DEVELOPMENT: O’Neill Enlightened But Unchanged After Africa Trip

By Emad Mekay Reprint | | Print |

Emad Mekay

WASHINGTON, Jun 5 2002 (IPS) - A high-profile trip to Africa by U.S. Treasury Secretary Paul O’Neill may have introduced the U.S. official to scenes of African poverty, but it produced no immediate changes in U.S. foreign development policy.

“It is too soon to announce policy recommendations from the trip, but I certainly learned a great deal,” O’Neill said in a speech at Georgetown University here, just days after he concluded a 12-day trip to Uganda, Ethiopia, Ghana and South Africa.

The declared purpose of the trip was to help O’Neill create policies on how to spend the extra 10 billion dollars in U.S. development aid pledged by President George W. Bush in March.

O’Neill said Wednesday that his technical team was still working on the criteria for allocating the funds, known as the new Millennium Challenge Account, but suggested the money might go to “local leaders” and countries with a proven track of “good governance”.

“We in the developed world must support African leaders who are creating the conditions for success ¡ ruling justly, encouraging economic freedom, and investing in their people,” O’Neill said. “And we must ourselves take a leadership role in demanding results.”

Civil society groups, lobbying for more generous U.S. aid and better poor-friendly policies, have decried the process as lacking transparency and participation.

“It’s still not clear what are the conditions under which the pledges are going to be disbursed,” said Irungu Houghton, U.S. programme co-ordinator with the advocacy group Action Aid.

“The lack of coherence around the relationship between U.S. aid, national security, and the treasury is definite,” Houghton said after listening to the speech. “It is not even clear who is taking responsibilities for disbursing the funds and in what ways it is happening so people interested in the process can participate.”

O’Neill said he still favours a development prescription for Africa that includes private investment, trade liberalisation and better governance.

“As private enterprise expands in an economy, trade and investment grow to dwarf official aid. Countries that won political independence years ago finally win their economic independence as well,” O’Neill said of his potential plans.

“Government provides the conditions for growth, but it is not the source of prosperity. Private citizens create prosperity through enterprise.”

Civil society groups have expressed concerns that Washington was trying to find ways to make inroads for U.S. companies into Africa and treating the increase in aid as a hike in subsidies. O’Neill did not dispel these fears.

Referring to the success of several American and domestic companies working in Africa, the former businessman said he wanted to alert some U.S. firms to the potential of Africa.

“In fact, on this trip I promised some of the government leaders that I’d call my good friend, (Chairman) Sandy Weill at Citibank and tell him to get there (to work in Africa),” he said.

“It’s important that we urge U.S. institutions especially vital institutions in the financial sector, to go there. One of the fallouts of this trip is to work with Secretary (of Commerce Donald) Evans to create some trade missions and identify some people in the U.S. who should be introduced to opportunities in Africa.”

Houghton said that pushing for more market access in and for Africa and promoting private sector operations were signs that the trip produced no shift in policy.

“The big picture hasn’t changed. It has simply been more informed by the visit,” Houghton said. “Africa is still one single big market for transnational big corporations, particularly U.S. corporations, to come and invest.”

“What we still see is the 400-year-old story of Africa being an exporter of raw materials, rather than being a centre of development,” added Houghton.

But, said Houghton, O’Neill seems to have had his eyes opened to the importance of human development, a step forward in what he hoped would be “a long learning process”.

Three priority areas emerged during O’Neill’s trip: safe water, primary education, and combating AIDS/HIV. Water and education were part of U.S. policy before, but “HIV is probably the new one”, said Houghton.

The treasury secretary said that as he walked through shantytowns and along muddy roads he saw first-hand the gap between aid programmes and what is needed on the ground. “It was sometimes shocking to see the disconnect between the aid bureaucracies with their 15-year plans and the availability of more immediate solutions,” he said.

Forty-five percent of sub-Saharan Africans, or 300 million people, lack access to clean, safe water, said O’Neill. In Ethiopia alone, that figure is 78 percent, or 50 million people.

He also reiterated the controversial U.S. position that up to 50 percent of World Bank and other development bank funds for the poorest countries be provided as grants rather than as loans.

The U.S. argues that replacing loans with targeted grants will eliminate the need for governments to repay long-term investments in people. This would abolish the next generation of debt service problems.

“It is time to end the sad cycle of indebtedness for countries committed to success,” he said.