Theme: The ‘Millennium + 5’ summit was held last September. It was hoped that the Millennium Goals would be backed more solidly and that the strategies so far implemented to reach these goals would be reviewed. However, neither the UN meeting nor the autumn meetings of the International Monetary Fund and the World Bank –held only a few days later– appear to have met the expectations of many sectors in this ‘Year of Development’.
Summary: This analysis is limited to a brief description and assessment of the results achieved in international development cooperation at the recent United Nations summit and the subsequent autumn meetings of the IMF and the World Bank. After reviewing the main features of the debate on increasing Official Development Assistance (ODA) and the appropriateness of implementing international development assistance in the framework of the Millennium Goals, details are provided on the headway made in the agreement to cancel the debt of Heavily Indebted Poor Countries (HIPCs).
Analysis: The fight against poverty, the cancellation of foreign debt owed by poor countries, new financing instruments for development assistance and international development in general have been appearing increasingly on the international political agenda in 2005, and this has been reflected in the news media.[1] This can be explained in part by the high expectations held in different sectors of society and certain governments regarding the results of the Millennium + 5 summit held at UN headquarters on September 14-16.[2] This summit was followed by the autumn meetings of the International Monetary Fund (IMF) and the World Bank (September 24-25). For developing countries, the most significant result of these meetings was the support shown for the debt cancellation agreement proposed by the heads of government of the G-8 countries at their summit in Gleneagles, Scotland, in July.
Three particularly relevant issues were debated at the various meetings held throughout the month and were given extensive media coverage: a (re)questioning of the Millennium Development Goals (MDGs), donors’ financial commitment to ODA and the operation to cancel the debt of 18 poor countries in the framework of the Heavily Indebted Poor Countries (HIPC) initiative.
The Millennium Goals and the 0.7% Commitment
Some days before the United Nations summit, controversy erupted over the MDGs and donor commitment to giving 0.7% of GNP (gross national product) to ODA. John R. Bolton, the recently appointed US ambassador to the UN, had presented a list of more than 700 amendments to the wording of the final communiqué. The most outstanding of these in terms of development assistance were the elimination of the MDGs as a framework for donor action. Instead, these were to be replaced by the less specific steps mentioned in the Millennium Declaration,[3] –lacking time-specific goals or performance indicators– and the elimination of any reference to the financial commitment of donors to allocating 0.7% of their GNP to international development assistance.
Bolton’s proposed amendments were met with perplexity in many quarters. The UN’s 2005 meeting was supposed to be the summit for UN reform and a review of the MDGs, in a year when poverty has been the key issue on the international political agenda. The MDGs derived from the Millennium Declaration had (at least apparently) been politically accepted as the general framework in which foreign donors should work in developing countries, and in which developing countries should carry out their economic and social planning. In this respect, the reluctance of the US delegation to accept the eight goals and their corresponding objectives and indicators, was interpreted as a step backwards in the fight against poverty. Bolton’s reaction regarding the volume of assistance was also met with criticism, though to a lesser extent. While it is true that the donor community has not yet committed itself to raising development aid to 0.7% by a specific date –for instance, as proposed by the Monterrey Consensus– some sectors of civil society hoped that the New York summit would, among other things, establish a more specific schedule for donors to implement their financial commitments.
The controversy over the US position on the MDGs and ODA was accompanied, one day before the summit, by the publication in PloS Medicine of the results of a study in which Amir Attaran criticised the fact that it was impossible to obtain a precise idea of how much progress was being made towards the MDGs, since many of its performance indicators were not being measured accurately. For example, it is impossible to know if tuberculosis is being fought effectively (goal eight, objective six) since no developing country keeps records of the number of new patients with this disease –records that would make it possible to develop performance indicator number 23–. The author is therefore condemning the UN’s inability to establish quantifiable goals that can be measured with reasonable accuracy and its inability to develop –after nearly five years– a rigorous system for measuring pre-established objectives.
Thus, a (not very sophisticated) debate reopened as to whether or not it was a good idea to establish a full set of MDGs (with their respective goals and performance indicators) as the framework in which donor and beneficiaries should work towards achieving higher levels of development. The main arguments for and against this can be summarised as follows.
First of all, the aforementioned measurement difficulties make it impossible not only to take a precise snapshot of the current state of many of the problems covered by the MDGs, but also to know how they are changing and, therefore, to determine the resources necessary to solve them. There are not only obstacles to a precise measurement of the incidence of tuberculosis and malaria, but (as has been mentioned in previous works) also to the calculation and estimation of trends in income poverty. In fact, we do not even know whether the number of people surviving on less than two dollars a day is closer to the 56.1% of the world’s population claimed in studies by Chen and Ravallion,[4] or to the 52.9% suggested by the World Bank.[5] Other authors, such as Sala-i-Martin have put poverty levels as low as 18.6% of the world’s population.[6] However, what is involved here is more a criticism of the UN’s inability to diagnose the state of world development than a criticism of the definition of development implicit in the MDGs: the available information is not sufficient to determine development needs and, therefore, development goals. To some extent, by pointing out the problems with measurement, the need to raise ODA to 0.7% is also put in doubt: the size of the problem has not been precisely determined and, therefore, neither have the resources needed to fight poverty in its diverse forms.
The solution to the measurement problem would seem obvious: put the necessary energy into obtaining a reliable database to assess the situation and trends in developing countries in terms of the MDGs and, based on this, estimate the level of ODA necessary to finance the fight against poverty. As Sachs, McArthur and Schmidt-Traub have indicated, in response to Attaran, ‘Of course the data on the poorest population is weak, as is any effort involving the poorest’.[7] This being the case, perhaps quantified goals such as the MDGs are necessary in order for the community of donors to make the effort to enlarge and enhance the quality of their databases. In other words, if the MDGs were not at the core of the development cooperation system, it is possible the political impetus to carry out this statistical work would not exist.
In any case, we must keep in mind the extremely complex nature of any development process, which involves a developing country’s economic, social, political, historical and cultural circumstances. Any estimate of the resources needed to support a process of this kind would remain just that: an estimate. 0.7% of the GNP of donor countries or any other volume of ODA will never, in itself, guarantee the development of a region or a country.
Another common criticism of the MDGs is that they have a strong social focus (mother-child health, incidence of infectious diseases, education, gender equality, etc.) while putting much less emphasis on purely economic goals such as GDP growth. It is true that of the eight goals, only two are purely economic: the first one, which involves low income or consumption, and the eighth, which deals broadly with the impact of international economic relations on the development of recipient countries. The MDGs follow the human development approach, which attempts to go beyond development approaches based heavily on economic variables (such as per capita income and GDP growth) –approaches that do not necessarily translate into better social conditions (access to education and health care, literacy rates, etc.) for broad segments of the population, especially in countries where there is great inequality–. The MDGs do not include economic variables because these variables are not a goal in themselves, but rather are an instrument to improve social conditions. The MDGs are general goals with performance indicators that do not specify how each goal is to be achieved. In many cases, higher GDP growth rates will indeed be necessary to achieve the MDGs.
Third, and finally, as has been frequently stated, one of the main advantages of the MDGs is that they involve a certain consensus among the international community regarding the main features of development. The MDGs are a way of conceptualising development, which means that they establish the main working guidelines for both donors and recipients. The potential implications of this consensus are very broad and could prevent the enormous dispersion of donor activities that largely explains the frequent failure of development cooperation in recent decades.
In the end, the final communiqué[8] of the UN meeting did reiterate donor commitment to the MDGs, beyond the Millennium Declaration. References were also made to raising ODA to up to 0.7% of donor GNP although, once again, no time-specific goals were set. The summit’s final communiqué therefore does not advance any further than previous documents, including the Millennium Declaration and the Monterrey Consensus. In practical terms, this means it was a setback: we are only ten years from the established deadline for reaching the goals and there is not yet even a roadmap in place.
Very briefly, there may be very different reasons for the US position and the statements that Bolton made before the summit regarding the MDGs and the size of ODA. Although the US is one of the least generous donors in relative terms (0.15% of GNP in 2003, according to OECD figures), the Bush administration’s recent proposals do seem to indicate a greater effort on their part in this area. An example of this is the recent headway made in US bilateral assistance policy –the Millennium Challenge Account–. There has recently been a considerable increase in US funds destined to developing countries and we may be seeing a change in the direction of some aspects of US development cooperation. This may indicate a desire to design and implement their development cooperation policy with a sectoral focus –allocating aid to sectors such as infrastructure that are not considered especially relevant in terms of the MDGs–. Or, in more general terms, they may want to put their bilateral policies with developing countries ahead of the multilateral policies of bodies such as the UN –multilateral bodies that would be responsible for channelling part of the promised increase in US assistance–.[9]
Debt Cancellation
A few days later, at the annual meetings of the International Monetary Fund and the World Bank (September 24-25 inWashington), 184 countries supported the debt cancellation plan approved by the G-8 countries in Gleneagles (Scotland) in July.
At the latter meeting, the heads of the G-8 governments agreed to cancel the multilateral debt held by the African Development Bank (AfDB), the IMF and the World Bank with the 18 HIPC countries that have reached the ‘completion point’. With the exception of the IMF, these institutions would be provided with additional financing equivalent to the current value of the cancelled debt. An agreement was also reached to discount the cancelled debt from future assistance to the programme’s beneficiary countries, which will receive aid based on the general criteria for soft financing by international agencies.[10]
Apart from the fact that this agreement will have practically no financial impact on beneficiary countries, there have been complaints from many quarters that the conditions for assistance under the HIPC programme are too harsh, and that they meddle too much in national economic policy. However, at the IMF’s request, a new debt cancellation formula is being considered. This would be different to the HIPC programme and specific to this agreement. The list of beneficiary countries will depend on the feasibility of their meeting the new conditions. However, since the conditions for access to the programme are likely to be made stricter, the number of beneficiary countries may shrink to below eighteen.
Also, the final communiqué of the IMF and World Bank meetings reiterated G-8 financial support only for World Bank soft financing, but did not mention the AfDB.[11]
Conclusions: Development cooperation has been on the front pages of the economic and financial press as a result of the publication of the reports by the Commission for Africa and the Millennium Project, the G-7/G-8 debates on innovative mechanisms for financing development (for example, an international tax on capital movements, a tax on airplane tickets or a fuel tax) and the debt cancellation agreement. All this had helped raise expectations in many sectors of society regarding the results of the United Nations summit (where the headway made towards the Millennium Goals was also reviewed) and the autumn meetings of the IMF and the World Bank in September.
However, the results were met with disappointment in many quarters. Five years after the Millennium Goals were established and ten years from the scheduled date for achieving them, the international community still has not committed itself to a set of measures to make this happen. In fact, some donors are once again questioning whether development should be defined according to these goals. Furthermore, the commitment to increase development financing to 0.7% of donor GNP continues at a standstill and the foreign debt cancellation agreement does not include certain details that could enormously change the results for the countries benefiting from the programme.
The eighth of the MDGs sets out the key areas where –from the point of view of the United Nations– developed countries must focus their efforts to help development in poor countries: increased development assistance, cancellation of the foreign debt of countries receiving aid and the establishment of more balanced international trade relations that include poor countries. This analysis has briefly assessed the steps followed in the first two areas mentioned above, in this ‘Year of Development’. Various assessments made at the ministerial summit in Hong Kong –held in the framework of the Doha Round of World Trade Organization– agree that there have been few specific results.
According to Bello, the only tangible result is the European Union’s commitment to eliminate export subsidies for agricultural products in 2013[12]. Also in Hong Kong, certain headway was made in reducing cotton subsidies and opening up markets to products from least developed countries (LDCs), while providing them with bigger aid packages to enhance their trading capacity. It must be borne in mind, however, that LDCs account for only a third of developing countries and include an even smaller proportion of the people living in underdeveloped conditions.
The results of the summit seem to have met the lowest expectations. At least, the meeting will keep the round alive until 2006, when more important agreements are likely to be made.
Iliana Olivié
Senior Analyst, International Cooperation and Development, Elcano Royal Institute
[1] The reports by the Commission for Africa and the Millennium Project provide examples of the presence of obstacles to development on the international political agenda, as do the negotiations on debt cancellation that have largely been the focus of the G-7/G-8 meetings. See: WP 42-2005 and ARI 35-2005 or ARI 83-2005 for more details on the development of the debt cancellation proposal.
[2] http://www.realinstitutoelcano.org/especiales/WebCumbreMilenio/WebMilenio.asp
[3] Details of the Millennium Goals at http://ddp-ext.worldbank.org/ext/MDG/home.do
[4] Shaohua Chen and Martin Ravallion (2001), ‘How Did the World’s Poorest Fare in the 1990s?’, Review of Income and Wealth, Series 47, nr 3, September, p. 283-300.
[5] World Bank, World Development Indicators, online database.
[6] Xavier Sala-i-Martin (2002), ‘The World Distribution of Income (Estimated from Individual Country Distributions)’, ColumbiaUniversity, mimeographed.
[7] See ‘Millennium Development Goals “Not Doomed to Fail”’, SciDev.Net, September 13.
[8] See http://daccessdds.un.org/doc/UNDOC/LTD/N05/511/30/PDF/N0551130.pdf?OpenElement
[9] For a more extensive analysis of UN reform and the US position on it, see Soeren Kern (2005), ‘Will the United Nations be Reformed?’, ARI 131/2005, Elcano Royal Institute.
[10] For a more complete description and an assessment of the Gleneagles debt cancellation agreement, see [11] The final communiqué is available at:
http://siteresources.worldbank.org/DEVCOMMINT/NewsAndEvents/20660181/Sept_2005_DC_Communique_E.pdf
[12] Other analysts say this would have been eliminated around the same time anyway, due to the internal economic needs of the economic union.
