ECONOMY

Rich nations urged to make good on foreign aid promises

Greece’s role on the international scene has changed radically in recent years. However, the most symbolic dimension of this development has gone almost unnoticed. Having long been an aid recipient, Greece in 1999 made the transition to the donors’ club – the approximately 25 most prosperous nations in the world which are committed to providing foreign aid and exercising economic diplomacy in the process. Perhaps the most important instrument through which this aid is channeled to developing nations to fight poverty is the World Bank. Dr Biagio Bossone, member of the World Bank’s Executive Council and, since October 2003, director for Italy, Greece, Portugal and Albania, was in Athens recently and spoke to Kathimerini on the prospects for the global economy and the fight against poverty. «There has been an improvement in the general economic conditions around the globe, despite certain imbalances that can be corrected, and we hope this can be done smoothly. It is important that growth is recovering and this creates a favorable environment for the provision of aid to the poor countries,» he said. «A developing global economy is a prerequisite for the development of poor countries,» he continues, explaining that this is a necessary, but not a sufficient condition. Development does not automatically reduce poverty, both among and inside nations. Of course, economic growth in the developed countries has indirect impact on poor ones through trade and because governments find it easier to secure funds for aid. The most important initiative for fighting poverty are the so-called «Millennium Development Goals,» which was formulated in the 2000-2002 period and was signed by most countries. Two innovations «With the setting of the Millennium Development Goals, we have two big innovations,» says Bossone, «the introduction of many dimensions into the problem of poverty and the measurability of goals. «To start with, poverty is no longer seen exclusively as a problem of growth, that is, a problem of increasing incomes – which is, of course, an important dimension but not the only one. Other dimensions are health, education, global problems with diseases such as AIDS, environmental problems, and access to clean water.» Moreover, the Millennium Goals are determined through specific, clear and fully measurable characteristics. They include reducing poverty by half, reducing infant mortality by two-thirds and mortality at childbirth by three-quarters. «We have quantitative targets which we have to meet by 2015,» says Bossone, stressing that «this, of course, does not mean that poverty will have been eliminated by then, even if we attain the targets. But it will be a first step.» Trade liberalization, more and better development aid, and securing a stable economic environment are issues to which developed countries can contribute. Particularly as regards the first issue, protectionism in OECD countries is very strong, with high tariffs on products in which poor countries have comparative advantages: farm products, textiles and clothing. By contrast, they have greatly reduced tariffs on industrial products in which they are competitive themselves. On the other hand, developing countries still have to do a great deal more, such as consolidating institutions, promoting good governance, reducing corruption, and cutting barriers to trade among themselves, the so-called «south-south» problem. If assurances cannot be reached that development aid will be used properly and not be lost in the channels of corruption and inefficiency, there can be no positive result, no matter how much money is offered. «We live in an interdependent world; rich and poor live on the same planet.» Aid must be offered by developed countries, if not out of a sense of altruism, then at least through a sense of self-interest, because imbalances are not sustainable and we would find ourselves in a world of instability. «We must act now to avoid irreversible situations in the future.» A recent report on progress in the attainment of the Millennium Development Goals, published by the World Bank and the IMF, offers the pessimistic prediction that most developing countries will not be able to meet most of these goals if current trends continue. They have to expand basic services such as clean water supply, health, education, electricity, roads, and protection from infectious diseases. Developed nations must lower their trade barriers and increase aid. The report appeals to them to show leadership and make good on the promises they gave at the conference on financing development in Monterrey, Mexico, in 2002. Aid to developing countries must be doubled from the current $58 billion annually, as a first step with $18.5 billion by 2006. China, India and Vietnam have taken the biggest strides in tackling the problem of poverty, but in Africa the situation is deteriorating in many nations. Botswana, Benin, Mali are praised for improving rates of primary school attendance and Uganda and Zambia for limiting the spread of AIDS.