Committee for the Abolition of Illegitimate Debt

From September 20 to 22 a ‘High Level Plenary Meeting’ will be held at the UN in New York to look at the achievements concerning the Millennium Development Goals (MDGs). Once again, non governmental organizations in wealthy countries are mobilizing their troops in order to push for more development aid.

For those who might not remember: the MDGs are 8 objectives, 16 targets and 60 indicators concerning development cooperation. They aim at halving extreme poverty between 1990 and 2015, providing primary education for all children, gender equality and empowerment for women, fighting HIV/aids and malaria, reducing child and maternal mortality and caring for a better environment. The eighth and not quantified objective concerns the obligations of rich countries: more development aid, debt relief, access to their markets, affordable medicines and new technology.

The UN wants its member states to take vigorous action. Five years before the final date, the aim is to see what has happened and what remains to be done.

A missed opportunity

These objectives were adopted at the Millennium Summit in 2000, ten years after the end of the cold war and before 9/11. Typically, the Millennium Declaration contains all traditional and important principles and values of the UN, its commitment to its charter, equal sovereignty, self-determination, peace and solidarity, shared responsibility. But it also stresses the neoliberal accents its powerful member states want to stress: free trade and strong partnerships with the private sector, for poverty reduction as well as for the realization of the goals of the UN.

Unfortunately, after the summit, well-intentioned civil servants have taken out of this Declaration some of its objectives and presented them as a separate program. Decent work and human rights were left out. Shall we call it a coincidence that the selected objectives were totally in line with the ‘International Development Goals’ the OECD OECD
Organisation for Economic Co-operation and Development OECD: the Organisation for Economic Co-operation and Development, created in 1960. It includes the major industrialized countries and has 34 members as of January 2016.

http://www.oecd.org/about/membersandpartners/ had proposed in 1996? That was one year after the UN Social Development Summit in Copenhagen adopted an encompassing action platform on poverty, employment and social integration. After the adoption of the Millennium Goals, the Copenhagen program was never heard of again. The international community had decided it wanted to help half of the extremely poor people and in order to prevent any criticism, they stated this was a very ambitious program. The NGOs agreed.

In 2005, at the MDG+5 summit, a controversial text was adopted calling for the implementation of the MDGs but without any reference to the UN conferences of the 1990s. It introduced the very controversial concept of ‘responsibility to protect’. On the positive side, we have to mention a reference to the need of ‘ambitious national development strategies’ and to ‘innovative sources of financing’ as well as to ‘efforts to reduce capital flight and measures to curb illicit transfer of funds’.

However, in its preparatory report to the summit (‘In larger freedom’), Secretary-General Kofi Annan had pointed to the fact that the MDGs ‘clearly do not in themselves represent a complete development agenda. They do not directly encompass some of the broader issues covered by the conferences of the 1990s, nor do they address … growing inequality’. Nevertheless, economic and social development had disappeared from the agenda. At the G8 G8 Group composed of the most powerful countries of the planet: Canada, France, Germany, Italy, Japan, the UK and the USA, with Russia a full member since June 2002. Their heads of state meet annually, usually in June or July. meeting in Gleneagles that year Bono stood hand in hand with the NGOs and the World Bank World Bank
WB The World Bank was founded as part of the new international monetary system set up at Bretton Woods in 1944. Its capital is provided by member states’ contributions and loans on the international money markets. It financed public and private projects in Third World and East European countries.

It consists of several closely associated institutions, among which :

1. The International Bank for Reconstruction and Development (IBRD, 189 members in 2017), which provides loans in productive sectors such as farming or energy ;

2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;

3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.

As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.

to call for a ‘Make Poverty History’.

No reliable data

One of the major problems with the poverty reduction policies of international organizations is a serious lack of reliable data. The World Bank is the only provider of statistics on global poverty, but it constantly changes its methodology and ‘corrects’ its failures. In 2000, poverty lines were changed and extreme poverty in Subsaharan Africa rose from 39.1 to 49,7 %; a new estimate for extreme poverty in 1980 gave 1,482 billion people instead of the former 800 million. In 2007 it modified its estimates again for a whole series of countries. Apparently it had ‘overestimated’ the Chinese economy with 40 % and Indian economy with 25 %. It once again introduced new poverty lines, this time 1,25 $ a day for extreme poverty and 2,50 $ a day for poverty.

According to the UNDP UNDP
United Nations Development Programme The UNDP, founded in 1965 and based in New York, is the UN’s main agency of technical assistance. It helps the DC, without any political restrictions, to set up basic administrative and technical services, trains managerial staff, tries to respond to some of the essential needs of populations, takes the initiative in regional co-operation programmes and co-ordinates, theoretically at least, the local activities of all the UN operations. The UNDP generally relies on Western expertise and techniques, but a third of its contingent of experts come from the Third World. The UNDP publishes an annual Human Development Report which, among other things, classifies countries by their Human Development Rating (HDR).

in its Human Development Report of 2005, 67 countries were lacking any data on its population living with less than 1 $ a day, and 93 countries were lacking trend data. Today, 118 countries have data on two different moments on 16 of the 60 MDG indicators. In 2003 there were only 4. The most recent UN Report on the World Social Situation (‘Re-thinking Poverty’) states that either Chinese poverty is underestimated, or poverty rates in other countries are overestimated.

Be that as it may, according to the latest statistics of 2008, global extreme poverty is declining and there is a serious chance that the MDGs will be met by 2015. Is that a major a achievement? No, it is not. Because this ‘progress’ is exclusively due to the declining poverty in China and India. China had already met the MDGs in 2000, at the moment the MDGs were adopted and it was decided the reference year was going to be 1990. Secondly, the extreme poverty rates are only very slowly declining for Subsaharan Africa (from 50,8 % in 1981 to 50,4 % in 2005) while the number of extremely poor people has been rising (from 202 million in 1981 to 384,2 million in 2005). Instead of halving extreme poverty between 1990 and 2015 (in percentage), one can almost speak of doubling extreme poverty from 1981 to 2005 (in number of people).

Neoliberal policies

The second problem with the MDGs and other poverty reduction policies, like the Poverty Reduction Strategy Papers (PRSPs) of the World Bank and the IMF IMF
International Monetary Fund Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.

http://imf.org , is that they do not require any change in the neoliberal policies the Bretton Woods institutions are still imposing. Even if there is a kind of ‘consensus’ on the end of the ‘Washington Consensus’, conditionality has hardly changed, free trade is still considered as the alpha and omega of growth, liberalization, privatizations and deregulation are still on the agenda, fiscal deficits and inflation Inflation The cumulated rise of prices as a whole (e.g. a rise in the price of petroleum, eventually leading to a rise in salaries, then to the rise of other prices, etc.). Inflation implies a fall in the value of money since, as time goes by, larger sums are required to purchase particular items. This is the reason why corporate-driven policies seek to keep inflation down. are still perceived as the worst enemies. As an evaluation document of 2007 of the IMF revealed, a consequence is that most aid poor countries receive cannot even be spent but has to be put in the reserves.

As from 1990, the year in which the World Bank proposed its new poverty reduction policies, the analysis of its poverty conceptualizations made clear that they were perfectly compatible with its neoliberal philosophy. In fact they were meant to forget about social protection and social security, both seen as a matter of ‘vested interests’ of the non poor workers in the formal sector. Social expenditures had to go to those ‘who really need it’. Income and income inequality were neglected if not willingly forgotten. Poverty became a problem of individuals without access to markets. And markets were the mechanisms that would lift the poor out of poverty. In this way, poverty reduction became a matter of redistribution from the non poor to the poor instead of from the rich to the poor. And poverty reduction became the human face of neoliberal globalization.

Economic and social development

Ten years after their introduction, neither the MDGs nor the PRSPs are successful. What is clear today and should have been clear to all in 2000 is that poverty reduction is only possible as the result of a successful economic and social development process. And these were totally forgotten. Today, the UN Secretariat and several of its organizations are again promoting the idea of economic and social development, promoted by a developmental state. They rightly defend the development of productive capacity, selective protectionist policies, flexible trade mechanisms and most of all transformative social policies beyond poverty reduction. Universal policies are indeed more efficient than targeted measures to the poor and should not cost more than about 4 % of national incomes. Social policies and economic policies go hand in hand and reinforce each other. Unfortunately, the World Bank and the IMF still see social policies as being residual.

Finally, development aid is rather meaningless if in the meantime debt servicing, capital flight and tax evasion are dragging ten times more money out of poor countries than aid can pour in. At any rate, the aid system will have to be seriously remodeled. It is still donor-driven and highly fragmented. A global system based on global taxes could be more generous and more efficient.

Another world is possible

It seems as if the whole development world is at a crossroads. Will the lessons of the recent crisis and of thirty years of growing impoverishment and inequality be learned? Will neoliberal policies prevail or will the UN approach of a developmental state with coherent economic and social development be adopted? Will the climate crisis be taken into account and will the wealthy North accept it also has to redesign its development paradigm?

These are difficult questions that cannot be answered right away. One thing however should be clear: poverty is not a problem of poor people but of the whole of society and of the international community. It means the problem has to be tackled at the national and at the global level. Development and inequality, ecological consciousness, self-determination and redistribution are an inherent part of it.