D+C Development and Cooperation (No. 5, September/October 2001, p. 27-28)

After months of negotiations, the world community adopted an action programme for the Least Developed Countries (LDCs) covering the decade 2001 to 2010. The final negotiations at the United Nations Third LDC Conference in Brussels, May 14-20, were preceded by three preparatory conferences held in New York in July 2000 and in February and April this year. Consensus of all the 157 countries represented was required for adoption of the 43-page programme, which was achieved only after a marathon of negotiations. If only one country, whether the USA, Iran or Djibouti, had not approved all or part of the programme the conference would have produced no results.

The German Federal Ministry for Economic Cooperation and Development (BMZ) had ultimate responsibility for the conference within the German government. The European Union was the driving force in the negotiations, while the Group of 77, spoken for by Bangladesh, Ethiopia and Benin (all LDCs), did not take a united stand. Egypt, China, Cuba, Brazil, Argentina and Iran in particular made the G77's negotiating approach difficult, which clearly annoyed the LDCs that were prepared to make compromises.

I rate the conference a great success. In particular, it was achieved as part of a cohesive EU strategy to include all fundamental issues important to us in the action programme:

• Poverty reduction is laid down as the overarching goal for the LDCs, and the importance of the Poverty Reduction Strategy Papers (PRSP), a tough negotiating point to the last, is emphasised.
• Also after lengthy negotiations, the programme adopted the important political goals of: good governance; observance of human rights; strengthening women's rights; transparent, democratic and accountable institutions; increasing the effectiveness of tax collection systems and transparency of public spending; and combating corruption, bribery, money laundering and the illegal transfer of funds.
• The programme underlines the important role of family planning, an inclusion which the Vatican sought to prevent to the end, and of primary education.
• A separate chapter of the action programme covers the development of business enterprises in the LDCs, and points up the importance of women as entrepreneurs and the instrument of the public-private partnership (PPP). German Development Minister Heidemarie Wieczorek-Zeul, who led the conference's forum on investment and company development, said the BMZ would allocate funds for promotion of investment and women entrepreneurs in LDCs.

The Brussels conference differed from the first two LDC conferences in Paris in 1981 and 1990 in that, driven by the expectations generated before and during it, decisions were taken on six main points. These did much to make the conference a success.

1. Within the EU, Germany helped to push through the 'Everything but Arms' initiative covering quota- and duty-free access of all LDC goods to the EU market. After the toughest of negotiations, the conference also managed to get the USA, Canada and Japan to commit themselves to the goal of opening their markets to LDC products. Lengthy negotiations within the G77 also ended with the threshold countries being persuaded to consider doing likewise.

The accord in the trade sector was decisive for the conference's success. A World Bank study shows that the 49 poorest developing countries could boost their exports by about 11 per cent if the USA, Canada and Japan followed the EU in granting them exemption from customs duties. That would mean extra earnings for the LDCs in the order of US$ 3 billion per year.

2. The programme also obliges countries to observe the principle of the un-tying aid in development cooperation with LDCs, which the OECD's Development Assistance Committee pushed for. Japan, too, agreed to that point in the final negotiating phase in Brussels. This means that development projects must in future be open to international tender. No donor country providing funds as part of Financial Cooperation (FC) will be able to insist that developing countries buy solely from it the goods and services they need for development projects. Savings by the LDCs are put at 20-25 per cent.

More development assistance
for the poorest countries

3. In the run-up to the conference, Germany increased the LDCs' share of its bilateral FC and Technical Cooperation (TC) from 25 per cent (DM 603 million) in 2000 to about 30 per cent (DM 744 million) for 2001. The extra DM 141 million this year are being spent on programmes in the sectors of combating AIDS, family planning, primary education and renewable energy. The countries covered include Yemen, Chad, Malawi, Lesotho, Mozambique, Rwanda, Tanzania, Uganda, Madagascar, Mali, Cambodia, Nepal and Bangladesh. To balance these inputs, funds for some threshold countries such as Malaysia, Argentina and Venezuela were reduced or axed altogether. An important statement for Germany in the action programme covers the international goal of providing ODA for the LDCs equalling 0.15 per cent of gross domestic product. It says: “Donors should make their best efforts to accelerate their endeavours to reach the target.”

4. The Brussels conference also helped during the run-up to it to ensure that concrete decisions on debt relief were taken so quickly. The relief for the 17 LDCs benefiting from the initiative for High Indebted Poor Countries (HIPCs) totals US$ 23 billion. The money saved in debt servicing can be spent on public health services and education, and will increase the national budgets of the favoured countries by an average of 20 per cent.

The German government has forgiven the LDCs, except for a few countries such as Burma and Liberia, all debt stemming from bilateral FC. Furthermore, the government is to forgive all trade debts which can be rescheduled in the case of LDCs that qualify for the enhanced HIPC initiative. This means that all LDCs belonging to the HIPC group will be free of debt to Germany.

In addition, the action programme also encourages official lenders which do not belong to the Paris Club to take part in debt relief for the LDCs. The programme also calls for consideration on a case-to-case basis of debt relief for LDCs which do not benefit from the HIPC initiative. Finally, the programme also encourages the donors to consider in special circumstances a moratorium on LDC debt.5. The EU on May 7, shortly before the conference began, agreed to forgive the LDCs of the HIPC group their repayment of special loans granted as part of the first three Lomé agreements. The sum involved is 60 million Euro.

6. In addition, the EU on May 15 adopted a five year programme to combat HIV/AIDS, malaria and tuberculosis including provision of affordable drugs to treat these diseases. As part of this year's bilateral cooperation, the BMZ is allocating DM 130 million to the fight against AIDS.

The 157 countries that participated in the LDC conference in Brussels adopted the action programme in consensus. This means it is binding for their governments, although it does not have the clout of international law. The decisions in Brussels show that the world community is capable of action, and that global governance is taking shape.