Shortchanging the South

Funds, always a sticky subject, was an area of considerable debate at UNCED. What emerged was a weak compromise which left northern purses relatively untapped

 
Last Updated: Saturday 04 July 2015

MONEY for sustainable development in the developing countries was the only nut which UNCED could not crack. Two years of intense negotiations concluded in Rio with the South getting very little in hand.

The UNCED secretariat had estimated that developing countries would need US $125 billion worth of international assistance every year. Against these rough estimates, the developing countries probably netted an additional US $2 to US $2.5 billion -- roughly equivalent to two days of the Gulf War.

The Group of 77 -- the coalition of developing countries -- and China wanted clear assurances that industrialised countries would reach the accepted UN target of giving 0.7 per cent of GNP as aid by 2000. The donor countries, led by the US, remained extremely reluctant. The compromise finally reached at Rio catered to all tastes. It says in part, "Developed countries reaffirm their commitments to reach the accepted UN target." This applies to all the industrialised countries, except the US which has never affirmed the target.

It further says that the countries "agree to augment their aid programmes in order to reach that target as soon as possible". This applies to Germany, Canada and the UK which have refused to accept any timebound commitments. The resolution adds, "Some countries agree or have agreed to reach the target by the year 2000." This applies to France.

Then, "those countries which have already reached the target are to be commended and encouraged". This applies to the Netherlands, Norway, Denmark and Sweden. And last, but not least, it also says, "Other developed countries.... agree to make their best efforts to increase their level of ODA." This applies to the US, which only gives roughly 0.21 per cent of its GNP as aid.

The compromise clearly does not give the G-77 the commitment it was looking for and leaves any increase in ODA up in the air. Koy Thompson of the International Institute of Environment and Development in London pointed out acerbically that the entire Agenda 21 should also have been framed saying that "some countries agree to protect their forests as soon as possible, some agree to protect them by the year 2000, some who have not agreed to protect them will do so sometime in the future etc...."
Earth increment As the IDA -- the soft loan window of the World Bank -- is replenished periodically, the G-77 wanted IDA-10, which is to be finalised by the end of 1992, to be replenished at IDA-9 levels, in real terms. In addition, there should a "substantial Earth Increment". This means that, instead of replenishing IDA in absolute terms at US $15.5 billion, it should increase in real terms to roughly US $18 billion. The Earth Increment talked about in Rio was roughly about US $5 billion, of which US $1.5 billion would come from the World Bank's interest income and the rest from donor countries.

The final agreement dropped any specific mention of the Earth Increment. It directed governments to consider World Bank president Lewis Preston's statement to the UNCED plenary, in which he'd said that "there is a compelling case.... for an earth increment for IDA-10, covering the period 1993-95. This would be additional to the volume of resources needed to maintain the IDA-9 funding in real terms." The major donors were furious because it pre-empted any negotiations on their part, but gave the South the lever to ask for, at the very mimimum, an adherence to the World Bank president's commitment.

Obviously, the South is being short-changed, and in an area in which the South has a legitimate right to demand reparations. Whether the northern negotiators were too cussed or the southern negotiators too weak in Rio, time alone will tell.

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