Saturday, July 02, 2005

G8: Missing the point

George Bush has responded to the growing pressure surrounding the upcoming G8 meeting in Gleneagles by promising to double US aid to Africa. But while welcome, this is fundamentally missing the point. Bush's increase follows the same old path of making aid conditional on "better governance" - code not just for reduced corruption, but also for the "Washington Consensus" of open markets, privatisation, and user-charges for basic services. And these are the problem, rather than the solution, because they make the basic education and health which are the prerequisites for any sort of economic development unreachable for the vast majority of Africans.

It's also missing the point because it ignores the key component of the Make Poverty History campaign: trade. One of the reasons Africa remains mired in poverty despite a half-century and more of aid is because the rules of global trade are stacked in favour of the rich and against the poor. Through the World Bank, IMF, and aid conditionalities, the rich have forced the poor to systematically open their markets, while keeping their own closed. As a result, poor countries cannot develop export markets, while their internal markets are devastated by cheap imports. The result is joblessness and poverty.

Reforming world trade rules to create a level playing field would produce far more benefit to the poorer countries than increasing aid budgets. The poor world already gains thirty-two times as much revenue from exports as it does from aid. Oxfam has estimated that increasing their share of world trade by only 5% would deliver them an extra US$350 billion a year - seven times more than they currently receive in aid. And the effects would be dramatic: it is estimated that every 1% increase would reduce the number of people in extreme poverty by 128 million.

Strangely, though, the G8's dialogue on this has focussed on aid and debt-reduction (again, with strings attached), rather than trade. And the reason is obvious: the rich countries profit from the present inequalities, and are perfectly willing to see the poor continue to die of hunger and disease in order to continue to do so. And the only way this will end is if we stand up and tell our governments that we are no longer willing to tolerate it.


Yup. Between economic oppression and internal governmental corruption and bloody conflicts, Africans are just being squeezed to death.

We could improve all of this, but the major players don't have the will or the desire to just make things better.

Posted by Muerk : 7/02/2005 12:28:00 PM

and let's not forget the global gag rule, which means the US is saying, We'll feed your children but not give you the ability to choose whether or not you have them. Perpetuating poverty and the need for aid.

Posted by Ghet : 7/02/2005 03:32:00 PM

Well done NRT, youre absolutely correct. It reminds me of an article I wrote in 2001 about free trade and corporate greed. Its still relevant in 2005.">

Posted by Swimming : 7/02/2005 05:04:00 PM

Don't often agree with the left, but yes, the problem is trade protection. Particularly in agriculture. Tony Blair is actually talking about it, reducing the CAP in Europe. Of course, a little self-serving since Britain is a net contributor to the CAP.

Bush would do well to also go to work on his farm lobby, of course in the US the left tend to be anti-trade.

On governance: Aid to Africa is a waste of time where there isn't good governance. It just ends up in the pockets of dictators. Bush's definition of good governance may not agree with yours, but I presume that you agree that giving money to a government that has no intent of passing it on to their people is a bit wasteful?

On education, read an interesting paper by a guy called Lant Pritchett (university guy, in collaboration with the World Bank by the looks). Contention is that failure of education is often not failure of funding - it is failure of the govt in the country to actually want their people educated. In other words, governance again.

I think the problem is a little deeper than you are suggesting.

Posted by Anonymous : 7/02/2005 10:03:00 PM

you are dead right about trade protectionism being the big issue. Not sure you are so right about the focus on Governance. How many times do we need to see evil dictators take the cash (aid is fungible you know) buy guns, tanks, palaces etc, and use the goodwill of the west to cement themselves into power for another 20 years.

How well has Africa done since it became independent - Aid simply doesnt work, it reinforces the ability of the elites in these benighted countries to keep on playing at God-President and murdering their citizens.

This focus on responsibility and good governance is going to be tough, but really that and reducing trade barriers for (in particular agriculture) are necessary, and they go together.

Strangely enough, the evil Bush and Blair get this.

Posted by gazzadelsud : 7/03/2005 08:57:00 AM

> Bush's increase follows the same old path of making aid conditional on "better governance".

Your problem is the alternative is not "great local governance" - it is unbelievably terrible governance.

The "washington consensus", if you like, is a set of fairly simple generic rules that can help (but not the optimal strategy). If you want to develop a country you very selectively protext industries you dont protect them wholesale nor can you get away with protecting the same export industries as your competitors because then you are all just wasting money.

>the rules of global trade are stacked in favour of the rich and against the poor.

Your problem is
1) if you want to systematically favour poor over rich you also have to fairly systematically favour poor human rights over good human rights records and high income distribution over egalitarianism and failing to cooperate over cooperation.
2) the rules ae not really stacked against the poor, it is just that the very poor are now poor for a reason (for example poor governance, no resources etc) nd the damae done by these things compounds.

The only way to fix that in hte short term is to have "evil dictator subsidy" (ie pay the country more money the more evil the dictator is - a little similar to the debt forgiveness strategy) and a "low export" subsidy (which again discourages the solution).

Posted by Genius : 7/03/2005 10:38:00 AM