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

DSE Dialogue on Financing for Development

"It is high time to back up economic globalisation with political and social processes. It is time for a 'Global Deal' between the North and South." German Development Minister Heidemarie Wieczorek-Zeul addressed this appeal to the participants of an international political dialogue on 'Finance sector reforms in the context of globalisation' organised by the Development Policy Forum of the German Foundation for International Development (DSE) in Berlin last November. The meeting was in preparation for the UN conference 'Finance for Development' (FfD) in Monterrey, Mexico, this March. Wieczorek-Zeul said that after the events of September 11, the UN's competencies in the economic and development policy sector must be greatly strengthened. The minister argued for the creation of a Security Council for economic policy, as had been proposed last summer by the Zedillo Commission on development financing set up by UN Secretary-General Kofi Annan.

Wieczorek-Zeul also renewed her call for regulation of short-term currency transactions, and said a study commissioned by her ministry would examine the feasibility of a tax on currency transactions (Tobin tax). The study should be ready in time for the FfD conference. The author of the study, Frankfurt professor of economics Paul Bernd Spahn, told the DSE meeting that in view of US resistance to such a tax his survey would above all consider the possibility of the Eurozone countries introducing it unilaterally. This follows the presentation of a similar study by Prof. Jörg Huffschmid, economist of Bremen University, last September which described a European go-it-alone on a Tobin tax not only as possible but also effective.

Andrew Crockett, head of the Bank for International Settlements (BIS) rejected Spahn's proposal, but at the same time emphasised the need for an international structural policy in order to be able to react to the shortcomings of the finance markets and "protect the losers of globalisation". As important instruments for that, Crockett cited globally applicable standards and codes for the finance sector. But Hazem Fahmy, of Egypt's UN embassy and one of the most active representatives of the Group of 77 (developing countries) at the FfD negotiations in New York, criticised that discussions focussed too much on the technical questions of regulating the finance markets. He said that first of all a much stronger representation of the developing countries in the decision-making bodies of the international finance institutions must be ensured.

The DSE meeting placed great importance on improving international cooperation in the tax sector. If taxpayers were earning taxable income from around the world, there must also be corresponding global cooperation on taxation, Jeffrey Owens, head of the OECD Centre for Tax Policy, noted with transnational companies in mind. He proposed that initially the cooperation of regional tax organisations such as the Commonwealth Association of Tax Administrators (CATA), the Inter-American Center of Tax Administrations (CIAT), or the OECD's own tax policy centre should be improved. He said the UN could assume a coordinating role, and NGOs should be included in the work. Mauricio Escanero, head of the Preparatory Committee (PrepCom) for the FfD, indicated that it was aimed to incorporate this proposal in the conference's final document.
Jens Martens

Magsaysay Award For Chantal Oung

Cambodian lawyer Chantal Oung is this year's winner of the prestigious Magsaysay Award, the Asian equivalent to the Peace Nobel Prize. Supported by the German NGO terre des homes, the 34-year-old attorney four years ago opened the Cambodian Women's Crisis Center in Phnom Penh, the first drop-in center for maltreated women and girls (see also D+C 3/2000, pp.17 - 18). Since then, more than 800 women found protection there from domestic violence, pimps and drug dealers. The center employs 23 staff who not only provide help for the oppressed women but also try to fight the root causes of violence against women. They lobby for the adoption of appropriate legislation and go into the villages to enlighten women about their rights.

As a child, Chantal Oung barely escaped death when she became refugee in her country devastated by years of war and state terror. Her father and brothers were killed by the Red Khmer, she finally ended up in a camp near the Thai border where she attended a school run by the UNHCR. After the defeat of the Red Khmer, she moved to Phnom Penh in 1979 and later became a lawyer. Her experience in dealing with cases of violence against women led her to found the center. For many oppressed women in Cambodia, Chantal Oung and her work have become a symbol of hope.
(terre des hommes)

Support for Insolvency Procedure

Surprisingly, the deputy head of the International Monetary Fund (IMF), Anne Krueger, has spoken out for a regulated insolvency procedure for over-indebted countries. Her idea is that a country in deep trouble over its payments should be able, upon request, to suspend its debt servicing until it has reached agreement with its creditors over rescheduling. At the same time, controls on movements of capital should ensure there is no capital flight.

However, to implement such a procedure there is a need for globally uniform legislation to protect debtors from legal action by their creditors, Krueger said. She sees her proposal as a contribution to improving involvement of private sector creditors in solving financial crises. Commercial banks have come out against her plan, while US Treasury Secretary Paul O'Neill has welcomed it.

Like his German counterpart, Federal Finance Minister Hans Eichel, O'Neill had earlier also advocated an international insolvency procedure. He was joined at the end of November by Gordon Brown, British Chancellor of the Exchequer, and Paul Martin, Canadian Finance Minister. That means a majority of the G7 finance ministers are for implementing the old NGO demand for a formal insolvency procedure that would take more account of the interests of debtor countries than is afforded them by the current crisis management system.

Brown and Martin cited as a model for an international procedure Chapter 11 of the US law on insolvency, which regulates private companies' inability to pay. But NGOs such as the former Debt Relief Year campaign, argue for an international insolvency law resting on Chapter 9 of the American code, which regulates the insolvency procedure for public institutions. In contrast to the rules covering private bankruptcies, Chapter 9 protects the debtor's sovereign rights, offers the people affected the right to a hearing, and in the case of a settlement considers public interest in the debtor institution maintaining its state functions.
(E+Z)

Does FDI Help Development?

How does foreign direct investment (FDI) impact on developing countries' economies? This was the question discussed by the 6th Business Forum of the Carl Duisberg Society (CDG) in Berlin last November. The discussions were based on the guidelines for multinational companies of the Organisation for Economic Cooperation and Development (OECD), which were reworked in 2000. They include recommendations for regulating issues of labour law and environmental protection, combating corruption, and observing consumer interests and tax laws.

Michael Manning, director of the Institute for National Affairs in Papua New Guinea, criticised the gap between what was written on paper and reality. He said the OECD guidelines were simply unknown in his country. "In mining or forestry, multinational companies develop the region with their own roads, towns, security services and schools. They bring their own staff with them, create no jobs, and put no money into further training of the local people. After completion of a project nothing remains to benefit the poor. The companies circumvent national tax laws or have to pay hardly anything. There are many cases of corruption within the government and local authorities."

But not only transnational companies ignore standards like those in the OECD guidelines. In many countries of the South they are seen as incompatible with the local culture. Matilde Corazon Alforja, a manager from the Philippines, said she hoped that geting to grips with rules like the OECD guidelines could in some regions trigger rethinking about internationally recognised values. Ganesh Shanka, environmental manager of the German-Indian Chamber of Commerce in Mumbai (Bombay), said differences in judging practices such as child labour and other issues of social and environmental relevance could be overcome only by cautious international dialogue.

How can investments pay off on the one hand and meet ecological and social standards on the other? One answer at the Forum was: by means of public-private partnerships (PPPs). Dale Anne Bourjaily, of Ecocooperation in Amsterdam, said: "Development cooperation should take on an intermediary function between businessmen and developing countries and lay down important fundamentals and priorities for the private sector's engagement." She said all involved could benefit from PPPs. Businessmen would get good advice at the beginning of a project, and after two to three years it would run without official support.

Karugor Gatamah, representing a businessmen's organisation in Kenya, cast doubts on the UNCTAD strategy propagated as a lesson drawn from successes in Southeast Asia, which says the state should play an active role in attracting FDI. He said the African people mistrusted their corrupt governments more and more. Africa's future, he added, was in direct cooperation between small to medium-sized African businesses and foreign investors.
Annette Hornung

Free Trade und Global Poverty

"The benefits of integration and free trade are real and powerful", said Nicholas Stern, Chief Economist of the World Bank, when launching a new report by the World Bank entitled 'Globalisation, Growth and Poverty: Building an Inclusive World Economy'. "Globalisation often has been a very powerful force for poverty reduction, but too many countries and people have been left out", Stern admitted.

The Bank's 158-page report set out to show that 24 developing countries that increased their integration into the world economy over the two decades up to the late 1990s - China and India being prime examples - have achieved higher income growth, longer life expectancy, and improved education as a result. These countries, home to some 3 billion people, enjoyed a five per cent average growth in per capita income in the 1990s, compared to only 2 per cent in rich countries.

At the other end of the spectrum, the report said, are some two billion people - particularly in sub-Saharan Africa, the Middle East, and the former Soviet Union - who live in countries that are being left behind. The 'non-integrators', as the World Bank calls them, have seen their economies shrink and their poverty rates rise, according to the report.

Criticism of the report comes from NGOs such as Rick Rowden of the Washington-based pressure group Results. "Timing, pacing, sequencing of trade liberalisation and many other aspects of the policies states choose in their process of integration are the real issues at hand in this debate, not whether or not to integrate", Rowden said. He argued that countries seek to liberalise only after they achieved a certain level of domestic industrial development and not before - unless it is imposed on them by the IMF and World Bank loan conditionality or WTO membership requirements.

Other critics argue that contrary to the Bank's advice, opening trade and the process of globalisation are widening the gaps between rich and poor, both within and between countries.

The World Bank does not agree with these points. It maintains that countries that introduced reforms in many areas as they opened up to trade, including protection of property rights and universal education, succeeded in improving their economic performance, narrowing the gap with rich countries and avoiding any systematic increase in inequality within their own borders.

David Dollar, co-author of the study, laid out a seven-point plan to help all developing countries take more practical steps to benefit from globalisation while managing the risks. The plan calls on poor countries to improve their investment climates and social safety nets. It urges rich countries to open their markets to exports from developing countries and to slash their large agricultural subsidies which undercut poor country exports. And it argues for a substantial increase in development assistance.

"What this means is simply more of the same of what they have already been pushing for 20 years", said Rowden. "Ask the Jamaicans who have had their industries totally wiped out by multinational corporations if what they think they need is yet more free trade."
(ips)

Mwanawasa Wins Flawed Elections in Zambia

Levy Mwanawasa, a 53-year-old lawyer, is the new president of Zambia. He was sworn in four days after the controversial December 27 election which was severely criticised by national and international observers. The inauguration, which was attended by none of the six invited heads of state from Southern Africa, took place although final results had not yet been declared, and counting and recounting was still going on in some constituencies four weeks later.

Mwanawasa won only by a very narrow margin - 29.1 per cent against 27.1 per cent for his closest rival Anderson Mazoka. Actually, due to low voter registration, only 503 000 out of a population of 11 million people voted for the new president. But according to the Zambian constitution a simple majority is sufficient. So Levy Mwanawasa got into office with over 70 per cent of Zambians voting against him because their votes were divided among ten opposition candidates. Like in Kenya's last two presidential elections, the Zambian opposition failed to put up a common candidate and, as a result, failed to win the poll. But in the new parliament, Mwanawasa will have to govern against an opposition majority which, however, is amorphous and may be weakened further by floor crossing which has been common practice during the past few years.

Levy Mwanawasa was the candidate of former President Frederick Chiluba whose unconstitutional bid to run for a third term was heavily opposed by civil society and part of his own Movement for Multiparty Democracy (MMD). Between 1991 and 1994 he was already Vice President in the first Chiluba cabinet but resigned accusing the government of serious corruption and drug trafficking. In 1993 Levy Mwanawasa narrowly escaped a road accident with serious head injuries from which he is still not fully recovered.

Unlike both the last parliamentary and latest presidential elections in Zimbabwe, campaigning in Zambia went on without violence. But local civil society groups with their over 10 000 monitors and overseas observers from the European Union, the Carter Center and the Southern Africa Development Community (SADC) blamed the Electoral Commission of Zambia for its incompetence, bad planning and poor management of the electoral process.

According to them, pre-election manipulation of the process, administrative hitches, the excessive use of state resources by the ruling MMD, government refusing access of opposition candidates to the national TV station on the eve of polling day for the pre-planned presidential debate had created an uneven playing field. Logistical and organisational shortcomings caused chaos and delays particularly in opposition stronghold Lusaka, where voters waited patiently until 5 a.m. the following day to cast their ballots. Other irregularities were Chiluba's late choice of 27 December as the polling day - a day close to Christmas and in the middle of the rainy season - and the failure to declare it a public holiday. This created considerable inconvenience to workers, people in rural areas and to students who despite the closure of their colleges and universities stayed behind and voted.

The circumstances of Mwanawasa'as election put the political stability of Zambia in doubt as some opposition parties, petitioned the result at the High Court to nullify the election, and both the Christian Council and the Non-Governmental Coordination Committee too did not recognise the new president.
H.B.

ACP Countries and the World Market

At a workshop of the NGOs World Economy, Ecology and Development (WEED) and terre des hommes in Bonn last December on the future of relations between the European Union (EU) and the African, the Caribbean and the Pacific states (ACP), some NGO representatives sharply criticised the EU's plans to convert the Cotonou Agreement signed in July 2000 to so-called Economic Partnership Agreements (EPAs) from 2008. The EPAs are free trade agreements that the EU plans to conclude with individual ACP groups.

The critics say the cooperation will likely not lead to reciprocal free trade agreements because these would have a marked negative impact on the weaker ACP countries.

One workshop participant said: "If unequal partners are treated equally, no-one should be surprised if unjust results come out of it." Paul Goodison, of the European Research Office, in Brussels, picked up on several basic problems and summarised the reservations as follows:

• Should the ACP states go in for free trade agreements with the EU and dismantle their tariffs for all EU goods, some of them would lose a significant source of revenue for their public budgets. Some countries in Southern Africa already face this problem, without having signed up to EPAs. There is already a free trade agreement between South Africa and the EU. And since, as members of the Southern Africa Customs Union (SACU), Botswana, Namibia and Swaziland aim to reduce all tariffs on trade with South Africa by 2012, these three countries will no longer able to impose duties on EU goods imported via South Africa. Namibia's budget is currently financed to 8.6 per cent from import duties on EU goods. This would be a loss that the government could scarcely balance from other sources.
• Opening their markets by the African side could also lead to a loss of jobs, which also can already be seen. The South Korean car manufacturer Hyundai runs an assembly line in Botswana. When Botswana's indirect linking to free trade with the EU via SACU loomed in mid-2000, the company announced that it would close the plant in the foreseeable future. It said that in view of the future duty-free imports of European cars into Southern Africa it no longer saw positive prospects for the sales of its own cars there.
• The EU's Common Agricultural Policy continued to cause considerable distortions on the agricultural product markets. The EU was at present reshuffling the funds for its producer prices support system (intervention purchases) in favour of direct - non-negotiable in the WTO - income assistance for EU farmers. The result was that the farmers could produce and export at 'world market' prices. The cereals market was a good example. Although direct price support for cereal-growing in the EU dropped by 75 per cent from 1992 to 1999, production increased from 179 million tonnes in 1992/93 to 211 million tonnes in 2000. If the ACP states were no longer allowed to protect themselves from this unfair competition by import barriers their agricultural production would be endangered.
• Finally, the EU should not underestimate the difficulties that many developing countries have in producing for the world market or placing their products on it. Low productivity, insufficient and unreliable public institutions and a lack of infrastructure (transport) would for the foreseeable future hinder the poorest countries above all in entering the world market as reliable suppliers. In this connection, thought must also be given to the disastrous impacts of the AIDS pandemic, which is also claiming many victims among skilled staff. (E+Z)

Drugs Alone Will not Vanquish Leprosy

10 million leprosy patients worldwide were healed of their disease in the last 20 years by applying the multi-drug therapy (MDT) recommended by the World Health Organisation (WHO). But this is no cause for complacency, says the German Leprosy Relief Organisation (DAHW). "Of these ten million, three million are handicapped because of their illness. An additional 2 million are stigmatised and suffer from discrimination as a consequence of their leprosy and need help for their social and economic re-integration. We, therefore demand that more attention is paid to the social needs of leprosy patients and public enlightenment campaigns are mounted to eliminate the leprosy stigma," says DAHW in a press release.

As part of a worldwide campaign, DAHW is appealing to WHO to widen the scope of its fight against leprosy. Although WHO initiated the creation of the Global Alliance for the Elimination of Leprosy (GAEL) in 1999, its strategy relies mainly on providing drugs and concentrates on the 10 countries with 90 per cent of the leprosy cases. For the sake of reporting success, the WHO was forgetting the three million handicapped and the high number of new cases - 700 000 last year - while leprosy patients in countries suffering from wars and disasters were totally overlooked, charged the DAHW.

DAHW was founded as an NGO in 1957 and collected donations worth DM 860 million until 2000; in 2001, DAHW spent more than DM 32 million for 330 projects in 47 countries. One of its priority countries is India where 231 projects were supported from 1957 to 2000. In 2001, DAHW was active in 103 projects in the states of West Bengal, Tamil Nadu, Andhra Pradesh, Kerala, Rajasthan, Gujarat and Punjab. (DAHW)

Opportunities and Limits of 'e-Learning'

What opportunities do the new information and communications technologies (IT) offer Personnel and Technical Cooperation? What experience have the German Foundation for International Development (DSE) and Carl Duisberg Society (CDG) gained so far from their joint Internet learning platform 'Global Campus 21'? These questions and others were discussed at a specialist meeting on 'IT-aided Learning in Development Co-operation' which the DSE and CDG held in Bonn last October in cooperation with the German Agency for Technical Cooperation (GTZ).

The underlying theme of the entire meeting was the question of what additional value IT-aided learning programmes deliver compared with traditional learning methods. It was clear that in many cases IT can be deployed to advantage, although its value added varies from project to project. The upside is that IT can reach more students, that events can be prepared and followed up more efficiently, that learning programmes can be implemented decentrally, or that the participants build up a network. Finally, IT-aided programmes stand out for their topicality.

One conclusion from the discussions was that 'virtual' courses could only supplement 'social learning', meaning learning by physical presence at courses, and therefore the latter could not be displaced. The question of how the often inadequate access to IT-aided programmes for would-be students in the developing countries could be improved remained open. Here it is not only a matter of technical barriers such as low network connection density, narrow bandwidth or slow data transfer rates, but also the fact that in many countries telecoms services are much too expensive.

What trends and prospects are indicated for learning programme work? One of the meeting's recommendations was to create motivating 'learning arrangements'. That means to design part-virtual programmes in such a way that the target group will be encouraged to collaborate in the work. That is particularly important in the case of e-learning because other than in 'presence' courses the usual 'social control' among the participants is lacking, and it is mostly a matter of self-directed, individual learning. Such motivating arrangements should include a clearly structured course flow, combined if possible with 'presence' phases as well as the consistent backup of a tutor or moderator. The final result can range from a simple chatroom or forum for preparation and follow-up of a 'presence' event to a 'virtual' classroom with various communication functions.
Claudia Kornahrens
Monika Soddenmann

Leopold Sédar Senghor Dead

Former Senegalese President and poet, Leopold Sédar Senghor, died at the age of 95 in Verson, Normandy, last December. Born in 1906 in Joal near Dakar, Senegal, Senghor was one of the founding fathers of African independence. He was a Christian, who studied at the Sorbonne University in Paris and later was honoured to become a member of the prestigious Académie Francaise. Together with Aimé Césaire, he was the founder of the 'négritude' movement in 1932 which tried to restore the dignity and cultural equality of the Black race. After World War Two, in which he served as a soldier and was imprisoned in Germany, he became a member for Senegal in the French National Assembly and rose to the post of State Secretary in the Edgar Faure government. After independence of Senegal in 1960, he became the first president of the West African state - an office which he held until his voluntary resignation in 1980. Throughout his rule, Senghor remained closely linked to the former colonial power, France, while in his domestic policies, he became more and more autocratic and secured the rule of a single party, his socialist Union Progressiste Sénégalaise. s