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Aid, Debt & Development

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International Aid & Development: Creating a More Effective System
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An investigation into the inability of the current system of international aid to significantly reduce poverty over the past 35 years, with practical proposals for an alternative mechanism, based on economic sharing, which can rapidly foster self-sufficiency in the developing world.

International Aid & Development: Creating a More Effective System

19th May 2006
Written by Rajesh Makwana

Over the past 35 years governments have failed to follow through on their pledges to deliver aid, condemning many millions to unnecessary suffering and death. Even in light of international commitment to the Millennium Development Goals (MDGs) and the fact that only 10% of the annual global military expenditure would be required to meet the goals, it is extremely unlikely that they will be met. Sadly, even if the MDG for halving poverty is met, 900 million people would still be living in extreme poverty in 2015.

If the goal of international aid is to ensure that food, water and medicine are available where most needed, it is clear that the existing regime is not working. Instead of depending on patronage aid, the global economy must be reformed to ensure that it functions primarily to secure the basic human needs of all people. STWR propose that a system of sharing those resources which are essential to life is the best way of achieving this and that the priority for a system of sharing must be to initiate an emergency redistribution program to rapidly address extreme poverty.

Below we examine these issues in greater detail and present a list of related resources for those wishing to research further.

Contents


Part 1:  The Limitations of Aid and Development Programs

Economic Growth and Development
Statistical Problems

The Inequality Predicament

Requirements for Development
How much AID is needed? - Overseas Development Assistance (ODA)

Levels of Aid Expenditure
The Ineffectiveness of Aid
Taxes for Increasing Development Funding

Part 2:  Sharing Resources for Development


Part 1:  The Limitations of Aid and Development Programs

Economic Growth and Development

Development assistance in the form of aid has, unfortunately, on the whole, failed to deliver even basic social and economic security for many billions of people living in poverty.

To understand the ineffectiveness of global efforts to promote poverty reduction and development in low income countries, we need to understand the ideological premise which underpins such efforts. Economic policy decisions, both nationally and globally hinge on the assumption that economic growth must be the primary objective for both emerging and established economies. It is assumed that by creating more national/global income through economic growth, a trickle down effect will follow, thus enabling the poorer strata of society to increase their proportion of total income. This concept is almost universally accepted amongst economists and governments. It is the engine that drives all international development efforts that are coordinated by the World Bank and IMF. It is the premise upon which the free market economy is based and reinforced through the efforts of multinational corporations and the World Trade Organization (WTO).

The economic growth model is not an inevitable assumption but a political and ideological choice. An accumulation of research over recent years clearly undermines the ideology and highlights its inefficiency, particularly with respect to poverty reduction (see below for links to these resources). In addition, the statistics used to quantify the prevalence of poverty and the effectiveness of poverty reduction measures are widely recognized as inadequate. The combination of inadequate statistics and political reasons for pursuing economic growth has resulted in the pursuit of wrong international development policies.

Historically, the resistance of policymakers to alternative 'poverty-centred' approaches can be traced to a number of political issues and precedents that still hold strong. For example, when considering policies to address unemployment and inequality, national governments have repeatedly chosen to stimulate growth rather than to redistribute wealth. The redistribution of wealth goes against the immediate interests of the wealthiest sectors of society, those who are more likely to influence policy decisions.

The World Bank has always rejected the evidence that economic growth is unsustainable. They postulated the ‘environmental Kuznets Curve’ in their 1992 World Economic Development Report. This wrongly theorized that although environmental degradation is a problem, if growth continues, we will eventually become rich enough and sufficiently technologically advanced to pay for the costs of cleaning up the environment. 

These assumptions are reinforced by the International Financial Institutions (IFIs) and multinational corporations, and significantly influence governmental decisions regarding the global economy. The mandate for economic activity and growth is the perfect platform for multinational corporations, whose profitability and political influence have grown rapidly as a result. In turn, corporate activity in all its forms creates a large proportion of the economic growth that governments pursue. In 2002, the top 200 corporations alone had combined sales equivalent to 28% of world GDP. Hence the corporate–government relationship is complimentary and self-reinforcing. When cash strapped governments in developing countries do not want to follow the neoliberal model, they often find themselves unable to resist the financial pressure from the IMF and commercial pressure applied by multinational corporations.


Statistical Problems

According to the World Bank the number of people in developing countries that survived on less than 1 dollar a day fell between 1990 and 1999 from 32% to 25%. However a closer examination reveals that over the same period the number of people below the international poverty line only decreased by 1% per year, from 1.3 billion to 1.1 billion. This small reduction in global poverty was almost entirely the result of China’s figures. Much of the rest of the developing word (sub-Saharan Africa, Latin America, the Caribbean, the Middle East and North Africa) saw an increase in poverty by around 7 million over the same period.

Furthermore, there is much controversy regarding China’s sharp decrease in reported poverty levels over this period. National poverty estimates show a much lower decrease in poverty levels than World Bank estimates. Analysts suggest that the smaller reduction was mainly due to demographic changes, with household sizes becoming significantly smaller over the period. Overall, it is clear that the accepted income poverty reduction observed in the 1990s does not purvey an accurate picture of the prevalence of poverty.

Another statistical problem with measuring poverty has been the use of Gross Domestic Product (GDP) and the $1 and $2 dollar a day poverty line measures.Essentially, GDP measures the size of an economy, but it is a statistical average that disregards issues of income distribution, inequality and welfare. It only measures ‘productive activity’– any process that generates money, whether for good or ill. ‘Productive activity’ includes military activities and efforts to deal with environmental problems. On the other hand it does not take into account activities that are of benefit to society, such as childcare.

The $1 dollar a day was based originally on the 1985 Purchasing Power Parity (PPP) of a number of countries, and was updated in 1993 using a different set of PPP values, thus making data comparisons unreliable. It now represents the median value of the lowest 10 poverty lines amongst a group of 33 countries – and is equivalent to a poverty line value of $1.08. It means that living below the $1 a day level anywhere in the world is equivalent to someone in the US in 1993 having $1.08 each day to spend on all his needs.

There is also the opinion that, due to the application of a conversion factor when calculating PPP, poverty estimates grossly under-represent actual poverty levels. For example, in India, the one dollar a day level is actually equivalent to 20 cents, and the two dollar a day equivalent to 40 cents. Using this correction, there are far more people actually living below the poverty threshold.

Yet another problem with this measurement is whether it is at all suitable for measuring and tracking poverty, as poverty is relative. Studies have shown that as a country grows economically, the poverty line within the country rises- i.e. it costs more to survive. Of course, the $1 a day measurement does not take this into account, so those who increase their income above their country’s poverty line threshold may still experience the same level of poverty, even though they would not be considered poor on the basis of the $1 dollar a day measure.

In addition, the international poverty line is not based on a global common basket of basic goods and services. Whilst poverty is considered a multidimensional issue, its $1 a day measurement is only one dimensional – i.e. it does not take into account the absolute lack of access to basic food, water and services that those living in poverty experience. Overall, many studies have concluded that the $1 a day poverty norm overestimates progress in reducing income poverty whilst underestimating global poverty levels.


The Inequality Predicament

The theory of economic growth for development is based on the premise that increasing the size of the economic ‘cake’ will increase the size of the developing countries’ slice of the cake. This view does not address relative inequality which is crucial to meaningful poverty reduction. Nor does it acknowledge the fact that, whilst creating economic growth, a consumption-based economy is unsustainable in terms of resource depletion. Over-consumption has polluted the land, sea and air, resulted in mass deforestation and excessive mineral extraction. It has ultimately obstructed economic growth and reinforced poverty in many of the least developed countries by damaging the environment and facilitating climate change.

Both GDP and the $1 a day measures neglect the issue of inequality. Recent studies have shown that inequality is harmful to economic growth, and the income gap is widening. Income distribution worsened between 1988 and 1993, with three quarters of the world’s population experiencing a fall in their real income levels, particularly amongst the poorest. Such inequality results in the paradox of overall decreasing poverty levels and a simultaneous increase in the number of people living in extreme poverty.

Given current levels of global inequality, any increase in income from economic growth would benefit the richest 1% of the population 120 times as much as it would benefit the poorest 10%. During the period between 1981 and 2001, nearly 96% of global economic growth went to those who live above the $2 dollars a day poverty line, and the share of poverty reduction through economic growth fell from 5.5% in the 1980s to 3.1% in the 1990s. The New Economics Foundation recently calculated that it takes $166 of global economic growth to achieve $1 of progress toward poverty reduction.

The pursuit of economic growth for addressing poverty, whether as a national or an international policy, is politically motivated.  It avoids more difficult reforms that redistribute wealth and deal with inequality. Redistribution policies are a much more efficient way to combat poverty, but those in the higher and thus more influential echelons of society resist such policies. A 1% redistribution of the incomes of the richest 20% of the world’s population to the poorest 20% would reduce poverty of the poorest the same amount as a 20% per capita growth. (20% growth would be a phenomenal rate of growth by the standards of any country.)

The provision of food and basic human needs is an internationally agreed human right, and should therefore be provided free of all conditions. The provision of food and basic human needs should not be conditional on economic growth as is currently the case. Economic growth should be a mere by-product of development economics, rather than an ideology upon which development policy is based. 


Requirements for Development 

The broad ideology that drives international development assistance is misguided. But the United Nations’ and other international agencies’ analysis of country specific requirements to promote development are fundamentally correct. A broad outline of the urgent and essential needs of developing countries for food and services include:

1. Agricultural inputs for food production
2. Safe drinking water and sanitation
3. Medicine and healthcare facilities
4. Education facilities
5. Access to energy
6. Basic infrastructure for transport, communication and utilities
7. Housing and clothing

These are the basics required for development, but they are not universally available, and this failure is the true cause of global poverty. 45% of the global public lives on less than $2 dollars a day, far below the amount needed to purchase all of the above essentials.

The international development agencies use and administer grants from donor countries for development purposes, but without significant impact. This is partly due to a lack of political will to invest in development – resulting in meagre development grants. The conditions attached to aid also render it ineffectual. Debt and unfair trade agreements exacerbate the situation, which is even further worsened by the mismanagement of these funds by both the international development agencies and the recipient governments. 


How much AID is needed? - Overseas Development Assistance (ODA)

Oversees development aid and assistance must address the immediate crisis of the 1.1 billion who live in extreme poverty. It must also address the longer term requirements for development so that all countries can end domestic poverty and economic insecurity.

The Millennium Development Goals (MDGs) represent global commitments to the eradication of extreme poverty and to halving the overall levels of hunger by the year 2015. The economist Jeffery Sachs, as part of the Millennium Project, identified the main obstacle as that of raising the requisite funding. He calculated that developing countries require around $80 billion dollars a year until 2015 to achieve the goals. However, given the complexities and self interests that affect a significant proportion of ODA (see below) and allowing for administrative costs, Sachs calculated the amount of ODA that needs to be provided by donor countries to meet the MDGs is $135 billion rising to $195 billion by 2015. This represents between 0.44 and 0.54 % of donor GNP over the period, significantly less than the 0.7% that all donor countries have already committed to. It represents an approximate doubling of current donor assistance as a percentage of GNP. These figures represent the total ODA required to reach all the MDGs and not just the elimination of extreme poverty.

The process is a road map, one that is progressive yet slow, with goals that are high minded, yet fall short of what is required. This bold and crucial global compact is far from on track, with some analysts estimating that meeting some of the goals may take an additional 50 years because donors rarely honor their commitments. Until the goals are met, thousands will continue to die daily from extreme poverty. Even if the goals are achieved within the given time frame, 900 million people will have an income of less than US$1 a day in 2015.

The developmental plans for reaching the MDGs are mired by the very system the goals exist within. The goals do not address the bigger picture of the global economy, whose structure is increasingly organized around the profit motive. Wealth, resources, services and knowledge that belong in the public domain continue to be drained from economically poorer nations. These are transferred to corporate interests, safeguarded by the dominant governments who are blinkered by their drive for economic growth.

What is required is an emergency relief program that absolutely relieves extreme poverty, and is implemented within a package of global economic reforms that can render it fundamentally democratic and equitable. An outline of an emergency relief program of this nature can be found below.


Levels of Aid Expenditure

It was way back in 1969 that the Pearson Report first stipulated ‘total aid should amount to 1 percent of GDP, and official aid, 0.7 percent of GDP by 1975’. Donor governments promised to reach this level of ODA at the UN General Assembly in 1970.

36 years later, the world has witnessed numerous further reports, commissions, governmental pledges and millions of unnecessary deaths. Yet ODA figures for some of the largest economies in the world struggle to reach a fraction of this agreed figure, with the global average ODA at 0.25%. Economic superpowers such as the USA argue that they donate the largest amount in US Dollars, but in real terms they invest a mere 0.17% of GNI, the 2nd lowest ODA percentage of all donor nations.

Country

Aid as % of GNI

Country

Aid as % of GNI

Australia

0.25

Japan

0.19

Austria

0.24

Luxembourg

0.85

Belgium

0.41

Netherlands

0.74

Canada

0.26

New Zealand

0.23

Denmark

0.84

Norway

0.87

Finland

0.35

Portugal

0.63

France

0.42

Spain

0.26

Germany

0.28

Sweden

0.77

Greece

0.23

Switzerland

0.37

Ireland

0.39

United Kingdom

0.36

Italy

0.15

United States

0.16

 

Source: UN Millennium Project  

Comparatively, in the same year (2004) the US spent $455 billion on their military budget (according to the Stockholm International Peace Research Institute) - almost half the global military expenditure, or 3.9 percent of US GNP. In 1998 industrialized countries devoted US$353 billion (seven times total ODA spending) to protecting their agriculture, according to the United Nations Development Program. In 2005 migrants from developing countries sent $232 billion back to the developing countries they came from. This was more than double the amount rich countries donated ($100 billion) in the form of ODA in the same year.

As mentioned above, the ODA required for achieving the Millennium Development Goals must gradually increase to $195 billion in 2015, or 0.54 percent of donor GNP. Although this represents a small increase from current levels, the Social Watch Report (2005) states that even this modest goal is unlikely to be met given current trends.


The Ineffectiveness of Aid

The insufficient levels of ODA clearly reflect global priorities based on self-interest. The effectiveness of aid is further compromised by the form it takes and the imposed conditions that recipient countries are subject to.

Members of the Organization for Economic Co-operation and Development (OECD) provide Bilateral Oversees Development Assistance (ODA). Total ODA by OECD countries amounted to a record $106 billion in 2005. But only 22.4% of ODA went to the least developed countries. Of this less than 20% was spent on basic social services such as health care, water supplies, education and sanitation.

The 31% increase from last years ODA figure was primarily a result of debt relief, which totalled about $23 billion in 2005. The majority of this debt relief was provided for Iraq, thus reflecting clear strategic benefits to the US. Debt relief is conditional to Structural Adjustment Programs (SAPs). These benefit creditor nations by opening their access to financial and commodity markets and allowing their corporations to purchase foreign resources and services from the public sector. The overall benefits of debt cancellation are absorbed by creditor nations.

In addition to conditions accompanying debt, around 40% - 45% of total bilateral aid remains tied. Tying aid ensures that developing nations can only use it to purchase goods from the donor country. This benefits donor countries and their industries whilst raising the cost of many goods and services by up to 40% for developing countries. These countries would otherwise have provided their own goods and services, thus benefiting their local industry, or they would have purchased them more cheaply from other countries. The overall effect is to reduce the actual value of total bilateral aid by a further $6 billion (2002).

Official figures for tied aid should not be taken at face value, as even untied aid is often used to fund privatisation projects, as is the case with the UK’s untied aid funding water privatisation. The corporate ownership of local, natural and essential resources such as water is extremely profitable for foreign corporations and their host countries, whilst having a detrimental impact on poverty reduction measures, human rights and democracy.

The US and EU incorporate other forms of international aid such as debt relief and food aid into their figures, thus distorting them. The US is well known for donating aid as part of their overall foreign policy strategies, to allied countries.

The dumping of food aid in developing countries is now well documented as having a detrimental effect on the recipient nation. Imported food aid directly competes with local food markets which are often destroyed along with the livelihoods of local producers. It also creates a dependency upon these food imports and foreign producers, disincentivising local producers over time.

Meanwhile, food aid donor countries benefit by capitalising on tons of surplus agricultural production which would otherwise have rotted in storage facilities. Giant commercial organizations, mostly US corporations, handle the processing and shipping of food aid at inflated prices. 50% of the food aid budget is spent on processing and shipment. These goods arrive between 3 and 6 months later, further undermining the benefits of food aid especially in emergencies such as environmental disasters.

The flow of financial resources from donors to developing countries is eclipsed by the debt repayments from developing countries which amount to some $100 million per day, more than twice as much as they receive in aid. The amount needed to write off the entire multilateral debt burden for all 59 low income countries is about $80 billion; $26 billion less than the total ODA in 2005. The cancellation of this debt would ensure that governments of the 59 poorest countries could be able to channel a further $100 million into essential social services like the provision of water, sanitation and healthcare, every single day. Like to the aid regime, maintaining the debt regime provides clear financial opportunities and rewards for creditor nations and institutions.

According to Sachs, of the $76 billion ODA for 2002, only $12 billion went to low income country governments in a form that can be used to support the provision of basic human needs and services. The rest was taken up by debt relief, debt repayments, middle income countries and payments to expensive foreign consultants for emergency assistance and technical cooperation.

Developing nations are under-represented within the World Bank and IMF, the main bodies that administer multilateral aid. These institutions are also undemocratic and closely aligned to the interests of the US, economically powerful nations and corporations. The administration of aid by these agencies increasingly comes with counterproductive conditions such as Poverty Reduction Strategy Papers (PRSPs). Imposed conditions must be abolished in favour of a rights based approach to aid administration. The Reality of Aid Report (2002) argues it is critical that the assessment and administration of aid should be dealt with under the neutral and experienced auspices of United Nations Agencies such as the UNDP.

This brief analysis demonstrates the diminishing financial benefits of aid for those in the least developed countries and demystifies the altruistic claim that donors attach to their Overseas Development Assistance (ODA). Foreign aid is provided in order to further foreign policy objectives by securing export markets. It also provides corporations with profitable commercial opportunities. The maintenance of the aid regime reinforces the economic dominance of more affluent nations. It does little for the 1.1 billion people who are living in extreme poverty.


Taxes for Increasing Development Funding

In 1980 the Brandt Commission issued an important, widely-read report that reviewed a number of global tax proposals. The Commission favoured a transfer of resources to developing countries through taxes on “international trade, arms production or exports; international travel; the global commons, especially sea bed minerals”. Its report concluded that “a system of universal and automatic contributions would help to establish the principle of global responsibility, and would be a step toward co-management of the world economy.”

Although many global tax proposals have received favourable international backing, corporate interests and the US in particular have resisted their implementation. For example, in 1997 Congress signed a bill making payment of US dues to the United Nations conditional upon the UN abandoning efforts that “develop, advocate, promote or publicize proposals” that impose taxes or fees on US citizens. Since then third world countries and NGOs have continued to campaign for global taxation with little progress.

In an effort to front load aid to help meet the Millennium Development Goals, the UK’s Department for International Development (DFID) launched a proposal for an International Finance Facility (IFF) in 2003. By issuing bonds, based on legally-binding long-term donor commitments, the IFF would raise $50 billion a year to fund development. However, due to the usual concerns and opposition, the proposal has yet to be implemented.

A more recent development saw president Chirac of France implement an international tax on airline tickets. It is expected to raise 200 million Euros (US$240 million) a year for AIDS and other health programs largely directed at African states. Chile has followed suit and many other countries support the initiative.


Other Tax Proposals

Originally proposed by James Tobin, Ph.D., a Nobel laureate economist, the Tobin tax is essentially a levy on international currency trades. Foreign exchange speculation amounted to $1.9 trillion per day in 2004. This is a huge and particularly volatile market, often creating financial crises and increasing poverty in affected countries. The Tobin Tax was initially designed to reduce the exchange rate volatility by discouraging destabilizing short term capital flows. Meanwhile the tax would generate up to $300 billion per year, twice as much as is required to achieve the Millennium Development Goals (MDGs) by 2015.

Despite the usual lack of political will for its global implementation, NGOs continue to discuss models for currency transaction taxes and have proposed unilateral options for both the USA and the UK. The support for currency taxation is steadily growing mainly through the combined voices of developing nations and NGOs.

In the light of current environmental concerns, Energy Taxes have recently been in the news, with New Zealand (in 2005) being the first country to adopt such a policy. Many other countries, particularly in the EU are also considering the levy. But these taxes are primarily designed to help countries achieve emission targets as opposed to supplementing finance for development.

Given current levels of spending on the military and armaments, it is clear that the outlook for the global South would be entirely different if resources were re-directed to development from military budgets. Arms are primarily traded from the north to developing countries, creating instability and perpetuating poverty. According to a CRS report for congress, the total value of global arms transfer agreements in 2003 was over $256 billion. A 1% tax on this trade would have raised $25.6 billion, nearly twice as much as that required in 2006 to achieve the MDGs. Obviously there is heavy opposition to an arms tax from within the industry and from governments in the North, who support their own countries' arms industries.

Simple taxes on currency transactions and arms trading would together yield four times the funding needed to reach the Millennium Development Goals and lift millions out of perpetual poverty. Although such taxes present a strong case for funding development, the proposals are unlikely to be met without increased public pressure or a global economic crisis.

Part 2:  Sharing Resources for Development

Abolishing Aid and Sharing the World’s Resources

We have examined the potential global costs for development required to meet the Millennium Development Goals (MDGs) by 2015 and argued that the donation of the required level of aid is unlikely to occur within the specified time frame. Furthermore, the goals do not go far enough, quickly enough in addressing poverty. The main reason for the ineptitude of the MDGs is not the goals themselves which are high minded and represent an important international commitment, but the condition of the global political and economic system within which these goals are to be pursued. To recap, the accepted growth-based model of economic development is unsustainable, unable to deal with inequality and propagated under false assumptions and commercial interests. Thus even substantially greater ODA by donors of 1% of their GNP would not deal with the fundamental flaws inherent within the current global economic system.

It is crucial that the focus of development shifts from ineffectual aid donation to a fundamental restructuring of global economic priorities. There should also be an immediate emergency program of relief to address extreme poverty. Below we address the issue of development from the perspective of global cooperation and redistribution of essential resources. A global economy based on sharing resources will be a more effective tool for development.

An analysis of the predicament of developing countries presents two basic levels of need:

  1. Those experiencing extreme poverty and malnutrition – around 1.1 billion people who struggle to survive, 850 million of whom are perpetually starving 
  2. Those who live in poverty – the further 1.6 billion people who live on less than $2 dollars a day.

International development efforts must initially concentrate on these two groups which constitute about half of the global population. Of these two groups, the first presents a particularly urgent problem, as some 50,000 of those in this category die each day as a consequence of their predicament. For these people, a comprehensive United Nations Emergency Redistribution Program (UNERP) must be implemented immediately, with the specific goal of addressing extreme poverty.

Achieving a state of perpetual self sufficiency for the first group as well as addressing the needs of the second group falls within the wider remit of sharing the world’s resources to meet basic human needs globally. This process is necessarily outside the reach of a UNERP and requires broader structural adjustments at the international level.

Both these processes must be implemented simultaneously; the UNERP can only be successful if executed within a broader plan of global resource sharing. A proposal for how to implement a system of sharing and an emergency redistribution program is presented below. The original, longer version of the proposal can be read here


The United Nations

Given its international membership and humanitarian charter, the UN system is clearly the only international body with the experience and resources to address global economic reform. In its current state, however, the UN is far too handicapped to initiate such change. Over the past 20 years, the US in particular has undermined the UN’s effectiveness by withholding pre-agreed and essential funding. The main reason for this is self preservation, as US economic hegemony is not compatible with the UN’s humanitarian principles. Instead, funding has been diverted to the largely undemocratic international financial institutions that favor America’s economic ideologies – The WTO, World Bank and IMF.

The situation has been made worse by the Security Council’s excessive influence over UN decisions, and the permanent members’ use of undemocratic and outdated veto powers. The accumulative result is an under-funded and under-staffed UN system that is consistently bypassed on global economic and security matters. The UN system must be restructured and revitalized, firstly to ensure that the democratic power to make and act upon decisions resides within the General Assembly. It should be also provided with all the resources necessary to fulfil its original mandate of regulating global economic affairs, strengthening international cooperation and promoting peace. The UN must be allowed to live up to its charter, in particular Article 55 which states:

"With a view to the creation of conditions of stability and well-being which are necessary for peaceful and friendly relations among nations based on respect for the principle of equal rights and self-determination of peoples, the United Nations shall promote:

a. higher standards of living, full employment, and conditions of economic and social progress and development;
b. solutions of international economic, social, health, and related problems; and international cultural and educational cooperation;
c. universal respect for, and observance of, human rights and fundamental freedoms for all without distinction as to race, sex, language, or religion."

International dialogue for reform must be centred on these principles, alongside the principle of sharing as the appropriate value with which to secure these universal rights. Once sharing has been accepted as the guiding principle for a reformed economic system, it would be necessary to create an additional, fully representative and accountable body within the UN responsible for organizing a global framework for sharing and thereafter to coordinate the global redistribution of resources.

This new agency could be established as a subsidiary to the General Assembly under article 22 of the UN Charter. Alternatively, an agency can be formed with intergovernmental agreement and brought into association with the UN via the Economic and Social Council (ECOSOC) according to articles 57 and 63 of the UN Charter.

For the time being we can call such a body the ‘UN Council for Resource Sharing (UNCRS)’.


A United Nations Council for Resource Sharing (UNCRS)

All participant countries should be fairly represented in the UNCRS, and all members would subscribe to a declaration of mutual benefit and equality. At all stages, the process should be transparent and directed by member countries representing their citizens’ needs.  The activities of the UNCRS would be strictly in the interests of the global community, would be free of any national political or commercial gain and would eventually replace existing international aid, development and poverty reduction strategies. It would be important for the new Council to work very closely with existing UN agencies.

Involvement with the program should not be enforced upon any country; nations should remain free to develop economically in their own way. Nor should there be any conditions attached to sharing resources, although it seems wise that participating countries agree not to consume more than their ‘fair share’ and to entrust their excess production and/or resources to the UNCRS  in order to cooperate in the international effort to secure everyone’s basic needs.

Since a significant portion of the world’s goods and services that are currently commoditized can be considered ‘essential resources’, and therefore shared instead of traded for profit alone, the UNCRS would become a crucial part of the framework for the governance of a new global economy.

Sharing essential resources would naturally create a more manageable international trade and finance framework, under which existing international financial institutions (such as the IMF, World Bank and WTO) would be rendered broadly redundant and could be progressively dismantled. Established agencies, such as the UN Economic and Social Council (ECOSOC) and UN Conference on Trade and Development (UNCTAD), are well equipped to take over as the arbiters and overseers of the remaining international trade, finance and development mechanisms.

An international strategy to rapidly alleviate extreme poverty and to ensure that essential resources are shared in the longer term will require the UNCRs to initiate two programs of reform:

  • In the Short Term:  A United Nations Emergency Redistribution Program (UNERP) – to end needless deaths from extreme poverty

  • In the Longer Term: Global System for Sharing Essential Resources – The Global Sharing Network (GSN) – to ensure an ongoing sharing of resources that can create a more sustainable economy. 

We will consider each function in turn below:


1. The United Nations Emergency Redistribution Program (UNERP)

The most immediate program that the UNCRS should undertake is an Emergency Redistribution Program (UNERP) to end extreme poverty and unnecessary deaths. A similar program to transfer essential resources from 'north to south' was first proposed in the Brandt Report (1980) but, despite widespread approval, the necessary political will to implement the proposals was sadly lacking. Humanity cannot afford this level of political complacency again; not to act is to condemn millions of people to needless hardship and death.

The process of an UNERP would be structurally and ideologically different from existing aid mechanisms, and the goal would be to prevent the deaths of the 50,000 people who die each day from poverty, within a three year period. This would be achieved through the universal provision of essential resources, regardless of cost implications. The emphasis would be on the redistribution of existing material resources, outside of the market system, and not simply the pooling and redirection of patronage aid.

The entire process would be coordinated by the United Nations Council for Resource Sharing (UNCRS), which would have an internationally agreed mandate to ensure that they can manage the collection and distribution of these resources from donors. Necessarily, countries with the greatest surpluses of each individual resource would be first in line to share their excess, a responsibility that would naturally fall on the shoulders of more affluent and productive countries.

The UNCRS would utilize existing sources of data from UN agencies, the World Bank and NGOs for these figures. Where there is insufficient or disputed data, the UNCRS would turn to member country governments and where necessary conduct local surveys within countries. This information would form the basis of a global network for sharing resources (as detailed below) as part of a more comprehensive system of sharing.

The program would be initiated earlier than a more comprehensive system of sharing could be mobilized, and the following steps would need to be followed:

A. Calculating the most urgent national and global requirements.

Data from member countries and existing statistical resources would allow the UNCRS to coordinate a global assessment of the quantity and types of emergency provisions required and an analysis of where they are required. In most cases these will be food, water and medicine:

Food: The United Nations World Food Program (WFP) food basket or ration usually consists of a variety of basic food items (cereals, oil and pulses, sugar and salt), and possibly additional ‘complementary’ food items (meat or fish, vegetables and fruit, fortified cereal blends, sugar, condiments) which enhance nutritional adequacy and palatability.

Equipment: Equipment and energy supplies for cooking food are also essential.

Medicine: Medication to prevent and treat diseases such as malaria and HIV/Aids, and other basic medical supplies. Basic health centers and trained medical personnel to administer medication and provide basic health services.

These resources would be country specific and should be determined by the World Health Organization (WHO) and similar agencies.

Water: Water pumping, treatment, storage and distribution equipment. The international standard for emergency water provision is 15 litres a day per person, approximately four gallons.

All of the above essentials require infrastructure in the form of roads and transportation to ensure that supplies can reach those who need them. Given the lack of this infrastructure in some of the least developed countries, the provision of transportation vehicles, fuel, personnel and the building of necessary roads and infrastructure also would be necessary.

B. Sourcing provisions to meet global needs.

Similar data would enable the UNCRS to determine the quantities of each of these provisions that donors must supply, and determine which countries are best placed to supply them.

Where possible the provisions would be redistributed as raw materials, goods and services as opposed to finance. In these cases, redistribution should be organized so that those who produce goods in excess of their domestic needs can easily share their excesses. In some countries, a simple redistribution nationally would be the priority. Other, more affluent countries would be in a position to concentrate on redistribution internationally.

C. Redistributing these resources.

The United Nations Council for Resource Sharing (UNCRS) would coordinate international efforts to redistribute these essential resources to where they are most urgently required.

The UNCRS would work closely with their members as they mobilized resources for distribution, and donor countries would be informed where the quantity of each resource should be sent. It is feasible that the army, navy, air force and other military bodies would be involved in transporting goods. This act of military service could replace the existing and largely wasteful military operations that are commonly pursued as part of selfish foreign policy objectives.

Another possible source of international assistance is the global public who, through their goodwill, may wish to give their time and resources to assist in the collection, transportation and distribution of the emergency supplies- in both donor and recipient countries. Qualified individuals may also be able to provide more specialist assistance as doctors or nurses, or in the construction and maintenance of crucial infrastructure, such as roads and heath centers.

History provides many examples of how a motivated and informed global public often leads the way in humanitarian assistance, often being the catalyst to more effective action by governments. Examples of such a heartfelt response to humanitarian crises are plentiful, including many natural and manmade disasters such as the Ethiopian famine in the 1980’s, and more recently the Asian Tsunami of 2004.  Already, large numbers of people volunteer to work with agencies of all types, in both developed and impoverished countries, to provide humanitarian assistance in various fields. It would seem prudent for donor governments to specifically request public support for this global initiative, coordinate a public campaign and ensure that individuals can, where appropriate, obtain the necessary assistance to apply themselves to this program at a local, national or international level.


Emergency Redistribution as an Alternative to Aid

It is clear that the UN Emergency Redistribution Program (UNERP) is immense in scope and purpose, requiring the combined effort of the international community, coordinated by the UNCRS. It differs from existing development structures as most of the ‘aid’ or redistributed resources will not be channelled through governmental bureaucracies, but mobilized directly on the ground where it is required in the form of food, water and medicine. The resulting self-sufficiency and direct access to resources will end the dependency that developing countries have on systems of aid, which will in turn bring an end to the existing aid mechanisms which are grossly insufficient and often corrupted by political, economic or commercial interests, or nation-specific foreign policy objectives.

The effective implementation of a UNERP can result in the elimination of extreme poverty, potentially saving the lives of some 50,000 people each day. It would embody the most urgent and important aspect of international aid, emergency and development programs. The UNERP could be expected to span a period of around 3 years, by which time it is hoped that extreme poverty would be largely eradicated.

It must again be emphasized that the UNERP would only constitute the first part of a wider economic reform to ensure that essential resources are shared internationally, as discussed in more detail below.


2. Restructuring the World Economy and Sharing  Resources

Reform of the world economy and the establishing of a wider system of sharing should begin as soon as the UN Emergency Relief Program (UNERP) has gained momentum. Whereas the UNERP is a tool for the immediate relief of those in extreme poverty, a parallel restructuring of the global economy would be necessary to ensure that the wider basic needs of the global public can be met in perpetuity. This includes the right to healthcare, education, housing and clothing.

Since the world economy is largely capitalistic at present and based on production and consumption for the sake of wealth accumulation, the aim of reform would be to mitigate the prevalence of market forces and commercialization. In order to correct the unequal distribution of resources around the world, to end poverty and to highlight the commonality of nations, those resources which are common to all people and necessary for life must be made universally available. Re-establishing the stake that humanity has in the world's natural resources, produced goods and services will necessarily involve government intervention to minimize corporate and nationalistic control over them.

The management, production and distribution of essential resources must be organized to ensure that only after the basic human needs of all people are satisfied can they be made commercially available to other economic entities for the purpose of profitable production or consumption. This must occur within a reformed commercial framework which benefits local communities and ensures that resources are made available for all nations to become self sufficient and productive to the best of their capabilities.

Broader political and economic reform on a global scale will also be necessary if sustainability and economic justice is to be permanently established. Many suitable measures for global reform have gained wide support amongst progressives, activists and alternative economists world-wide. Measures which would compliment a system of sharing by providing ancillary mechanisms and support for more comprehensive reform include:

Strengthening, democratizing and refinancing the UN system.

  • Progressively decommissioning the IMF, World Bank and WTO.

  • Implementing the principles of economic localization and subsidiarity to significantly reduce corporate influence, regulate corporate activity and strengthen local economies, production and food security.

  • Implementing the contraction and convergence model of global carbon emissions reduction, encouraging energy efficiency and investing in renewable energy.

  • Shifting to sustainable, non-carbon intensive agricultural practices.

  • Cancelling all multilateral debt owed by developing countries.

Comprehensive reform can ensure that the selfish interests of economic entities, whether they are countries or corporations, will be superseded by the combined interests of the global community. A true internationalism which can foster peaceful relations between nations and the cooperative advancement of humanity can then be established. Clearly many of the above measures are interdependent. For example, by encouraging the local production and consumption of resources, the inefficient and carbon heavy practices of international freight transportation of many resources will be significantly reduced, making it easier to achieve stricter emissions targets.

In order to institute a broader system of sharing it will be necessary to determine more comprehensively what constitutes ‘essential resources’, and therefore come to a global consensus regarding levels of need and consumption. It will also be necessary to create a framework to safeguard these resources and to establish a global network to facilitate their international distribution. Each of these issues is considered in more detail below.

Determining Essential Resources and Needs

Over and above the provision of resources as part of an emergency relief program, the UNCRS would need to determine which resources are deemed ‘essential’ and are to be shared internationally. The consultation process should be carried out away from any political or commercial influences and in conjunction with UN member countries, UN agencies and other humanitarian bodies.

A system of sharing would also be based on a set of assumptions regarding the level of need that each person has for each particular resource. Such measurements will obviously vary from country to country and are also likely to differ within a country. Implicit in any such system, however, is the need for affluent countries which currently over-consume resources to consume less and learn to live sustainably within global ecological limits. If the citizens of affluent society lived simpler lives and did not pursue material gain and maximum instant gratification alone, the environment, local community and social fabric would immeasurably benefit. Reducing over-consumption and preventing unnecessary waste would ensure that sufficient resources are available globally to meet all citizens’ needs.

With a combination of educational measures and the prioritizing of essential needs amongst developing nations, excessive over-consumption would have to be counteracted in affluent countries. Rampant and unnecessary commercialization can be addressed through measures to regulate corporate activity; energy consumption can be reduced by cutting back on inefficient corporate trade structures and lowering food miles; and economic localization and sharing resources according to need can help further develop distributional efficiency. 

A gradual contraction and convergence method, similar to that applied to emission reductions by the Global Commons Institute, would have to be employed in relation to general consumption around the world. Over time, as a degree of equality establishes itself across the globe, differences in consumption would decrease in size. Until then, such measurements would be specific to countries, regions, or even towns and villages. The fluctuating quantities will be monitored locally, regionally and internationally to provide feedback for a global network that could ensure the correct resources and quantities are distributed.

An accepted definition of what the universal basic requirements are for living a normal, healthy life should be has already been agreed in article 25 of the UN declaration of Human Rights, which states that:

“Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services…”

We can extrapolate from this that, broadly speaking, the following types of resources are essential for securing basic human needs:

  • Land – for housing and agriculture

  • Energy –  required at all stages of development and all aspects of life

  • Water – essential for life, agriculture, sanitation and industry

  • Materials - derived from minerals for constructing roads and buildings

  • Technology, equipment and machinery for infrastructure, building, manufacturing, agriculture and processing

  • Infrastructure and transportation for energy, food, water, machinery, materials and people

  • Knowledge and training for an effective workforce

In order to consider how the ownership and management of these various resources could be organized, it is useful to group them according to type. There are three general categories: 

  • Naturally occurring resources – e.g. land, water, oil, gas and mineral ores

  • Produced goods – e.g. agricultural produce, medicines, building materials and machinery

  • Services – e.g. utilities, healthcare and education

The management of each of these types of resources would have to be structured differently at the international level, which will require an invigoration of some existing international bodies and the creation of certain new mechanisms, as outlined below.

Holding Natural Resources in Trust - A Global Commons Trust

To reverse the insidious and selfish enclosure of the global commons, the right for all to have access to and benefit from common resources must be returned to world citizens. Only through responsible trusteeship divorced from the profit motive can we be sure that the world’s natural complement of resources can be managed sustainably to secure the urgent needs of current and future generations. Common resources could include land, water, the atmosphere, oil, gas, coal, iron, bauxite, copper and other essential minerals and metals.

A trust is a suitable legal mechanism to ensure that essential resources are managed in the interests of the global community. Internationally identified common resources can be written into a ‘Global Commons Trust (GCT)’. The beneficiaries of the trust would be all world citizens, whilst the trustees would be a fully representative and international body – the UN Council for Research Sharing (UNCRS). The trust would be created on the premise that the specified common assets must be utilized in a manner that prioritizes securing the basic needs of humanity.

Generally, the ‘entrusted’ resources would require extraction and/or the application of productive processes or distribution to create useable goods or services. The options this presents the international community are outlined below.

Producing Essential Goods

Where it makes sound ecological and economical sense, the production of goods from raw materials should be sited near to where the resources are naturally located. Governments, working in cooperation with the UNCRS, would then be responsible for organizing production to ensure that global needs can be secured. Depending on the country of origin, levels of local need, aggregate global needs and other factors, a proportion of produced goods would be allocated for global redistribution, whilst a portion would be made available for local consumption.

Within the context of the wider reforms mentioned above, governments would have a range of options open to them for how to organize the production of goods such as basic agricultural produce, essential medicine, and much-needed building materials. They could establish national production facilities for goods which suit their national compliment of resources through a process of full or part nationalization of existing industries. However it may be more efficient, especially in the early stages, to make use of the existing productive facilities owned by multinationals, for example existing producers could be mandated to donate a suitable proportion of their goods to help secure global needs. Another option is that larger corporations are broken down into their smaller components for local communities to organize cooperative production facilities, as has been the case in some Latin American countries such as Argentina.

The combination of options adopted would vary from nation to nation, depending upon their particular set of circumstances, and the expertise of the UNCRS and other UN bodies would be made readily available to counties which require assistance in restructuring their local economies along these lines.

Providing Essential Services

To ensure that there is universal provision of essential services such as healthcare, education and access to utilities, global institutions which can coordinate their provision must be strengthened and new organizations created to oversee the distribution process around the world.

Currently the World Health organization (WHO) leads the field in facilitating international healthcare and has detailed research on where and which types of healthcare services are required. Similarly, the United Nations Educational and Social Council (UNESCO) is at the forefront of the ‘Education for All’ movement and has information regarding how and where programs should be implemented and which resources are necessary to secure universal education.

Apart from various awareness-raising and monitoring NGOs, however, there is no global agency which is directly involved in overseeing the provision of utilities such as water or energy. Increasingly, these services are not even managed by governments but are in the hands of private corporations.

Once the right to energy and water is internationalized through a Global Commons Trust, a new World Utility Organization can begin to coordinate the provision of essential utilities and engage in research activities to ensure that relevant and up-to-date information is available where required. Such an organization could coordinate local groups, non-profit companies and cooperative organizations to manage the provision of utility services. It may also be possible in the short term for existing corporations, under international mandates, to lend their expertise and resources to these projects.

The UNCRS would be directly involved in coordinating this process by ensuring that resources such as water, energy and infrastructure are redirected to where they are most urgently required.

A Global Sharing Network (GSN)

In order to practically establish a system of sharing within the global economy, the UN Council for Resource Sharing (UNCRS) would set up and coordinate a Global Sharing Network (GSN). This would be a computerized system that acts upon information from governments around the world. The GSN would measure the changing levels of excess production in each country, then calculate how much of any resource a country is able to redistribute to another. The system would automatically adjust for the changing levels of ‘need’ and ‘productive output’ individual countries may experience. Such fluctuations would also occur as consumption in affluent countries contracts and world consumption converges to sustainable levels as developing countries lift themselves out of poverty. The GSN would ensure that excess resources are shared efficiently and with minimal impact on the environment, by ensuring that goods travel the shortest possible distance at all times.

Cooperation between nations is essential for this system to work effectively. National governments would work closely with the UNCRS in order to provide up-to-date information about (a) which essential resources are available to share through the GSN; (b) which resources the public are in need of; and (c) the location of these relative excesses and insufficiencies. The national government would be responsible for ensuring that resources are distributed appropriately within the country, a task that the GSN would facilitate.

The UNCRS would provide logistical support in the creation of networks within countries to ensure that correct information is fed back to the GSN. Such networks are likely to comprise of civil society groups which monitor resource levels locally and regionally, and a governmental body which coordinates and collates this information to feedback to the GSN. Members of the community would be encouraged to form local and regional assemblies to ensure that the basic needs of the public are accurately represented. They would also assist in the distribution of resources received from other regions or countries.

The process of sharing basic resources in this way is essentially a democratic and direct route to economic development. The method would ensure a ‘bottom up’ development controlled by those most affected, and not an imposed ‘top-down’ process. Local and regional assembly structures of this kind would also enable genuine political participation to become a reality.

Given the scale of the task, the involvement and expertise of existing development NGOs and UN agencies such as the FAO, UNDP and ECOSOC would prove essential. The UN agencies in particular have established links both at the local and governmental level in developing countries and possess a wealth of practical experience, research and statistics. These will prove invaluable when implementing poverty reduction and development strategies, locally and nationally. 


Conclusion

In a global economy where essential resources are shared, the primary objective would not be commerce, trade liberalization or economic growth, but the production and global distribution of all resources that are essential to life. Adopting a system of sharing will mean that the majority of commodities and goods that are currently traded would instead be cooperatively owned and distributed by the global public through the UN Council for Resource Sharing (UNCRS). As a result, international trade in commodities and their derivatives will be significantly reduced and confined to non-essential goods, and commercial interests would have no direct influence on economic sharing. Corporations would operate within this new global framework to serve the remaining economic, industrial and technological needs of society.

Sharing will ensure that essential domestic needs are largely met at the local level, thereby reducing dependency on foreign imports of essential goods. As a consequence, there would be less need for developing countries to agree to prohibitive trade agreements, whether multilateral or bilateral. This would free the population to develop their own industry and economy, making it eventually possible to decommission the WTO. Divorcing essential resources from financial markets will dramatically reduce the amount of stock and financial derivatives related to the stocks that are speculated upon and traded. This will help to reduce the global financial instability that many economists and analysts believe will, sooner or later, result in an international economic crisis and world stock market collapse.

Sharing resources will also mean that developing nations will require less foreign exchange reserves as they will be purchasing fewer goods from abroad. This will reduce the need for developing countries to turn to the IMF for loans and accrue crippling debts. It would therefore be possible to eventually decommission the IMF. Sharing in the way described is essentially a democratic and participatory process. Once economic and social justice has been achieved, these democratic structures can be utilized to further a nation’s integration into a democratic global economy. The mutual benefit of sharing will be clear as the existing system of patronage aid is replaced and once the developing world is living healthily and in a self-sustaining manner.


Rajesh Makwana is the Director of Share The World's Resources (www.stwr.org)