LDC Summit in Istanbul

Dr. Abdul Momen: The most important event of this year for the UN and especially for the Least Developed Countries (LDCs) is the upcoming LDC Summit IV to be held in Istanbul on May 9-13, 2011.  There are 48 LDCs in the world, 33 in Africa, 14 in Asia and one in Caribbean.  South Sudan after its independence on July 9 may join the group making it 49.  Over 880 million people live in LDCs and nearly 75% of them live below the poverty level.  The LDCs are the least developed countries and Bangladesh is the largest LDC. According to UN a country is classified as a Least Developed Country if it meets three criteria:

• low-income (three-year average GNI per capita of less than US $905, which must exceed $1,086 to leave the list)
• human resource weakness (based on indicators of nutrition, health, education and adult literacy) and
• economic vulnerability (based on instability of agricultural production, instability of exports of goods and services, economic importance of non-traditional activities, merchandise export concentration, handicap of economic smallness, and the percentage of population displaced by natural disasters).

In 1971, there were only 25 LDCs and their share in global trade was nearly 1% and now after 40 years, their numbers have almost double, unfortunately, their share in the global trade remained stagnant at 1% and their share to global GDP is only 2 per cent.  During the last 40 years, only one LDC graduated (Cape Verde), one opted out (Botswana) and another (Maldives) is in the process of graduating. That means, the promises and instruments that have been developed or offered to LDCs for their graduation or uplifting is not working effectively.  The UN General Assembly unanimously adopted a resolution A63/227 and hoped that half of the LDCs would graduate by 2020 and in order to graduate, they need to have at least 7% GDP growth rate per annum for next ten years. Unfortunately, the scenario is still bleak. Therefore, LDCs are demanding a ‘big push’ as they believe ‘business–as-usual’ is not likely to help them much to achieve their goals.

Since 1981, the leaders of LDCs and that of the Development Partners (DPs) routinely get-together at a conference at each 10^th year to address the needs of LDCs and to find means to meet those needs. Last Conference was held in Brussels in 2001 and it adopted ‘Brussels Programme of Action (BPoA) with lot of promises and hopes including a laundry-list of 37 objectives. Unfortunately, although BPoA was great and comprehensive, it remained an ‘unfinished agenda’.  Now while experts are working day and night to come up with an ’action-oriented, achievable and pragmatic action program for the Istanbul Programme of Action’ (IPoA) for the LDCs, unfortunately, progress is slow owing to Development Partners apathy to come up with “additional benefits’, reluctance to take responsibility to rehabilitate the ‘climate migrants’, giving them higher voice in the decision making in BWIs or even to reiterate delivering their own commitments under the excuse of current financial meltdown and job loss.  While many DPs mostly EU countries have no objection to grant ‘free access’ or 100% duty-free-quota-free access to their markets, important ones and the emerging economies and many G-77 members are unwilling to allow the LDCs of this special facility.  Therefore, it appears that the upcoming LDC Summit for which host country Turkey is spending millions of dollars could be a Summit without beef and substance. However, veteran diplomats argue, UN does agree at the last minute and therefore, don’t lose hope.  The presence of effective leaders in Istanbul could change this scenario and may help realize additional deliverables and such would provide hopes and dreams to their countrymen for a better future.

No wonder, the Fourth Conference on LDCs in Istanbul, therefore, is very important. It would provide a unique opportunity to review how the development concerns of Least Developed Countries and MDG challenges can better be met by increasing aid, improving its quality and strengthening mutual accountability frameworks for development results.

Although primary school enrolment, child mortality rate and per capita income in many LDCs have increased in the last decade yet most of them are finding difficulty to achieve all MDG goals owing to a range of structural and other challenges common to many LDCs, such as weak productive and technical capacities, poor infrastructure, poor access to markets, conflict or post conflict situations, adverse political volatility and infighting, low domestic resource mobilization, and low resilience to shocks and crises.   Important issues especially for Bangladesh such as ‘climate migrants’, ‘trade access’, ‘technology transfer’, ‘infrastructure build-up’, ‘special fund’, ‘increase ODA’, ‘effective monitoring’ are still being debated and Prime Minister’s presence hopefully will resolve these issues though political big push.

First, to increase productive capacity or to alleviate poverty, the LDCs look toward ODA (Official Development Assistance) support to promote development in LDCs. The Development Partners reiterated to provide 0.15-.20 percent of their GNI to LDCs in the LDC III Summit in Brussels in 2001. The 2010 report of the United Nations MDG Gap Task Force however estimates the shortfall of ODA to LDCs at $23–$43 billion in 2008.  Only nine DAC donors are meeting target 7 of the Brussels Programme of Action (BPoA).  The latest OECD/DAC forecasts indicate that the share of country-programmable aid to LDCs could fall further over the next two years owing to economic debacle in DPs plus escalation of food and fuel price increase. The DPs argue that resource flow in any form like home remittance, contributions by private or philanthropic foundations like Bill Gate Foundation either to government or NGOs, foreign direct investment and the like be considered as a part of resource flow to LDCs. LDCs argue that resource flow from private foundation, remittance, etc cannot replace ODA obligation. Against this background, the 4^th LDC Summit is being arranged in Istanbul. 

Secondly, one of the stumbling blocks to the negotiation of LDC IV outcome document is the definition of ‘Development Partners’ and in this debate, the LDCs have become a ‘football’ or ‘soccer ball’. The traditional development partners like USA, EU, and CANZ (Canada, Australia, New Zealand) are arguing that the global economic scenario has dramatically changed over the years and emerging economies like China, India, Brazil and South Africa have become dominant players in the global trade and development.  Their proportion of trade with the LDCs is substantial and rising.  Therefore, they should also be considered as ‘development partners’.  The emerging economies on the other hand argue that they will help the LDCs under the umbrella of ‘South-South solidarity’ but they are not ‘Development Partners’.  Although their economies are improving, they argue that they have a large number of people below the poverty level. They further argue that the traditional Development Partners have their historical obligation to assist LDCs.  In this debate, LDCs become a ‘football’ and in the process, their issues are being ignored and relegated.

However, the expectations and demands of the LDCs are simple and straight forward. They would like to graduate and in order to graduate and also to meet the needs of their poverty-stricken millions, they want to develop their productive capacity and technological know-how.  They want to diversify their trade and commodity. They need guaranteed, predictable and adequate resources without too many conditionality. They need to guarantee at least 7% GDP growth rate of their economies without which they may not graduate, neither can they achieve their MDG goals by 2015. Therefore, they need additional investment and free access to markets. They want the following:

(1)   100% Duty-free-quota-free market access to developed and emerging countries.

(2)   They would like to see that the commitments made by Development Partners in terms of ODA be met and after 2015, be increased. They hope the DPs to double this percentage.  

(3)   In order to enhance their productive capacities they want DPs to come up with additional resources both financial and technological. Those LDCs that are unable to payoff their debt be forgiven and those that paid on-time be rewarded.

(4)   They want access to affordable and state-of the-art technology to help improve their economies. Without transfer of technology, it would be difficult for them to graduate. Interestingly, new user-friendly technologies that can enhance productivity and efficiency are mostly in the private sector in DPs and they are reluctant to move to LDCs without incentives. 

(5)   Therefore, LDCs would like the DPs to provide incentives to its own investors so that they invest in LDCs and create jobs both at home and host countries. Such will benefit global consumers. They want aid for trade and investment.

(6)   LDCs are hard hit and most vulnerable owing to rise of food and fuel price, recurrent floods, cyclones, earthquakes, natural calamities and more importantly, erratic climate changes. Therefore, they want a mechanism or a special fund to mitigate their crises at times of need.  

(7)   The Brussels Programme of Action of 2001 was a great ‘outcome document’.  Unfortunately, it is an ‘unfinished agenda’ owing to the fact that there was no mechanism in-built in it to evaluate and monitor the achievements and obligations of each partners of the agreement.  Same was true with the MDG goals. Out of 7 MDGs, in the absence of monitoring mechanism, the goal 7; responsibility of development partners to come up with resources and technology to help achieve rest of the goals defaulted. Therefore, they would like to set up a mechanism so that these are being constantly monitored and evaluated for effective implementation and accountability.

(8)   Unless additional benefits are provided to them, they believe they cannot reach the MDG goals.

As the negotiation was not going smoothly, a selected group of LDC Ambassadors at the UN met Permanent Representatives of important countries and groups both developed and emerging economies and they all expressed cooperation and sympathy.  But those have not been fully translated at the expert level yet. Only one week left prior to Istanbul Summit, not more than 50% of the negotiation has been completed up to the satisfaction of LDCs.  Therefore, LDC leaderships are worried.  They are worried that if they cannot improve the lot of their people, it may create global insecurity and the cost of such insecurity could be enormous.  In addition, they argue that the global community cannot shy off their moral obligation to help the poor.  The DPs as well as the emerging economies are reluctant to come up with decent package owing to recent financial meltdown, job loss, increase of fuel and food prices.  The LDCs argue that such financial meltdown is short-lived, and LDCs are looking forward, not for two but for next 10 years.  In addition, they argue that there is no shortage of funds as such.  As per SIPRI Report of 2011, global community spent over $1.5 trillion on defense in 2009 and USA alone spent over $110 billion in Afghanistan in 2010.   Therefore, question is not shortage of funds but question is our sense of priority and our sense of moral obligation.   

Good news is, recently few LDC PRs met the Deputy Administrator of USAID Donald Steinberg. He will lead the US delegation to Istanbul Summit. He was very sympathetic to LDC issues and stated that President Obama would like to break down the barriers between LDCs and the DPs as he believes that 85% demand in future will come from LDCs.  He reaffirms his government’s commitment to traditional ODA, setting up of ‘Enterprise Development Fund’ with a view to encourage American firms to invest in LDCs, increasing OPIC guarantee, adopting ‘Presidential Initiative’ to help assist mitigation and adaptation programs for climate change risk reduction, committed to promote South-South and North Triangular cooperation aiming at enhancing productive capacities in LDCs, adding value-added in all areas of food security, market access, agricultural investment, and the like.  He stated that although their budget has been drastically cut but USAID fund for LDCs remain untouched.  He argued that his government is more concern on accountability and value addition and therefore, they will welcome a monitoring mechanism. Listening to the demands of LDC PRs, he stated that there is lot of commonalities and therefore, a win-win agreement should be reached.  He stated that USA is on LDCs’ side to put pressure on emerging countries to come up with encouraging packages for LDCs.   LDC leaders asked him to take leadership role to convince other DPs and instruct his experts to translate these policy decisions and visions in the nearly stalled outcome document of the LDC IV. 

As per the latest report from the negotiation which is ongoing at the UN this weekend, 100% DTQF access to market has been put under bracket as no resolution could be reached on it.  However, probability of increasing ODA from current .15-.20 per cent of GNI to .25 per cent GNI is likely to be reached.  However, experts will leave contentious issues to be resolved by top political leaders at the Istanbul Summit.  Therefore, stake for the LDC leaders at the Istanbul Summit is very high.  Good news is, Bangladesh delegation will be led by its Prime Minister Sheikh Hasina who has earned global respect and recognition for her able leadership and command over others for her success in many MDG goals in spite of calamities, resource constraints, huge population and political polarization.  Like her, President Paul Kagame of Rwanda (Africa’s biggest success story), and Prime Minister Meles Zenawi of Ethiopia (Climate Change Fund Co-Chair) are known as ‘doers’ and they all will attend.  Therefore, the LDC experts are hoping that their presence and active participation may help achieve their desired objectives; a global commitment substantiated by adequate, affordable and easily accessible resources for enhancing infrastructure including energy availability, roads and highways, increasing productive capacities, free access to markets, technology, and a conducive global environment for Prime Minister’s vision of a mid-income digital Bangladesh.  But the process is not easy.  It is challenging, it is difficult and it would need political acumen, superb leadership, compromises, strong resolve, rock-solid unity and solidarity of all and of course, clear vision.  Let us hope for the best for the upcoming LDC Summit especially for the teeming millions of LDCs so that their hopes and aspirations; their hope for a decent living, for decent jobs, for a prosperous and peaceful life, and a life of hope and dreams for their children be achieved.