DEVELOPMENT: A Subsidy North and South Can Agree On?

By Thalif Deen Reprint | | Print |

Thalif Deen

UNITED NATIONS, Apr 22 2005 (IPS) - The United Nations, which aggressively campaigns for the elimination of some 300 billion dollars in annual subsidies doled out to Western farmers, claims that unfair agricultural tariffs are killing the livelihoods of farmers in the world’s poorer nations.

"I urge developed countries to dramatically reduce agricultural subsidies, without delay," is the constant refrain from U.N. Secretary-General Kofi Annan, who has complained that Western tariffs are destroying agricultural exports from developing nations.

But the U.N. children’s agency UNICEF is turning the equation around to promote the creation of another form of "subsidy" – a "global commodity subsidy."

The proposed new subsidy is meant to fund vaccines and drugs for children whose parents cannot afford to pay high prices for some of these life-saving commodities.

"We call this a virtuous subsidy," says Kul C. Gautam, deputy executive director of UNICEF, "because it will make vaccines and drugs available either at discounted prices or free of charge to families in developing countries."

Since "subsidy" is considered a "dirty word" in the development lexicon, UNICEF has formally substituted the word "subventions."

The estimated cost of this global commodity subsidy is about 10 billion dollars over a 10-year period. And Gautam is confident that the world’s rich nations will back the UNICEF proposal.

"Today, we blame and deplore the fact that industrialised countries spend a billion dollars a day in farm and trade subsidies that harm the interests of poor people in developing countries," he told a recent seminar at the European Commission headquarters in Brussels.

"How about considering a positive global subsidy scheme for health that we might all support?" he said.

Gautam cited the case of long-lasting, insecticide-treated bed nets or the new artemesinin-based combination therapies (ACTs) against malaria, the number one cause of mortality and morbidity in Africa.

"Poor people in low income countries, who need them most, simply cannot afford them," he added.

Last year, UNICEF provided about seven million bed nets free. Japan is donating about 10 million, but the current demand is about 200 million bed nets, which are used primarily as a preventive measure against mosquitoes carrying malaria.

Citing several other examples, Gautam said that most of the poorer nations have not been able to access products such as the hemophilus influenza B (HiB) vaccine (to prevent meningitis and penumonia) or the rotavirus vaccine (to prevent diarrhoeal disease), largely because of high prices.

So are the pediatric anti-retroviral (ARV) medicines to treat HIV/AIDS in young children.

Gautam said that over a 10-year period, a global commodity subsidy could help reduce the price of bed nets progressively, from about six dollars a piece to about two dollars; ACT drugs from two dollars to about 50 cents; and the HiB vaccine or the rotavirus vaccine from four dollars to less than a dollar.

He argued that increased demand created through such subsidies would, initially, bring down prices of these commodities to an affordable level for developing countries.

Gautam said the agreed commodities could be purchased in bulk through an organisation with a proven track record, such as UNICEF. The commodities would then be made available to qualifying developing countries either at discounted prices or distributed free.

If tens and millions of bed nets are purchased in bulk, the prices will obviously come down. "But even at two dollars each for a bed net, an African family will not be able afford it," he pointed out.

But he warned that eventually developing nations will have to be self-reliant. "We cannot live in a culture of giveaways."

According to a UNICEF study, the proposal is to "flood" low income countries with life-saving health proposals based on sound economic analysis and country commodity and capacity assessments.

The primary focus in the developing world will be sub-Saharan Africa. Although it comprises only 12 percent of the world population and barely one percent of the global economy, this poverty-stricken region now accounts for about 43 percent of the world’s child deaths, 50 percent of maternal deaths, 70 percent of people with HIV/AIDS and 90 percent of AIDS orphans.

The UNICEF proposal for a global subsidy scheme is also linked to the Millennium Development Goals (MDGs), which include a 50 percent reduction in poverty and hunger; universal primary education; reduction of child mortality by two-thirds; cutbacks in maternal mortality by three-quarters; the promotion of gender equality; and the reversal of the spread of HIV/AIDS, malaria and other diseases.

A summit meeting of 189 world leaders in September 2000 pledged to meet all of these goals by the year 2015. But progress in achieving the goals has been painfully slow.

Gautam said that MDGs were primarily about children because "it is poverty that is the greatest obstacle depriving children of their right to enjoy a decent childhood."

It is because of poverty, he said, that over 10 million children die every year – about 30,000 every day – most of them from causes that are readily preventable.

"It is poverty that keeps 120 million children out of school – the majority of them girls. And it is poverty that lands millions of children in child labour and sexual exploitation."

Children bear the brunt of poverty. "That is why UNICEF argues that poverty reduction must begin with children," Gautam said.