1/5 MAKE POVERTY HISTORY 2005 Trade Justice. Drop the Debt. More & Better Aid Summary TRADE JUSTICE The UK Government should: 1. Fight for rules that ensure governments can choose the best solution to end poverty and protect the environment. This will not always be a free trade one. 2. End export subsidies that damage the livelihoods of poor rural communities around the world. 3. Make laws that stop big business profiting at the expense of people and the environment. DROP THE DEBT The unpayable debts of the world s poorest countries should be cancelled in full, by fair and transparent means. MORE AID All donors must: 1. Commit to bridging the finance gap needed in order to achieve the MDGs. In 2005 they must meet their promises made at Monterrey and increase aid by at least $50 billion per year. 2. Set a binding timetable to reach the international aid target of 0.7% of national income. 3. Provide sustained increases in aid to achieve 0.7%. 4. Ensure that the 0.7% does not include funding for debt relief - debt relief should be additional to aid spending. BETTER AID All donors must ensure that: 1. Aid is focused on the poorest people. 2. Aid supports policies defined and fully owned by the recipient countries. 3. All economic policy conditions, such as trade liberalisation, deregulation, fiscal austerity and privatisation, are ended. 4. Aid is reliable and predictable. 5. Aid is fully untied, including technical assistance and food aid. 6. The World Bank and IMF are truly democratised.
The Make Poverty History coalition has come together to demand political action on trade, debt and aid, and we are committed to achieving change on all three. If we are to have any hope of eradicating poverty, there must be concerted action aimed at trade justice, dropping the debt and providing more and better aid. A coordinated effort on all these issues is important because they are inextricably linked. The debt crisis, trade injustice and politically-driven aid policy interact with each other to exacerbate poverty, inequality and environmental degradation across the developing world. The three issues are also linked because they are vehicles through which rich countries are pursuing their own narrow selfinterest rather than the interests of the poor. Whether through binding multilateral, regional or bilateral trade deals, or economic policy conditions attached to aid and debt relief, rich countries are pushing poor countries to adopt neo-liberal economic policies, which have proven to be ineffective in reducing poverty. We believe that rich countries have a moral obligation to provide a major increase in resources through increased aid and debt cancellation. The make poverty History coalition will also press governments to de-link trade policy, debt relief and aid provision from the pursuit of corporate, political and foreign policy objectives and focus efforts on eradicating poverty and achieving sustainable development. The UK Government holds the presidency of the G8, and the presidency of the European Union in 2005. In light of the pressing need, we call on the UK Government to grasp this opportunity for change and push for trade justice, dropping the debt, and more and better aid. 2/5 TRADE JUSTICE The UK Government should: 1. Fight for rules that ensure governments can choose the best solution to end poverty and protect the environment. This will not always be a free trade one. 2. End export subsidies that damage the livelihoods of poor rural communities around the world. 3. Make laws that stop big business profiting at the expense of people and the environment. In particular, the following six actions are both politically possible in 2005 and would make a significant step towards Trade Justice: i. The EU should unilaterally end agricultural export subsidies now. ii. iii. iv. The EU should support changes to trade rules to enshrine the right of developing countries to protect their domestic agricultural sectors on the grounds of food security, livelihood security and sustainable rural development. As a first step at the WTO, the EU should ensure developing countries are able to self-select products on these grounds to be exempt from any further liberalisation. The UK Government to demand that the IMF and World Bank stop imposing trade conditions on poor countries. The EU to withdraw its demand that water is included in GATS. v. The UK Government (and EU) should oppose any restrictions on the ability of governments to regulate foreign investment in accordance with their development and environmental needs. vi. The EU to ensure that global trade policies and practices do not undercut internationally agreed social and environmental standards, in particular core labour standards and as a first step to ensure that the ILO is granted full observer status at the WTO.
3/5 vii. viii. The UK Government (and EU) to enact legislation to ensure that companies are held accountable for their social and environmental impacts at home and abroad. The EU to withdraw the following demands from its Economic Partnership Agreement (EPA) negotiating mandate: - reciprocal trade liberalisation - negotiations on competition policy, investment and public procurement Note: Where the target is stated as EU our aim is to have the UK push for this change. Further details: www.tradejusticemovement.org.uk DROP THE DEBT 1. The unpayable debts of the world s poorest countries should be cancelled in full, by fair and transparent means. 2. Any resources necessary to achieve such cancellation should be in addition to, and not drawn from, the funds required to meet existing targets for overseas aid. 3. The international financial institutions must stop requiring poor countries to implement harmful economic policies, such as privatisation and liberalisation, as a condition for granting debt relief. 4. Full multilateral debt cancellation should be rapidly delivered, particularly given that many countries have already demonstrated the ability to ensure that the proceeds of debt cancellation already received under HIPC are properly targeted at poverty reduction. 5. A fair, transparent and comprehensive international insolvency process should be created to allow creditor and debtor countries to resolve debt crises without compromising the ability of poor countries to meet the basic social needs of their peoples, and without forcing poor countries to repay what the insolvency process determines to be odious debts. 6. Future development funding for the world s poorest countries should have a strong bias towards grants, until such a time as they can reasonably be expected to bear low-interest loans. Grants should effectively and efficiently target poverty, without compromising environmental and human rights standards, and be free of undemocratic and economically damaging conditionalities. Further details: www.jubileedebtcampaign.org.uk MORE AID If the international community is serious about eradicating poverty all donors must meet the international aid target of 0.7% of national income as a matter of urgency. On current figures this would mean $120 billion more aid and would lift 48 million people out of poverty. All donors must: 1. Commit to bridging the finance gap needed in order to achieve the MDGs. In 2005 they must meet their promises made at Monterrey and increase aid by at least $50 billion per year. 2. Set a binding timetable to reach the international aid target of 0.7% of national income. 3. Provide sustained increases in aid to achieve 0.7%. 4. Ensure that funding for debt relief is not included within the 0.7% - debt relief should be additional to aid spending.
4/5 BETTER AID 1. Aid should be focused on the poorest people All aid should aim to lift the poorest out of poverty. However, many donors use aid as a foreign policy tool and to support international trade objectives. This is why, for example, the EU only gave 38% of its aid to least developed and low income countries in 2001, with 62% going to middleincome countries. We believe that: (i) All donors should explicitly adopt the principle that aid should be used for poverty eradication and should work with recipients to develop tracking procedures to ensure it reaches its intended purposes. (ii) All donors should commit to giving at least 70% of aid to least developed and low income countries by 2010, with the other 30% being directed at the poorest in other countries. 2. Aid must support policies defined and fully owned by the recipient countries Despite the rhetoric about the importance of national ownership and participatory mechanisms such as the PRSPs, local ownership is still being undermined in practice by the imposition of universal approaches and policies by dominant multi-lateral institutions and donors. All donors should: (i) Support policies and strategies grounded in national choices, involving parliaments and particularly reflecting the priorities of poor people. (ii) Respect the right of the recipient government to revise policies in order to achieve the intended outcomes. 3. All economic policy conditions, such as trade liberalisation, deregulation, fiscal austerity and privatisation, are ended For over twenty years, the World Bank, IMF and bilateral donors have been making provision of aid, loans and debt relief, conditional on the implementation of free market policy reforms by poor countries. The imposition of policies such as trade liberalisation, deregulation, fiscal austerity and privatisation, in return for aid, has not been shown to reduce poverty and is also undemocratic and unfair. Nonetheless we believe that there should be full transparency in the way that aid money is spent. For example, between 1990 and 2002, sub-saharan Africa received US$212 billion in aid (over US$16.3 billion per year on average). But in return for this aid, African countries were required to deregulate and open up their economies. These countries are now more integrated into the world economy than most rich countries, yet between 1990 and 2000 average incomes in sub-saharan Africa declined resulting in increased poverty and hunger. If the people of poor countries are to have control over their future, and aid is to be an effective tool for poverty eradication, all economic policy conditionality must be abandoned. 4. Make aid reliable and predictable If aid is to be effective it must be delivered in stable, predictable, manageable and sustained flows within medium to long-term financial frameworks that enable developing country governments to plan interventions on the basis of assured availability of recurrent funding. Countries cannot plan or expand effective public expenditure programmes without the confidence that resources will continue to flow to implement and sustain the programmes over a given period. The unreliability of donors when following-through on their commitments creates problems in terms of achieving stable resource flows and often results in significant shortfalls in budgets. The current lack of lack of donor co-ordination and harmonisation also significantly increases the transaction
costs associated with aid, undermines country ownership, and places demands on countries limited resources. All donors should: (i) Provide aid in a stable, predictable and reliable form. Aid commitments should be made over a period of at least 3 years (rolling), and all aid committed should be disbursed, except under extreme circumstances. (ii) Ensure that they are fully transparent to the beneficiaries of aid regarding planned and actual aid disbursements, evaluations of aid effectiveness, and conditionalities attached to aid. (iii) Fully implement commitments made in the Rome Declaration in February 2003 to harmonise the operational policies, procedures, and practices of donor institutions with those of recipient country systems. Donors should also ensure that all aid is aligned behind countries locally owned strategies. 5/5 5. Fully untie all aid, including technical assistance and food aid A large proportion of aid never reaches poor people, mainly because it is tied to the purchase of goods and services in donor countries. According to OECD studies, aid tying can increase the price of goods and services by up to 25%. In 2001, all OECD donors agreed to untie aid to Least Developed Countries (LDCs), apart from food aid and technical assistance. Despite this agreement, however, most donors continue to tie their aid, with the notable exception of the UK, which has fully untied all aid. We believe that: (i) As a first step, donors must immediately implement the OECD agreement and untie aid to LDCs; (ii) Donors must also follow the UK s lead and fully untie all aid, including food aid and technical assistance, to all developing countries (iii) A greater emphasis should be placed on the purchase of locally produced goods and services. 6. The World Bank and IMF should be truly democratised Board composition and voting power should be rebalanced to ensure that developing countries are fairly able to represent themselves. (i) Governing bodies should be made transparent through publication of agenda, transcripts, summaries and minutes of World Bank and IMF board meetings. In addition board members should express their position with formal votes rather than informal indications of position (ii) Leadership selection should be opened up by the introduction of a transparent process for selecting the heads and senior personnel of both organisations. This should involve all member countries and significant stakeholder groupings and assess candidates on merit, regardless of their nationality. (ii) Governments should support the International Parliamentary Petition calling for national parliaments in recipient nations to have the right and obligation to be fully involved in the development and scrutiny of all measures associated with World Bank and IMF activities within their borders, and hold the final power of ratification.