D+C Development and Cooperation (No. 2, March/April 2002)

Alternative Development in Drug Control

There is a close link between drug production and development. It is not criminal energy which induces small farmers in Latin America and Asia to cultivate drug crops, but poverty and the prospect to secure the survival of their families with this production. The recognition of this fact led to a new approach in German development cooperation in the 1990s. 'Alternative Development' means that people are given the opportunity to open up new sources of income. More emphasis is also given to prevention of drug use and rehabilitation of addicted persons, especially in view of the fact that misuse of drugs is increasing also in drug producing countries. Alternative Development also has an impact on the illicit drug trade which is a worldwide industry turning over between US $ 300 and 500 annually.

To discuss the experience gained so far with the new approach, which has also been adopted by the United Nations, a group of 80 experts met at the German Foundation for International Development (DSE) in Feldafing, Germany, in January 2002. Participants included representatives from national and international institutions from drug producing countries in the Andean region (Bolivia, Colombia, Ecuador, and Peru) and in Asia (Afghanistan, Laos, Myanmar, Pakistan, Thailand, and Vietnam). This setup offered a unique opportunity for an exchange of lessons learned in both continents. In their final declaration, participants welcomed this opportunity, but also regretted that "in the international arena and at the national level, collaboration between agencies responsible for development cooperation and those responsible for activities to control the abuse of drugs are weak".

In order to strengthen international cooperation in this field, the conference adopted a number of proposals for concrete action: the German Agency for Technical Cooperation (GTZ) wants to build up a system to evaluate the different factors impacting on projects of Alternative Development; the UN Drug Control Programme will create a platform on the Internet which will allow practitioners in the field to exchange experience via e-mail; the DSE's Centre for Agriculture, Rural Development and Environment in Feldafing will offer its virtual forum 'Global Campus' and further dialogue events for the implementation of the conference results.

Earlier in the Feldafing meeting, Marion Caspers-Merk, National German Drug Commissioner, had told the participants that a successful drug policy must look at both the supply and the demand side. "If drug consumption decreases in industrial countries, the incentives also decrease in international drug trade. This means that the pressure on small farmers decreases to hand themselves over corrupt, criminal and violent drug traffickers", she pointed out. This in turn would increase the chance to launch alternative development in drug producing areas.

These longterm concepts are not universally accepted, though. The United States, for instance, are still trying to fight the symptoms rather than the root causes of the problem. In the Andean countries, coca fields are destroyed with herbicides from planes with no regard for the damage to the soil and the drinking water. Germany's development politicians think little of these methods. Hans-Jochen de Haas of the German Ministry for Economic Cooperation and Development (BMZ) said: "The farmers first need sustainable and credible alternatives before they will abandon drug production". The final declaration backed this view when it said:"Alternative Development should neither be made conditional to a prior elimination of drug crop cultivation nor should a reduction be enforced unless viable alternatives exist." The principles of self-determination, participation and empowerment of groups were nowhere to be found in reality, the participants complained. National drug policies incorporating Alternative Development should, therefore, be developed and implemented.

Latin America: 100 Years Behind

Latin American countries will need 100 years to catch up with industrialised countries if they do not address rampant corruption, weak rule of law and poor education, says the Inter-American Development Bank (IDB). "The rate of income growth in Latin America is so slow that it would require about a century for the region to attain the current income levels of developed nations," the Bank says in a new report, 'Competitiveness: The Business of Growth'.

Officials of the Washington-based multilateral lender say secondary education and the quality of public institutions are "critical areas that need major strengthening if Latin America and the Caribbean is to close the growing gap with developed countries in competitiveness and productivity."

The 2001 report, which also focuses on economic and social progress in the region, acknowledges advances over the past decade but notes the region's productivity, a key to growth, lags behind more dynamic economies in Asia, the Middle East and Eastern Europe. Business development and productivity are hindered by "crime and corruption, severe deficiencies in infrastructure, and other problems," including a weak rule of law, the report says. Regulatory frameworks and practices must be made more predictable and the justice system must be more effective for business to flourish.

The IDB has touted regulatory and judicial reform as part of a 'second generation' of structural adjustment for borrowers since the mid-1990s. But social activists have scored this approach as advancing such issues intellectual property rights and fraud and bankruptcy protection while neglecting civil, political, social and cultural rights. According to the report, however, the former issues are key to stimulate productivity and generate economic surplus. The IDB notes that corruption has rendered credit inaccessible to many businesses and contributed to financial sector instability.

IDB President Enrique Iglesias, in a preface, says the region has taken great strides in opening markets and tearing down fences that once protected national industries from foreign competition, privatising state enterprises and clipping tariffs. Nevertheless, poverty persisted. Currently, 170 million Latin Americans one of every three people - lived on less than two dollars a day, the report says.
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Poor Economic Growth in Asia

The economic downturn in Asia is deeper and will last longer than expected. This is the conclusion of the Asian Development Bank (ADB) in a report on the economic situation in the region. A recovery is expected not before the middle of the year 2002. Growth rates in East Asia without China dropped from 7.1 per cent in 2000 to 1.7 per cent in 2001 and will grow only at the moderate rate of 2.9 per cent in 2002. China itself will maintain its high average growth rate of 7.4 per cent.

According to ADB, investors in Asia are reacting by withdrawing their capital from the region. For Indonesia, Malaysia, Singapore, Thailand and the Philippines, 1996 was the last year with a net capital inflow. In 2001, an estimated $29 billion was withdrawn from these countries, and a further $15 billion will follow in 2002. The total capital outflow from the five Southeast Asian countries since the financial crisis in 1997 would then add up to $170 billion.

Private investments are estimated to increase only by 6.6 per cent to $6 billion in 2002, much less than in the 1990s. One reason is the slow progress in restructuring the economy. In Indonesia, 55 per cent of all credits are still in default, in Thailand, the ratio is 25 per cent and in Korea, Malaysia and the Philippines, 18 per cent.