Nielson: UK aid scheme ‘morally wrong’

By David Cronin

Date: 04/03/04

POUL Nielson, the European development commissioner, has branded as "morally wrong" a UK proposal to use the international capital markets to increase aid to the world's poorest countries.

The UK's Chancellor of the Exchequer Gordon Brown is the chief advocate of the international finance facility (IFF) idea, under which the annual amounts industrialized countries give to developing ones would double to around €150 billion.

Under Brown's plan - a key British contribution to the debate about bolstering the fight against poverty - donor countries would make a series of aid commitments for the period up to 2015. These promises would then be used as collateral for bonds issued in the capital markets, releasing cash now for education and health projects as well as the relief of debts crippling poor economies.

Speaking to European Voice, Nielson suggested the extra borrowing implied by the IFF would add to the global debt problem.

"I don't like it ," he said. "It's problematic to base additional official development assistance on more borrowing from future generations. We have had enough of a debt burden in poor African countries. And no matter how you turn around and look at it, the reality of this is that you would have an indirect increase of the debt burden.

"Morally, I find it wrong not to discuss it with present citizens and taxpayers but to leave this burden to our children and grandchildren."

Brown has been seeking support for the IFF from fellow members of the Group of Eight (G8) top industrial countries, which Britain will chair next year. So far, though, France is the only other G8 member to endorse it. According to Nielson, the IFF cannot be a substitute to increasing aid on the "basis of solidarity" and without borrowing.

The Danish Social Democrat believes EU member states are moving in the right direction towards reaching a target of giving at least 0.7% of national income to development aid. Such a level of aid from industrialized nations is deemed necessary if the UN's millennium goals of reducing by half the proportion of people who live on less than a dollar per day, ensuring universal primary education and reducing by two-thirds the mortality rate for under five-year-olds, are to be hit by the agreed date of 2015.

But he said the Union should put greater pressure on the US and Japan to also raise their aid levels. Latest comparative data from the Organization for Economic Cooperation and Development put average development assistance for the EU-15 at 0.35% of national income. Rates for Japan and the US were 0.23% and 0.12% respectively.

Nielson also dismissed a prediction by Gordon Brown that realizing the goals in sub-Saharan Africa would not be possible until 2165, based on current aid trends.

He described the deduction as a "senseless extrapolation, based on what has happened in a few years", adding many unknown factors make such predictions unreliable.

"If X number of African countries are in conflict, then nothing is possible. If they are not in conflict, then lots of things are possible," he said.

• The full interview with Poul Nielson will be included in a development aid special report, to be published on 18 March.

Report of comments by European Commissioner for Development, Poul Nielsen.

• Primary Source

http://www.hm-treasury.gov.uk/documents/international_issues/int_gnd_intfinance.cfm http://www.hm-treasury.gov.uk/documents/international_issues/int_gnd_intfinance.cfm

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