analysisBy Claude Martin
Has the UN Conference on Financing for Development in Monterrey, Mexico, really been a turning point in development aid, as some commentators have maintained, or was it just a spin to camouflage the disappointing commitments made by the rich nations?
President George W Bush's announcement of a $5 billion increase in aid from 2004 will raise the American contribution by about 50 per cent, but this must be set against the fact that the US currently spends a paltry 0.1 per cent of its GNP on development aid. Similarly, the European Union has committed an additional $7 billion by 2006, and announced a gradual increase in its aid budget to 0.39 per cent - yet that is still well short of the UN target of 0.7 per cent of the industrialised countries' gross domestic product.
However it is presented, Monterrey did not come up with the additional $50 billion a year the World Bank has said would be necessary to reach the UN millennium declaration target of halving world poverty by 2015.
There are two immediate conclusions to be drawn. The first is that the thoughtful declarations after September 11, which recognised that we are living in one world, not two, have now been proved to be nothing more than lip service. Second, the Monterrey outcome is a bad omen for the forthcoming World Summit on Sustainable Development (WSSD) in Johannesburg, South Africa, particularly in view of the projected increase over the coming three years in global military spending to more than $900 billion, a level about 15 times higher than the aid budget.
However sad this may be though, we need to realise that poverty reduction is not solely a matter of aid funding, often not even a question of financial investment. In fact, the history of development aid is littered with examples of projects that have been badly adapted to local circumstances, and the money has, in consequence, deepened poverty - not to mention programmes that were more of an export promotion by donor countries than actual development aid.
One of the reasons for this failure is the inability to fully understand the root causes of poverty and a simplistic way of measuring it. This is evident in the current poverty reduction debate because, a dollar value is used to measure poverty. According to the UN and a number of intergovernmental institutions, there are 1.2 billion poor people who live on less than a dollar a day. So what about the Amazon Indians, the Penan tribe, or the Baka pygmies who have never seen a greenback, and maybe not even the local currency?
Their incomes, livelihoods, and social and cultural integrity depend entirely on the goods from forests. In fact, the moment currency appears in their forest settlements, it may result in the demise of their cultures and the start of real poverty. There are at least 1,400 distinct indigenous and traditional peoples living in the world's forest areas alone. Are they poor because they do not have a monetised system?
Perhaps one may point to the comparatively low numbers of indigenous peoples who may have been included among those living in absolute poverty by default. But what about the vast majority of the 1.2 billion poor people who, according to a World Bank study, depend at least partly on forest resources? Twice as many people rely on traditional medicines for their primary health care. Are some of them poor because our current system of national accounts, which measures everything in GNP terms, cannot assess the value of natural goods and services?
I am in no way downplaying the crucial importance of poverty eradication, and I understand the need to put numbers to it, but unless we have more sophisticated ways of classifying poverty - which must include social and cultural criteria and account for natural resource use - aid programmes may lead to the same failures as past development programmes.
Understanding the root causes of poverty also means analysing the impact of Northern consumer markets and trade on the livelihoods of poor countries. Trade barriers imposed by industrialised nations on goods from developing countries seriously limit the development options of some of the poorest. Tariff barriers on the import of textiles from developing countries are a classic example of protectionist measures by rich nations that fly in the face of poverty reduction goals.
In addition, billions of dollars and Euros go to agricultural and fisheries subsidies which damage the livelihood of many rural poor in developing countries. The EU, for example, subsidises its vastly oversized fishing fleet to fish the coastal waters of Africa under fisheries access agreements, thus directly competing with poor traditional fishing communities for an increasingly scarce resource. This is in direct contradiction to the EU's own development policies.
Then, there is the increasing impact of climate change. According to statistics from the reinsurance company Munich Re, the damage caused by weather-related events has increased dramatically over the past decade and affects the poorest countries of the world far more significantly than richer nations. This damage now amounts to 13.5 per cent of the GDP of the poorest countries.
Some conservation organisations have learned through many years' experience that even modest investments in poor countries can make a huge difference if funds are strategically applied, based on proper analysis of the local situation, and used to promote local capacity, particularly when combined with policy change.
Thus, whether Monterrey was a turning point in financing development or not cannot simply be judged in terms of billions of dollars, regrettable as it is that industrialised nations do not "walk the talk."
What will determine the prospects for development aid is whether donor nations are serious enough in applying aid for pro-poor strategies, based on valuation of natural resource contributions; whether they resist misusing aid funds to promote exports of industrial goods; and whether they are prepared to abolish trade barriers and perverse subsidies that are in flagrant contradiction to their own development policies.
An important step in that direction could be made by the governments of industrialised countries at the upcoming World Summit for Sustainable Development (WSSD) in Johannesburg.
Dr Claude Martin is the director-general, WWF International