By Thalif Deen
UNITED NATIONS, May 26 1999 (IPS)

UN Secretary-General Kofi Annan told leaders of the world’s major industrial nations Wednesday their obsession with Kosovo should not detract attention from a global economic crisis threatened the stability of developing nations.

In a letter to German Chancellor Gerhard Schroeder, president of the European Council and chairman of the upcoming Group of Eight summit, Annan focused on three key issues: global poverty, development aid and external debt.

All three, had gone from “bad to disastrously worse” during the past few years, Annan wrote.

Since 1995, the number of people living in abject poverty had risen by an additional 300 million, reaching a peak of 3.3 billion.

Official Development Assistance (ODA) – doled out annually by the rich to the poor – plummeted from 63.0 billion dollars in 1992 to 49.6 billion dollars in 1997. And African nations, weighed down by rising debt burdens, spent nearly 36 billion dollars on debt repayments last year: up from 31 billion dollars in 1996.

The Group of Eight, most of whom are members of the 15-nation European Union, comprised the United States, Britain, Canada, France, Germany, Italy, Japan and Russia.

Annan’s letter was sent in advance of their summit meeting in Cologne, Germany, June 18-20. It warned the industrial powers that “there is a danger that the continuing economic crisis afflicting many countries may be overlooked” because of Western European pre-occupation with Yugoslavia.

“The financial crises which swept across the countries of East Asia, the Russian Federation and Brazil reversed, in a matter of months, the economic and social gains of many decades and jeopardised the political and economic reforms on which many of those countries had embarked,” the letter said.

Annan also told the leaders of the eight nations that overall living standards have fallen dramatically in the worst-affected economies in Asia, including Indonesia, South Korea and Thailand.

“Latin America has experienced recession, Africa is barely able to sustain its already low level of income, and the outlook for many of the economies in transition is bleak,” he pointed out.

Annan said that the internationally agreed goals of poverty eradication and social progress in the developing countries “are simply not achievable so long as world output continues to grow at its present sluggish rate.”

According to figures released by the United Nations Wednesday, world economic growth had declined by almost 50 percent – from 3.6 percent in 1996 to an estimated 1.9 percent in 1998. The prediction for 1999 is also estimated at a low 1.9 percent.

“This has had a dampening effect on the prices of primary commodities – which are still the main source of export revenues for most developing countries, and especially for the poorest among them,” Annan said.

The slowdown in world growth also aggravated the imbalances in trade among the leading industrial powers, and thereby threatened the stability of the international financial system, his letter warned.

“I would urge the governments of the leading industrialised countries to adopt measures which can help bring about a more balanced pattern and higher levels of output growth, and so provide the growing export markets that developing countries need for their economic recovery.”

Conscious of the fact that development assistance from Western donors had declined, Annan called for “bold measures” to relieve the debt burden of developing nations, particularly the 48 least developed countries, (LDCs), described as the poorest of the poor.

Among the proposals advocated by Annan was the debt write-off for LDCs.

“Debt relief, however, should not come at the expense of Official Development Assistance,” he cautioned Schroeder. “I hope that you and your colleagues in Cologne will commit yourselves to reverse the decline in ODA flows and to explore new ways of mobilising resources for development.”

Meanwhile the World Bank estimated that 2.3 million more people would join the ranks of the poor in Thailand; 500,000 in Malaysia and 665,000 in the Philippines.

Poverty levels of these countries had returned to levels of early 1990s, wiping out the effects of 10 years of growth, the Bank said. Four out of every 10 Africans now lived in conditions of absolute poverty, and evidence suggested that poverty was increasing throughout the continent.

In sub-Saharan Africa, 51 percent of the people were living below the poverty line of one dollar-a-day, according to the Human Development Report released annually by the UN Development Programme (UNDP).

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