REPORT Kevin Watkins

Oxfam UK & Ireland The Oxfam Poverty Report

© Oxfam (UK and Ireland) 1995

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This book converted to digital file in 2010 Introduction

Acknowledgements v

Introduction 1

1 Poverty 12

2 A world at war 42

3 Structural adjustment 71

4 International trade 109

5 Ecological footprints 151

6 , debt, and development finance 171

7 An agenda for change 216

Notes 227

Index 243

Information on the international Oxfam group 250 Figures and tables

0.1 Changes in the percentage of the population living in poverty 4 1.1 Children aged 6-11 out-of-school 1980-2015 26 1.2 Comparative spending on primary and secondary 40 2.1 Global refugee statistics 1988-1993 44 2.2 Weapon sales to developing countries by permanent members of the UN Security Council 59 3.1 Real expenditure per pupil in primary school, Zimbabwe 80 3.2 and education sector spending, Zambia 1981-93 82 3.3 Maternal deaths and Ministry of Health recurrent expenditure per capita, Zimbabwe 84 4.1 Sub-Saharan Africa's share in world exports 1971-1991 116 4.2 Percentage growth rate of the economy of developing countries according to type of exports 117 4.3 GATT winners and losers 129 4.4 Price fluctuations for coffee and cocoa 131 5.1 Current annual carbon dioxide release per person 156 6.1 Global aid and private investment flows, and developing countries'share of the private investment 173 6.2 IMF transfers to SILICs 1980-94 175 6.3 Latin American and Caribbean debt 1980-94 177 6.4 SILICs debt stock and arrears 1980-94 180 6.5 Distribution of debt by creditor category 183 6.6 Official aid from donor countries, showing percentage for social priority areas 194 Acknowledgements

This report is a co-operative effort which has drawn heavily upon contributions from Oxfam's staff and partners. Chapter 5 was written by Caroline Lequesne. A number of case studies were prepared by Siddo Deva, who also contributed to Chapter 1. Chapter 2 draws on the work of Ed Cairns and Guy Vassall-Adams. Substantial parts of Chapter 6 were written by Tricia Feeney and Chris Roche. Dianna Melrose contributed to the writing of sections of the report, and was responsible for overall co-ordination of the project. We are especially grateful to Rosemary Thorp of St Antony's College, Oxford, and Queen Elizabeth House, Oxford, for acting as chairperson for a small group of Oxfam trustees who made an important contribution to the development of the report. The other members of this group were Chaloka Beyani of Wolfson College, Oxford, Bruce Coles QC, and Jeremy Swift of the Institute for Development Studies, Sussex, whose comments were particularly challenging and thoughtful. Several other external readers made time to comment on various drafts. Michael Holman of the Financial Times and Professor Sir Hans Singer of the Institute for Development Studies, offered constructive criticism and perceptive observation throughout, despite being presented with virtually impossible deadlines. Gavin Williams of St Peter's College, Oxford, provided particularly helpful comments on Chapter 3. Guy Mhone of the Southern African Regional Institute for Policy Studies, and Niki Jazdowska of the Training and Research Support Centre (TARSC) offered valuable insights and criticisms of various parts of the report. We hope they will feel that their combined efforts have brought about improvements in our analysis, although any errors remain the responsibility of Oxfam alone. There is insufficient space to acknowledge all of the Oxfam staff who have contributed directly or indirectly to the report. However, special thanks are due to Michael Bailey, Cowan Coventry, Justin Forsyth, Pushpanath Krishnamurthy, Ruth Mayne, Lucy Muyoyeta, Ben Rogaly, Mogha Smith, Simon Ticehurst, Helen Walsh, and Ian Woodmansey, for their input; and also to Paul Kendall, for designing the graphics.

Kevin Watkins, Oxfam Policy Department Oxford, May 1995

Introduction

The battle for peace has to be fought on two fronts. The first is the security front, where victory spells freedom from fear. The second is the economic and social front, where victory spells freedom from want. US SECRETARY OF STATE, CORDELL HULL, 1945

Our common humanity transcends the oceans and all national boundaries ... Let it never be asked of any of us — what did we do when we knew another was oppressed? NELSON MANDELA, PRESIDENT OF SOUTH AFRICA, 1992

Were all humanity a single nation-state, the present North-South divide would make it an unviable, semi-feudal entity, split by internal conflicts ...a world so divided should be regarded as inherently unstable. THE SOUTH COMMISSION, 1992

The vision that faded for protecting the most basic social and economic rights of their citizens. Half-a-century ago, the United Nations emerged The UN Charter and the Universal Declara- as a beacon of hope out of the darkness of the tion of provided the moral Second World War and the years of economic framework for a new system of rights and depression, social dislocation, and international obligations upon which the new order was to be tension which preceded it. The institutions of built. Far from being empty rhetorical flour- global governance which emerged alongside ishes, these documents were statements of in- the UN in the post-war period were partly a tent. As President Roosevelt wrote: 'this is no response to the failures of the 1930s, and partly vision of a distant millenium. It is a definite basis the product of an inspired vision for the future. for a world attainable in our own time and The resolve which under-pinned that vision generation." was rooted in the two simple words 'never The five decades which have elapsed since the again'. Never again should violence and conflict UN was founded have witnessed some be allowed to destroy the lives of the world's remarkable changes. Global economic wealth people. Never again should poverty and mass has increased sevenfold and average incomes unemployment be tolerated. And never again have tripled. The record of advancement in should governments relinquish responsibility human welfare, measured by increased life B The Oxfam Poverty Report expectancy, falling infant mortality, improved in the face of forces over which they have little nutrition, and increased educational attain- control. Few of these people have heard of the ment, has been unprecedented. Yet in the UN Charter, yet through their actions they are midst of this progress, the basic rights en- striving to achieve a world which reflects its shrined in the UN Charter are being violated principles. In the slums of Peru and Zambia, on a massive scale. For the millions of women, Oxfam's partners are working with communities men, and children whose lives are being who are attempting to maintain the most basic destroyed by armed conflict, the Charter's levels of health, education, and nutrition despite pledge to 'save succeeding generations from the devastating economic pressures. In the free- scourge of war' offers a cruel parody of reality. trade zones of Mexico and the Dominican As we near the beginning of the twenty-first Republic, they are supporting the efforts of century, genocide, systematic attacks upon female workers to establish basic employment civilian populations, and mass rape, are claim- rights, non-discriminatory labour practices, and ing unprecedented numbers of victims. a living wage. In ecologically degraded drought- But no combination of war or prone areas in southern Africa, vulnerable inflicts suffering or destroys human potential communities are developing water conservation on the scale of the 'silent emergency' of poverty. and cropping systems aimed at enhancing their Today, one-in-four of the world's people live in security. And in Brazil and Colombia, local a state of absolute want, unable to meet their groups are working with Indian communities basic needs. Millions more live close to this and black farmers to protect the land rights upon perilous condition on the very margins of sur- which their survival depends from encroach- vival. In a world where technological frontiers ment by commercial interests. are being pushed back at a breathtaking rate, 35,000 children die every day from diseases Working together for change which could be prevented through access to adequate nutrition and the most basic health Local initiatives of this type provide a powerful provision.2 Meanwhile, one half of the world's force for change. So, too, do the growing num- population is systematically discriminated ber of community groups and non-govern- against and denied opportunity, for the 'crime' mental organisations (NGOs) which have of having a female chromosome. emerged in response to the deepening develop- Even stated in cold figures,th e scale of global ment crisis. New alliances for change are deprivation retains the power to shock. But emerging. In Brazil, a mass campaign against facts and words alone can never capture the has brought together churches, trade suffering inflicted by poverty. They cannot, for unions, NGOs, the private sector, and local example, convey the tragedy of the one-in-six government, involving millions of people in African children who will not live to see their practical local-level action to raise awareness of fifth birthday; or of the half-a-million women the causes of . This is a who die each year from causes related to preg- powerful example of co-operation between nancy and inadequate health care. Nor can they different layers of civil society in response to an hope to capture the vast wastage of potential erosion of social and economic rights. represented by the 130 million children who do Alliances are also emerging on the inter- not attend primary school. national stage. Many of Oxfam's partners were Through its international programme, Oxfam among the thousands of NGOs which lobbied witnesses on a daily basis the destructive power of the Earth Summit in 1992 and the World poverty in the poorest villages and slums of the Summit for Social Development in 1995. The developing world. It also witnesses the quiet communique's agreed at those Summits bear heroism of ordinary women and men seeking to the imprint of their influence. Some NGOs are protect their communities and rebuild their lives now working to encourage the public pressure Introduction for change which will be needed to translate the in expanding that prosperity. But the extremes agreed principles into practice. Others are of poverty, inequality, and instability associated working together in regional and international with uncontrolled markets were to be avoided networks to address human development prob- through state regulation, in the public interest, lems associated with conflict, trade, and finance, at both national and global level. Today, how- in an attempt to force the interests of the poor ever, most governments and the international on to the agendas of the world's governments. financial institutions created at Bretton Woods The new global alliances which are emerging to oversee the new order, place far too much reflect a growing recognition of the challenges faith in laissez-faire economic policies. Poverty created by the globalisation of the world redution is supposed to emerge principally as a economy. Foreign investment and inter- by-product of market deregulation, with the national trade flows are creating a world of benefits of growth gradually trickling down to increasingly porous borders, in which govern- the lowest stratas of societies. In reality, the ments are being superseded by formidably divergence in living standards between rich and powerful transnational companies (TNCs). The poor is assuming ever more signigicant propor- deregulation of markets and the growing tions. power of international financial institutions Economic growth is imperative if poverty is to have contributed to this trend. Yet there have be reduced. But the is as been no countervailing measures to protect important as its creation. At an international global citizenship rights in the manner envis- level there is a gross maldistribution, with the aged by the UN. In a small way, the inter- structures of world trade and finance support- national alliances of citzens' groups which are ing an increasing concentration of wealth in the now emerging are starting to fill this gap, industrialised world. In 1960, the richest fiftho f building bridges between local action and inter- the world's population living in the industrially national policy debates. Once again, this is a advanced countries, had average incomes 30 positive contribution towards the creation of times greater than the poorest fifth, living in the developing world. By 1990, they were receiving the type of world envisaged by the United 5 Nations 60 times more. Calculating real purchasing power differences, as the International Monetary Fund now does, reduces the disparity Rich and poor: the widening gap —but it is still greater than 50:1.4 While it is true But while local communities and citizens' that the Third World is not a homogeneous groups have emerged as a powerful force for bloc, and that some countries, notably in East positive change, the same cannot be said for Asia, have increased their share of world governments. If poverty were an infectious income, the poorest countries are falling disease, which could be caught by the rich as further behind. The poorest 50 countries, most- well as the poor, it would have been eradicated ly in Africa, have seen their incomes decline to the point where they now account for less than long ago. Political will and financial resources 5 would have been found in abundance, just as 2 per cent of global income. These countries they were to develop instruments of mass des- are home to one-fifth of the world's people. truction during the Cold War. Yet govern- ments, North and South, have been willing to tolerate and acquiesce in the steady marginal- The persistence of poverty isation of the poor. Developments within countries have mirrored Fifty years ago, the post-war settlement the trends in the international economy, with sought to establish a framework for shared the poorest sections of society becoming prosperity. Markets were to play a central role increasingly marginalised. In most developing The Oxfam Poverty Report

Figure i.l Changes in the percentage of the population living in poverty 1985-2000 (projected)

SOURCE: UN countries, the poorest fifth of the population those of the industrial world, millions of families share between them, on average, little more — from the Altiplano of Bolivia to the slums of than 5 per cent of national income, while the Peru and Brazil — are no better off than sub- wealthiest fifth claim over half. Saharan Africans. Almost one million children Nowhere in the developing world are the in the region die each year from causes which contrasts between poverty and national wealth are largely preventible, and another seven 7 more striking than in Latin America and the million are malnourished. Caribbean. While average incomes are six times Left unchecked, poverty will continue to those in Africa, some 200 million people live in claim victims on a growing scale. On present poverty. Inequalities are widening across the trends, the number of people living in poverty region. Despite its financial crisis, Mexico has could rise to 1.5 billion by 2025. In South Asia, achieved one economic distinction: it has the home to the world's largest population of poor world's fastest growing number of billionaires, people, the proportion of people living below with 13 in 1994.6 The combined wealth of these the poverty line is falling, but the absolute individuals is more than double the combined number is rising. Sub-Saharan Africa is a special wealth of the poorest 17 million Mexicans, source of concern because poverty is increasing whose share of national income is falling. More not only in terms of the total numbers affected generally, while the middle and upper classes of but also as a proportion of the population. By the region enjoy living standards comparable to the end of the decade, the ranks of the 218 e Introduction million Africans living in poverty will have of life at home, speaks volumes about a wider swelled to 300 million, with the downward indifference to poverty. spiral in human welfare indicators likely to con- Writing about his own society, the American tinue into the next century. Sub-Saharan Africa economist JK Galbraith has described a 'culture is now the only part of the developing world in of contentment', in which governments repres- which infant mortality rates are rising and liter- enting a prosperous majority are willing to acy levels falling. For Latin America, growth maintain an economic system which disen- patterns imposed on the region's grossly un- franchises a large 'underclass'.12 The enjoyment equal social structures offer a future of of prosperity for the contented majority is increased marginalisation for the poor. disturbed only by a continuing threat of'under- The tendency towards increased poverty and class' social disorder, crime, and conflict. The inequality is not confined to developing coun- role of the state, in Galbraith's account, is tries. In the United States an additional four becoming similar to that of a security firm, million children fell into poverty during the containing social tensions within urban ghettos 1980s, even though the wealth generated by the at minimal cost. The alternative of raising country's economy expanded by one-fifth.8 By to address the underlying causes of social 1992, child poverty affected 22 per cent of all marginalisation, is ruled out on the grounds children, and infant mortality rates for black that it would alienate the prosperous majority children were more than double those for white upon whom re-election depends. Yet it is in this children.9 In the European Union, the number tension between security and the suppression of of people living in poverty grew from 38 million the 'underclass' that Galbraith identifies a force to 52 million between 1975 and 1988. Several for change. He writes: 'The age of contentment countries experienced a dramatic increase in will come to an end only when and if the adverse poverty and inequality.10 For example, until the developments that it fosters challenge the sense 1 mid-1970s, income inequality in the UK was in of comfortable well-being.' ' steady decline as economic growth increased Most people in the industrial world will find a general prosperity. However, over the period resonance between Galbraith's sobering des- 1979-1992, the poorest quarter of the cription of US political life and their own exper- population failed to benefit from economic ience. While the majority of people in most growth. As a result, the proportion of the pop- industrial countries have attained levels of ulation with less than half the average income affluence which would have been unthinkable has trebled since 1977. Today, 12 million even 20 years ago, insecurity has also reached people live on less than half the average income, record levels. Drug dealing, inner-city crime, more than double the number in 1979; and the family disintegration, mass unemployment, are number of individuals living below the poverty now all aspects of everday experience. The most line has increased from 5 million to almost 14 immediate costs are borne by the poor, but million." there is a deep and pervasive sense of society breaking down in a manner which threatens everybody. There is also a deepening sense of The 'culture of contentment' unease at the social and moral implications of Of course, poverty in the industrialised world is allowing poverty, homelessness, and widening not in the same category as poverty in the inequality to destroy the lives of vast numbers of developing world, being measured in terms of people, and at the waste of human potential relative deprivation rather than absolute want. caused by poverty. The ethos of the 1980s, However, the willingness of governments in the when the pursuit of individual advancement world's richest countries to tolerate the exclu- was presented as a form of inadvertent altruism, sion of so many people from an acceptable way is now questioned both on grounds of self- I The Oxfam Poverty Report interest and out of moral concern. The new dented numbers of refugees and displaced ethos of enlightened self-interest was reflected people. It is also causing the growth of sprawl- in one recent report on inequality in Britain, ing urban slums, which have become focal which concluded: points for social tension, and political di- saffection. Migration to these slums is being Failure to reintegrate (the) excluded minority into the enforced by environmental degradation, mainstream of society will leave the well-to-do major- linking town and country in a vicious circle of ity with a heavy price to pay in terms of increased pub- social decline. lic spending, wasted economic resources and social The consequences of such trends cannot, as dislocation." Northern governments appear to imagine, be The challenge is to extend this enlightened contained by border controls. Social collapse self-interest and moral concern to the inter- and the disintegration of states has been accom- national stage and to developing countries. panied by the mass migration of refugees, the There, too, a culture of contentment is much in increase in international drug trafficking and evidence. Northern governments, which organised crime, the spread of regional ten- control the governance of the world economy, sions, and recourse to violence. Just as crime are contentto tolerate and maintain trade and and social breakdown in the industrial world financial structures which concentrate wealth in will not respect the boundaries of affluent the industrialised world, while excluding the middle-class suburbs, so the forces unleashed poorest countries and people from a share in by conflict and global poverty will not respect global prosperity. national borders, however well-defended they For their part, most Third World govern- may be; and however restrictive the immigra- ments have their own culture of contentment. tion policies of the states which control them. They maintain systems of income and land The architects of the UN system, with the distribution which exclude poor people; they experience of the Great Depression a vivid concentrate public investment in areas where it memory, recognised that real security could maximises returns to the wealthy and mini- never be built upon poverty. That was the mises returns to the poor; and all too often they overwhelming lesson of the 1930s which they waste vast sums on armaments, creating took with them into the San Francisco confer- military machines which are as impressive as ence which established the UN. Without peace, their country's human welfare indicators are the UN Charter recognised, there could be no depressing. One aim of Oxfam's campaign is to lasting social progress; but without social build a bridge between citizens in the North and progress there could be no lasting peace. Thus the South who are working to challenge the 'freedom from want' and 'freedom from fear' forces which deprive people of their rights at became the rallying calls for a new order to be local, national, and international levels. built upon the foundations of international co- operation and shared prosperity. Fifty years on, there is a new crisis in human security every bit Shutting out the problems as threatening as that which gave rise to the UN. Underpinning the global culture of con- People are desperate for alternatives which tentment is a presumption on the part of offer hope, instead of a world scarred by deep- Northern governments that the social problems ening poverty, inequality, and insecurity. Yet associated with international deprivation can be the institutions created 50 years ago to win the 'ring-fenced', or contained within discrete peace are failing, with governments, to offer boundaries; but this is not possible. Deepening alternatives. In large measure, this can be poverty is one of the main driving forces behind traced to a vacuum in political leadership. the civil conflicts which are creating unprece- Indeed, at no stage in post-war history have the I Introduction challenges facing humanity been so great and shelter, and non-discrimination. Most of the the political vision of world leaders so myopic. world's governments have signed this Covenant. Unfortunately, they have done so without any serious intention of implementing The need for a renewed vision it. This reflects a wider debasement of the The anniversary of the UN provides an oppor- currency of social and economic rights. tunity for governments and citizens' groups to In 1993, the world's governments adopted a provide a new vision for human security and communique' at the Vienna Conference on poverty eradication into the next century. In Human Rights confirming that all rights, social the past, moments of crisis in the twentieth and economic as well as civil and political, were century have brought forward acts of great 'indivisible, inter-dependent and universal'.15 political courage and imagination. The New Yet they continue to tolerate violations of social Deal of the 1930s and the Beveridge Report and economic rights which, if repeated in the which founded the British welfare state are two sphere of civil and political rights, would examples. Writing in the 1940s, William provoke international outrage. One of the Beveridge defended his declaration of war underlying reasons for this discrepancy is a against the 'five great evils' of ignorance, view, widespread among governments, that the disease, squalor, idleness, and unemployment, extension of human rights provisions into the by emphasing the scale of the challenge to be social and economic sphere is misplaced. In confronted. 'A revolutionary moment in world particular, many governments claim that full history,' he wrote, 'is a time for revolutions, not social and economic rights are unattainable, for patching.' A similar sense of purpose under- especially in the poorest countries, because of pinned the UN Charter, which established in inadequate financial resources. This is at once embryonic form an international charter of partially true and totally irrelevant. citizenship rights. The challenge today is both It goes without saying that not all countries to develop and to implement new social can immediately provide universal health care, compacts at the national and international level education, and secure employment for their through which these rights can be realised. This citizens from their own resources. But the will require institutional change as well as purpose of the UN's social and economic rights reforms in economic policy. Weak institutions provisions is to secure the progressive achieve- which are loosely connected to civil society ment of rights through international co- cannot oversee the effective implementation of operation. That is why the International strategies for achieving social and economic Covenant on Economic, Social and Cultural rights, however well-intentioned governments Rights does not demand that states immediately may be. That is why transparent and accountable provide for all citizenship rights. Rather, it calls government, popular participation in decision- on them to: making, and investment in institutional reform are essential to genuine development. take steps, individually and through international as- sistance and cooperation, especially economic and Much of the overall framework for trans- technical, to the maximum of available resources, with lating social and economic rights from principle a view to achieving progressively the full realisation of into practice already exists. The International rights recognised in the present Covenant.16 Covenant on Economic, Social and Cultural Rights, which came into force in 1976, en- In other words, there is a collective obligation shrines most of the social and economic rights on governments to adopt policies aimed at contained in the UN Charter and the Universal enhancing, within the limits of the resources Declaration, including the rights to adequate available, the most basic rights of the world's nutrition, basic education and health care, citizens. Regardless of whether or not the full The Oxfam Poverty Report citizenship rights envisaged by the Covenant financial institutions in relation to their obliga- are ever realised, the moral entitlements it est- tions under the Covenant on Cultural, Econ- ablishes must remain a guide to action. Writing omic and Social Rights. Similarly, the Economic over 60 years ago in an appeal for greater social and Social Council of the UN, which is equality, RH Tawney faced criticism similar to becoming increasingly marginal, should be those levelled at the International Covenant. responsible for public debates on the impact of He responded in the following terms: macro-economic trends and policies on social and economic rights. The important thing, however, is not that it (i.e. equal- What is required to translate UN principles ity) should be completely attained, but that it should be into action is the adoption by governments of sincerely sought. What matters to the health of society tangible targets for creating opportunities and, is the objective towards which its face is set, and to sug- through international co-operation, for them to gest that it is immaterial in which direction it moves, embark on the task of poverty eradication 'to because, whatever the direction, the goal must always the maximum of available resources'. There elude, is not scientific, but irrational. It is like using have already been steps taken in the right the impossibility of absolute cleanliness as a pretext for direction. One of the most encouraging devel- rolling in a manure heap.'7 opments in recent years has been the prepara- tion of national programmes of action to achieve the targets set by the 1990 World An end to poverty Summit for Children. These targets include a What is vital for the health of our global society reduction by one-third in child mortality; a today is that governments and citizens set their reduction by half in maternal mortality; the faces towards global poverty eradication. Inev- provision of universal primary education; and itably, there are limits to what governments can the provision of safe drinking water for all. One do for people. But there are no limits to what advantage of such targets is that they serve as a people can do for themselves when they are benchmark against which government policies given the opportunity to realise their potential. can be measured. Another is that they expose Providing that opportunity within the broad the fallacy behind the argument that poverty framework of human rights principles estab- eradication is not affordable. For example, can lished by the UN should be a shared objective we really talk about the non-affordability of for governments, citizens' groups and individ- social and economic rights when: uals worldwide. • Governments can find $800bn a year in This is not an argument for the recitation of military expenditure to finance the yet more vacuous statements at the UN, more acquisition of the means of destruction, but 'high-level' conferences, or new layers of UN claim to be unable to find the $5bn a year bureacuracy to monitor and oversee the non- which would provide basic education to all performance of governments in protecting the children, helping to release their creative social and economic rights of their citizens. potential for the benefit of all. Indeed, the focus should be firmly upon mak- • African governments spend more in repaying ing existing UN machinery for monitoring debts than they do on the health and social and economic rights work more effect- education of their citizens. ively (an issue which we address in our recom- • The costs of meeting the health and education mendations). For example, the various bodies targets agreed at the World Summit for which monitor compliance with UN human Children represent around 16 per cent of what rights conventions should have a strengthened developing countries currently spend on role in monitoring and reporting on the per- weapons. formance of government and international I Introduction

Creating an enabling environment Armed conflict, which we discuss in Chapter 2, is a major source of vulnerability and poverty In this report, we outline some of the wider in many of the countries in which Oxfam works. policy and institutional reforms needed to Increasingly, the victims of these conflicts, create an enabling environment for poverty whether in Bosnia, Rwanda, or Afghanistan, are reduction. The starting point, as we stress civilians. The picture is this area is not entirely throughout, must be that of involving men and bleak. If the peace settlement in Angola holds, women in the design of policies which affect southern Africa will be free from war for the first their lives. When it comes to understanding time since the 1960s. Long-running conflicts in poverty, the real experts are the poor Central America have been brought to an end. themselves. Popular participation, improved The durability of peace in these regions will accountability, and transparency must be depend critically upon international support central to any project for for post-conflict reconstruction. In the case of which is to have a chance of success. Central America, it will also depend upon the At a national level, as we argue in Chapter 1, willingness of governments to address the long- governments in developing countries could do standing social inequalities which gave rise to far more to give the poor a stake in society if armed conflict in the first place. they were to abandon their preference for But while there are opportunities for peace defending vested interests. Land redistribution which must be grasped, the spread of conflict is and wider agrarian reform, including the a source of mounting concern. Deep-rooted protection of common property resources, is ethnic tensions, separatist ambitions, widening long overdue in Latin America, parts of Africa, social divisions, social disintegration, and envir- and much of Asia. There is also scope for wider onmental degradation are all fuelling armed redistributive measures, especially in Latin conflicts. It is increasingly clear that conflict America. According to the World Bank, raising prevention must start, as the UN Charter all the poor in that continent above the poverty envisaged, with investment in human develop- line would cost the equivalent of only 0.7 per ment and poverty eradication. More immed- cent of GDP — the approximate equivalent of a iately, governments should establish 2 per cent income increase on the wealthiest restrictions on arms transfers and a compre- fifth of the population.18 hensive ban on the production, storage and sale Public spending priorities are in urgent need of a weapon which has come to symbolise the of reform in much of the developing world. At gruesome reality of modern conflict: the land present, social sector spending is concentrated mine. in areas which maximise the benefits to the As we suggest in this report, the UN has wealthy, while bypassing the poor. The focus suffered from a surfeit of expectation and a should be firmly upon providing primary deficit in financial reources and leadership. health care and basic education. Resources for However, more effective forms of UN interven- investment in these areas could be released by a tion must be developed to resolve conflict reduction in military spending and more before large-scale violence breaks out, and to effective regulation of state finances to prevent provide more responses to the inter-related large-scale corruption. Contrary to the claim tasks of peace-making, peace-keeping and that there is a trade-off between economic delivering humanitarian relief. growth and redistribution, the high-performing The Bretton Woods institutions — the IMF economies of South-East Asia have built their and the World Bank — were created to provide high growth rates upon redistributive land and the framework for post-war global economic income policies, and the provision of universal governance. Their aim was to facilitate full primary health care and basic education. employment and shared prosperity. Today, The Oxfam Poverty Report

both institutions publicly proclaim povety trade has placed an unbearable strain on the reduction as their central priority. As we argue natural resource base of many countries, under- in Chapter 3, however, their policies have mining environmental sustainability. Reconcil- evolved in a manner at variance with that objec- ing global commerce with the higher claims of tive. Instead of promoting full employment and sustainable resource management must occupy a the regulation of markets in the interests of central place on the international trade agenda social welfare, both agencies place their faith in of the twenty-first century. the type of laissez-faire prescriptions and dereg- Second, globalisation has been accompanied ulated labour markets which their founders saw by a formidable increase in the power of TNCs. as directly responsible for the crisis of the 1930s. Increasingly, these companies are able to Moreover, while advocating universal primary exploit national differences in social and envir- health care and basic education, the Bretton onmental standards by locating their invest- Woods agencies have encouraged governments ment in the sites of maximum profitability. The to introduce user-fees for social welfare pro- GATT Uruguay Round will further strengthen vision. The result of this incursion of 'market their position by limiting the right of govern- principles' has been to deny vulnerable com- ments to regulate foreign investment. The munities access to health and education. danger which this creates is that of a downward To make matters worse, the economic pol- spiral in standards towards the lowest common icies associated with the structural adjustment denominator. Reversing that spiral will require programmes of the World Bank and the IMF a social clause in international trade rules to have comprehensively failed to bring economic enforce compliance with minimum standards. recovery to many of the world's poorest coun- As we suggest in Chapter 5, the Earth Summit tries. Even where growth has been achieved, it increased public awareness of the formidable has been built upon the increased marginal- threats posed by over-consumption and pollu- isation and exclusion of the poor. New forms of tion in the industrial world. While the world's adjustment are needed to translate any com- poorest countries account for the bulk of world mitment to poverty reduction into practice. population, their citizens walk more lightly on Nobody today questions the case for economic the planet and leave a smaller ecological foot- reforms aimed at reducing destabilising budget print. The average American citizen has an deficits, establishing realistic currency align- environmental impact on the planet some 140 ments, and restoring balance-of-payment via- times greater than the average Bangladeshi, bility. The challenge is to reach these objectives and 250 times greater than the average African. in a manner which protects the vulnerable, is These differences are rooted in the galloping socially inclusive rather than exclusive, and consumerism upon which Northern prosperity which establishes a foundation for sustainable has been built. That consumerism imposes a economic growth. huge strain on the world's resources. With 16 International trade is one of the main threads per cent of the world's population, the indust- of global interdependence. However, as we show rialised countries generate two-thirds of its in Chapter 4, the benefits of international trade industrial waste, over one-third of the green- have been disproportionately concentrated in house gases responsible for global warming, the industrialised countries and a relatively small and they consume over one half of its fossil group of developing countries. The Uruguay fuels. Were the developing world to follow the Round agreement will do little to change this same path to economic growth as the industrial balance. Nor will it address two deeper problems world it would destroy our planet's biosphere, which have emerged with the accelerating with unthinkable consequences. movement towards a globalised economy. First, Governments and citizens in the industrial it is now clear that the relendess expansion of world have a responsibility to adopt life-styles I Introduction and energy-conservation measures more com- source of external finance. However, the bulk of patible with a sustainable future for the planet. international aid flows are of questionable rel- That means regulating markets in a manner evance to the poor, since donors continue to which ensures that prices reflect more accur- attach a higher priority to the promotion of ately the environmental costs of production. com-mercial self-interest than to poverty And it means investing in technologies which reduction. will lower the pollution associated with pro- This report outlines our views on some of the duction. Such technologies must also be trans- policy changes which are needed to eradicate ferred to developing countries on affordable poverty. As a non-governmental organisation terms. working in over 70 developing countries, In Chapter 6, we argue for a major overhaul Oxfam is acutely aware that there are no easy of financial relations between the industrial and answers when it comes to development. Much developing world. Debt repayments continue of what we say in this report is highly critical of to impose a crushing burden on the world's governments and international financial instit- poorest countries. Moroever, a growing pro- utions. But NGOs, Oxfam included, make their portion of that debt is owed to multilateral cred- share of policy mistakes. Our perspective is itors, which steadfastly refuse to countenance informed by what we have learned from our large-scale debt reduction. There is an urgent involvement with grassroots communities and case for a comprehensive write-off of official popular organisations. In the pages which debt and for new initiatives to reduce the follow, we set out an analysis which reflects that burden of multilateral debt. In Latin America, perspective, and which we hope will be a contri- the surge in private capital flows since the late bution to a wider debate. Ultimately, however, 1980s has ended the outflow of financial real progress towards poverty reduction will resources from that region. Despite this, the depend upon local communities coming to- region still suffers from acute debt problems. gether to act as a catalyst for change; and on For the world's poorest countries, excluded governments, NGOs, and international finan- from private capital markets, international cial institutions alike listening and learning development assistance will remain the major from them.

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