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LDC Meet Ends, Blame Game Begins

ISTANBUL, May 16 2011 (IPS) - Mission not accomplished. This is in three words what more than 200 eminent speakers and panelists from over 70 participating countries in effect told their peers, the media and delegates who attended the U.N. Least Developed Countries (LDCs) Fourth Conference May 9-13 in Istanbul.

The summit, code-named UN-LDC IV, attracted an unprecedented – for a development conference – crowd of 11,000, including heads of state, politicians, diplomats, technocrats, business executives, and journalists in Turkey’s economic capital, according to Turkey’s President Abdullah Gul, who inaugurated the meeting.

Although the event was praised as a great success by the keynote speakers at the closing ceremony Friday, the final outcome has not been as convincing as hoped by many of the stakeholders.

Common characteristics of the 48 least developed countries are their lowest per capita incomes (less than 745 dollars per person per year) and the highest population growth rates (2.8 percent). These states are also totally off-track in the internationally agreed development goals, including the Millennium Development Goals, and at the bottom of the Human Development Index rankings. Lack of sound governance, adequate institutions, and endemic corruption seem to form a common denominator for most of the LDCs.

In spite of strong financial commitment, the international community, embodied in governments of developing and developed countries, or development partners in U.N. jargon, has not produced the results expected, as evidence-based appraisal shows.

Following the resolutions adopted in the last LDC meet in Brussels ten years ago, aid to LDCs was initially set at 14 billion dollars a year for 2001. By 2009 it had climbed to 39.9 billion dollars annually, and the 2010 amount is anticipated to be around 43 billion dollars, according to U.N. estimates.

The return on this investment has, however, been disappointing. Although the overarching goal of the Brussels Programme of Action (BPoA) was “to make substantial progress towards halving the proportion of people living in extreme poverty and suffering from hunger by 2015”, the number of LDCs practically doubled in the BPoA’s lifetime, from 27 to 48 countries. That is, 21 more countries became poorer than a decade earlier.

Poverty is determined by the percentage of the population that lives below 1.25 dollar a day on purchasing power parity (PPP) basis, which results in the poverty headcount ratio. Cape Verde and Maldives graduated out of the LDC league in 2007 and 2011 respectively. From the remaining lot, Gambia and Mauritania only have shown sufficient progress to achieve the goal of halving the ratio by 2015.

By April 2010, a total of ten LDCs were in a situation of debt distress, that is, insolvency for all practical purposes, and another ten were at high risk of debt distress, according to United States Conference on Trade and Development (UNCTD) 2010 report on LDCs.

At the Istanbul intergovernmental meetings and the side debates among non-governmental organisations (NGOs), the Intellectuals Forum and the Academics Council, arrows of blame flew in all directions.

The developed countries came under fire for their change of attitude towards committing more funds for LDCs. Their solidarity position has visibly changed since the BPoA, following concerns about terrorism after 9/11 2001, the war in Iraq, the financial crisis of 2008, and subsequent social discontent at home.

They demanded better governance and accountability for the use of the funds disbursed to the respective LDCs. Their inclination in Istanbul was to pass the torch to the private sector. Public Private Initiatives (PPI), more intensive commerce with LDCs, regionalisation of the development effort through South-South relations, foreign direct investment, and fair trade were put forward as alternatives, or complements, to financing programmes by state development partners.

NGOs protested that transferring responsibility from the state to the business sector was hardcore liberalism and exploitation of the LDCs’ natural and human resources. They were, in turn, blamed for lack of rational management and control of the aid raised and distributed by them.

LDCs were, obviously, in the seat of the victim and culprit at the same time. Several among them experienced strong economic advancement since 2001, with an average annual real gross domestic product (GDP) growth of 7 percent. Afghanistan, for instance, topped at 18.79 percent real GDP growth, but did not manage to find its way out of the LDC group. In 2008, Afghanistan received the largest official development assistance (ODA), 4.9 billion dollars.

Tanzania has been receiving over a billion dollars a year since 2001, but 89 percent of its 42 million population was living on less than 1.25 dollar a day (PPP) in 2008.

African LDCs received the lion’s share in foreign direct investment: 22 billion dollars out of a total of 27 billion in ten years. Progress in living conditions in Africa has, nevertheless, been marginal, with undernourishment percentages of the population ranging between two to three times higher than Asian LDCs.

Another weak spot in the LDCs commitment to move out of pariah status has been the lack of fulfillment of agreed obligations toward the international community by many amongst them. Out of 48, only 35 states submitted a progress report to the U.N. on the compliance requirements of BPoA.

Western donors have been asking, where is the ODA money going? Afghanistan lies at the very bottom group of the 2010 corruption index published by Transparency International (TI). Tanzania is in the group just above. Most of the LDCs are in the last two groups of the TI classification.

Corruption and kleptocracy seem to be, for most development partners, the evils that keep LDCs away from development. The U.N., on the other hand, appears to be looking at the bright side of information. In a report last year it cited Yemen among LDCs that had shown progress in governance, because of its 2006 presidential elections.

The supporters of the Istanbul Programme of Action claim it addresses this disease with drastic medicine. A first reading of the final draft approved by the UN LDC IV Conference is, however, not convincing in this respect. It does not propose substantial measures to deal with the problem, just soft recommendations for better behaviour.

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