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Pious words leaving the poor in a spin
Alan Beattie

          THIS was to be the year of aid and Africa. Some have already declared it to be a success: to others, it has been mainly a victory for policy repackaging and spin.
In truth, such is the nature of the promises and of aid itself that it will be a long time before it becomes clear whether the rich countries are keeping or reneging on their promises and even longer before much evidence emerges on whether the aid has worked.
Moreover, with only two months to the climactic trade meeting for the year, the Hong Kong ministerial conference of the World Trade Organisation (WTO), informed observers are warning that the opportunities for trade to lift Africa out of poverty will require a lot more than a deal to cut rich nations' farm subsidies.
Whether this year has seen real advances for aid to Africa depends on one's opinion of where the international community started in January. For the optimists -- among them the rock star Bob Geldof and UK prime minister Tony Blair -- the Group of Eight meeting in Gleneagles, Scotland, in July, promised an extra $50bn of aid, half of it to Africa. For the pessimists, most of this increase had already been promised in previous meetings and previous years, and earlier pledges to increase aid, notably by Germany and Italy, are already falling well behind.
Richard Manning, chair of the development assistance committee of the Organisation for Economic Co-operation and Developments (OECD) development assistance committee, says a rise of $50bn in aid between now and 2010, taking the global total from $80bn to $130bn, would represent the biggest increase since the committee was formed in 1960.
"These figures are impressive, but they do need to be treated with some caution," Mr Manning wrote recently. "For many donors they imply that aid will be perhaps the most rapidly rising element of public spending year after year. Given the pressures on public budgets in many OECD countries, delivering such increases will be a stiff challenge."
Moreover, not just the level but the composition of that aid will also be under scrutiny. Japan, for example, admitted in August that it was thinking of counting debt relief for Iraq as part of its pledge to increase aid by $10bn over the next five years, as it is permitted to do under OECD rules. If it counted the full $7.0bn of defaulted Iraqi debt it has pledged to write off or reschedule, that would make up most of its pledge at almost no real cost.
The Japanese government notes that debt relief has formed a small part of its aid in the past. But it has also refused to say how much of the $7.0bn will be counted over the next five years.
Meanwhile, the campaign to write off debt to the International Monetary Fund (IMF) and World Bank for the world's most heavily-indebted countries has had to overcome obstacles. The G8 called for the fund and bank to write off the remaining debt owed by countries that have already qualified for relief.
Some of the smaller European countries including the generous Scandinavian aid donors, though they supported the principle of 100 per cent debt relief, felt that recipient countries should have to continue to meet conditions showing that their economic policies were on track and they were spending the money wisely.
The World Bank, too, was concerned that writing off its debt will deprive it of income over the 40-year horizon when those loans would have had to be repaid, and sought assurances from its rich donor countries about making good the difference.
At last month's meetings of the IMF and World Bank, those objections were overcome with promises to make good the difference. But still, the amount of money involved in this initiative is rather small -- $1.0bn a year.
With the long-term worth of the aid and debt relief announcements yet to be proven, campaigners are looking to trade to provide a clear-cut win for the year. But not only do the prospects for deep cuts in farm tariffs and subsidies -- the area of chief interest to developing countries -- look weak, but the benefit that Africa will gain from any such deal is likely to be strictly limited.
Development campaigners, and Mr Blair, are keen to say that export subsidies are the most pernicious form of state intervention for the developing world. But economists point out that most of the benefit of abolishing them will go to those agricultural exporters such as Brazil that compete directly with European exports.
Most sub-Saharan African countries are net importers of food, and in any case do not grow much of the temperate products such as wheat and beef that are most heavily subsidised by rich nations.
A recent World Bank paper suggested the abolition of rich nations' farm export subsidies could be a net negative for developing countries, as their food bills would go up. Africa is likely to suffer more than most.
And with poor countries largely seeking to exempt themselves from tariff cuts, the other benefits of the round for them -- reducing trade barriers within the developing world -- are also likely to go unfulfilled.
Under syndication arrangement with FE


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