Global Policy Forum

UK's Brown Says Poverty Breeds Terrorism,

World Bank Press Review
November 1, 2004

U.K. Chancellor of the Exchequer Gordon Brown said poverty in nations outside the industrial world is encouraging terrorism and he urged countries to boost their foreign aid budgets, Bloomberg reports. "Poverty is a breeding ground for discontent," Brown said in an interview in London for an ITV documentary series. "There is a sense of injustice. We have got to act if we are going to avoid the development of terrorist cells."

The comments add to the British Labour government's argument that rich nations must pay more to cure disease and spur economic growth in Africa and Asia. Brown is struggling to win backing for his International Finance Facility, which would double to $100 billion the cash available for relieving debts of the world's poorest nations. In the interview for the documentary titled ``The New World War,'' Brown said the penalty for failing to help poor nations may be more attacks in the West. The comments are his most explicit yet linking poverty and terrorism. "Poverty is no excuse for terrorism," Brown said. "Some of the terrorists that are most famous now are themselves very rich people. What is lacking is the political will to translate a commitment that has been made by everybody to reality."

World Bank President James Wolfensohn, speaking on the same program, echoed Brown's view and said the world will be a more dangerous place in the next generation. "What are our children going to do if half the planet cannot get a job, cannot have a family, are frustrated in everything that they're trying to do and who are knowledgeable today about what is happening," Wolfensohn said. "Frustration and a lack of hope will drive instability." U.K. Prime Minister Tony Blair plans to make forming a strategy to bolster the economic fortunes of African nations a priority when Britain hosts meetings of the Group of Eight nations next year. Further, terrorism, climate change and world poverty are inextricably linked. We must conquer them before they destroy us, argues broadcaster Jonathan Dimbleby in 'The New World War: A Reporter's Personal View', The Observer reports.

On related topics, Agence Europe reports that the European Commission is determined to redouble its efforts to fight HIV/Aids, malaria and tuberculosis in developing countries. To this end, it has just adopted a communication establishing the political framework of this reinforced fight against three transmissible poverty diseases. The objective of this new strategy remains the fight against poverty, and the fight against the three infectious diseases will continue to be backed up by the increasingly broad range of EU policies which have their part to play: trade, development, research, health and external relations, says the news report. For the first time, however, the Commission has announced a two-pronged attack, concentrating on: -human rights, to avoid worsening the marginalisation and stigmatisation of very high-risk groups; -the implications of these disease for human safety, being that they decimate communities and destroy social cohesion (which is most particularly the case with HIV/Aids); -the coherence of the answers to be found to these three diseases in all of the EU's external relations (beyond just development policy).

Finally, an editorial in the Toronto Star says that millions of Canadians already dig deep into their own pockets to support foreign aid, for both humanitarian and hardheaded reasons. Some 3 billion people, half of the world's population, live on less than $2 a day. Preventable hunger and illnesses will kill 18 million this year. That is a huge pool of desperation. If a fraction of the resources devoted to Iraq and Afghanistan were used to fight AIDS, tuberculosis and malaria, to combat ignorance and to provide water for farmers' crops, countless lives would be saved. Entire regions would have reason to thank the rich Northern democracies rather than see them as indifferent, or as the enemy. And if Canada's contribution ought to be more generous, it should also be spent in areas where it will do the most good.

That is far from the case now. Two of the biggest recipients of Canadian aid are China and India, which spend $60 billion a year on their nuclear-armed militaries. Both have active space programs. Yet Ottawa is giving China millions to produce leaner swine and to upgrade roads, while India gets millions to grow trees and modernize boilers. This "aid" looks suspiciously like Ottawa exporting Canadian technology, genetics and training, not helping the poorest. As he reviews foreign aid, Paul Martin has good reason to ask Canadians to dig deeper, the editorial says. But he must pledge that every new dollar will be spent to improve lives in the poorest countries, not to flog our goods and services. We should also lower trade barriers to allow more poor countries to sell their goods here. And forgive more unpayable debt. We live in a world where 1 billion people have 80 per cent of the wealth and where 5 billion have just 20 per cent. That alone should encourage "a certain missionary zeal" to bring hope to the desperate, as World Bank President James Wolfensohn recently put it. We must not be blind to the forces of despair that encourage despotism, fanaticism and instability. "Without dealing with that question of poverty," Wolfensohn warns, "there can't be any peace."

China's Exports Put Squeeze On The Neighbors

China's rivals are suffering, but capital goods producers are winning, reports the Australian Financial Review. How has the Chinese export juggernaut affected the development of its neighbors? It's no trivial issue. The developing countries of the region, in which we have a major strategic and economic interest, depend on export-oriented growth to power their development and lift their citizens out of poverty. Indonesia is one example. It needs strong export growth to recapture the dynamic growth of the pre-crisis decades. But Indonesia's export performance has been weak, although its exchange rate has been, on average, 30 per cent below its pre-crisis level. Part of Indonesia's problem, according to the International Monetary Fund, is intense competition from Chinese exporters.

China Daily meanwhile reports that those who anticipate an influx of Chinese textiles after the restrictions on such commodities expire next year may well be wrong as come countries are expected to continue imposing protectionist measures and China's apparel industry is not capable of flooding world markets with cheap homemade goods. The Agreement on Textiles and Clothing (ATC), signed by WTO members to set limits on the amount of apparel and textiles developing countries export to the developed world, and all quantity restrictions on these commodities, will expire on January 1, 2005. One of the most commonly used means in international trade protection over the last few decades, the quota system has long been maligned, as developed countries always protect their companies and jobs from more cost-effective foreign competition. Such protectionism is against the basic principles of free and fair trade, which are the cornerstones of international trade relations.

China is short of energy to fuel its boom, BBC News further reports. China has signed an agreement to buy oil and gas from Iran and to develop Iran's Yadavaran oil field, according to state media from both countries. The deal was signed in Beijing by Iranian oil minister Bijan Zanganeh and Ma Kai, head of China's National Development and Reform Commission. China, which has longstanding ties with Iran, is searching for new energy reserves to drive its booming economy. The agreement will be carried out by Chinese oil company Sinopec. Kazakhstanskaya Pravda also reports that Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, China, Azerbaijan and Mongolia delegations will attend the conference. Management of Asian development bank, EBRD, IMF, Islamic development bank, World Bank and UNDP will participate in the conference too. The forum is to work out general approaches, and coordinate positions on urgent economic problems.

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