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No half-diagnoses, no half-measures, urges Dutch Minister

by Chakravarthi Raghavan

Geneva, 27 Feb 2001 -- The Third UN Conference on Least Developed Countries (LDC-III), due to meet in Brussels in May, should be the last, and “there should be no half-diagnoses, no half-measures, no more paper resolutions good for nothing but window-dressing,” the Dutch Development Cooperation Minister, Mme.Eveline Herfkens declared Tuesday in a speech at the UNCTAD Trade and Development Board.

Mrs Herfkens was concerned that the Preparatory Committee for the UN LDC-III had not got the results needed and there was a danger of producing a compromise document of little operational value that would soon be forgotten. It was necessary for the whole international community to pull together to achieve the only goal that matters, “the reduction of poverty.”

The international development targets were the basic objectives. These must be converted into individual country targets, and expectations should be raised to achieve those targets.

Stressing the importance of the Poverty Reduction Strategy Papers, Mrs Herfkens noted that almost half of the LDCs had completed one, while others were working on one. Each country’s unique strategy formed the vehicle for both domestic policy and external support. All parties should accept the PRSP process as a foundation on which to build, and the Brussels meet should reaffirm the importance of this process and make it central to the Programme of Action.

The PRSP plans need finance, and it must be viewed as a whole. The LDCs must mobilize their own resources to the maximum -  through transparent and accountable public expenditure management, with high priority for poverty reduction within public expenditure and an equitable tax system including tax collection, and do everything in one’s power to root out corruption.

Trade was an important means for finance. The markets of LDCs were too small to support fast, healthy development. LDCs need to break into foreign markets, regional markets and global markets. International trade was the key to obtaining the foreign currency needed to fuel poverty reduction strategies. Aid was secondary to this. By promoting trade, LDCs could generate foreign exchange earnings that were not threatened by falling levels of ODA or bound by conditionality.

Despite trade liberalization, LDC exports had not shown sufficient growth in recent years. Weaknesses in their capacity - weak institutions, inadequate infrastructure, limited skills - had constrained their exports. These were the issues that the Integrated Framework for Trade-related Technical Assistance should be dealing with, on the basis of home-grown needs assessment. Strengthening the capacity of LDCs to trade should be an integral part of the national poverty reduction strategy in the PRSP process.

But trade policy was not just a domestic issue for LDCs. The international community needed to take action as well.

“First and foremost,” said Mrs Herfkens, “we must cease distorting LDCs’ markets by dumping our surplus agricultural products, be it canned tomatoes, milk powder, let alone beef that European consumers won’t touch because of BSE.”

Referring to the proposal being debated within the EU for duty-free, quota-free access for LDC exports on the EU markets - Pascal Lamy’s ‘everything-but-arms’ proposal, with a 3-year transition for sugar, rice and bananas - the Dutch minister noted that powerful lobbies, mainly European sugar and rice producers and producers in non-LDC developing countries,  had formed against the proposal.

The Dutch minister was unhappy with the exceptions and transitions agreed to in the package, but said that if others matched the EC, and perhaps did better, it would send an important political signal to those discussing a new WTO development round.

On the issue of LDC financing, the Dutch Minister underscored the importance of debt relief.

However, she said, it should be ensured that the poor who had not benefited from the original loans but had paid the price for the debt crisis, should be the first to benefit from the debt relief, as part of a broader poverty reduction strategy.

Secondly, there was the question of who would pay for the debt relief.  Such debt relief should be a bonus over and above regular aid, and “debt relief must not be paid for, as some G-7 countries want, by using the net World Bank income, which would otherwise have gone to the Bank’s soft-loan window, the IDA.”

“Debt relief for HIPC cannot be at the expense of countries like Bangladesh or Nepal, who have always met their debt obligations.  Inadequate financing for debt relief is a cause of major concern. It will be absolutely unacceptable if countries that meet the conditions of the HIPC initiative do not receive the promised reduction in their debt. The Netherlands has done its share and has contributed more to the HIPC Trust fund than other countries, not in commitments or promises for the future, but in hard cash.

“I call upon the other countries, especially the G-7 who claim to be the initiators of the HIPC plan to live up to their promises. They should put their money where their mouth is,” Mrs. Herfkens said.-SUNS4845

The above article first appeared in the South-North Development Monitor (SUNS) of which Chakravarthi Raghavan is the Chief Editor.

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