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Sunday, June 2, 2024

Poor countries call for debt revolution at UN summit

Western nations gave out more than $185 billion in grants and cheap loans in 2021, according to the OECD. Official development assistance is one of the pillars of the international financial system.

Worn down by growing debt and a barrage of crises, leaders of the world’s poorest countries have stepped up calls for the rules governing handouts of billions of dollars to be rewritten.

Western nations gave out more than $185 billion in grants and cheap loans in 2021, according to the OECD. Official development assistance is one of the pillars of the international financial system.

But the 46 Least Developed Nations holding their own UN-organised summit in Doha this week feel short-changed.

Five decades after the LDC club was set up by the UN to organise trade privileges and easier access to other finance, presidents and prime ministers said their problems have piled up.

Climate change, Covid-19 fallout, food and fuel price rises stoked by Russia’s invasion of Ukraine and ever bigger debts are weighing on the poor nations who are blaming the system.

“Our partners have a tendency to cast all blame on the recipient partner for failures and avoid scrutiny of their of their own aid programmes that certainly might have contributed to the failures,” said East Timor’s President Jose Ramos-Horta.

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– Debt blame game –

Seychelles President Wavel Ramkalawan said it was time for the international finance institutions to move beyond per capita gross domestic product as the only measurement for development.

“One size does not fit all,” he said calling for a system that recognises that different countries have different problems.

UN Secretary General Antonio Guterres widened the attack when he condemned a global financial system “designed by wealthy countries, largely to their benefit.” Without any cash reserves, the poor nations were being forced to pay “predatory interest rates.”

The coronavirus pandemic was regularly cited at the summit. The LDCs got fewer vaccines and then had to borrow at crippling rates to pay for their emergency measures.

Ahead of the summit, the UN Development Programme (UNDP) estimated that 52 countries were either suffering debt stress or close to it and in danger of default.

Read more: Irony: G-7 wants to protect poor countries from China’s debt trap

Lesotho’s deputy prime minister Nthomeng Majara was among leaders to call for an “urgent” rescheduling or writing off debt.

The calls added to longstanding criticism of the World Bank and International Monetary Fund for imposing austerity on poor populations to get loans.

China is now the biggest single creditor nation, often seen as rivalling western influence, but has recently indicated a willingness to work with the IMF and other institutions to organise debt relief.

Alongside the official summit, civil society activists held their own meetings to propose radical solutions to the debt problem.

Lidy Nacpil, Asian Peoples Movement on Debt and Development, a coalition of several activist groups, said the developed world should just agree to give compensation as they have in international talks on countering climate change.

We want something that is similar to the climate convention, an acknowledgement of the responsibility that wealthy nations have in this unsustainable economic system we have,” said Nacpil.

At a 2009 climate conference, major economies promised $100 billion a year by 2020 to help pay for the ravages of rising temperatures but have not yet managed to reach that figure.

Rolf Traeger, an LDC specialist at the UN Conference on Trade and Development, told one Doha panel meeting that specialists had long looked for alternatives to official aid but that few ideas have come forward. “It’s hard to see,” he said.