Select Committee on International Development Minutes of Evidence

Examination of Witnesses (Questions 98-99)




  98. Chancellor, Secretary of State, welcome. Subject to anything you would like to say, I thought, how we would play it, Chancellor, is, if you and then the Secretary of State might like to make an opening statement, then we will have some questions which we will put to you, and, I think, between you, decide how you would like to answer them, and indeed whether Gus or Barrie want to answer them. And then, subject again to anything you want to say, we thought we would try to take this reasonably briskly, to finish by about 5 o'clock, if that is convenient to you, so it gives us about an hour and a half maximum; is that okay?
  (Mr Brown) That is okay; thank you.

  99. So, Chancellor, do you want to start off?
  (Mr Brown) Yes, thank you very much, Chairman. It is a pleasure to return with Clare Short to this meeting of the International Development Committee, to thank you for the work that you do and have done, and to record that in the last five years I believe that your support has been vital in ensuring a restructuring of debt, which has enabled 26 countries now to obtain substantial debt relief, agreement around achieving the Millennium Development Goals, that by 2015 we must halve the proportion of people in poverty, cut child mortality by two-thirds and ensure every child has basic education. And, of course, the Monterrey Consensus, which you are discussing today, that development aid be seen not as charity but as investment in building capacity for growth; and what I believe is the makings of a new deal for the global economy, that, in return for developing countries pursuing corruption-free, pro-stability, pro-investment and pro-trade policies, developed countries should substantially increase the development aid they are prepared to offer in the run-up to 2015. Clare Short will be able to talk about all areas of international development, of course, but I want to say something specifically about debt relief and finance for development, so that we build a virtuous circle of debt relief, poverty reduction and sustainable development, in order that no country genuinely committed to good governance, economic development and poverty reduction, and to the opening up of trade and investment, is denied the chance to achieve the 2015 goals through lack of resources. Twenty-six countries are now receiving debt relief, but because of difficulties, as a result of low commodity prices and economic decline, and because some of the earlier forecasts made by the international institutions for growth were overoptimistic, we estimate that we will need a further $1 billion from richer countries to drive forward the implementation of HIPC and ensure its full financing. And, starting from the Halifax G7 Finance Ministers meeting, we will be asking the international community to come up with a plan that would mean ensuring the full financing of the HIPC initiative, and the systematic topping-up at completion point to ensure that no country exits the HIPC process with an unsustainable debt burden. The Zedillo report estimates, if we are to succeed in achieving the Millennium Development Goals, an extra $50 billion will be required each year until 2015; to raise investment by $50 billion would require unprecedented action, but I believe it is not beyond us. Together, pledges from the European Union and the United States, made at the Monterrey Conference, would raise $12 billion a year more for education, health and anti-poverty programmes from 2006, which means there is a reversal in a 20-year decline in aid levels. And I propose we ask Europe, America and other countries to maximise the benefits from the development aid spending by examining, as a matter of urgency, the means by which this $12 billion a year boost can be made to go much further, and its benefits maximised. By dissociating aid from the award of contracts, to maximise the impact on poverty, gains to anti-poverty programmes could be as high as 20 per cent. More effective use of aid could produce extra resources. A greater focus on the poorest countries and better collaboration amongst donors, including the pooling of budgets, could also maximise the efficiency of aid in diminishing poverty. Overall better allocation, co-ordination and untying, by bilateral donors and by international institutions, could make aid 50 per cent more effective. Developing countries must, of course, show that the funds they have received are properly and effectively used, ending corruption, meeting their obligations to pursue stability and creating the conditions for new investment, so that we can ensure the resources go to fighting poverty. This is a new deal, where, in return for developing countries pursuing these policies, developed countries would put more money to increase vitally-needed funds to achieve the Millennium Development Goals. Now, in recent months, many proposals have been made for new and innovative ways to meet the funding gap, the Tobin tax, arms tax, Special Drawing Rights, and it is right that we examine the practicalities of these proposals. One possibility is to leverage up the new resources promised by Europe and the US through an international financing facility, or Development Trust Fund; if national governments offered a guarantee, either through callable reserves or appropriate collateral security, then additional aid contributions could be levered up in the years to 2015 to meet the $50 billion target, so ensuring that the $12 billion already committed to additional aid goes further and its benefits are maximised to the advantage of all. We will advance only if we advance together, and that means that each country must play their part, accept their responsibilities and go further than they have been prepared to go in the past.
  (Ms Short) I would like just to say a couple of words about where Monterrey fits into the action we have been trying to take to get more coherence and more united effort into the international system. Because, as you know, international development is littered with conferences, that make grand declarations that are never implemented, littered with initiatives and announcements, made by important people when they go to these conferences, that simply recycle the existing money around the fashion of the moment. We have been working since 1997 to get better global governance, really, and, as you know, the UN conferences in the nineties came up with a series of targets, the OECD adopted them in the DAC, the International Development Targets, we then took them back to the UN, and they started saying, "Don't impose these OECD targets on us." But we worked on, and the Millennium Assembly of the UN, reaffirming the targets, now named the Millennium Development Goals, at a meeting of the UN attended by more heads of state and prime ministers than have ever previously attended, was step one. Step two, Doha, Trade and the Development Agenda, and that was a shift in the international mind set, we have got to deliver on it, but to get the world agreeing there will be a trade round that will focus on delivering advances to developing countries. Then Monterrey, Financing for Development, where is the money coming from, and not just where is more aid coming from, that is an issue and I am sure you will come back to it, but how do we maximise the flows from trade, from how developing economies run themselves, to grow their economy, to have better revenues, to get rid of debt overhangs, so that they can use their revenues better. And the final bit in the jigsaw is Johannesburg, WSSD, can we get the environmental lobby to join up with the development lobby to be working for a sustainable planet; rather than a north of the world that is almost anti-development and not looking for sustainable development, but looking for conservation. So I think we are making great advances in getting coherence into this international picture and into all countries agreeing. And Monterrey was very important, in that the developing world and the OECD countries agreed on what the reform agenda is to deliver to the poor of the world; that is unprecedented in human history, and very post cold war. That, now, what reforms are necessary to get the best balance between what the state does, what the market can do, internationally and nationally, was an enormous gain, and most of that was done before the meeting in Monterrey. The preparatory process was very good and went well. But I think it would have gone sour without the commitment to more aid, and the commitment from Europe, which is yet to be delivered, but helped to leverage the US feeling then that they had to commit. And I think, now, we have got to get WSSD right and then drive the world into implementation and stop having so many conferences, and, if we have conferences, let us just check on delivery, rather than have any more grand declarations.

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2002
Prepared 24 July 2002