D+C Development and Cooperation (No. 4, July/August 2002)

Peter J. Croll took over from Herbert Wulf as Director of the Bonn International Center for Conversion (BICC) at the beginning of the year. Founded in 1994 with support from the State of North Rhine-Westphalia, the BICC is an independent, non-profit organisation and think-tank concerned with promoting the transfer of former military resources and assets to alternative civilian purposes. In recent years, crisis prevention and conflict management have also become important aspects of the BICC’s research work. Peter Croll, a German national who studied economics and languages, tackles his new job on the basis of a profound knowledge of the developing world. His wide experience in national and international development cooperation includes project management, development banking, institutional development, policy advising, and development management. He has held senior management positions with German Technical Cooperation (GTZ) at its headquarters and abroad. His last assignment was as GTZ country director in Kenya. Of particular interest for his new job was his involvement in crisis prevention and conflict management in Kenya through a project called COMANI - Conflict Management Initiative - which comprised of conflict-risk assessment, conflict mapping and assessment of ‘best’ and ‘worst’ practices in selected districts of Kenya.

Croll sees a challenge for BICC in ‘zooming out’ the results of its applied research work into various operational measures of its clients. He wants to build on the strengths of the institute in fields such as proliferation of small arms, post-war conflicts, defense industry restructuring, and community-oriented conversion. For a man who comes from development work, conversion issues are anyway closely linked to issues such as poverty, globalisation, human security, and terrorism. Democratisation and good governance are also not possible without security sector reforms. The scope for his think-tank thus is almost unlimited - a challenging task awaits Peter Croll and his team of German and international researchers.

DSE Dialogue on Trade Policy

The developmental impacts of the new trade round agreed by the World Trade Organisation (WTO) in Doha at the end of last year were the focus of an international dialogue organised by the DSE Development Policy Forum and WTO in the Berlin Reichstag in April. Among the some 80 participants were ministers from industrialised and developing nations, MPs and representatives of international organisations, business associations and NGOs. The agenda covered the WTO rules on subsidies, problems of market access, the role of the new technologies, and investment and competition policy issues.

WTO Director-General Mike Moore emphasised the importance of the agreement on a new trade round. He said Doha had placed the developing countries’ interest centre stage. But State Secretary Erich Stather of the Ministry for Economic Cooperation and Development (BMZ) said some trade policy areas must be fundamentally reformed to justify talk of a "development round". He said that particularly in the case of market access for developing countries, patent protection, special treatment of poorer countries, and the demands on regional free trade zones the challenge was to make the existing trade rules development-friendly.

The problem is that many developing countries are not equipped to take an active part in the Geneva negotiation marathon. Therefore the question of how the negotiating capacities of the poor countries could be strengthened was also on the table in Berlin. That this is by no means a purely technical problem but also a political one was made clear by Victoria Tauli-Corpuz, of the Philippines’ Tebtebba Foundation, who pointed out that strengthening the negotiating capacities of the South would mean nothing less than weakening those of the North.

In this connection, the participants also discussed the question of what use the WTO’s dispute settlement mechanism was for developing countries. It was once again clear that questions like these have long been answered differently among the developing countries. While Costa Rican foreign trade minister Tomas Duena Leiva said the dispute settlement procedure had certainly helped his country, Jamaica’s ambassador to the UN in Geneva, Ransford Smith, said that for many small countries the right to retaliate in cases of trade disputes was "purely theory". True, like an industrialised nation they could impose punitive tariffs if a dispute panel decided in their favour, he said. But a loss of sales on a tiny import market like Jamaica’s would hardly hurt the losing party as much as import restrictions in the big markets of Europe and North America.

Discussion in Berlin on the subject of investment, on which the Doha conference merely agreed preliminary negotiations, was especially contentious. Jean-Marie Metzger, director of the OECD’s department for trade, called for lessons to be drawn from the Multilateral Investment Agreement (MAI), which failed in 1998 due largely to its top-down approach. The Nigerian trade minister, Mustafa Bello, questioned the use of a MAI, asking: "In what sector have we then not already opened our economy in any case?" His counterpart from Uganda, Nicholas K. Biwott, added: "Although we have liberalised, we have not exactly been flooded with investments."
Thomas Fritz

EU Wants Free Trade with ACP States

In April 2002, the European Commission published guidelines for the negotiations between the European Union (EU) and African, Caribbean, and Pacific (ACP) sta-tes on so-called Economic Partnership Agreements (EPAs). These agreements are intended to replace in the long term the existing trade and development relations between the two groups of countries known as the Lomé Agreement, or, more recently, the Cotonou Agreement concluded two years ago. The idea is to substitute the preferential treatment of ACP states stipulated in the earlier agreements by reciprocal free trade relations. The negotiations on EPAs are scheduled to start in September and to be concluded by 2007. Before the start of the negotiations, the European Ministerial Council must decide on the guidelines.

These guidelines have come under severe criticism from the German advocacy NGO World Economy, Ecology and Development (WEED). In a press statement, WEED says the EU should consider the special needs of ACP states and base its demands for a further liberalisation on developmental progress achieved in the respective countries. Instead of forcing these countries to prematurely open their markets, the basis for fair economic relations between the EU and ACP must be oriented on poverty reduction and development, WEED said.

A close reading of the introduction to the guidelines does not seem to justify this criticism, though. The text clearly states that EPAs are above all "tools for development" of ACP countries and that the restructuring of trade relations with the EU should serve this purpose. EPAs are to promote sustainable development and contribute to poverty reduction in ACP states, the guidelines say; their primary aim was not to make EU-ACP trade relations compatible with WTO rules.

WEED trade expert warns that the language of the introduction should not be taken without a dose of scepticism. "In the end, what counts in the negotiations are the directives contained in the annexes", says Schilder.

But even these annexes do not really give cause for the concern that the EU is out to force the ACP states to prematurely open their markets. They say, for instance, that the timetable for a reduction of customs tariffs and the final list of goods whose trade is to be liberalised should reflect the economic, social and ecological pressures to which ACP countries are subjected as well as their capability to adjust their economies to the liberalisation processes. The Commission also concedes that the negotiated liberalisation schedule may have to be subsequently corrected in case of serious problems in ACP states.

However, WEED expert Klaus Schilder remains suspicious and says the Commision is split on these issues between Development Commissioner Poul Nielson and Trade Commissioner Paul Lamy. He also fears that the EU may also introduce issues into the negotiations which are not even regulated by the WTO, such as rules for investments, public procurement, or internal measures for trade facilitation.
Tillmann Elliesen

US Raises Farm Subsidies

GERMANWATCH has severely criticised the new US farm bill which raises agricultural subsidies by $82.8 billion during the next 10 years. The additional subsidies enable US exporters of farm products to undercut world market prices and enter local markets with cheap American imports. GERMANWATCH board member Rudolf Buntzel sees the farm bill as a wrong signal for the current negotiations on agriculture within the World Trade Organisation (WTO): "The USA are preaching a lowering of subsidies and market adjustments to the rest of the world, but they on their part are even raising subsidies and disregard world market prices. The protectionists in the industrial states will now get the upperhand. The process of creating common rules for the benefit of developing countries in multilateral negotiations has suffered a serious setback", Buntzel commented.

For the developing countries the new US farm policy was a catastrophe, said GERMANWATCH agriculture expert Rainer Engels. "At a time of low world market prices, the world’s largest exporter of agricultural goods, who dominates many markets for staple foods, will continue to produce surpluses. This will lead to even lower prices and will ruin farmers all over the world", he said.

Ann Tutwiler, president of the US International Policy Council on Agriculture, criticised her own government and said the developing countries would now ask themselves why they should open their markets and expose their farmers to worldwide competition while industrial countries were apparently not prepared to do the same with their farmers.

America’s trade policy was also criticised at the annual ministerial meeting of the OECD in Paris. Referring to the new US subsidies for agriculture and the additional customs introduced to protect the US steel industry, WTO Director General, Mike Moore, said it was difficult for many governments to argue for the liberalisation of trade if at the same time other countries were closing their markets. Belgian Prime Minister Guy Verhofstadt said that the US measures were not compatible with the spirit of the agreements adopted at the last WTO summit in Doha.

For More Market Access for Developing Countries

"In the context of slow global growth, improved market access could provide a useful boost to developing countries. Following the WTO meeting in Doha, the challenge now is to make the multilateral trading system more development-friendly. The outcome will be judged by the extent to which developing countries achieve greater market access without their policy options being unduly restricted In the meantime, greater use of regional trade and financing mechanisms may provide relief from external constraints and protection against financial instability." These are some conclusions from the Trade and Development Report 2002 published in April by the United Nations Conference on Trade and Development (UNCTAD) in Geneva.

Commenting on the Report, German Development Minister Heidemarie Wieczorek-Zeul said she supported the UNCTAD demand for a further opening of industrial countries’ markets for products from developing countries.

Politically, we cannot afford to apply double standards: to ask the developing countries to open their markets and at the same time continue to practice protectionism in many areas such as textiles and agriculture." High-quality food imports from developing countries at attractive prices were also in the interest of consumers in industrial countries, she said. At present the OECD countries were spending US$360 billion to protect their agricultural markets. "This is seven times the amount spent on development assistance worldwide", she added. These subsidies must disappear as quickly as possible, the minister demanded.

Dr. Michael Baumann of the advocacy group GERMANWATCH said in response to the UNCTAD Report, a full opening of industrial markets would result in a 50 per cent increase of export revenues for developing countries. Structure and quantity of protectionist measures of industrial countries were leading to distortions of investment and trade structures, burdened the environment, impeded poverty reduction and raised the competition of developing countries among each other, Baumann said. The industrial countries, on the other hand, were profiting from low prices for raw materials and imports produced with unskilled labour. "The task of the European Union as the world’s largest trading power must be to use the chances of globalisation beyond their own legitimate interest for sustainable development", Baumann commented.

Municipal Cooperation On Agenda 21

"Shape the future together" - this was the motto of two statewide action weeks, April 15 - 30, in North Rhine-Westphalia in the run-up to the World Summit on Sustainable Development in Johannesburg, which was organised by the One World state network and the Carl Duisberg Society (CDG).

At the concluding event in Bonn, April 29-30, about 100 participants from 20 countries discussed the question of what input North-South municipal cooperation can make to implementing Agenda 21. In four working groups on the sectors of town administration and private companies, public-private partnerships in urban water supply, participation of civil society and cooperation of NGOs, the participants compared notes on North- South cooperation at local level. It became clear that in this kind of cooperation it still is necessary to get to know better the way of life and political and economic framework conditions of the other side before there can be talk on what both sides have in common. "We still feel as though the discussion on Agenda 21 is coming from another world," said a woman from Cameroon. "The key areas for us in the South are not noticed at all in the North." But there was consensus that the change to sustainable global development can only be achieved, if at all, by partnership.

At the end of the conference the organisers handed Ursula Schäfer-Preuss of the Ministry for Economic Cooperation and Development (BMZ) a symbolic suitcase packed full with civil society demands on the world’s governments for the Johannesburg summit. Besides basic criticism of global political and economic framework conditions, without whose radical change there can be no sustainable development, the suitcase also contained many practical demands. These included the withdrawal of the Westdeutsche Landesbank (WestLB) from backing an oil pipeline construction project in Ecuador, tax breaks for Fair Trade products, and integration of the World Trade Organisation (WTO) in the UN system.

The president of the Habitat International Coalition, Kirtee Shah, repeated at the end of the conference that the present path of global development, which was not aligned on the principle of sustainability, was the problem. Fairer economic structures, solving the debt issue, and observing international and national obligations - particularly the North’s in providing money for sustainable development - were indispensable for a change of course. Shah said that on the whole the Bonn conference had not given these fundamental problems the attention they deserved.
Martina Schaub

‘Africa Works’: no Reason for Afro-Pessimism?

Normality is the right approach in dealing with Africa - this was what some participants saw as the message at the Africa Economic Congress in Berlin in April. More than 200 diplomats, politicians, businesspeople and development experts turned up at Berlin’s red-brick city hall to make suggestions for the ‘New Partnership for Africa’s Development’ (NePAD) which was to be discussed at the G8 meeting in Canada wend of June. The Organisation for African Unity had put the NePAD idea to the rich nations at the last G8 summit in Genoa last year.

To be sure, the Berlin congress, organised jointly by the Ministry for Economic Cooperation and Development (BMZ), the German Development Bank (KfW), the German Agency for Technical Cooperation (GTZ), the German Development Company (DEG) and the Africa Association in Hamburg, was not about making demands and formulating developmental principles. Rather, under the motto "Africa doesn’t beg. Africa works", the programme featured African companies that are already proving Africa is far from about to be written off. With varying degrees of nimbleness, vision and persistence in various branches and regions they are providing examples of the business dynamics that NePAD is to foster in the long term. The showpiece enterprises included what was sworn to be the corruption-proof investment banking company of a Nigerian manager; the South African energy and technology sector group Mvelaphanda Holdings Ltd., owned by Tokyo Sexwale, the former ANC rebel turned captain-of-industry; and the transnational Fotso Group of Douala, which has banking businesses in several Central African countries and administers real estate in France, an insecticide production plant and Cameroon Airlines.

The Senegalese fashion designer Oumou Sy, who also markets her models in Europe, and - although illiterate - recently opened West Africa’s first Internet café in Dakar, drew special attention. She riveted her audience by reporting on her efforts to spread computers around her country, including using donkey carts to transport cable to remote telephone connections. Contrast was offered by Campbell Grant Utton, who built up the MTN mobile phone company in South Africa which now also operates networks in Uganda, Swaziland, Rwanda, Cameroon and Nigeria.

Moeletsi Mbeki, brother of the South African President, also took part in the discussions, although not so much to present his inputs to South Africa’s new economy in the shape of his own film and television company. Rather, he pointed out the pro- blems in Africa that had to date been suppressed or ignored. He said the problems - state crises, civil wars, unemployment, corruption, and flight of capital - made NePAD necessary because it was due to them that the success stories of African companies presented in Berlin were not the rule. Mbeki also accused the G8 states of unfair competitive practices by means of subsidies and trade barriers. In addition, he complained that so far African businesspeople, trade unions and NGOs had not been involved sufficiently in NePAD planning.

Mbeki’s unsparing words, which were greeted with loud applause, were a pleasant contrast to the media-bashing of some other speakers. They topped their barrage by saying the media’s dissemination of a pessimistic image of a continent plagued by wars, crises, crime, corruption, capital flight, diseases and natural disasters had given rise to the fixed idea of a hostile investment climate in Africa. Delegates of the opposite view, including businessman Claas Daun, who is involved in South Africa, said that in reality the African market offered "immense opportunities". The only problem was the activities of the trade unions. But Chancellor Gerhard Schröder and Development Minister Heidemarie Wieczorek-Zeul emphasised that social peace was the best precondition for better business.

The Chancellor and the Minister also spoke out for a strengthening of public-private partnerships (PPPs) between official development cooperation and the private sector. They said PPPs made development cooperation more efficient, improved the sustainability of projects, and also paid off for commerce and industry. It was a win-win situation. The question of the countries and sectors in which PPPs were a realistic alternative remained open. But doubts were cast on the claim that poverty in Africa can be reduced significantly with the aid of PPPs, since industry understandably puts profit before care and supply, whether or not with help from NePAD.
Johannes Wendt

Kabbah Confirmed in Sierra Leone's Elections

Dr. Ahmad Tejan Kabbah, a 70-year old former lawyer, was re-elected as president on May 14 in Sierra Leone's most peaceful elections ever in the 40-year history of this small West African country. Immediately after the announcement of the results, he was sworn in for a second five-year term amidst jubilation of his followers. With over 70 per cent, his victory was surprisingly high, leaving only 23 per cent for the runner-up, Ernest Bai Koroma of the All Peoples' Congress (APC). The other seven candidates shared the remaining seven per cent of the vote. Among them Alimamy Bangura of the RUF Party who took a mere 1.7 per cent and had his hopes dashed to play a major role in Sierra Leone's politics.

The notorious RUF rebel movement and its child soldiers were known for atrocities like killing tens of thousands and chopping limbs of innocent people, leaving the country traumatized. Its jailed leader Fodeh Sankoh will now face trial in a Special Court. With their high turnout the voters clearly demonstrated they were fed up with this terrorist group and after a decade of civil war and bloodshed just wanted peace. A relaxed and joyful atmosphere was felt throughout the country.

In the parallel Parliamentary Elections Kabbah's Sierra Leone People's Party also swept to victory by winning 83 of the 112 seats, leaving 27 for the APC. The last two seats were won by the Peace and Liberation Party (PLP) of the former coup-leader and military ruler Johnny Paul Koroma. To the dislike of the government, the PLP got a large majority from both army and police. This quickly caused rumours of a split in the still disgruntled armed forces and was seen as a bad omen for the future.

Observers from the EU, the Commonwealth, ECOWAS and the Carter Center were unanimous in their verdict. Despite shortcomings in voter registration and education, administrative problems and some under-age voting they called the elections largely free and fair.

When the civil war in Sierra Leone came to an end only in January this year, experts asked themselves whether the plundered country was really ripe for elections. War-related activities had caused damage to an already poor economy and infrastructure. With 80 per cent illiteracy, human development and social indicators are about the worst in the world. So the prospects were not very good.

Things gradually started to change after the signing of the 1999 Lomé Peace Agreement and the subsequent arrival of a peace-keeping mission of 17,500 armed UN troops. Under an expanded mandate the UNAMSIL carried out the disarmament of 46,000 ex-combatants and, together with British soldiers, prepared the ground for a return to civil life and general elections.

Without their logistical support and the assistance of the International Foundation for Electoral Systems the whole election process would not have been possible. Despite the return to democracy, UNAMSIL will have to stay on for some more time.

While Sierra Leoneans were going to the polls, in neighbouring Liberia civil war was raging again, producing new refugee streams across the border. Living under UN sanctions, President Charles Taylor has been a main actor in the Sierra Leone drama and is still the source of instability in the region. But the other major factor which had triggered the conflict were the rivalling economic interests involved in Sierra Leone’s important diamond industry. Here exists the real challenge for President Kabbah and his endeavour to build a peaceful and stable government.
Heinz Berger

Effects of the Intifada on Israel’s Economy

The war conducted by Israel to suppress the second Intifada in the Palestine autonomous regions since September 2000 is costing the country a heavy economic price. According to a report in Frankfurter Allgemeine Zeitung, the country’s economy slipped into a recession at the end of 2001 after a 6.4 per cent growth the year before. It was the first time since 1953 that Israel experienced a negative growth. For the current year, experts expect at best economic stagnation, provided the political situation does not deteriorate further.

The only growth sector at the moment is the arms industry. The military require constantly more money. According to official Israeli figures, the fight against the Intifada cost the country US$2.75 billion, or 4 per cent of GNP, from September 2000 to the end of 2001. To finance the extra costs the Israeli population faces higher taxes and cuts in subsidies. This may lead to increasing poverty which already affects 10 per cent of the population.

The economic crisis is not only a result of the Intifada, but also due to the slump in the information and telecommunications (IT) industry which was a major engine of the boom in 2000. A decline in tourism, construction, agriculture and trade with the Palestinian autonomous areas also contributed to the economic problems. But the worst may still come. Foreign investors which invested up to 1 billion dollars annually in Israel are beginning to turn their back on the crisis-ridden country. Peace in the region may be the only salvation for Israel’s economy.

This is also the only hope for the Palestine Autonomous Areas. A report by the UN Food and Agriculture Organisation (FAO) said in April that Palestinians in West Jordan and the Gaza strip are suffering from increasing hunger and malnutrition. Millions of people are living in poverty and do not have the necessary means to buy food, the FAO said. Because the border between Israel and the occupied territories have been closed for more than 18 months, tens of thousands of Palestinians can no longer work in Israel. Farmers are unable to work their fields, and food markets have collapsed.

The number of underweight-born babies has increased by 10 per cent, and that of stillborn babies by 50 per cent in West Jordan. FAO said it is also watching with great concern the destruction of important infrastructure, among them irrigation systems, greenhouses, orchards, and 8 000 ha of farmland. FAO also criticised the seizure of land and water resources by Israel. Palestinians only dispose of 112 cbm of freshwater per person compared with Israel’s 377 cbm per person.

Difficult Compromise at Children’s Summit

The UN Special Session on Children which took place from 8 - 10 May in New York ended with unanimous agreement on a new agenda for the world’s children, including 21 specific goals and targets for child health, education and protection over the next decade. The final document "A World Fit for Children" was adopted by representatives of 189 nations and focuses on four priority areas: promoting healthy lives; providing quality education for all; protecting children against abuse, exploitation and violence; and combating HIV/AIDS. 21 agreed targets which are to be translated into national action plans within a year are intended to improve the situation of children, especially in developing countries.

The Special Session was remarkable in that nearly 400 youth and children delegates took part in the official General Assembly business for the first time in history. UNICEF Executive Director, Carol Bellamy, said after the session the children made an enormous impact on the governmental delegates and presented a very clear and united view of their aspirations and expectations. "I can’t imagine ever going back to summits on children’s issues without young people there to represent their own experiences, views, and outlook", she said.

The consensus at the Special Session came at the end of 30 hours of hard bargaining which saw the United States, some Islamic countries and the Vatican on the one side, and most of the rest of the world, especially the European and Latin American states, on the other side. The US resisted a link between the conference document and the ten-year-old Convention on the Rights of Children which has not been ratified by the US, together with Somalia, as the only two countries in the world. Other objections of the US and other countries centred on the fear that the term ‘reproductive health service’ in the document included tolerating abortions for minors. The US also resisted a proposal by the Europeans to ban the dealth penalty for youths under the age of 18.