AFRICA: Marshalling Aid Will Not Be Easy

By Sanjay Suri Reprint | | Print |

Analysis by Sanjay Suri

LONDON, Jan 12 2005 (IPS) - Will the world do for Africa now what the United States did for Europe after World War II? One continent had been devastated by a dramatic war, the other has been laid low by grinding poverty. There are new signals for change, but whether change will follow is another matter.

The signal this week comes by way of a visit to several African countries by Britain’s chancellor of the exchequer (finance minister) Gordon Brown.

This is more than a British visit. Britain took presidency of the G8 (the United States, Canada, Britain, France, Germany, Italy, Japan and Russia) at the start of this year. In the second half, it will hold the rotating European Union (EU) presidency. Brown’s visit marks the launch of Britain’s plans for both the G8 and the EU.

The Brown plan has been set out broadly as a new Marshall Plan for Africa.

The original Marshall plan, officially called the European Recovery Programme, was a huge success. It was named after then U.S. secretary of state George Marshall. Under that Plan the United States gave one percent of its gross national income (GNI) between 1947 and 1951 for the reconstruction of Western Europe.

The plan then produced 13 billion dollars in grants and loans, the equivalent of about 100 billion dollars today. The benefits went to 16 countries, and to none more than Britain, which received three billion dollars. The plan led to the fastest growth period Europe has ever known.

Gordon Brown’s "Marshall Plan for the developing world", principally Africa, seeks to combine massively increased aid, easier trade rules and debt cancellation for the poorest countries.

In a speech in Edinburgh last week, Brown suggested almost that if anyone can do it, he can. He said 2005 offered a "once-in-a-generation" opportunity for change.

Brown will talk up that kind of change in Africa as he begins his tour in Kenya Wednesday. The tour will take him on to Tanzania, Mozambique and South Africa.

But Brown’s New Year push brought new problems almost immediately. The massive outpouring of support for the tsunami-hit countries had a message of its own for the least developed in Africa; it showed how much more the rest of the world can do when it has to, and consequently what it was not doing for crises in Africa that are less sudden but more grave.

British Prime Minister Tony Blair said last week that Africa suffers "the equivalent of a man-made, preventable tsunami every week." In his speech in Edinburgh the same day, Brown sought the same "passion of compassion" for Africa that the tsunami had brought.

Brown has proposed a novel but controversial scheme to back high words with substantial cash. Brown has devised an International Finance Facility (IFF) – a 50-billion-dollar "live now, pay later" scheme that would issue bonds in the capital markets using rich countries’ long-term funding commitments as collateral. The scheme has been proposed as a way of doubling international aid to more than 100 billion dollars a year.

This means that rich countries would in effect borrow from their future lending commitments to get money into development now, and in time for the Millennium Development Goals (MDGs). The eight MDGs include several well-defined targets primarily around poverty reduction to be met by 2015.

But while Brown has gone public time and again with his proposals, the other G7 partners (the G8 minus Russia) have said little in support of Brown’s plan. And Brown has only in effect until the G8 summit in Gleneagles in Scotland in July this year to convince his powerful partners.

Brown’s Marshall plan has provoked only caution, but also resistance, primarily from the United States. A "no" from the United States would mean effectively a veto of his plan.

What could lead to effectively a U.S. veto is the rival Millennium Challenge Account proposed by the United States. This too proposes more aid, but ties it to achievements in good governance and anti-corruption measures. Cooperation in its "war on terror" will not be far behind.

A firm indication of how far Brown’s plan can go will not come from anything through his Africa visit this week but at a meeting of G7 finance ministers called in London Feb. 4 and 5. Little agreement has been forthcoming on Brown’s other proposals for debt relief and trade benefits. The G7 was quick to agree Brown’s proposal for a freeze in debt repayments from the tsunami-hit countries. But Brown has aligned himself with the liberal end of the political spectrum in cancellation of debt repayments by the poorest countries. On this too, partners have responded with a conspicuous silence.

EU trade commissioner Peter Mandelson, an old colleague of Brown and Blair in the British government and the Labour Party, has proposed substantial trade benefits for poor countries – immediately for those hit by the tsunami.

But the EU has not come to any final agreement on this, and it is not certain what Britain could propel it to do in the second half of the year when the tsunami has faded – and the G8 summit is over.