% of its gold reserves
to fund debt relief it should be as much as one third. This
would give the $8 billion necessary to write off the debt in
its entirety. Similarly, the scale of trade preferences
needs to be increased by a similar magnitude, at least three
fold, if developing countries are to feel any quid for their
quo of alleviating the worst working conditions of child
labourers or improving the local environment.
This is not the beginning of the end. Just the end of the
beginning.
Copyright © 1999 By JONATHAN POWER
I can be reached by phone +44 385 351172 and e-mail:
JonatPower@aol.com
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