A Golden Opportunity 

  JEFFREY SACHS

CAMBRIDGE: The rich countries meeting in June at the G-7 Economic Summit in Cologne had some interesting things to declare about their relations with the poor countries. First, they acknowledged without ever quite admitting it that their earlier attempts to reduce developing-country debt had failed. Therefore they signaled the start of a new program, immediately dubbed the Cologne Initiative, to reduce further the debt burden of the so-called Highly Indebted Poor Countries (HIPCs). Second, they instructed the IMF and the World Bank to rethink their development strategies, in order to put more focus on social problems, particularly health and education.

One could of course be quite cynical about both announcements. After all, it has been clear to most objective observers for many years that the rich countries had no realistic strategy for reducing the unrecoverable debts of the poor countries, yet such critics were told to be patient, that everything was okay. Moreover, only the finance ministers of the G-7 could possibly have believed that the IMF and World Bank were doing a good job in the poorest countries. In truth, their record is often disastrous, or simply irrelevant. The IMF in particular has no strategy for long-term economic development, even though the United States has assigned the IMF the lead role in economic development in dozens of poor countries.

Another reason for cynicism is that the G-7 did not move mainly on their own initiative, but rather in response to a growing cry of international civil society for action on behalf of the world's poorest. Credit for the Cologne Initiative goes strongly to the worldwide movement known as Jubilee 2000, a grassroots movement based on the biblical concept of Jubilee, in which unrecoverable debts should be forgiven in order to allow the debtor to make a fresh start in life. The Jubilee 2000 movement has adherents in all parts of the world, including Pope John Paul II, rock stars such as Bono of the Irish group U2, and non-governmental organizations representing many religions and professions.

We should move beyond cynicism, however, in embracing the new Cologne Initiative, especially to push the G-7 countries to do all that needs to be done to make the Initiative successful. The details of the Initiative announced in Cologne were disappointing, but these details can still be changed under international public pressure. At least the initiative pointed in the right direction.

The motivation for urgent action on behalf of the poorest nations is clear. The 42 countries that are part of the HIPC initiative have a combined population of around 700 million. Around three-fourths of these people live in Africa. The combined HIPC population has a life expectancy of around 50 years, compared with 78 years in the rich countries. Around one-third of their children are malnourished, and will consequently suffer a lifetime of physical and cognitive disabilities. Many will never finish even primary school or be able to play an effective role in modern society. Diseases are rampant, including an AIDs epidemic that killed about 2 million people in Africa last year, and malaria, which took over 1 million lives.

A successful Cologne Initiative would build on the following concepts. First, the debts of the countries suffering from extreme poverty and illness would be forgiven entirely. Around 25 countries out of the 42 HIPC countries probably need complete debt cancellation. Second, the United Nations Development Program (UNDP) and the World Bank, rather than the International Monetary Fund, should take the lead in helping these countries. Both the UNDP and the World Bank would help to ensure that debt forgiveness opens the way to new and ambitious programs of social improvement, focusing on health and education.

The UNDP should turn its annual Human Development Reports into concrete guidelines for social action, to help ensure that each impoverished country has the adequate resources to provide effective programs for children's vaccines, AIDS prevention, meals for impoverished children, improved access to clean water, and mother-and-infant medical care. The UNDP should also have the task of coordinating the specialized agencies of the United Nations on behalf of the world's poorest, to ensure that key organizations such as United Nations Children's Fund (UNICEF) and the World Health Organization (WHO) have the access and financial resources to fulfill their missions.

The Cologne Summit announcements so far fall short of these objectives. The debt relief proposals are still too small. The role of the IMF remains too large. Public health goals are still too far down the list of priorities. But we should maintain hope and pressure on the international organizations and the rich countries. Already, international actions have pushed the G-7 in a new and hopeful direction. With a continued worldwide movement on behalf of global justice and economic development, a much more ambitious program for the world's poorest can still be reached.

© Project Syndicate, June 1999