Statement on the ASEM Development Conference: Towards Sustainable Development

Wednesday, 22 April 2009 03:02

The Reality of Aid-Asia presents this statement to the ASEM Conference to give the civil society perspective on the challenges Asian developing countries and peoples face in achieving genuine aid effectiveness and development effectiveness. The ASEM partner governments have a vital and central role in improving the conditions of the region’s tens of millions of poor and marginalized – indeed even more so in these times of global financial and economic tumult.

April 20-21, 2009
Manila, Philippines

The Reality of Aid-Asia presents this statement to the ASEM Conference to give the civil society perspective on the challenges Asian developing countries and peoples face in achieving genuine aid effectiveness and development effectiveness. The ASEM partner governments have a vital and central role in improving the conditions of the region’s tens of millions of poor and marginalized – indeed even more so in these times of global financial and economic tumult.

We acknowledge the Beijing Declaration’s affirmation of the importance of economic development, social progress and environmental protection as mutually reinforcing and interdependent elements of sustainable development. We likewise recognize the special attention given to the MDGs, climate change and social cohesion.

We are however concerned that the overall thrust of national and international economic policy practice as adopted and promoted by ASEM member governments is generally inconsistent with these declared objectives. Particularly alarming is that the drive to liberalize international trade and investment and to deregulate economic activities remains and could even intensify. The conditions unfortunately appear to be there and global trade, capital flows and economic growth have already declined sharply. This could provide the impetus for the industrialized powers to more aggressively seek to open up developing countries to improve export and investment prospects for their increasingly problematic agricultural, industrial, service and financial sectors.

As it is, various ASEM governments are negotiating bilateral and regional free trade agreements (FTAs) or otherwise pushing to resume and quickly conclude talks at the World Trade Organization (WTO). Yet the policies these push directly undermine the capacity of economies to create and cultivate the conditions for sustained employment, rising incomes and rapid growth. They also even render other macroeconomic policy instruments – including fiscal, monetary, financial and exchange rate policies – developmentally ineffective. At the same time it would be distressing if those pushing to open up developing countries themselves implement overt or concealed protectionist policies.

Moreover, we fear that policy incoherence will worsen in its various dimensions with the onset of the global crisis. Even before this it was difficult for policy actions to be mutually reinforcing and systematically geared towards development objectives – the crisis will likely result in widely varying policy responses across and between European and Asian governments, many of whom may understandably perceive a conflict between domestic recovery and overseas development objectives. The adverse impacts of these are similarly going to be varied.

It is undeniable that the current situation creates difficulties for making progress towards and achieving various development goals and this reality must be acknowledged for there to be any chance of it being addressed squarely.

European governments have agreed that the International Monetary Fund (IMF) is to have a renewed role in preventing and coping with financial crises. But this should not lead to a renewed role in imposing policy conditionalities on developing nations. European countries have also proposed packages of stimulus measures, such as for large-scale infrastructure projects, and bail-outs for domestic financial and industrial interests. These aggravate already difficult fiscal constraints and could impact on aid flows and preferences. It is similar with efforts to confront global climate change. There is a need to ensure funds and real additionality despite the crisis, and for such funds not to be used as a cover for donors to make policy conditionalities.

Indeed achieving aid effectiveness has become an even greater challenge. Developing countries bear heavy debt-burdens and have less political clout vis-à-vis donors and multinational agencies, with the result that “development strategies” are often drawn up to be acceptable to donors rather than developmental or genuinely owned by citizens. This is exacerbated by corruption with public officials amenable to anything as long as inward financial flows and opportunities for self-aggrandizement are ensured. The debt burden of developing countries will also only become more acute where more expensive debt servicing and tighter credit will exert even greater pressure on vital social spending and welfare services. These pressures effectively make developing country governments more accountable to donors, creditors and investors rather than their own citizens.

There could be an even greater tendency to policy conditionalities and tied aid, which substantially reduce the development effectiveness of aid, as donor governments seek to maximize benefits from aid at the expense of the recipient countries. More than ever, large and expensive infrastructure projects that only create temporary employment in a few areas should be avoided. It is worse when major energy and water infrastructure projects dislocate communities, deny them access to resources for their livelihoods, and increase their vulnerability to environmental disasters.

The ASEM background study accurately paints the picture of intensified vulnerability for the poor in Asia due to the current crisis: undiminished gaps towards achieving the MDGs are likely to expand with dramatic decreases in formal employment (especially for youth and women) as well as increases in the number of the working poor and those in vulnerable employment; income inequality and inward migration will increase as external markets shrink and economic growth turns sluggish. Unabated environmental degradation and the lack of social protection increase the vulnerability of those unable to fall back on other resources to ride out the crisis. Gains in the provision of universal education, access to health care and other social services will deteriorate. Migrants in Europe have also already been facing worsening work, living and welfare conditions and it would be a tragedy if their social exclusion were to worsen further.

There is much that needs to be done to even begin to address the problem of eradicating poverty in Asia. Yet there is already much to be learned.

The severe dislocation of so many of the world’s poor in past decades and the current crisis itself go far in underscoring the limits of “free market” policies of “globalization”. This points to how developing countries must have the flexibility to implement macroeconomic and development policies as they deem appropriate. The international economic environment in general and regional/bilateral relationships in particular have to be designed to ensure this. This is the only way that economies will be created that are capable of promoting sustainable development – development that is broad-based, inclusive, improves the well-being of the citizens and promotes social cohesion.

At the same time, all the ASEM member governments are challenged to ensure that there is progress towards making all economic, financial, trade and development cooperation policies genuinely coherent and in the service of the most vital development objectives. It is imperative for partner countries to exercise and expand democratic ownership so that the ultimate objects of their development efforts are able to express, define and shape development strategies and thus become actors in the achievement of their own development. Without sincere dialogue and substantive multi-stakeholder engagement, growth, social protection and development cannot be considered inclusive and effective nor sustainable.

* Reality of Aid is the only major north/south international non-governmental initiative monitoring poverty reduction and development cooperation. It brings together more than 40 civil society networks involving thousands of member development NGOs working in the field of international cooperation in the 22 donor countries, as well as in Asia, the Americas and Africa. The Reality of Aid builds on a ten-year track record of independent assessment of aid policies and practices, and aims to contribute to more effective international aid and development cooperation strategies to eliminate poverty, based on principles of North/South solidarity and equity. Reality of Aid-Asia is composed of over 40 civil-society organizations.