Davos poverty lecture sounds rich from Chirac

By Dana Spinant

Date: 03/02/05

"The youth of Africa, Asia and Latin America is rightly demanding its entitlement to the future. If this prospect is denied them, however, let us beware of the risk of revolt."

Jacques Chirac, the French president, spoke these words not in front of the anti-globalisation, anti-capitalist crowds at the Social Forum in Porto Alegre, but to the business and political elites gathered in the luxury ski resort of Davos, Switzerland.

The World Economic Forum stole some thunder from Porto Alegre this year by copying its major themes - poverty alleviation and making globalisation fairer - and by borrowing its stars.

U2's Bono shared the Davos stage with other emblematic anti-poverty figures, Thabo Mbeki, the South African president, Luis Inacio Lula da Silva, president of Brazil, and Benjamin William Mkapa, president of Tanzania.

But the fine words spoken at Davos were undermined by the track record on fighting poverty of those who delivered them.

Chirac proposed an international tax to raise money for the poor countries. He floated four possible levies: a tax on international financial transactions, a levy on flows of capital in and out of the territory of countries that maintain banking secrecy, a tax on the fuel used by air or sea transport or a one-dollar contribution per plane ticket sold worldwide.

The common feature of Chirac's proposals is that they are utopian. The president of one African country said in Davos: "It would take decades before any of these proposals could be implemented. That, provided that they are agreed by the international community - which is highly unlikely."

He accused Chirac of making "a major contribution" to keeping poor countries poor by insisting on "paying high subsidies to European farmers and on closing the door to the poor countries' farmers' products".

African leaders at Davos insisted that market access for the poor countries was the only long-term solution for improving their lot. Cutting agricultural subsidies in the developed countries could double farm incomes in the South, a Davos debate on poverty was told.

While cash is necessary as short-term relief, the developing countries need sustainable flows of money that are not dependent on the international donors' generosity or on world economic growth.

"The poor world should be allowed to produce, export and earn money, instead of becoming a society fed on a drip by the West," the president from the African state said.

Gerhard Schröder, the German chancellor, agreed that, "the rich world needs to eliminate agricultural subsidies, punitive excise duties and protective clauses". The sentiment was echoed by John Howard, the Australian prime minister, who said: "Trade access is worth far more to underdeveloped countries than development assistance."

The Porto Alegre gathering also identified cutting trade barriers and slashing subsidies as the main priority in the fight against poverty.

The consensus is that a combination of trade liberalisation, aid and debt reduction, matched on the ground by measurable improvements in money management, reduction of corruption and good governance are what is needed to get Africa out of poverty.

2005 will be the test year for these aspirations. The rich countries will be urged to grant market access for developing countries and end their subsidies in December, at the end of year Doha Development Round trade liberalisation talks in Hong Kong.

The Group of Seven meeting of finance ministers and central bankers in London (4-5 February) could be an opportunity for the world's richest countries to decide to cancel the debt of the poor. The same meeting could approve a new financing instrument, the international financing facility proposed by the British to raise funds for the developing world.

But African leaders are not more optimistic about the latest proposals than about earlier promises.

President Mkapa of Tanzania expressed his continent's exasperation: "The problem is not that we don't support these funds and want to enlarge the funds, whether [through] a trade tax or a transport tax," he said. "But seeing how countries in the EU can't agree about a common agricultural policy I find it difficult to think they will agree on a common fund very soon. We already have a mechanism for fighting the war on poverty [in the Overseas Development Assistance target of 0.7% of gross domestic product]. So why can't we put our money where our mouth is?"

Report on the 2005 World Economic Forum in Davos, which focussed on poverty alleviation and making globalisation fairer.