SOCIAL SUMMIT: DEBT, ADJUSTMENT AND BWIS EMERGE AS KEY ISSUES

6:14 AM Nov 10, 1994

SOCIAL SUMMIT: DEBT, ADJUSTMENT AND BWIS EMERGE AS KEY ISSUES
New York Nov 9 (TWN/Martin Khor) -- Five months from now, Heads of States and Governments will meet at Copenhagen for the UN Social Summit, but whether their journey will be worthwhile for their public or merely another wasted exercise that would increase alienation within societies is the major question facing those engaged in the preparatory process.

During the first two Prepcom meetings Third World delegations and many NGOs grouped around the "Development Caucus" were strongly arguing that since this was a global Summit, it should focus on longterm international structural factors that hamper the poorer countries' capacity for social development. At the end of the October intersessional "informal consultations", it was becoming clear that the Summit process will be shaped by some of these questions: the need to cancel or reduce the Third World's external debt, changing structural adjustment policies, and making the Bretton Woods institutions more accountable to the community of nations represented by the United Nations.

At the October informal consultations, Algeria, speaking for the Group of 77 and China, stressed the need for the Programme of Action to focus on a few principles: additional financial resources (and not a mere reallocation); structural adjustment programmes avoiding negative impacts on the social sector; debt relief and debt cancellation; and better coordination between the UN and Bretton Woods institutions.

These issues are also foremost on the agenda of many NGOs active in the Social Summit process. They believe that unless it brings about structural reforms in global economic relations and institutions, the Summit will be only an academic exercise -- once again reiterating the need to solve poverty and unemployment problems but not willing to tackle some of the most important of their root causes.

An NGO statement sponsored by the Development Caucus and the Women's Caucus -- two powerful coalitions -- and signed by 8l groups from over 20 countries listed l2 points essential to the Summit's success.

It stressed that the NGOs' aspiration is for the Summit to address the structural causes of poverty, unemployment and social disintegration, rather than the symptoms. It said that structural adjustment programmes had focused on export growth but disregarded wealth distribution and environmental sustainability and have been an obstacle for governments to develop social strategies. "The Summit must urge that adjustment policies be fundamentally revised."

The NGOs also called for debt reduction initiatives going beyond the existing packages. "Most urgently, the writing off of multilateral debt of Africa and of all low income countries is needed, since multilateral debt has been identified as a major obstacle for releasing resources for social development," they said.

The statement called for a reform of multilateral structures, and for making the international financial institutions and the World Trade Organisation accountable to the UN system. Programmes implemented by these institutions should be monitored through social impact studies, which would be submitted to relevant UN bodies," they said.

At the second prepcom meeting in August, many developing country delegates spoke of how structural adjustment programmes (SAPs) had adversely affected health care, education and housing programmes, and called for changes in the design of these programmes -- and not just "safety net" or welfare measures to help out the victims.

Almost all Northern countries agree that the Summit must say something about the social impact of structural adjustment, but some are in favour only of measures to offset the ill effects, and not for any reconsideration of basic policies. This debate continued at the October consultations, with the Sudan making a strong statement: "We are against programmes that relegate social development to mitigating the negative impact of structural adjustment. We need to redesign structural adjustment programmes, not just mitigate their effects."

The latest draft declaration (dated 26 October) contains a Commitment (No. 7) to ensure that SAPs promote social development. This lengthy section includes clauses that "we shall ensure that social development objectives are designed into all adjustment policies and programmes" and that "we shall undertake measures to protect basic social programmes and expenditures...from across-the-board budget reductions."

At the international level, there are commitments (in the draft) to get the Bretton Woods institutions to integrate social development goals into their policies and programmes; to promote a coherent approach through cooperation between the multilateral financial institutions and the UN; and to request the UN and international financial institutions to study the impact of SAPs on economic and social development and assist adjusting countries create conditions for growth, job creation, poverty eradication and social development.

However there is considerable disagreement over this text. Some countries of the North want to dilute the language (to only include tackling negative effects but avoid a commitment to change adjustment policies); others have proposed omitting Commitment 7 (on structural adjustment) altogether from the politically high-profile Declaration and moving the subject instead to the operational Programme of Action.

The battle over different approaches will be a highlight of the January l995 Prepcom meeting.

The October consultations saw debt relief and debt cancellation emerging as a major Summit issue. This is partly due to the great skepticism over any possible increase in aid, and indeed significant real aid cuts have replaced the Rio Summit pledges. Thus, the question of finding resources for social development will hinge more importantly on releasing and redirecting the huge funds now set aside by most South countries for debt servicing.

If the South countries pursue this issue, the Social Summit process has now the potential to become the most important multilateral forum for negotiating a systematic reduction or resolution of the South's external debt problem.

The latest draft Declaration (26 October) has some specific references to debt. Part of Commitment 6 is to "find a realistic, comprehensive and sustainable solution" to the debt problem, including cancellation of bilateral debt (of Africa and least developed countries) no later than l996, and in the framework of the UN New Agenda for the Development of Africa in the l990s. Commitment 8 on financial resources includes ensuring "urgent implementation of existing debt-relief agreements and negotiating further initiatives and innovative measures to eliminate all debts of severely indebted countries at an early date." The annexed Notes to the draft Declaration (which had been discussed at the October meeting in closed session in a smaller group of 20 countries) show a wide difference of opinion on this matter of debt relief. At one extreme, there was even a proposal that this commitment on debt be deleted altogether. On the other hand, the Group of 77 has proposed a four-point plan which was more comprehensive than what finally appeared in the draft:

* Cancellation of the public debt of African and least developed countries, depending on conditions in the country/region, with sub-Sahara Africa to be given priority;

* General reduction in the debt of other developing countries, in a definite time-frame;

* A commitment from the countries whose debts are cancelled or reduced, to the effect that the resources released shall be invested in social development programmes.

* Reduction of multilateral debt of the developing countries by means such as those recently envisaged in Madrid (at the World Bank-IMF meeting in October).

The Notes also show that the European Union position was quite similar to that which eventually appeared in Commitment 8. Its components include: implementation of existing debt-relief agreements; further initiatives to alleviate debts of severely indebted countries through more favourable terms of debt forgiveness, including reducing the debt stock for some low income countries; reduction of bilateral debt of the poorest and heavily indebted countries to enable them to exit from the rescheduling process and support economic reforms."

A major endeavour of the South so far is to include a commitment on reducing multilateral debt. If it is achieved, this would be a breakthrough, as so far debt relief measures have only applied to official bilateral debt and commercial debt. The World Bank and IMF have to date refused to agree to relief on debts owed to them, preferring to lend out more to get their debts repaid and serviced. Many development NGOs and developing country governments view the Social Summit as an occasion to initiate multilateral debt reduction.

Another key issue that has emerged is the view of many countries that the Social Summit be used to make the Bretton Woods institutions more accountable or at least be more in line with the United Nations in economic and social policy. There is a widespread feeling that World Bank and IMF priorities and policies are disproportionately skewed towards narrow "economistic" targets and mechanisms (such as export growth, liberalisation and privatisation), at the expense of social goals (such as poverty eradication and equity) and social development. Hence the determination that the Summit facilitate changes to structural adjustment programmes.

For many NGOs and governments, there is the belief that so long as the Bretton Woods organisations pursue their present policies, there will be very serious limitations to social development. Yet these institutions are not now accountable to the rest of the United Nations system. The successful implementation of the reforms sought in the Social Summit requires that the IMF, World Bank and regional banks, as well as organisations such as the World Trade Organisation, should follow the paradigm, the approach and the policies agreed to in the Summit.

A critical concern emerging out of the Summit process has thus been initiating the means by which there be coherence between UN and Bretton Woods policies, and by which the Bretton Woods institutions can be more accountable to the community of nations in the UN. This need for accountability of the Bank and Fund, and for strengthening the coordination role of the UN, has been stressed not only by NGOs (for instance those associated with the 50 Years Is Enough Campaign) and many Southern governments, but also by some Northern countries.

At the October consultations, the Canadian delegation said that "we need to rethink the role and mandate of the Bretton Woods institutions" and Australia emphasised the need to strengthen ECOSOC to coordinate the UN's social policies and activities and to think about the role of the international financial institutions vis-a-vis ECOSOC.

As Koos Richelle of Holland, who chaired the committee on the Programme of Action document put it in his report: "It was generally agreed that there should be close cooperation, coordination and coherence within the UN system and with the Bretton Woods institutions." And the latest draft Declaration makes a commitment to "promote and strengthen the coordination between the UN system and the Bretton Woods institutions in the area of social and economic programmes."

But exactly how this coordination should take place, and how to initiate a process whereby the Bretton Woods institutions would come under the influence of the UN system (rather than vice versa) has not been spelt out by any delegation or NGO.

Juan Somavia, Chile's Ambassador who is chairing the Summit preparatory committee, summed up the situation well at the closing session of the October meeting and said there were two major outstanding issues. The first was the question of financial resources, including debt relief, where the many different views were now on the table for future negotiations. The second was the issue of follow-up within the institutional system, involving the UN, Bretton Woods institutions and regional banks.

"To put it starkly," he said, "whilst on the resource issue there are differences of opinion, on the issue of follow-up there appears to be no opinion," Somavia said. "This worries me a lot as the process is weakened if there is a shortage of views on the institutional follow-up."

If the Social Summit process can concentrate the energy and political will of governments to tackle structural issues such as debt relief, reform of structural adjustment and the need to make policies of Bretton Woods institutions more coherent with those of the UN, it may yet make a significant breakthrough in the fight against social ills such as poverty, unemployment and social disintegration.

If, however, in the remaining months to the last Prepcom meeting in January and the Copenhagen Summit in March, the big powers decide that the Summit should only deal with symptoms and not structural factors, then the opportunities offered by the Summit will be wasted.