14 June 1993

Doc. 6865

1403-9/6/93-4-E

REPORT

on North-South interdependence and solidarity:

Europe and the least developed countries

(Rapporteur: Mrs VERSPAGET,

Netherlands, Socialist Group)


Summary

      Europe, along with other industrialised nations, must work closely with the governments and the people in the poorest developing countries in order to improve their economic, social and ecological situation, at the risk of otherwise seeing them slide into total destitution and chaos. Aid must be used efficiently, however, and be focused on the most vulnerable groups, such as women and children. Aid should primarily be aimed at human development.

      The least developed countries themselves have a particular responsibility for the establishment and strengthening of democracy and "good governance", for putting their social and economic house into order, for protecting human rights and improving the lot of the broad masses, especially women, and for developing human resources through education and training.

I. Draft resolution

1.       While many developing countries have shown unprecedented economic and social gains over the last thirty years — resulting in higher life expectancy, an increase in adult literacy by more than one third, and a decrease by half in the mortality rate of young children — the number of least developed countries (LDCs) with an annual per capita income lower than 600 United States dollars has doubled since the 1970s, to forty-eight in 1992. A majority of these are in Sub-Saharan Africa.

2.       The Second United Nations Conference on the Least Developed Countries, held in Paris in September 1990, called it an "ethical imperative" to refuse the continued marginalisation of the countries in question, and warned of "serious seeds of tension" and a danger to peace if international commitments and shared development were abandoned.

3.       Europe, along with other industrialised nations, must work closely with the governments and the people in the poorest developing countries in order to improve their economic, social and ecological situation, at the risk of otherwise seeing them slide into total destitution and chaos. Aid must be used efficiently, however, and be focused on the most vulnerable groups, such as women and children. Aid should primarily be aimed at human development.

4.       LDCs themselves have a particular responsibility for the establishment and strengthening of democracy and "good governance", for putting their social and economic house into order, for protecting human rights and improving the lot of the broad masses, especially women, and for developing human resources through education and training.

5.       Every effort must be made to enable developing countries involved in internal or external conflicts to cease hostilities and restore peace.

6.       The Assembly calls on the member states of the Council of Europe and the European Community to take the following action in order to assist the poorest developing countries:

i.       to improve those countries' terms of trade by allowing them greater access to the markets of industrialised countries, even for goods that compete with those of the north, to offer them the opportunity within the GATT framework to protect vulnerable infant industries and agriculture, and to encourage north-south co-operation and foreign investment;

ii.       to help LDCs that rely on only a few commodities for their exports, to achieve greater diversification of exports;

iii.       to realise substantial reductions in the foreign debt of LDCs, including official debts to governments and multilateral organisations and to facilitate these countries' access to international capital markets;

iv.       to commit themselves — as agreed at the United Nations Conference on Environment and Development — to reaching as soon as practically possible, if this has not yet been done, the goal set by the United Nations of having official development assistance reach 0,7% of their GNP, and to ensure that at least one-third of such assistance be focused on the poorest developing countries;

v.       to considerably improve co-ordination of bilateral and multilateral development co-operation programmes, notably within the United Nations Development Programme and the World Bank;

vi.       to take every possible measure to facilitate non-governmental organisations carrying out their beneficial work on behalf of developing countries, usefully complementing other types of assistance;

vii.       to work in favour of reduced and better controlled arms exports to developing countries and to create control mechanisms to oversee hardware arms exports, in particular, in line with Assembly Resolution 928 (1989) on arms sales and human rights.

7.       The Assembly draws attention to the relationship between hunger and poverty in LDCs on the one hand, and the lack of democracy, the waging of civil and external wars, and violations of human rights on the other. It therefore calls on the governments of Council of Europe member states to broaden and develop the peace-building and peace-keeping instruments of the United Nations, and to elaborate further an efficient early warning system for emergency aid, permitting timely intervention to prevent disasters such as those in Somalia and the Sudan.

8.       The Assembly also believes that women and men should have equal rights and opportunities, regardless of culture, tradition and religion, and that donor countries should take developing countries' compliance with this principle into greater account. Appropriate family planning policies are necessary to reduce undue population pressure, and they can only be implemented by women who are free from oppression, who have enjoyed education, who benefit from basic health care, and who are sufficiently nourished.

9.       Furthermore, the Assembly recognises that unless population growth is brought down to a rate lower than the increase in national income, neither the economic situation nor standards of living can improve. Population policies should therefore form a central part of north-south co-operation, and every effort must be made to encourage developing countries to introduce the policies required.

10.       Finally, the Assembly recalls the five criteria for future development co-operation set down in its Resolution 981 (1992). These are: the degree of poverty in the recipient country; its respect of human rights and democracy; efforts at economic and social reform; a reduction of military expenditure; and protection of the environment. These criteria are as valid for the poorest developing countries as for developing countries in general.

II. Explanatory memorandum

by Mrs VERSPAGET

Contents

Page

I.       Introduction       5

II.       The roots of underdevelopment        7

      1.       Some basic facts       7

      2.       Legacies of the past        10

      3.       Domestic developments in LDCs       11

      4.       External factors        13

III.       International co-operation        16

      1.       Bilateral development co-operation. The role of

      international organisations        16

      2.       Initiating reform in recipient countries        20

IV.       Concluding remark. Europe's role        21

APPENDIX I:       Burden sharing indicators        22

APPENDIX II:        Concessional and non-concessional disbursements of

      the main multilateral organisations, 1989-90        23

I.       Introduction

1.       Mr Fourré and others, on 12 February 1992, presented a forceful appeal on behalf of the world's poorest countries, through a motion for a resolution entitled "Europe's contribution to the fight against hunger, and to the development of the most disadvantaged regions".

2.       The motion points out that "one of the Council of Europe's goals is the strengthening of north-south co-operation and the peaceful reduction of the excessive inequalities between north and south". It furthermore states that "the role of the Council of Europe member states in the internal development of the poorest countries is thus becoming essential". And it goes on to conclude that "all Council of Europe member states have a duty of solidarity with the most disadvantaged countries".

3.       The text, however, also draws attention to the existence of a "major crisis ... showing that certain Third World countries 'lack' the necessary support to cope with this crisis". And it goes on to say that "indicators relating to food, social provisions, health and education are worsening — meaning a death sentence on millions of people each year and a plunge by several hundred million human beings into unacceptable living conditions".

4.       The purpose of the present report is to discuss the main problems raised in the motion. It will try to examine the extent of, and reasons for, the economic stagnation or even decline of the least developed countries (LDCs), and Europe's possibilities of remedying the situation. In so doing, it will in a way complement the report on the wider issue of north-south interdependence and solidarity presented to the Assembly in May 1992 by Mr Aarts and Mr Holtz (see Doc. 6594 and Resolution 981 (1992)). The Rapporteur thanks her colleagues on the Committee on Economic Affairs and Development for their valuable comments given at its first examination of the present report, in London in March 1993.

5.       For over a decade the Parliamentary Assembly has devoted regular attention to the north-south "problématique" through reports and initiatives too numerous to be accounted for in this space. Suffice it to mention the pioneering conference held in Lisbon in 1984 on the theme "North-South: Europe's Role" and the six-month (January-June) 1988 European Public Campaign on North-South Interdependence and Solidarity, culminating in a Closing Conference in Madrid in June that year, and in the adoption of the so-called Madrid Appeal.

6.       The Appeal had as its aim to achieve the goal of a fairer sharing of the earth's resources, to promote more just social and economic policies and to make a much more serious and sustained effort than up to then to give all persons a real chance for an acceptable and dignified existence. And the Appeal states, quite in line with the motion for a resolution referred to above, that Europe has "the possibility, the unique opportunity, the specific responsibility and the distinctive interest to change the face of north-south relations, and to join with the south in a true partnership against poverty, the abuse of human rights and apartheid".

7.       In 1992, the Assembly adopted Resolution 981 (1992) on the "new north-south relationship", which largely echoes the concerns of Mr Fourré and his co-signatories. The resolution in particular points to the plight of the least developed countries, which "face stagnation or even a fall in per capita income". It talks about the "vicious circle of underdevelopment, linking high population growth with poverty and environmental degradation", and says that "development co-operation must become a more central political concern in the 1990s. Its goals should be to contribute to a development which ensures human dignity and an existence which is economically productive, socially just and environmentally sound".

8.       In September 1990, UNCTAD (the United Nations Conference on Trade and Development) held the Second United Nations Conference on the Least Developed Countries. The programme of action adopted by the conference was rather different from similar declarations adopted previously. It, in fact, placed the main responsibility for an improvement in the situation in LDCs on these countries themselves. It called for "policies ensuring the involvement of populations in the decisions taken" and urged "concern for the situation of the most vulnerable groups of the population". Furthermore, the text advocated "respect for human rights and social justice", and called for applying "effective population, education, training and employment policies" in order to "reverse the trend toward environmental degradation".

9.       Most of the LDCs present at the conference (defined as those with a per capita income of less than 420 United States dollars per year) wanted a commitment by the industrialised countries of 0,2% of their Gross National Product in yearly official aid. Several donor countries did not, however, wish to enter into such a commitment, and therefore one only finds a general call in the declaration for a "substantial increase" of official development assistance, to be "managed effectively and with transparency" (a clear reference to a fear by many donor countries that aid money is not always put to its proper use). The donor countries vowed to search for ways of easing the debt burden of LDCs, and to integrate them more closely into the international trading system. The role of non-governmental organisation in helping LDCs was also underlined. Finally, the declaration spoke of an "ethical imperative" to help the poorest countries in the world, emphasising that lasting peace will be impossible if the gap is not reduced between rich and poor nations.

10.       The Committee for Development Planning of the United Nations is the body which recommends to the United Nations General Assembly whether a given country should be put on the LDC list. For 1991 the CDP suggested the upper limit of 600 United States dollars in order for a country to count as an LDC. In addition, criteria such as difficulties in ensuring "Human Resource Development" and the "Augmented Physical Quality of Life Index" (APQLI) should also be taken into consideration. It all amounts to a rather complicated formula, but with its new criteria the Committee for Development Planning of the United Nations reached the conclusion that forty-seven countries should be considered as LDCs. Only one country, Botswana, has left the category, whereas in 1991 six countries — Cambodia, Ghana, the Solomon Islands, Madagascar, Zaire and Zambia — were added.

11.       The following African countries ares considered LDCs: Equatorial Guinea, Ethiopia, Benin, Botswana, Burkina Faso, Burundi, Djibouti, Gambia, Guinea, Guinea Bissau, Cap Verde, the Comores, Lesotho, Liberia, Madagascar, Malavi, Mali, Mauritania, Mozambique, Niger, Ruanda, Zambia, Sao Tome and Principe, Sierra Leone, Somalia, Sudan, Tanzania, Togo, Chad, Uganda, Zaire, and the Central African Republic.

12.       In Asia and Oceania the following fourteen countries were listed as LDCs: Afghanistan, Bangladesh, Butan, Yemen, Cambodia, Kiribat, Laos, the Maldives, Myanmar, Nepal, Samoa, the Solomon Islands, Tuvalu and Vanuatu. In Latin American only one country, Haiti, was considered an LDC.

13.       The Committee on Economic Affairs and Development at its first reading of this report engaged in a lively discussion about development co-operation terminology. The term "Third World", everybody agreed, should be dropped from the vocabulary, not least because the "Second World", that is the east bloc, has disappeared. The term "the south" is no longer fully apt either, because many poor countries are in Europe or in the Asian parts of the former Soviet Union. One member felt that a special term was needed to describe African and Asian developing countries, whereas another wanted a term that also included certain European countries like Albania. Others saw "underdeveloped countries" as being a rather degrading description, which begs the question whether "least developed countries" is any less so. Others, again, suggested "low income countries" or simply "poor countries". For the time being, however, the Rapporteur has kept the term "least developed countries", since it is the one used by the United Nations and the least developed countries themselves.

14.       Finally, is it correct "lump together" all LDCs, as has most often been done for convenience's sake in this report? Some in the Committee on Economic Affairs and Development do not feel so. Any two countries, they maintain, may share the same poverty and yet be very different as regards size, potential, resources, population, geography (for example, landlocked or with a coast line) and so forth. The Rapporteur wishes this important point to be borne in mind whenever she is not making the distinction herself.

II.       The roots of underdevelopment

1.       Some basic facts

15.       For the developing world as a whole, the past twenty-five years have seen unprecedented progress. Among the gains are:

—       a life expectancy which has increased by about ten years;

—       a near halving of infant mortality;

—       almost a doubling of per capita incomes, a faster pace than, for instance, in the United Kingdom during the industrial revolution, or in the United States as it grew to economic maturity.

16.       However, this impressive overall performance masks a highly uneven pattern of progress. While some countries in East Asia have seen their incomes double, and then double again, in the last twenty-five years, thirty-six nations are actually poorer today than they were then — nineteen of them in Sub-Saharan Africa. Africa's falling behind is even more evident when one considers that one in two Africans lives in a nation that has lost ground over the period in question, compared with only one in twenty Asians, and one in four Latin Americans. The thirty-six countries are:

Table 1:        Countries whose constant $ GNP per capita was lower in 1990 than in 1965        (Source: 1992 World Bank "World Development Report")

In AFRICA

Benin

Burundi

Chad

Ethiopia

Gambia

Ghana

Madagascar

Malawi

Mauritania

Niger

Nigeria

Senegal

Somalia

Tanzania

Togo

Uganda

Zaire

Zambia

Zimbabwe

In LATIN AMERICA

Argentina

Bolivia

Chile

Dominican Republic

Guatemala

Guyana

Honduras

Jamaica

Panama

Peru

Venezuela

Uruguay

In ASIA

Bangladesh

Nepal

Pakistan

Sri Lanka

Syria

      17.       Furthermore, although progress can be seen for some developing countries, the gap between rich and poor countries is still widening. In 1960 the richest 20% of the world's population had incomes thirty times greater than the poorest, in 1990 they were getting sixty times more. To illustrate the uneven pattern of progress: in 1991 the total GDP for LDCs has grown no more than 1,4 % as compared to 3,4% for all developing countries. 1992 shows negative growth, due to drought conditions in the Horn of Africa and Southern Africa. A good example of the deteriorating conditions in some LDCs is Tanzania, which suffered a fall of 10% of its GDP between 1980 and 1989.

Table 2:       Income development in African versus other low income        countries 1962-90 (Index: 1960 = 100)

18.       The situation in Sub-Saharan Africa is particularly alarming. Social development there has stagnated or even suffered reversals. In many African countries today, children are more likely to have their development stunted by lower birth weight, higher malnutrition and poorer access to primary education than their siblings born in the late 1970s or early 1980s.

19.       In its recently published (May 1993) report "Global economic prospects and the developing countries", the World Bank paints a picture which is at the same time cautiously optimistic and mixed. The number of poor people in the world (defined as having a purchasing power of less then 370 United States dollars a year at 1985 prices in the United States) in 1990 stood at 1,133 thousand million. It could decline by 82 million by the end of the century, if the world economy and trade develop satisfactorily, the report says. While the World Bank foresees a "significant turnaround" on the part of Latin America in the current decade, it fears that Sub-Saharan economies will not grow "at a rate much higher than population growth", and that the number of poor people in these countries will grow by at least 50%.

20.       The non-governmental organisation OXFAM is rather more pessimistic. In its recently published report "Africa, make or break: action for recovery", OXFAM describes the crisis of Sub-Saharan Africa in these words: "Economic stagnation, social breakdown, decaying infrastructures, crippling debt burdens, ruinous prices for commodity exports, and environmental degradation threaten to retard Africa's development prospects into the next century, with frightening consequences for human welfare. Without recovery, more then 300 million people — half the region's population — will be living in poverty by the end of the decade".

21.       OXFAM goes on to say that total external debt in 1992 was 183 thousand million United States dollars to 30 thousand million United States dollars higher than in 1989, when large scale cancellations began.

22.       OXFAM proposes the following measures: "Increased aid flows, moving towards the United Nations target of 0,7 % of GDP for aid budgets. A fund to help Africa process its commodity exports. The ending of subsidised disposal of agricultural surpluses. Reduction of protectionist barriers against Africa's exports. Reform of structural adjustment programmes, including protection for African industries and greater investment in health and education. Strengthening the United Nations role in aid and peacekeeping. Finally, the appointment of one special representative responsible for co-ordinating United Nations operations.

2.       Legacies of the past

23.       There is no denying that the legacy of the past still weighs heavily on many of the countries referred to. The borders of the colonies of various European (and non-European) powers rarely reflected ethnics realities, and many of the wars we witness today, for instance in Africa, are fought between different ethnic groups, or peoples, that are expected to live together and form unitary states within such borders. Trade between the colonies and the mother country was often one-sided, ie the colony was supposed to provide raw materials for the colonial power but not develop itself industrially or trade with neighbouring countries. Cultural patterns were imposed, leading to a widening of the gap between the ruling classes and the broad masses. Finally, the large exports or gifts of arms during the Cold War era have made possibly many of the Third World conflicts which plague us today. Somalia, the Sudan and Afghanistan are cases in point.

24.       However, as the era of colonial rule recedes further and further into the past, it can be less and less counted on to provide a full explanation for continued underdevelopment. Even the claim that insufficient foreign assistance is the root is not entirely convincing. Africa, for instance, in 1989 received 8% of its income through foreign aid — as against only 1,7% in the case of South Asia and 0,4% for Latin America! Africa receives four times as much assistance per person as Asia, and its share of aid has risen even as the continent has fallen further behind.

25.       A more recent legacy of the past has been the experimentation by many LDCs with more or less pronounced communism, leading inter alia to the nationalisation of industry, the swelling of governments administrations, and the belief that problems could only be solved by more, not less, state intervention. The fall of the main proponent of state communism, the Soviet Union — and the gradual abandonment of communism in favour of a free market economy even in a country like the People's Republic of China — place many LDCs before the challenge of completely overhauling their economic system. The same holds for authoritarian regimes formerly supported by certain western countries, since they were seen as being bulwarks against Soviet influence. In the absence of big-power rivalry, these will also have to fundamentally modernise their economies.

26.       Your Rapporteur also wishes to draw attention to the often negative impact of the so-called structural adjustment policies imposed by the World Bank and the International Monetary Fund. There programmes were often identical for developing countries, which nevertheless showed considerable differences among themselves and had different needs. The effect was often lower prices for export, negative social and ecological developments, and a disadvantage to agriculture for domestic consumption. Tanzania is an example of a country which has suffered from such structural adjustment policies (neglect of rural areas, migration to the cities, a large "informal economy" (partly thriving on children's labour), neglect of education etc).

3.       Domestic developments in LDCs

27.       As we turn to domestic policies in LDCs that may help explain poor economic development, it should be pointed out that this is not in order to place blame, but rather to help identify areas where improvements are possible, and where donor and recipient countries may work together towards that aim.

28.       One such area has to do with insufficiently diversified exports. The Sub-Committee on International Economic Relations (of the Committee on Economic Affairs and Development) was able to witness this firsthand during its visit, in September 1991, to the Côte d'Ivoire. Côte d'Ivoire today finds itself caught in what might be called a "trade trap". In the 1970s and early 1980s, the prices of cocoa and coffee, the country's major crops, rose rapidly, and the Côte d'Ivoire economy grew at an impressive yearly pace of about 7%, while the per capita income rose briefly to 1 200 United States dollars per year. The country in this situation started an ambitious expansion of its production of these two commodities — not realising that others, such as nations in South-East Asia and Latin America, quickly followed their example (often, as it happens, helped by multilateral financial institutions). The result, manifesting itself as from the mid-1980s, was a collapse in the prices of, in particular, cocoa (by about 40%). However, with so much invested in plantations of these crops, can a country like Côte d'Ivoire afford not to produce and sell them? Will it not instead hope to reduce losses by selling larger quantities? On the other hand, by doing so, do not Côte d'Ivoire and other countries in a similar situation simply deflate world prices further — ensuring, as it were, permanent poverty (African countries have lost an estimated 50 thousand million United States dollars in the last five years because of the fall in world prices for their export commodities.) (For a fuller discussion of the current situation in Côte d'Ivoire see Assembly Doc. 6594.)

29.       Terms of trade for many other Third World commodities have often deteriorated in recent years, and to a degree, this explains the current difficulties of African countries in particular. However, not only have these countries often failed to diversify and "upgrade" their exports through more manufacturing. (Thailand, for instance, was poorer than the countries of Sub-Saharan Africa in the mid-1960s; yet today it is a newly industrialised country with half its exports being manufactures.) But they have not even been able to maintain their shares of world exports in commodities where they specialise. Thus, Ghana's share of world cocoa exports slipped from 29% in 1970 to only 8% in 1986. Uganda's and Sudan's respective shares of world coffee and cotton exports fell by about half in the same period. If Africa had simply managed to maintain its share, it would have enjoyed an additional 10 000 million United States dollars in export revenues — a figure approaching what it receives in foreign aid! Finally, there is the enormously negative impact of protectionism as practised by many industrialised countries, not least through instruments such as the Multi-Fibre Agreement. Likewise, substitution (through biotechnology) of products such as cocoa and sugar has had its influence.

30.       Another factor has been the overvaluation of currencies. There was a tendency, at least until the early 1980s, to maintain fixed, and gradually more and more overvalued, currencies, with a two-fifths average real appreciation taking place during the 1970s. Overvaluation has served to reduce the price competitiveness of exports. In addition, a substantial portion of export receipts was often withheld from producers as a result of export taxes and high fees demanded by inefficient state monopoly marketing agencies. Inadequate supporting services and a crumbling infrastructure often made matters worse. Even in the "Franc Zone" — tying the currencies of thirteen French-speaking African countries to the French franc — overvaluation is becoming a problem for countries like Cameroon and Côte d'Ivoire, so much so that the whole arrangement is cast in doubt.

31.       Overvaluation has also hurt LDCs by making imports so cheap that domestic industry cannot develop or survive. One reason why governments are tempted to overvalue their currency is the existence of large government deficits. These absorb domestic savings and foreign funds that could otherwise have been channelled to the private sector. For instance, when President Mobuto, in January 1993, brought thirty-one tons of freshly printed (and virtually worthless) Zairian money back by plane from a printing office in Europe to pay his army, it is clear that the country's economy will suffer increased inflation, which in turn exacerbates the deficit, and so on.

32.       The inefficiency of many public enterprises has made the problem worse. Their number has been greatly expanded over the past few decades, and those that have performed well are the exception. The inefficiency of some — in the delivery of agricultural services, export marketing, banking, manufacturing and retailing — has further contributed to poor economic performance. Nevertheless, these public enterprises have often played an important role in industrialisation and were established because private entrepreneurs lacked sufficient capital or incentive.

33.       Equally serious has been the almost permanent neglect of agriculture. While agricultural yields have more than doubled over the last thirty years in the developing world as a whole, it has increased by less than 30% in Africa, in spite of that continent's clear potential. In brief, agriculture has been neglected. The previously mentioned overvaluation of currencies has led to food imports being so cheap as to render domestic food production uncompetitive. (Europe's heavily subsidised exports to Third World countries have often exacerbated this trend.) High taxes on domestically produced cash crops; price controls that further reduce the profits of peasant farmers; underresourced, inefficient research and extension services; underinvestment in rural infrastructure (rendering, for example transport of food more difficult); and the low ranking given to agricultural ministries in the governmental hierarchy are other factors worthy of mentioning.

34.       "Financial repression" is a term sometimes used to cover a whole series of practices in LDCs, such as : interest rates held at well below market levels; lending based on political rather than financial criteria; and the state's monopolising of the resources of the financial sector to finance budget deficits. Such "repression" prevents the financial system from developing. It frustrates the credit requirements of the private sector, and contributes to low-productivity investment.

35.       "Financial repression" is only one of the ways in which the over-extended role of the state has manifested itself. Controls and discretionary powers have been consistently preferred to policies operating through market incentives. This has hampered economic efficiency, and may even have led to a "decline of the state", by bringing it into disrepute among the broad masses of the population, by creating black markets, and by eroding the tax base. (Even though the above reflects the majority view within the Committee on Economic Affairs and Development, the Rapporteur feels duty-bound to report one dissenting voice. One colleague thus objected to the, in his view, exaggerated emphasis on the private sector in the report. He felt that there is already too much "private economy" in developing countries, and that, if anything, it is the state's role that needs to be expanded.)

36.       The Parliamentary Assembly in its Resolution 981 (1992) established five criteria for future north-south development co-operation, one of them being the "human rights criterion". "Official aid", the resolution says, "should in principle be reserved for countries which orient themselves toward democracy, the respect of human rights and the establishment of efficient and accountable administration The call for 'good governance' was made with particular fervour by the Committee on Economic Affairs and Development. Dictatorships should no longer be supported. Official aid to countries where the democratic process has been halted should in principle be interrupted, save for humanitarian purposes in emergency situations."

37.       In fact, many if not most of the poorest LDCs are more or less pronounced dictatorships. Dictators are not only unlikely to care about the suffering of ordinary people or about broad-based, long-term economic development. In addition, as rule becomes more personalised and power more concentrated, policies tend to become less predictable, more arbitrary. Personal aggrandisement and short-term political advantage lead to economic irrationality. Manipulating the distribution of wealth becomes more important than its creation. Zaire is an example.

38.       War stops development. Almost all of the thirty-six countries mentioned at the outset have been involved in one or the other substantial military conflict in recent years. In the last thirty years, wars have claimed nearly seven million victims in Africa, either directly or indirectly by making the provision of food and basic social services difficult or impossible. Wars uproot people, and refugees cannot, apart from anything else, be economically productive. Sub-Saharan African governments spend four times as much on the military as they do on health. By contrast, in East Asia spending on both health and education far exceeds military outlays.

39.       It must also be said that many countries have been "forced" to spend large amounts of money on the military due to tensions and wars in their region. Peace negotiations in Southern Africa or between India and Pakistan can therefore reduce the military outlays in those regions. Developing countries have also had to receive and take in large flows of refugees resulting from wars (and also from ecological disasters), with negative consequences for their socio-economic development as well as the environment.

4.       External factors

40.       We have previously touched upon the negative consequences of unstable or deteriorating commodity prices for LDC development. The long-term trend in this regard has been downward for most commodities, but most efforts to reverse it, or to compensate producers, have been in vain. It is difficult if not impossible to counteract market forces. (But see paragraphs 44-45 for a different approach tried in the Rapporteur's country, the Netherlands.)

41.       Add to this, however, the protectionism by the industrialised countries. The south keeps telling us, and rightly so, that "trade is better than aid", but the north maintains what often amounts to punishing import obstacles, for instance in many food commodities. Official development assistance — such as the 12 thousand million ecus that form part of the 1990-95 Lomé IV Convention — is seen by many LDCs as little more than a palliative to sweeten unfavourable trade conditions for the south. As a member of the Committee on Economic Affairs and Development pointed out, "neo-protectionism" of the north at present affects 20% of world trade.

42.       It is worthwhile to quote in this context the "Madrid Appeal", adopted in 1988 at the conclusion of the Parliamentary Assembly's European Public Campaign on North-South Interdependence and Solidarity:

"More robust global economic growth is an important factor in easing the problems of developing countries and in reducing unemployment in both the north and the south, and developing countries' growth must be compatible with sustainable development. There is a growing consensus that the revitalisation of development, growth and international trade in an increasingly interdependent world is a common objective which requires continued efforts within a multilateral framework involving all states. Specifically the developed countries have a responsibility to ensure a better environment for the growth and exports of developing countries, primarily by fostering vigorous economies in an open multilateral trading system, correcting massive current account imbalances and achieving greater stability in exchange and interest rates."

43.       Whereas the debt crisis has of late become less acute for both donor countries (and banks) and debtor countries overall, the situation of LDCs, especially in Sub-Saharan Africa, remains critical. The majority of these countries remain highly indebted, with bilateral and multilateral development banks in the north as the main creditors. LDCs have practically no access to the international capital market, and will therefore remain almost entirely dependent on official development assistance (ODA).

44.       To illustrate: the total external debt of developing countries has multiplied thirteenfold in the last two decades: from 100 thousand million United States dollars in 1970 to around 650 thousand million United States dollars in 1980 and to around 1 350 thousand million United States dollars in 1990. The debt of Sub-Saharan Africa is currently around 150 thousand million United States dollars (the same as the region's GNP).

45.       The total amount of ODA was around 54 thousand million United States dollars in 1990, of which only around a quarter goes to the ten countries that together have about three-quarters of the world's poorest population. The richest 40% of the developing countries receive twice as much ODA per capita as the poorest 40%. A country like India, with 34,2% of the world's total poor received 3,5% of the total ODA. In contrast, the "entry costs" for developing countries to participate in the global market has risen to 500 thousand million United States dollars (see figure below).

Figure:       Cost of global markets to developing countries according to UNDP

      (Source: UNDP report 1992)

46.       It is found, however, that as countries develop successfully, the proportion of ODA in overall credits tends to recede, that is more and more is taken care of by private lending institutions or through foreign direct investment. This also means that the countries in question have been able to "latch on to" world economic development, and can become more fully integrated in it. As a member of the Committee on Economic Affairs and Development pointed out, it is important to distinguish between ODA and privately supplied credits, especially at a time when budgetary difficulties in donor countries make increases in ODA — or even their maintenance at present levels! — a precarious business. It should be pointed out, however, that ODA is not determined in the first place by the needs of developing countries but by the goodwill of the rich countries. As such they are highly unpredictable.

47.       For Sub-Saharan Africa as a whole, ODA in 1990-91 amounted to 10,8% of GNP, and for countries like Mozambique and Tanzania it rose to 98% and 40% respectively. The region received 36,8% of worldwide ODA during the same period, versus 29,6% for Asia and only 17% for Latin America.

48.       There are various reasons for migration: poverty, conflicts and wars, natural disasters or ecological degradation, or any combination of these. Around seventy-five million people from developing countries are on the move each year as refugees, displaced persons, transient workers, legal or illegal migrants. There are around twelve to fifteen million internally displaced persons in developing countries and probably fourteen to sixteen million political refugees. Only 5% of these are likely to find their way to the north.

49.       The market in international labour is not free, but steered and controlled by the industrialised countries. Some countries, however, are more open to migration than others. In Australia, for example, the percentage of foreign residents is 21%, compared to 8% for the United States of America and 4% for Europe. Apart from certain drawbacks (brain-drain, social unrest etc.), labour migration has some clear advantages for both the recipient countries (cheap labour) and the sending ones (remittances, temporary solution for unemployment etc.). A study at the Indira Ghandi Institute of Development Research in India has estimated that due to immigration restrictions, by the year 2000 there will be a 1 000 thousand million United States dollars loss in global economic growth. The costs for the developing countries will amount to at least 250 thousand million United States dollars each year (see the UNDP human development report 1992 for more information). Unless there is development in the south, migration will continue. The amount of ODA (54 thousand million United States dollars) clearly is not enough. Economists have calculated that a tenfold increase in ODA would be needed in order to be able to speak of real chances of development.

III.       International co-operation

1.       Bilateral development co-operation. The role of international organisations

50.       ODA as a source, is, however, less certain than before. Total ODA to all developing countries rose only 5,4% from 1990 to 1992, and numerous donor countries are actually reducing it for budgetary reasons, or because of dissatisfaction with political and social conditions in recipient countries.

51.       The Assembly has indeed, in its Resolution 981 (1992) supported a kind of "conditionality" in ODA, by recommending that the criterion of "human rights", "economic and social reform", "reduced military expenditure" and "environment protection" should "influence the volume, channels and modalities of official development assistance".

52.       However, the Assembly in the same text also asked that "Council of Europe member states in particular should commit themselves to reaching, as soon as possible, the goal of official development assistance amounting to 0,7% of GNP, and should use for this purpose the resources freed as a result of reduced east-west tension and diminished military outlays".

53.       At present, as can be seen in Appendix I, the aid as a percentage of donor countries' GNP varies considerably among OECD countries, from a high of 1,14%, to a low of 0,19% — the weighted average for all OECD countries being 0,33%. The contributions made by the main multilateral organisations active in the field of development co-operation are shown in Appendix II.

54.       It must be a major interest for both donors and recipients that assistance should be given in a co-ordinated fashion. This is not always the case at present, neither among countries or among international organisations. One result is that the staff resources of recipient governments are stretched to the limit by the demands for time and attention of different donors. No doubt more could be done in this field than at present without adding bureaucracy.

55.       The efforts undertaken to improve co-ordination must, however, be recognised. Thus, during the 1980s there was a move towards greater co-ordination within the recipient country, often initiated by the World Bank and United Nations specialised agencies. Such co-ordination is necessary in order to mobilise and concentrate resources, and has the added benefit of reducing competitiveness among donors and between projects. In a number of countries there are regular, informal meetings of development agencies, at times including NGOs, with the establishment of working groups for particular issues. This co-ordination is intended to facilitate the donor-recipient dialogue on policies, enabling agencies to speak with one voice, take concerted action, and respond to particular issues within the country. This is likely to be especially important when aid is conditioned upon respect for human rights; military expenditures; transparency in governance, equitable access to basic services, including basic education; and promoting the participation of women.

56.       The motion for a resolution by Mr Fourré and others suggests the creation of two entirely new institutions, namely a "European Fund for Development Assistance initially based on endowments from Council of Europe member states", and a "European Agency for Survival and Development", whose task should consist in the "management of these responses, verification of the conditions, communications, monitoring and financial control".

57.       This is where the Rapporteur has some doubts. The question must be asked to what extent, if any, the creation of two such additional organisations will actually improve present north-south collaboration. It will be noted that the Parliamentary Assembly has so far not recommended the creation of any new institutions — with the exception of the "north-south centre" in Lisbon, which has the specific, and unique, aim of promoting public awareness in Europe on north-south matters. Instead, it has seen its role in assisting existing organisations in their task.

58.       The Assembly has no doubt felt, and continues to do so, that the world in general, and Europe included, already has a wide variety of institutions specifically or in part designed to assist developing countries — notably certain United Nations specialised agencies or subsidiary bodies (for example, the UNIDO, FAO, IFAD, the World Bank, UNDP, UNCTAD, the World Food Council etc.), and the European Community, which maintains privileged relations with sixty-eight developing countries — many of whom are LDCs — under the Lomé Convention. As has been pointed out, a main problem seems to lie in the co-ordination of assistance efforts among these agencies (also taking the considerable bilateral aid given by most Council of Europe member states into account), and in the efficacy of aid given — for instance in Sudan, Somalia or Mozambique, where assistance efforts are hampered by extremely unfavourable local conditions. Would not, for instance, the proposed "European Agency for Survival and Development" risk duplicating, say, the work of the World Food Programme (with its successful "Food for Work" projects), the FAO or the UNDP, to mention just a few institutions whose activities are essentially directed at poor countries?

59.       There is, however, one area where your Rapporteur feels that improvements are necessary: emergency aid. Since she comes from a member state of the Community, may she be permitted to welcome the creation in 1991, of a new European Community office for emergency aid. May she add, however, that if it is adequately to perform its task, it needs more attention by Community member states than has so far been the case.

60.       Also the United Nations has set up a new office for emergency aid, one of its tasks being to improve co-ordination between different United Nations agencies. It seems to your Rapporteur that communications between the United Nations Secretary-General, the Security Council and the United Nations agencies dealing with relief operations could be made more efficient. There may indeed be a need for an independent "Early Warning System" to be established in the United Nations, so that disasters like the one in Somalia can be detected before mass death from starvation sets in. It is important that such a body be independent, as otherwise some governments may actively obstruct emergency aid (as Sudan has done, for instance, with aid to its southern regions). Countries should guarantee, every year, a certain amount of money for this United Nations emergency aid office, in order not to lose too much time in gathering sufficient commitments (or contributions) before aid can actually be delivered. The question whether, and on which conditions, the sovereignty of countries can be subordinated to the necessity of aid is a crucial one. At times there seems to be a transition from humanitarian aid with military means to humanitarian intervention. This is a delicate problem on which your Rapporteur would like to make some remarks.

61.       There is a clear distinction between humanitarian action or aid, and humanitarian intervention. The first entails the giving of aid to bring relief to civilians in emergency situations, such as Operation Lifeline in southern Sudan, vaccination programmes in El Salvador, and humanitarian action of the United Nations and related organisations in Iraq and Somalia.

62.       The second is the use or threat of violence against nations which are grossly violating human rights and freedoms, with the idea of putting an end to these violations. In reality, however, humanitarian intervention is hardly ever solely based on humane motives: political or territorial factors have played their part, too.

63.       Although nowadays the notion of sovereignty is rather loosely interpreted, it is still the backbone of international law. However, respect for human rights — especially the right to life and existence of groups of people, and the non-violation of the international humanitarian right and the prohibition of violence — are key principles as well.

64.       International humanitarian action could be a good alternative to unilateral humanitarian intervention, which the United Nations Charter does not provide for. Reality, however, shows little success and many failures, as the world community faces the problems of national sovereignty, lack of international agreement or the incapacity of the United Nations and other humanitarian organisations to act. But there are some interesting legal developments: for example, United Nations Resolution 46/182 of 19 December 1991, with guiding principles for humanitarian emergency aid, the establishment in the United Nations Secretariat of a Sub-Secretary General and Department for Humanitarian Affairs, and the growing use of humanitarian cease-fires, zones and periods of tranquillity, and "blue corridors".

65.       Military protection and support of humanitarian aid should be embedded in international humanitarian and/or peace operations and politically supported by the United Nations Security Council. Principles of international law such as necessity, subsidiarity, proportionality and international humanitarian law should be applied.

66.       The essential characteristics of United Nations peace operations — being the consent of the host-country, strict impartiality and no use of violence other than in self-defence — should be respected as much as possible. In circumstances where there is no central government, the first principle cannot be rigidly interpreted: in reality the United Nations cannot escape from having to deal directly with important armed forces like the SPLM in Sudan and the FLMN in El Salvador.

67.       United Nations diplomacy and United Nations peace operations can have many faces, varying from quiet diplomacy to peace-keeping to peace-making; the investigation of facts, recommendation of procedures, mediation, reconciliation, recommendation of terms of settlement, imposition of temporary measures (cease-fires etc.), the sending of special or personal representatives of the Secretary-General or of United Nations observers (whether armed or not), or of soldiers.

68.       When considering large military United Nations intervention, one should examine whether it is possible for the United Nations to play both the role of peace-maker and that of taking violent action. Collective use of violence will rarely be the solution in solving conflicts, whether they are international or civil wars. Articles 42 to 47 of the United Nations Charter, which regulate the collective use of violence as well as the role of the Military Staff Committee, should if possible remain "sleeping beauties".

69.       The United Nations machinery should be much better equipped for quick reaction in times of need. The Security Council as well as the General Assembly should draw up special procedures, such as the permanent standby of trained forces and the freedom of movement for the Secretary-General. Apart from such bodies as UNICEF, WFP, the contribution by Red Cross and Doctors without Frontiers should also be acknowledged.

70.       Referring to our discussion in preceding paragraphs, can commodity prices that are ruinously low for LDCs be corrected? Conventional wisdom would have it that they cannot. Yet, in the Rapporteur's country the Netherlands, the "Max Havelaar Fair Trade Model" has tried and succeeded in doing exactly that. It involves organisations (co-operatives) of small coffee producers, trade organisations and coffee roasters in the Netherlands.

71.       Briefly put, Max Havelaar (a non-profit-making foundation) asks the consumer to pay a 10% "premium" on the coffee he or she buys when the world market price is considered too low. The money benefits directly the members of producer co-operatives in the LDCs, and strict control is exercised to ensure that it benefits members rather than middle-men. At present, the share of Max Havelaar of the Dutch coffee market is 2,3%; and it has recently been introduced also in Belgium. Can we hope that it can spread to other Council of Europe member states?

72.       The Max Havelaar initiative is an example of how also the average citizen can make a contribution to improving the income of ordinary people in LDCs. However, any more significant improvement will require more fundamental changes of the kind discussed elsewhere in this report.

2.       Initiating reform in recipient countries

73.       Most of the reform measures suggested for LDCs have already been implicity stated in the preceding chapters. They can be summed up as :

—       Sound macro-economic policies with sustainable budget deficits, and realistic exchange rates.

—       A liberal, rather than prohibitive policy environment for the private sector (or, as it is sometimes known in LDCs, the "unofficial economy"). Here, a change seems to be under way, in the wake of the worldwide abandonment of communism. A new "entrepreneurial generation" is waiting to express itself in Africa, if only it can be given the right conditions. It is important to avoid government monopolies, punitive regulations, price controls, large state subsidies, high tariffs or quotas on imports, not least with other LDCs (north-south trade needs to be stimulated, as it is far below what is could be). An open business environment will also stimulate foreign investment and contacts with the rest of the world, thus helping the country to become "part of" the worldwide creation of new knowledge. Some observers argue that this is, and will be even more so in the future, the key to economic development, as witnessed for example in the spectacular success of South-East Asia.

—       Adequate investment in infrastructure and in people. Experience suggests that governments that stay out of the production sector, as is done in many East Asian countries, can instead provide more effectively for schooling and health care, and create better infrastructure foundations for the private sector.

74.       Small amounts of public investment in key areas, such as agriculture, can make a huge difference. For example, small scale, relatively cheap irrigation schemes and the basic tasks of agricultural research and extension are often neglected, while large outlays are allocated, say, for fertiliser subsidies in many countries.

75.       Human investments are especially important. The two greatest threats to Africa's future are the neglected investments in primary education and in food security. A child born in Mali, Niger or Burkina Faso today is more likely to be malnourished while under five than to go to primary school on reaching six. In at least sixteen African countries a child is more likely to die before the age of five than to attend secondary school. Ironically, the public sector workforce is often neglected even as employment expands. Teachers' real wages have fallen by two-thirds over the last fifteen years in Nigeria, and by 13% in eastern and southern Africa from 1980 to 1985. It is hardly surprising that education deteriorates under such conditions. On the other hand, in nations where the quality of education and health care are rising, the salaries of teachers and nurses are increasing as well. And one member of the Committee on Economic Affairs and Development pointed to the importance of granting scholarships to gifted students for studies abroad (provided, of course, that they later on return to their country of origin in order to make it benefit from their expertise).

76.       Progress in LDCs to a crucial extent depends on their ability to reduce population pressure. Over-population "eats at" the environment, erodes the soil, bares the land of precious wood — and in the process make impossible any future productive use of the land in question. Thus, family planning ought to be an integral part of any long-term strategy for economic development in the LDCs.

77.       Finally, one of the most important tasks in north-south co-operation concerns women. Only emancipated women, whose education is considered as important as that of men, will be able to make their full contribution to economic and social development of LDCs, and be persuaded to engage in family planning. Seeing to their health care and food needs is of crucial importance in this regard.

IV.       Concluding remark: Europe's role.

78.       Council of Europe member states contribute over half of the world's official development assistance. But money is not everything, and it is wasted unless it is allowed to generate new wealth. "Conceptual assistance", is recognised as being as crucial to development in central and eastern Europe as is material aid. The same holds for LDCs, whose fate is as determining for the world as is that of any other group of countries. Europe has to give more and give better, working closely with the LDCs to make sure that assistance works. And it must always place the human being in the forefront. His or her right to, in the words of Assembly Resolution 981, a "development which ensures human dignity and an existence which is economically productive, socially just and environmentally sound" must become the guiding principle in north-south co-operation.

APPENDIX I

APPENDIX II

      Reporting committee: Committee on Economic Affairs and Development.

      Budgetary implications for the Assembly: none

      Reference to committee: Doc. 6576 and Reference No. 1777 of 11 March 1992.

      Draft resolution adopted by the committee on 1 June 1993.

      Members of the committee: Mr Holtz (Chairman), Dame Peggy Fenner, Mr Lotz (Vice-Chairmen), MM. Aarts, Becker, Gudmundur Bjarnason, Bloetzer, Bonnici, Brach, Colombo (Alternate: Ferrari), Davis, Demiralp, Mrs Durrieu, MM. Efraimoglou, Fabra, Flückiger, Garcia Sanchez, Gasperoni, Gassner, Goerens, Mr Gregory (Alternate: Brennan), Mrs Haglund, MM. Hellström, Kempinaire, Kiliç, Kittelmann, Albrecht Konecny, Koritzinsky (Alternate: Gundersen), Le Grand, Lewandowski, Mesoraca (Alternate: Covi), Paire, Pinto, Pirinski, Rehn (Alternate: Särkijärvi), Rodrigues, Rokofyllos, Schwimmer, Mrs von Teichman, MM. Thoft (Alternate: Gjellerod), Townend, Valleix, Mrs Verspaget, Mr Wintgens.

      N.B. The names of those members who were present at the meeting are printed in italics.

      Secretaries to the committee: MM. Torbiörn and Mezei.