Global Trends by Martin Khor

Star, Monday 16 May 2011   

Helping the  world’s poorest countries

A United Nations summit to assist the least developed countries (LDCs) ended last Friday with new pledges, but the results were really disappointing

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The plight of the world’s poorest countries was the focus last week of a United Nations summit in Istanbul, attended by almost 50 heads of governments and hundreds of Ministers.

There are 48 least developed countries in the world, 33 of them in Africa and 14 in the Asia-Pacific region.  Their combined population is about 800-900 million.  They are among the poorest billion of the world’s people.  

In 1971 there were only 25 LDCs, thus their number has almost doubled.  And only three LDCs have “graduated” to the status of a “developing country.”

The continuing poverty, poor health conditions and high unemployment in the LDCs are thus a great source of concern.

In the past decade, the LDCs enjoyed quite good economic growth rates.  But much of this achievement was due to the high prices of the commodities the LDCs export, rather than any breakthrough in industrial and agricultural development.

The commodity boom was reversed in 2008-9 due to the global recession, and the LDC economies dipped.  Commodity prices have picked up again in the past year, but this trend could again be reversed if the world economy slows down again, which is likely. 

Indeed the LDCs are even more vulnerable than before to the fluctuations of the world economy and the prospects for both (the global economy and the LDCs) are anything but bright.

The 4th UN conference on the LDCs (dubbed LDC4) was thus an important opportunity to review what has happened to the poor countries since the last conference a decade ago, and to obtain pledges from the developed countries to renew their support for the LDCs.

Unfortunately, the rich countries were in no mood to renew and raise their commitments. 

Many European economies are in a debt crisis; the US politicians are obsessed with cutting their government spending and Japan is in emergency mode following the earthquake and tsunami.

Thus, the rich countries were unwilling or unable (or both) to make meaningful pledges on aid. 

The Istanbul Programme of Action, adopted by the Conference on 13 May, merely stated that those countries already providing more than 0.20 per cent of their GNP as aid to LDCs will continue to do so; those which have met the 0.15 per cent target will undertake to reach 0.20 per cent; and others which have committed themselves to the 0.15 per cent target will either achieve the target by 2015 or try their best to do.

This weak statement with its loopholes was rebuked by the civil society groups attending the Conference.

“The plan of action has no teeth and appears to have left the people in LDCs in a worse position than before.  We are appalled and disillusioned.” said Arjun Karki, the leader of the civil society forum at LDC4.

"The failure of LDC-IV should mostly be blamed on the developed world for failing to commit additional finances for the LDCs," said Thida Khus, director of Silaka, a Cambodian NGO. 

Indeed, the Programme of Action seems to contain more commitments by LDCs to take their own actions, than commitments by rich countries to assist them, which is a reversal from previous LDC conferences.

For example, climate change is a major issue for LDCs which face increased flooding, lower agricultural productivity and other problems.

There is no new pledge in the Programme of Action to assist the LDCs either with funds or technology, beyond the general principles already made elsewhere.

Yet the LDCs have pledged to mainstream national adaptation and mitigation climate actions, and integrate these into national development plans. This pledge goes beyond what the LDCs have been obliged to do at the UN climate convention.

On   trade, the most hotly contested issue was the provision of duty free, quota free market access for products of the LDCs. 

There was an effort by developing countries in general to make an advance over the WTO Hong Kong decision of 2005 (which mandates that rich countries give duty-free status for at least 97% of LDC products) and to obtain this commitment for 100% products.

Disappointingly, the eventual outcome was only to “realise timely implementation” of the Hong Kong decision.  However an advance is that the adoption of this at the LDC conference could pave the way for an “early harvest” of the stalled Doha talks, that this can be implemented even before the overall Doha talks are completed.

Whatever small gains that the LDCs may get out of this conference may also be wiped out of they sign on to a free trade agreement they are negotiating with the European Commission.

In these Economic Partnership Agreements, the African and Pacific countries (many of which are LDCs) are being asked to cut their tariffs to zero for 80% of their imports.  They also have to open up their services, investments and government procurement business.

This may overwhelm the small farms and firms of the LDCs, and make it more difficult for them to institute development policies, a fear that was expressed by several speakers at a dialogue session on trade issues during the Conference.

The eventual success of this Conference now depends on whether a strong follow-up mechanism is set up to monitor and implement the pledges that were made in Istanbul in the Programme of Action.