EC credibility at stake

In 1992, even rich nations began to feel the pinch of impoverishment - and it hurt enough to make them cut down on global charity

By Jorgen Steen Nielson
Published: Friday 15 January 1993

-- THE RIO summit in June 1992 has turned out to be a midsummer night's dream. Only five countries -Denmark, the Netherlands, Norway, Sweden and Finland - have fulfilled in the past the promised inter- national goal that a country's overseas aid should be equal to 0.7 per cent of its GNP. Norway's overseas aid of 1.17 per cent of its GNP in 1991-92 was the highest, but by late 1992, even this aid stalwart had cut back together with Sweden and Finland.

During the 47th UN General Assembly, the 12 EC states held internal discussions in which only the Netherlands and Denmark argued for "at least 50 per cent additionality" for environmental programmes. EC ministers agreed merely to divert an initial 600 million ECU (US$ 760 million) for environmental programmes from development programmes in 1993. Nothing was said about additionality.

The financial future of the Global Environment Facility (GEF) was also left hanging at the Abidjan meeting in early December . GEF's replenishment was postponed until its work was evaluated.

Pakistan's Rio negotiator Jamsheed Marker said, "The most important things we'd like to see are the financial commitments which we undertook in Rio." But nobody was listening except, possibly, Den-mark, which will increase its aid budget by 2000 from 1 per cent of its GNP to 1.5 per cent. The extra 0.5 per cent is to be earmarked for environmental efforts in developing nations.

Cracks in the European Fortress

Recession, short-sighted trade policies and a near-collapse of the currency system block the route to a united Europe.

WILL SHE? Won't she? Europe of 1992 danced closer to a Union but not prettily as it reeled under the battering of Maastricht Treaty referendums and currency shocks. European Community president Jacques Delors referred to the "most dangerous European crisis in 20 years. " Though the Edinburgh EC summit in December applied some balm on the Maastricht Treaty ,the dream of a united Europe suddenly cracked.

A reported breakthrough in farm export subsidy negotiations between the EC and USA sparked a quarrel between France and the EC, with French farmers refusing to face the prospect of global competition. Recession brought to the surface latent jntolerance towards migrant workers and in Germany, the jobless took their anger out in racist attacks on migrant workers from the South, forcing foreign investors to re- evaluate their future plans.

The staggering costs of reunification also forced inflation-obsessecd Germany to maintain interest rates so high that they choked the economic growth of its neighbours. Europe's system of fixed exchange rates came to the brink of collapse with the Spanish peseta and the Portuguese escudo being devalued by 6 per cent and speculators mounting attacks on the Irish, Danish and French currencies.

Another blow was the postponement of ending frontier checks at European borders, which was to begin in January 1993. The crisis in Europe was accentuated by shortsighted Western trade policies towards the Eastern bloc, such as the slapping of anti-dumping duties on imports of Czechoslovakian steel. Eastern European governments, mean- while, began allowing their people free movement and from 1993, the former Soviet republics will do the same. As reforms in these countries proceed, unemployment will mount and add fuel to the pressure to migrate.

However, George Bush's signing of the North American Free ,Trade Agreement with Mexico and Canada, which aims at eliminating tariff barriers between these countries in 15 years, might still spur speedier construction of Fortress Europe. Clearly, there are tough days ahead for Europe.

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