The International

As the economic crisis continues enveloping the world, the UN News Service reports that developing countries already dealing with severe debts face a 17 per cent debt-rise this year. According to Mr Supachai Pnithchpakdi, the Secretary-General of the UN Conference on Trade and Development (UNCTAD), the UN Millennium Development Goals (MDGs) are partially to blame for the debt rise. “Borrowing heavily to achieve these targets, as well as to build roads, railways, ports, and other infrastructure needed to allow long-term economic progress, saddles them with debts that leads to slow growth,” he said on 9 November 2009 at a debt management conference in Geneva. “But,” he added, “not making such investments also leads to slow growth and will lead to many countries not meeting the MDGs.”

Set by the United Nations in September 2000, the MDGs are eight international goals ranging from eradicating extreme poverty to developing a global partnership for development, the latter of which includes a target aimed at dealing comprehensively with developing countries’ debt. The goals were accepted by all UN countries, and have launched unprecedented efforts by both developed and developing countries to accomplish them by 2015, as prescribed by the UN’s Millennium Project.

UN Secretary-General Ban Ki-moon has called the MDGs "ambitious but feasible," and believes that the process in achieving them requires "the combined efforts of all, governments, civil society organizations and the private sector, in the context of a stronger and more effective global partnership for development."

MDGs in question

Achieving the MDGs represents some of the greatest challenges in international development. While the intentions are certainly praiseworthy, they can be considered idealistic and impractical. Some believe that the time frame prescribed – fifteen years – is inadequate, and that a longer time frame is required to make far-reaching developments to ameliorate world poverty. Because of this, the amount of progress made upon the goals is being increasingly questioned. According to the British Medical Journal (BMJ), progress on the eighth MDG, which aims to develop a global partnership for development and which is especially relevant to sustainable debt relief, has been disappointing. The extension of sufficient financial support for developing countries is an important factor for progress in the eighth MDG, but BMJ reports that there has been a drop in the gross national income of donor countries in 1990 from 0.33 per cent 0.23 per cent. The significant drop in donor countries could result in decreased support for developing countries, endangering the building potential for a global support system.

Moreover, it is also being argued that the MDGs are focused on improving poverty conditions primarily in Africa, and neglect to incorporate the requirements of other poverty-stricken regions in the world. In an article called UN MDGs and US Aid to Africa: Ineffective and Unrealistic, author Richard Sarver asserts this perspective, and elaborates that in addition to favoring Africa, the MDGs aim to improve poverty primarily by pushing developed countries to offer financial aid to African countries requiring drastic improvements to achieve the MDGs by 2015. To underline the drawbacks of such actions, Mr Sarver maintains that the pumping of money into Africa by the US and other wealthy nations in the past has resulted in little improvement. He identifies reasons for this to be the lack of sufficient logistical and practical infrastructure in African governments, and accountability, the latter of which includes the reality of aid-receiving African nations being rife with corruption, and the risk of perpetual aid dependency: “Helping Africa should be a world concern, but flooding the continent with money over the next eight years is not a workable or wise solution.”

However, a survey conducted by PIPA, a joint programme of the Center on Policy Attitudes (COPA) and the Center for International and Security Studies at Maryland (CISSM), found that about 33 per cent of Americans believed that aid to Africa should actually be increased, and 50 per cent of Americans believed that it should remain at the same level, and thus not be decreased. The most popular pro-aid arguments included the idea of saving Africa, citing the continent’s high percentage of undernourished people and growing hunger rates. Americans also believed that Africa was a growing market for US trade, making it vital to improve economic conditions on the continent.

What’s more, officials associated with the UN Millennium Project admit that while it may be oriented towards Sub-Saharan Africa, it does not actively neglect other regions. In an article written for the United Nations Development Programme (UNDP) called The Millenium Development Goals in the CIS Countries, officials concerned with conditions in the Commonwealth of the Independent States (CIS) – a federation of countries that are former Soviet Republics – argue that the MDGs are based upon principles of social solidarity rather than just emphasizing the importance of financial aid. In addition to being tangible goals they serve as moral inspiration, and because of this they apply not only to Africa but also to other regions in the world, including those where CIS members are located.

But there are still other elements of the MDGs being questioned, such as accountability. Mr William Easterly, a Professor of Economics at New York University (NYU), argues that by formulating general development goals, such as the MDG aimed at decreasing poverty, accountability for individual countries is lowered because it becomes difficult to extract the effects of aid efforts from other factors. Furthermore, if all aid agencies and developed countries are collectively made responsible for a goal, then individual agencies’ and independent political accountability for making progress towards the goal becomes non-existent. At the NYU Africa House Conference called Fighting World Poverty in September 2005, Mr Easterly drew upon the example of a UN goal set in 1990, which aimed for universal primary enrollment by the year 2000, to emphasize his perspective. The goal was not achieved, and nobody was held accountable for the failure. It has now become part of the MDGs for 2015.

A 2006 report released by the UN Millennium Project responded to such criticism by arguing that the problems associated with the MDGs and will be overshadowed by the benefits of the project. If the MDGs are achieved, over 500 million people will be lifted out of extreme poverty; other benefits would include millions of children attaining the opportunity to attend primary school, and immense improvements to the world’s environmental plight.

The economic crisis, MDGs, and continuing international challenges

Conditions caused by debt can be life threatening. Heavily indebted developing countries often have to sacrifice spending on health care and education institutions to budget for debt repayments. According to the United Nations Children’s Fund (UNICEF), about 11 million children die each year around the world because of degenerative conditions due to debt. Moreover, an article by Mr Anup Shah called The Scale of the Debt Crisis holds developing countries’ debt rooted in the 1980s economic recession responsible for as many as 5 million deaths, primarily of children and vulnerable adults, in sub-Saharan Africa.

Thus, the relation between developing countries’ debt and the current economic crisis must be examined. Though the economic crisis originated in developed countries, the UN Department of Economic and Social Affairs (DESA) reports that now, developing countries are being hit disproportionately hard through capital reversals, rising and borrowing costs, collapsing world trade and commodity prices, and subsiding remittance flows. This perspective, as outlined in a press release for DESA’s mid-year report entitled World Economic Situation and Prospects 2009, expects the world economy to “shrink by 2.6 per cent in 2009, down from a decline by 0.5 per cent according to the pessimistic scenario of the forecast presented in January.”

But apart from accusations that the MDGs are contributing to the debt of developing countries, there is also the issue that the crisis may be impeding progress towards the MDGs. One example is rise in hunger rates in developing countries. According to the UN Food and Agricultural Programme (FAO), the number of undernourished people in the world increased by 75 million in 2007 and by 40 million in 2008, primarily because of higher food prices. Currently, there are about 1.02 billion people who do not have enough to eat; this amounts to more than the populations of the United States, Canada, and the European Union. Attempting to solve the problem of world hunger, the first MDG includes a target set to halve the proportion of people who suffer from hunger. But progress towards this solution has yet to materialize, as the UN World Food Programme (WFP) announced in July 2009 that the economic crisis was accelerating hunger, and that the worst was yet to come. The UN News Centre quoted WFP director Josette Sheeran as saying that “Communities are still reeling from the food and fuel price rises which peaked in 2008, and the present crisis threatens to undermine progress made in the fight against hunger.”

UNCTAD’s approach to debt resolution

With the revelation of ties rising debt and the MDGs, there are a number of approaches being taken to determine what next steps should be taken towards solutions. For some, more discussion between different parties involved with debt resolution is the way towards reducing debt in developing countries. This year, UNCTAD held the seventh Debt Management Conference from 9-11 November in Geneva to analyze the impact of the economic crisis on developing countries’ abilities to manage debt and debt resolution. Though the conference did not result in tangible solutions, discussion between developed and developing countries introduced new dimensions for debt resolution strategies. A major theme of the conference was the impact of the current financial crisis on debt and debt management, and discussion revolved around the implications of swelling debt for developing countries.

UNCTAD has also offered debt solutions by developing subsidiary programs dedicated to the problem. UNCTAD’s Debt Management and Financial Analysis System Programme (DFMAS), established over 25 years ago, provides support to over 100 institutions in over 65 developing countries; with the current crisis, it has been dealing with increased requests for support. DFMAS approach to debt management comes from providing solutions, which are based on capacity building: “The DFMAS Programme offers countries a set of proven solutions for improving capacity to handle the day-to-day management of public liabilities and the production of reliable debt data for policy-making purposes.” These “proven solutions” are threefold: the first part involves capacity building through supplying specialized debt management and financial analysis software, the second is capacity building through debt advisory services, and the third is capacity building through modules in debt data validation, statistics, and debt analysis.

Another project UNCTAD has developed for debt management is called Promoting Responsible Sovereign Lending and Borrowing which, through consensus building, aims to develop guidelines on sovereign lending and borrowing. The project aims to “create a forum to study and document the practices and standards of responsible sovereign lending and borrowing,” and is based upon acknowledgement of shared responsibility between creditors and debtors for the outcome of monetary lending. Shared responsibility calls for creditors to re-assess the impact of their financing decisions on debtor countries, and especially on the poorest of debtor countries. Critical re-assessment could significantly raise the possibility of achieving development objectives, such as the MDGs.

Bolder, more innovative solutions needed

World leaders have proposed innovative solutions for debt reduction in the past. In October 2007, during the sixty-second UN General Assembly meetings, discussion surrounded the issue of helping developing countries develop bolder, more innovative solutions to help them out of external debt traps. The meeting concluded with several of the countries’ representatives announcing alternative methods for debt management.

On behalf of China and the Group of 77, a coalition of UN developing nations, the representative for Pakistan called for more encompassing initiatives that would use effective, equitable, and development-oriented measures to tackle the external debt owed by developing countries: “In a time of declining official development assistance and despite promises of an additional $50 billion, developing countries are leaning precariously towards heavy reliance on debt cancellation and restructuring. As a result, debt sustainability must be linked to a country’s capacity to achieve national development goals.” As one alternative solution, Pakistan’s representative proposed grant-based financing, which would fully erase the official multilateral debt burdens of low- and middle-income developing countries.

At the meeting, the United States also provided input in resolving debt burdens for developing countries. The representative for the United States said that debt relief was not a blanket solution, and that resolutions should have conditions based upon a country’s poverty reduction efforts. In 2007, the United States had provided US$4.5 billion in development grants to fourteen countries it deemed as practicing good governance and sound economic play.

Calls for agricultural investments and women’s rights

Aside from direct debt resolution strategies, alternative methods for improving economic conditions also must be examined. Amongst these alternative strategies is improving agricultural sectors, as agriculture often plays an integral economic role in developing countries. Recently, a joint report issued on 14 October by the UN Food and Agriculture Organization (FAO) and the WFP announced that nearly all undernourished people live in developing countries, and that the increase in the number of the world’s hungry in times of both low prices and economic prosperity as well as periods of price spikes and recessions shows how weak the global food security system is. FAO Director-General Jacques Diouf said: “Investing in agriculture in developing countries is key as a healthy agricultural sector is essential not only to overcome hunger and poverty, but also ensure overall economic growth and peace and stability in the world.”

Moreover, the importance of women in economic development is also being emphasized. Research conducted by the United Nations in the Asia-Pacific emphasizes that women are valuable resources that are often ignored. According to the UN Economic and Social Commission for Asia and the Pacific (ESCAP), restricting women’s access to work, education, and health services, costs between US$42 billion and US$47 billion in losses to countries in Asia and the Pacific each year. With the MDGs providing incentives to improve economic infrastructures, there is also the opportunity to implement progressive methods in doing so. In a speech to members of the Asia-Pacific Economic Cooperation (APEC), ESCAP executive secretary Noeleen Heyzer said that stimulus packages extended to the Asia-Pacific region often contain large infrastructure and public works projects as an opportunity to engage a wide range of unemployed workers, but 80 to 90 per cent of these jobs are held by men. “One of the ways to create employment for women is to ensure funding for health, education and agricultural extension services, and investments in small and medium scale enterprises,” she said, “We must make sure that … women have access to opportunities to participate in national economic recovery and that they emerge from this crisis in a better position to participate in our region’s bright economic future.”

Accountability and homegrown initiatives

The issue of accountability also needs to be addressed. Mr Easterly, in compliance with his perspective that the MDGs neglect to incorporate accountability in their agenda, believes that rather than flooding developing countries with financial aid donor countries should look into supporting homegrown initiatives and grassroots organizations who can develop localized solutions to economic problems: “Accountability is not possible with specific piecemeal tasks, it is not possible with sweeping global goals. Open up aid agencies to independent scientific evaluation of a sample of their projects. Recruit and train the local people who are intended beneficiaries of aid, as well as local NGOs, to do evaluation and give feedback to government and aid agencies to be ‘aid watchers’”. Mr Easterly’s theory is supported by examples of successful homegrown initiatives. These include Oportunidades, a government social assistance program in Mexico that targets poverty by providing cash payments for families in exchange for regular school attendance, and Asheshi University in Accra, Ghana, which offers scholarships to half of the entering class. Both of these programmes were local creations, and the latter was denied support from official aid agencies.

Support for homegrown initiatives is reiterated in an article called The Role of Urban Grassroots Organizations and their National Federations in Reducing Poverty and Achieving the Millennium Development Goals, authors Celine d’Cruz and David Satterthwaite emphasize the roles locals play in improving their own lives. A focus is placed on organizations created by people the United Nations has labeled “slum dwellers,” and how such organizations can contribute especially to the seventh MDG, which includes a target aiming for significant improvements in the lives of at least 100 million slum dwellers. However, the authors also express that localized contributions can be enhanced all the more with appropriate financial and administrative support. Thus, perhaps with a coalition of local and international organizations, long-lasting progress in developing countries can be accomplished, alleviating debt burdens and accelerating progress towards the achievement of the MDGs.