| Growth and Poverty
Social Watch presents new report
TerraViva Editor´s Desk
The net transfer of financial resources to developing countries
has been negative each and every year since 1997, according
to what Kofi Annan, Secretary General of the United Nations,
reported to the General Assembly in 2002. “In other
words, money is being taken from the poor to give to the rich,”
says the new Social Watch 2003 Report, presented yesterday
in Porto Alegre.
The world economy is functioning like a “reverse Robin
Hood,” SW says.
The net transfer of money is the final result of many factors.
“Aid, for example, is a positive transfer from the developed
countries to the poorer nations, but debt repayment is a negative
one. Aid has been decreasing.”
The promise of debt cancellation made by the leaders of the
seven most powerful countries in the world (who also happen
to be the biggest creditors) is being implemented too slowly
and timidly for its effects to be perceived. Investment is
a positive transfer of resources when foreign corporations
bring in capital to start operations in a country, but it
weighs negatively in the final account if the profits are
not reinvested in the country but taken out of it. A negative
trade balance (when the country buys abroad more than it exports)
adds to the money outflows.
As a result of declining commodity prices and higher costs
of manufactured items, developing countries, even when exporting
more, earn less. Remittances from migrants working abroad
to their families are a substantial contribution to their
families and contribute to the balance of payments of their
countries of origin, but capital flight erodes those accounts.
Capital flight frequently originates in corruption money
deposited in foreign tax havens, but it is also a result of
legitimate domestic savings being transferred abroad in search
of security from potential financial crises, that in turn
are frequently caused or exacerbated by hot money («portfolio
investment») interested in short-term profits and not
in the well being of the public.
The money originating in developing countries and ending
up in the North doesn’t come from the pockets of the
poor and the workers. They don’t have savings to transfer
abroad; they buy fewer imported luxury items; they don’t
spend money abroad as tourists. It comes from the vaults of
governments, in the form of debt repayments, and from the
pockets of the elite. But governments have to make ends meet,
and they offset their fiscal deficits by cutting essential
services and by raising taxes.
And the savings lost or sent abroad by the wealthy are investments
lost by the country, which in turn would have generated jobs
and taxes. The poor and vulnerable end up suffering the most.
A record of unkept promises
After the fall of the Berlin Wall in 1989 and the subsequent
end of the Cold War, a series of major conferences and summits
1 drew a blueprint for a new era, when the «peace dividend»
was to finally make possible the old ambition to feed, educate
and care for the health of every child on the planet. At the
same time the traditional concept of «development»
(previously understood merely as economic growth) was updated
with concerns for the environment, for human rights, for cultural
diversity and for the condition of women. Civil society organisations
were encouraged to participate, and did so by the thousands,
bringing unusual enthusiasm into the diplomatic negotiating
processes, attracting media coverage and advocating for concrete,
measurable and time-bound commitments.
The Social Watch network was created in 1996 to monitor how
those commitments were being implemented and to urge the leaders
to do better, when needed. Reports like this one have been
published by Social Watch every year since then, following
indicators, summarising them in tables and, even more importantly,
voicing the findings and concerns of citizen groups reporting
about their daily realities at home.
Each country report is produced by autonomous citizen coalitions,
and is the result of many weeks of research, consultations
and debate. The authors come from different backgrounds. Some
are engaged in defending human rights, while others organise
the poor at the community level. Some work for trade unions
representing thousands of workers, while others concentrate
on gender issues.
What both the global statistics and the national reports
show in Social Watch Report 2003 is that the development promises
have not been kept. Those commitments were made in a world
of fast economic growth that believed in the magic of a revolutionary
«new economy» where bright kids were becoming
millionaires before graduating and countries hoped to «leapfrog»
from abject poverty into the 21st century thanks to an unending
inflow of private capital.
1 Children’s Summit in New York, 1990; Earth Summit
in Rio de Janeiro, 1992; International
Conference on Population and Development in Cairo, 1994;
World Conference on Human Rights, in Vienna, 1993; Global
Conference on Sustainable Development of Small Island Developing
States in Barbados, 1994; World Summit for Social Development
in Copenhagen, 1995; Fourth World Conference on Women in Beijing,
1995; Second United Nations Conference on Human Settlements
(Habitat II), Istanbul, 1996; World Food Summit in Rome, 1996;
Third United Nations Conference on the Least Developed Countries,
in Brussels, 2001; World Conference against Racism, Racial
Discrimination, Xenophobia and Related Intolerance, in Durban
2001.
That the promises were not kept is not just another story
of politicians failing to keep their word once they got elected.
Even governments genuinely committed to improving the fate
of their people were deprived by the global economy of the
means to do so.
The «Millennium Declaration» adopted by the General
Assembly of the United Nations in September 2000, and strengthened
politically by the presence of an unprecedented number of
heads of state, updated many of the development goals originally
set (and not met) for the year 2000 and reformulated them
for the year 2015. The declaration also gave official UN endorsement
to the goal of «halving extreme poverty,» by that
date.
The set of targets included in that document, known as Millennium
Development Goals (MDGs), is slightly less optimistic than
those originally set for 2000,2 yet it still requires a substantial
change in the global economic environment in order to achieve
them.
Five of the eight MDGs refer quite directly to basic service
delivery, in the areas of health, education and water provision.
Goal 1 on poverty is also to a major extent related to access
to services (even though poverty is now recognised as a multidimensional
problem, with a variety of internal and external causes).
It was only logical, then, for Social Watch to conclude that
it should contribute to the international debate by focusing
the present report on the services that are essential for
the poor.
While everyone agrees that basic services need to be improved
and made accessible to all, the discussion around how to accomplish
this is increasingly controversial. Negotiations on access
of foreign firms to service delivery are mandated to start
in 2003 by the General Agreement on Trade in Services (GATS),
a treaty of the World Trade Organisation, and the World Bank
is preparing a report on «services for the poor»
that condemns the current government provision model of service
delivery and advocates for private concessions and sub-contracting.
Such faith in the capacity of the market to work in favour
of the MDGs does not find support in what Social Watch coalitions
from around the world report here. As a result of their attempts
to «beat the market» many prominent CEOs ended
up in jail in 2002, while families that trusted them lost
their retirement savings. In order for the same unrestricted
and unregulated market operators not to beat the poor, both
governments and corporations have to be more accountable to
citizens everywhere.
The ink is still fresh on the paper where over a hundred
heads of state recognised that «in addition to our separate
responsibilities to our individual societies, we have a collective
responsibility to uphold the principles of human dignity,
equality and equity at the global level.» 3 Not allowing
that responsibility to be forgotten is one of the ways to
help them fulfil their commitment «to making the right
to development a reality for everyone and to freeing the entire
human race from want.
Roberto Bissio
Coordinator of Social Watch
Montevideo, December 2002
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