Category Archives: Official Development Assistance

Turning the world upside down: systemic change needed now

Photo: Granma.cu

by Jim Hodgson

In the face of deep inequality within and among the nations of the world, leaders of the so-called “less developed countries” find they must still appeal for basic fairness from their richer neighbours.

More than 75 years after the United Nations was formed, and almost that long since the first development programs were implemented (e.g., the Colombo Plan, 1950), and almost 60 years since the first gathering of the Group of 77 developing nations, leaders gathered last week in Havana and this week in New York to plead their case again.

Not that you would have read about the Havana meeting in mainstream media, but representatives from 114 countries attended the G77+China meeting in Havana. Among them were 30 heads of state or government, as well as senior officials from international organisations and agencies, including UN Secretary-General Antonio Guterres.

The meeting was held under the banner title, “Current development challenges: The role of science, technology and innovation,” but the talk was all about the systems of wealth and power that are rigged against developing countries.

In their final declaration Sept. 16, the G77 demanded fair “access to health-related measures, products and technologies” – a problem highlighted by “vaccine apartheid” during the Covid pandemic when richer countries had first access to vaccines. 

G77 called for an end to “existing disparities between developed and developing countries in terms of conditions, possibilities and capacities to produce new scientific and technological knowledge.”

They revived calls for a “new international economic order” and “new financial architecture,” including “through increasing the representation of developing countries in global decision and policy-making bodies which will contribute to enhance the capacities of developing countries to access and develop science, technology and innovation.”

Among the countries participating (including the host, Cuba) were several that have been harmed by sanctions that are usually imposed by wealthier countries to try to provoke changed behaviour by less powerful countries. Sanctions (referred to in the declaration with the UN Human Rights Council term “unilateral coercive measures”), together with external debt, inflation, displacement of peoples, inequality and “the adverse effects of climate change” are all among the “major challenges generated by the current unfair international economic order” and there is “no clear roadmap so far to address these global problems.”

Criticism of the existing international order carried over from the G77 meeting to the UN General Assembly, which met days later in New York.

“They don’t have the $100 billion to aid countries so that they can defend themselves against floods, storms and hurricanes,” said Colombian President Gustavo Petro, referring to the Loss and Damage Fund promoted at the COP climate negotiations to “new and additional” funding from donor nations.

Wars and climate change, he said, are related to that other unprecedented crisis: migration. “The exodus of people toward the north is measured with excessive precision in the size of the failure of governments. This past year has been a time of defeat for governments, of defeat for humanity.”

The political systems that we use to effect policy changes are failing to respond to the urgent needs of our time. Most politicians are beholden to the corporations and rich people who fund their political parties and perpetuate their hegemony. In four-to-six year electoral cycles, the deep changes needed to confront those problems are rarely undertaken. 

In Canada, think of the power that mining corporations have wielded to block meaningful investigation of human rights and environmental abuses by their subsidiaries overseas. Or the influence land speculators have over the Ontario government. Or the actions of oil, gas, coal and pipeline companies to stall meaningful action to cut greenhouse gas emissions. 

And then scale that up globally. Think of the ways pharmaceutical companies blocked access to HIV and AIDS medications until a global fund was found to pay them – and then pulled the same stunt over Covid vaccines. At the UN on Sept. 20, Guterres said time was running short for climate action thanks to the “naked greed” of fossil fuel interests.

What is delivered through Official Development Assistance and Sustainable Development Goals may be crumbs and band-aids. While necessary, those funds are not sufficient to counter instruments of power like corporations and their allies in the international financial institutions like the World Bank and the International Monetary Fund.

Political change is required to make the systems change.

As Xiomara Castro, president of Honduras, told the G77 in Havana: “The time has come to put an end to the backyards [using a U.S. term referring to its relationship to Latin America] because we are not pieces on a chessboard of those who are apologists for dependence. Our nations should not continue to suffer the mass privatization of their territories.”

Mafalda: But Liberty, you’ve put the map upside down!
Liberty: Upside down compared to what? Earth is in space where there is no up or down.
Liberty: That story that says the north has to be above is a psychological trick invented by those on the top to make those who are on the bottom continue to believe that we are the bottom. But, beginning today, conventional ideas are over!
Last panel, a voice: Where were you, Mafalda?
Mafalda: I don’t know, but a conventional idea has taken a blow.

(For that last line, Quino, the great Argentinian cartoonist who created Mafalda, wrote in the original Spanish version, “No lo sé, pero algo acaba de sanseacabarse” – the sense being that something has ended.)

Systemic failure of global finance demands system change

by Jim Hodgson

If, as UN secretary general Antonio Guterres has said, the excessive debts of impoverished countries represent a “systemic failure,” then the solution would be reform of the system.

And so, for at least five decades, UN agencies, development NGOs and global justice activists like me have talked about a “New International Economic Order” (NIEO) or reform of the “international financial architecture.”

Left: media coverage of the summit was mixed; right: Prime Minister Mia Mottley of Barbados at the UN climate conference in Glasgow, 2021.

The latest tilt at the windmill of reform came in June from French President Emmanuel Macron working together with Barbados Prime Minister Mia Mottley. They invited world leaders to Paris June 22-23 to come up with a new “global pact” to fund the struggle to overcome poverty and human-caused climate change.

“What is required of us now is absolute transformation – and not reform – of our institutions,” said Mottley in her opening address. Mottley had earlier worked with other Global South nations to propose what is called the Bridgetown Initiative – a plan for changes to governance, policy and practice of North-controlled international financial institutions.

What followed, however, showed a “wide chasm” between what the Global South needs and what the Global North is willing to concede, said Iolanda Fresnillo, policy and advocacy manager for debt justice at Eurodad, an NGO focussing on debt and development.

Images from the first years of our new millennium: a Lula campaign billboard in Brazil; a mural in Buenos Aires protesting the 2001-02 economic crisis.

Brazilian President Luiz Inácio (Lula) da Silva, insisted that leaders address global inequality. 

“It is not possible that, in a meeting between presidents of important countries, the word inequality does not appear: wage inequality, racial inequality, gender inequality, inequality in education, inequality in health. In other words, we are in an increasingly unequal world, and wealth is increasingly concentrated in the hands of fewer people, and poverty is increasingly concentrated in the hands of more people.”

With changes to taxation and provision of pensions, Brazil had lifted 36 million people out of poverty by 2010, he said. But after Jair Bolsonaro left office, 33 million were once again in poverty. Lula pledged to take steps again to improve the lot of the impoverished, to overcome deforestation in the Amazon and other forest regions of Brazil, and to collaborate with other governments for the sake of forests, climate and equity.

This August, Brazil will host a meeting of South American countries that share the Amazon basin. It’s a step toward 2025, when the Brazilian state of Pará will be the seat of that year’s climate negotiations, COP 30. Pará is where the Amazon River reaches the Atlantic Ocean.

But Lula also decried the ineffectiveness of global institutions that cannot enforce climate action and that represent the world as it existed in the late 1940s. “We cannot continue with institutions that work in the wrong way,” he said.

Western leaders “snub” Macron summit

Other than Macron, German Chancellor Olaf Scholz was the only G7 leader to attend. Canada was represented by then-International Development Minister Harjit Sajjan. (Sajjan was moved away from the development portfolio in the July 26 cabinet shuffle and replaced by Ahmed Hussen.)

But one searches in vain to find media commentary on Sajjan’s participation, and must turn instead to a government news release to find out what he said or did:

“While at the summit, Minister Sajjan participated in several high-level events, including an event on the key challenges, opportunities and tools required to achieve a new feminist financial architecture, as well as an event on increasing global investment in education to catalyze sustainable development. He also took part in a discussion on improving access to financing for Small Island Developing States (SIDS) through the Bridgetown Initiative and the Multidimensional Vulnerability Index. This discussion was particularly important to the Minister given his role of small states champion under the UN-Commonwealth Joint Advocacy Strategy for Small States. The Minister emphasized his commitment to amplifying the priorities of SIDS and helping to find solutions that work for them, particularly on climate vulnerabilities.”

Sajjan also announced that that Canada will invest $50 million in something called the BlueOrchard Latin America and the Caribbean Gender, Diversity, and Inclusion Fund “to increase access to financing for women, Indigenous peoples, Afro-Descendants and other underserved groups in Latin America and the Caribbean.”

BlueOrchard, the government news release explains, is “a member of the Schroders Group” and “a pioneer in the growing field of impact investing.” (Impact investing is defined elsewhere as an extension of socially responsible investing, and “goes a step further” by actively seeking investments that can create a significant impact.)

After a bit of digging, one learns that BlueOrchard Finance is a Swiss-based investment company that has been working in Latin America since 2007. It specializes in microfinance. “The strategy has financed 400,000 micro-entrepreneurs across 13 countries” in Latin America and the Caribbean. in 2019, BlueOrchard had about $3.5 billion in assets under management.

This is not the same as cooperatives, credit unions or even the microcredit “economy of solidarity”-style initiatives with which I have been involved in Haiti, Cuba, Guatemala and El Salvador. And it’s not about systemic change. 

“Feminist financial architecture” and other good intentions aside, Canada and the other wealthy nations are part of a continuing failure to finance the fight against impoverishment and climate change. 

Some among us have proposed changes to the global financial architecture for a very long time….

A post-script. Global South leaders do not see issues in the same way that their Global North counterparts see them. In Brussels a few weeks after the Paris summit, European Union leaders held their first meeting with Latin American leaders in eight years. While the EU pressed for more support for Ukraine, Latin Americans led by Lula pressed for dialogue and questioned new European demands ahead of a potential new trade deal. In the end, the joint statement could only say that the ongoing war is causing immense human suffering and increasing the global economy’s real vulnerabilities.

Debt crisis again provokes “deprivation and misery” in Global South

Asia Debt Monitor, April 2023 

by Jim Hodgson

Forty years ago, I spent five weeks of July and August in the Dominican Republic, learning from families, churches and unions about the ways people confronted their impoverishment. The people that I met taught me about long-haul, multi-generational struggle and solidarity.

Soon after that visit, protests in the D.R., Egypt and Peru erupted against conditions imposed by the International Monetary Fund (IMF) and foreign banks. The issue then – and again now – was how to cope with national debt, budget deficits, and rising interest rates.

The 1984 debt crisis: “Dominicans pay in blood”

“You are plunging Global South countries into a greater debt debacle that will cause more deprivation and misery,” wrote the Asian Peoples’ Movement on Debt and Development (APMDD) to leaders of the G7 rich countries on the eve of their mid-May summit in Hiroshima, Japan. Countries as diverse as Argentina, Pakistan, Sri Lanka and Zambia have confronted large debt and harsh repayment conditions in recent months. (Zambia has reached an agreement with lenders to restructure $6.3 billion of debt.)

This month, new reports from two United Nations agencies provide warnings and suggest some solutions to the weight imposed by banks and Global North governments on the people of the Global South.

The UN Development Program (UNDP) said 165 million people were forced into poverty between 2020 to 2023 as debt servicing pushed aside expenditures for  social protection, health and education. All of these additionally impoverished people poor live in low- and lower-middle-income economies, with the most-impoverished 20 per cent in low-income countries suffering the most with incomes in 2023 still below the pre-pandemic levels. Their governments cannot do more to assist because of conditions attached to debt repayment plans.

The UN Conference on Trade and Development (UNCTAD) said that public debt has increased faster in developing countries compared to developed countries over the past decade. “When developing countries borrow money, they have to pay much higher interest rates compared to developed countries, even without considering the costs of exchange rate fluctuations. Countries in Africa borrow on average at rates that are four times higher than those of the United States and even eight times higher than those of Germany.”

UNCTAD reports that 3.3 billion people live in countries were interest payments on debts are greater than spending for education and health care. An editorial in Mexico City’s La Jornada daily newspaper recalled thatUN Secretary General Antonio Guterres has denounced this injustice as “systemic failure.”

In a second editorial a day later, La Jornada noted the impact of Global South debt on efforts to confront the climate emergency. “In 2015, the 10 per cent of the world’s wealthiest people were responsible for half of the greenhouse gas emissions, and only one per cent were responsible for 15 per cent of those emissions. The most impoverished half of the people of the Earth generated only seven per cent of the emissions, but it is they who are most affected by climate change, higher food prices and even the destruction of their homes in severe weather events. The countries whose transnational corporations devastate the environment of the Global South with their unceasing extraction of natural resources close their doors to migrants and condemn them to remain in regions that have become uninhabitable because of the actions of those corporations.”

Historically, the ways that the IMF, banks and Global North governments have contended with debt crises have been to use them as opportunities to push neoliberal development models: free trade, extractivism, privatisation of state-owned companies and services, low-wage factory jobs and export-focused agriculture. And they avoid conversations about debt cancellation and reparations for colonialism and slavery.

APMDD and other Global South movements propose different approaches. In the letter cited above, APMDD urged G7 governments to: 

  1. Cancel the debt for countries in need, including public debts of a questionable and fraudulent nature that violated human rights and contributed to exacerbating the climate crisis.
  2. Support the elimination of IMF surcharges, which penalizes the most debt-distressed countries and further erodes the capacity of developing countries to respond to urgent social needs. 
  3. Enact/strengthen national legislation to require the participation of private creditors in debt relief, which is a key element in any serious wide scale debt reduction or restructuring effort. 
  4. Immediately deliver new, additional and non-debt creating climate finance for adaptation, mitigation and loss and damage, much more than the unfulfilled $100 billion/year pledge, to adequately meet the needs of the Global South. 

Once in a while, cracks appear in the wall of Global North indifference. In June, French President Emmanuel Macron convened a summit to reach a new “global pact” to finance the fight against poverty and human-induced climate change. I’ll share some outcomes in coming days.

Womin is a network of women’s organisations across Africa that proposes cancellation of African debt and ecofeminist alternatives to extractives models of development.