FINANCING FOR DEVELOPMENT
Annan urges skeptical donors; Castro leaves abruptly
> BY DEVIKA SAHDEV
Copyright © 2002 by The Earth Times. All rights reserved

"Some donors may be reluctant to commit themselves because they are not convinced that 'aid' works, said the Secretary General at the first plenary session of the Summit segment of the International Conference on Financing for Development in Monterrey. "To them I say, 'Look at the record.' There is abundant evidence that aid does work. Aid brings spectacular improvements in literacy, and spectacular declines in infant mortality when it is channeled to countries with enlightened leaders and efficient institutions."

After greeting a series of leaders including President Fidel Castro Ruz of Cuba, President José Maria Aznar of Spain and President Thabo Mbeki of South Africa, the Secretary General and President Vicente Fox Quesada of Mexico presided over the plenary session of heads of state and government. World leaders reaffirmed their commitment to the Monterrey Consensus, to the Millennium Development Goals and to working together to promote development.

"Development is a complex process, in which many different actors have to work together, and not against each other," said Annan. "That is why it is encouraging to see finance ministers and businessmen here, as well as development ministers. And that is why the process of preparing this conference-with the United Nations, the World Trade Organization and the Bretton Woods institutions working together as never before-has been so extraordinary."

James Wolfensohn, President of the World Bank, Horst Koehler, Managing Director of the International Monetary Fund, and Mike Moore, Director General of the World Trade Organization also spoke at the plenary, reaffirming the commitment of their respective organizations to fostering development in poor countries. The Doha WTO Ministerial Meeting in November 2001 was called the 'Development Round' and heralded as an opportunity to remove trade barriers to the benefit of poor countries.

Bringing down trade barriers, especially in areas like agriculture, is key to development said Moore. "The issue has never been trade versus aid, we need both. But aid related to trade capacity is money well spent and will make winners of us all. Trade can serve as a key engine of growth, but currently products of developing countries face many obstacles in entering the markets of rich countries."

Developed nations spend over $360 billion a year, or $1 billion a day, in agricultural subsidies. The World Bank's Global Economic Prospects report estimates that abolishing all trade barriers could boost global income by $2.8 trillion and lift 320 million people out of poverty by 2015, said Moore. "It is this immense magnitude of the benefits of trade liberalization which makes the work your governments are doing in implementing the Doha Development Agenda so potentially important as a source of finance for development," he added.

Mbeki, the South African president, told the gathering of world leaders, "Post-Doha negotiations must include the provision of increased market access for products from developing countries. We must call on the OECD countries to act on the more than $360 billion of agricultural subsidies, which lock out imports from developing countries."

The drama of the week, however, came from the Cuban leader, Fidel Castro. After an uncharacteristically short speech, he said he was obliged to go home immediately. "Due to a special situation created by my participation in this meeting, I am obliged to return immediately to my country," he said. He presented his excuses and called on delegates to treat his deputy at the conference, Ricardo Alarcón de Quesada, as the Cuban head of state for the remaining two days of the meeting. Diplomats told The Earth Times that Castro's decision not to remain in Monterrey was because of pressure from Washington. President George W. Bush, they said, who is scheduled to address the meeting on Friday, did not want to be in the same town as Castro.

Castro, who drew applause from the gathering, delivered a powerful speech condemning speculative trading and the 'existing world economic order.' "The world economy today is a huge casino," he said. "Recent analyses indicate that for every dollar that goes into trade, over one hundred ends up in speculative operations completely disconnected from the real economy." He called for a currency speculation tax, such as the Tobin tax, to raise revenues that could be distributed through UN agencies-and not "awful institutions like the IMF"-to supply direct development assistance to countries.

Following the plenary, Alarcón declined comment on the matter, saying instead that, "There is a problem and a delicate situation, but we do not want to go into the situation. There was a situation, which led us to the conclusion that the right thing to do is what he [Castro] did, and announce it in the plenary." Speculation continued throughout the day, but Alarcón said the Cuban delegation would refrain from further comment, while hinting at the possibility of discrimination.

The US has made clear that development assistance will only go to countries that encourage private enterprise through market-oriented mechanisms, fight corruption and adopt the best practices from governments and business around the world. Paul O'Neill, US Secretary of Treasury, stressed on Wednesday that assistance could not be spent without holding both the donor and the recipient accountable and responsible for its effectiveness.

Development assistance targeted to fight HIV/AIDS was an issue addressed by President Festus Mogae of Botswana. "HIV/AIDS is a human tragedy and there can be no development in Africa without a concerted effort-and the requisite economic support-to turn the tide against this pandemic," he said.

The conference in the industrial city of Monterrey has drawn thousands of government officials, business leaders, nongovernmental organizations and activists over the week. On Thursday and Friday, 56 heads of state and government are expected to participate in the conference, though with Castro's departure this number is already down to 55. There is a notable lack of Asian heads of government, but Latin American and African countries have a strong high-level presence the meeting.

Referring to the terrorist attacks against the United States and the coalition against terrorism, King Abdullah II of Jordan said that the world must take advantage of the new sense of urgency to alleviate poverty. "For too long, deep pools of poverty and desperation have served as breeding grounds for conflict and division," he said. "On September 11, a worldwide alliance was finally roused. Its mission cannot simply, or even primarily, be military. Victory over terror will require economic, diplomatic, and development efforts."

The heads of state and government will attend a retreat on Friday and issue a communiqué at the end of the meeting outlining future plans for development assistance and financing.

"The 'Monterrey Consensus' is not a weak document, as some have claimed," said the Secretary General. "It will be weak if we fail to implement it. But if we live up to the promises it contains, and continue working on it together, it can mark a real turning point in the lives of poor people all over the world."