Thanks
largely to the Enron scandal, there is much talk
these days about "aggressive accounting." Paul
Krugman, economics columnist of The New York Times--and
one of the stars of the just-concluded meeting
of the World Economic Forum--applied that term
yesterday to President Bush's budget. Many commentators
say that what is now called "aggressive accounting" is
what used to be called fraud. Basically it involves
overstating profits, hiding losses and using
a range of other tricks to make a company's balance
sheet look better than it really is--artificially
inflating the value of the company's stock. Nobody
really knows how widespread the practice is,
but
hardly anyone thinks that Enron or Arthur Andersen,
its auditor and consultant, were the only firms
engaged in it. Indeed, investors are so apprehensive
about the practice that they have sent all of
the world's stock exchanges into a tailspin.
But,
as Krugman points out, it is not only business firms
that are engaged in "aggressive accounting";
governments do it too--and so do international organizations.
For example, for years the UN Development Programme
(UNDP) and other development agencies have been trumpeting
the success of various of their anti-poverty projects
in the developing world. Judging solely from such reports,
one might think that poverty, disease and ignorance
must be quickly disappearing from the planet under
the onslaught of these good works. Would that this
were so! Alas, the same agencies provide amply statistical
evidence that the opposite is true.
"Aggressive accounting" is also
a problem for international conferences. Far
too often, the organizers of these conferences
let themselves get carried away by their enthusiasm
and grossly overstate the beneficial impact
that their meeting will have. But the problem
is more than just "over-selling" the
projected benefits to the host city or country.
Before
a conference takes place, all that can be
said about its
outcome is what its organizers
are hoping for. So, when the Earth Summit was
being organized, more than 10 years ago, it
was hailed as promising to forge a link between
environment and development. The Brazilians
coined even the name "ecologia" for
it.
The
conference itself produced the voluminous
Agenda 21,
which contains any number of suggestions
for ways in which the world's governments could
or should act to protect the environment, but
it was unable to agree on how such actions
might be funded, and as a result very, very
few of them have been implemented. For most
of the decade that has passed since, the development
of the world's poorest nations has stagnated
or worse; the flow of official development
assistance (ODA) from the rich to the poor
countries has steadily declined; the gap between
the rich and poor has widened; and environmental
problems have, by most reckonings, continued
to worsen. What is perhaps even more troubling,
however, is that now, as we are preparing for
the "Rio-Plus-10" conference in Johannesburg,
the World Summit for Sustainable Development,
we are not even focusing on rectifying what
went wrong 10 years ago. It's as if nobody
connected with the Summit thinks that such
concerns are worth spending time on.
The
Secretary General's report on "Implementing
Agenda 21," submitted to this PrepCom,
notes that, in the years since Rio, "Most
of the least developed countries suffered a
decline in ODA of at least 25 percent, and
seven countries of them, all in Africa, saw
ODA reduced by more than 50 percent."
If
the Johannesburg summit cannot so something
positive to reverse
this trend, then its outcome
will be as much about "aggressive accounting" as
about sustainable development. And that would
be a crying shame.
--Jack Freeman
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