D+C Development and Cooperation (No. 3, May/June 2002, p. 3)

Let us recall. It was in 1970 - more than 30 years ago - that the United Nations agreed that industrial countries should provide 0.7 per cent of their GNP for official development assistance. But instead of coming closer to this target, most industrial states dropped further and further behind. Germany which reached a maximum of 0.48 per cent in the early 1980s now stands at only 0.27 per cent. The United States fell back to a miserly 0.1 per cent of GNP, and the average of all states of the Organisation for Economic Cooperation and Development (OECD) stands at a mere 0.22 per cent. Only the Scandinavian countries and The Netherlands have reached or even exceeded the UN target. In terms of absolute figures, this means that the developing countries are receiving about US$50 billion in ODA annually from all OECD donors. But according to World Bank estimates, about $100 billion are needed to reach the targets of the Millenium Declaration.

In Monterrey, this negative trend seems to have been reversed - provided the promises made by Western leaders at this meeting will be followed up by corresponding budget allocations in the years to come. Most spectacular was the announcement by President George W. Bush, who had personally come to attend the conference, that the United States will raise its aid by $5 billion or 15 per cent in the next three years. This would still leave the United States at the tail end of aid donors in terms of GNP percentage, but it is a major step forward in the right direction. More important still, is the announcement of the European Union (EU) that its member states will raise their GNP average from 0.27 per cent at present to 0.33 per cent until 2006. Since the EU is the largest donor of development assistance, providing more than half of the total ODA, this will create substantial new funds - not as a one-time commitment, but on a long-term basis. As far as Germany is concerned, development minister Heidemarie Wieczorek-Zeul promised in Monterrey that her country would adhere to the EU decision and raise its budget accordingly to 0.33 per cent of GNP by 2006.

In spite of these favourable developments, NGOs have criticised the results of the Monterrey conference. The two big Christian churches in Germany said that even if promises of Monterrey were kept, there would still be too little money to halve the number of poor in the world. The child relief organisation terre des hommes said only a minute step had been taken - too little to solve the problems. A statement of 70 European development NGOs called the "Monterrey Consensus" a hypocritical document which contained no concrete commitment to eliminate poverty.

This criticism is of course, not unfounded. Everyone knows that ODA alone, even if there was much more of it, cannot do the magic trick and eliminate poverty. International trade and investment is much more important in terms of funds flowing from rich to poor countries. According to Nicolas Stern, Chief Economist of the World Bank, net private flows to developing countries have dropped by US$100 billion since 1997 - the year of the Asian financial crisis. And the drop in world market prices for many raw materials as well as the slump in world tourism since September 11 is costing developing countries more money than they can hope to gain through ODA from OECD governments. More than anything else, the poor states need an opening of markets for their products in the North, but the industrial countries continue to subsidise their agriculture to the tune of $350 billion per year and create obstacles for imports from the South despite all their professions to the ideals of free trade in the context of the World Trade Organisation. The unilateral imposition of higher customs on steel imports by the United States is a recent example for the discrepancy between rhetoric and reality when it comes to trade policy.

But the continuing misery in the poor countries of the world cannot be blamed solely on the lack of commitment by the countries of the North. As President Bush and others have said quite clearly in Monterrey, it is also the responsibility of the governments and people in developing countries to create conditions conducive to development. More investments in education and health, good governance and an end to corruption, democratisation and more participation of the people in decision-making are necessary preconditions for successful and sustainable development. These conditions must be created first and foremost through efforts of the developing countries themselves. Only then will more development funds lead to the expected results: the reduction of poverty and a better life for billions of people now living on the brink of disaster.

Monterrey offers a ray of hope. After September 11, the rich nations seem to have understood that the world will be safer if the gap between the rich and the poor is narrowed. But the additional billions now promised will not be enough. Structural changes in the world economic and financial relations are needed to give the poor people and nations a better chance.