High-Level Expert Group Meeting
8-9 December 1984
International Development Centre
Ottawa, Canada
Chaired by Ola Ullsten
Introduction
1. The InterAction Council attaches particular importance
to the acute problems faced by the Least Developed
Countries (LDCs). It has called for a special effort,
based on international solidarity and common human
interest, to increase the assistance provided to these
countries which, suffering acutely from the turmoil of the
international economic system, are now facing natural
disasters as well.
2. In particular the Council has pointed out that the
poorest countries, in comparison with other groups of
countries, have been forced into excessively harsh
adjustment measures, particularly in response to changes
in their terms of trade as a result of declining prices
for their primary products coupled with a dramatic
increase in oil prices. Noting that the scale of
indebtedness of these countries in world terms is not
substantial, the Council considers that particular
measures should be taken to bring the terms of debt
repayment for these countries into line with their longer
term capacity to pay, while upholding the basic principle
that obligations should be honoured.
3. The Council considers that there is an urgent need for
a rapid increase in concessional assistance to these
countries, together with measures in the field of trade
and technical co-operation to increase their earnings and
strengthen their domestic capabilities. In order to
promote a dramatic increase in resources for the deprived
peoples of these countries, the InterAction Council has
expressed its intention to launch an extensive campaign so
as to mobilize public opinion throughout the world,
together with private sector organizations, in particular
corporations and banks.
4. The Least Developed Countries as defined by the United
Nations are a small group of very poor, very
underdeveloped and economically very weak countries. Some
300 million people live in the 36 countries defined as
least developed which together have a combined GDP of
around $ 64 million. l6 of these countries are landlocked
and 6 are small islands. 24 of these countries are now
appealing for emergency aid in the face of famine,
desertification and drought.
5. The expert group considers that this group of countries
provides a focus for urgent action, taking into account
the specific problems faced by each individual country.
The group recognizes that widespread poverty is to be
found in many other developing countries which are not,
however, classified as least developed. It considers that
an effort should be made first to mobilize international
action for the LDCs as a basis for more widespread efforts
at a later stage.
6. The fragile process of development which has been
taking place in these countries is now breaking down. The
expert group reviewed the causes of this desperate
situation and concluded that it has come about as a result
of the following related factors:
- Inherent weaknesses in human resources, technical skills and physical and organizational infrastructure;
- An unforeseen combination of adverse international economic tendencies, including a substantial worsening in their terms of trade, a reduction in international markets for their products, high and unpredictable interest rates and substantial increases in the price of oil;
- Inappropriate domestic policies which are now being corrected in many countries;
- Natural disasters, desertification, drought, etc;
- Political instability, conflict, civil disturbances and substantial movements of refugees from country to country, five million in Africa alone.
7. The InterAction Council can play a positive role in promoting policy change together with increased flows of financial and other resources to assist the LDCs. The efforts of the Council should be based on the following premises:
- The situation of the LDCs, although desperate, is not hopeless. The countries, generally speaking, do have the potential to develop so as to provide a tolerable quality of life to the bulk of their populations. However, the process of development will be long and difficult and results should not be expected quickly. Sustained and increased assistance from the international community will be essential.
- Urgent action is required to stem the current rapid decline and preserve the gains which have been made in several decades of development efforts. Such immediate action to face the present crisis must be accompanied by and consistent with increased efforts to promote systematic longer term development.
- Careful co-ordination is required between the policy measures of the countries concerned and the policies adopted by developed countries and the wider world community to create an international economic environment within which these countries can develop.
- There are inescapable humanitarian reasons for the world community to make every effort to assist the deprived peoples of those countries. In addition it is in the political and economic interest of the developed countries to reverse the current decline in the LDCs.
8. The action of the Council should be directed to
promoting increased efforts by all groups of countries.
The Western developed countries, the Centrally Planned
Economies, the Oil-Producing Countries can all make
increased efforts, as can those developing countries
which, having reached a more advanced stage, can provide
considerable, relevant assistance. In addition to
governmental efforts, a substantial contribution should be
made by non-governmental organizations, by private
companies, by commercial banks and by concerned groups and
individuals throughout the world.
LINES OF ACTION
The group proposes that the InterAction Council should
pursue 4 principal lines of action, in addition to its
activities through informal channels:
1. High-level missions of Members of the Council to the
LDCs. 2. High-level missions of members of the Council to
the developed countries; 3. Consultations with the leaders
of international organisations and private sector
organisations; 4. A systematic effort to obtain public
support.
1. Missions to LDCs
9. The Council should send a series of high-level missions
to the LDCs to explain its views and to promote support in
these countries for policies to accelerate development.
The membership of the Council, drawn from both developed
and developing countries, should enable it to act
effectively to promote policy change in the developing
countries. The Council should take advantage of high-level
intergovernmental meetings, for example, of the
Organisation of African Unity to be held in 1985, to
advance its action proposals.
10. The missions of the Council to the LDCs should
emphasize among other points, the following:
(a) The essential need for longer term plans for economic
and social development in each country as a basis for
coherent and sustained development efforts. Political and
economic uncertainties and shortage of expert staff and
adequate data make planning particularly difficult in
Least Developed Countries. Medium and long-term
development plans are, however, essential as a framework
for the effective use of scarce resources.
(b) The need for increased efforts to develop human
resources with particular emphasis on basic education and
technical training. Many of the critical development
activities in the LDCs such as agriculture, health and
population planning are principally the responsibility of
women who remain, however, largely untrained. Emphasis
should be placed on the problems encountered by women as
an integral part of human resource development.
(c) The need for changes in fiscal and economic policies
to create appropriate conditions for increased
productivity and economic growth. Government policies for
agricultural prices, investment, exchange rates and the
role of the public and para-statal sectors for example,
are critical to the development process. It is widely
recognized that mistakes have been made in the past. As
part of a substantial effort to generate and utilize
additional assistance from the world community, the
necessary changes in national policies are a key
factor.
The Council can play a valuable role in promoting domestic
support for the changes required, providing external
support to governments who wish to undertake difficult and
controversial changes in policy.
(d) The need for vigorous and sustained efforts to
increase food production to meet domestic requirements.
There is substantial potential in many LDCs to increase
domestic food production which would have immediate
beneficial effects in ameliorating hunger, malnutrition
and poverty and would also reduce balance of payments
problems.
(e) The need in almost all the LDCs for effective
programmes to limit the growth of population.
(f) The need for more effective efforts in the countries
concerned to reduce environmental degradation and develop
indigenous energy resources. Under the pressure of urgent
short-term needs the governments of LDCs have very limited
human, physical and financial resources available to
preserve the physical environment. International support
is essential, but a corresponding framework of national
policy and organization is urgently required in many
countries if the current decline is to be reversed.
(g) The need to promote co-operation among the LDCs
themselves in the technical and economic sectors so as to
make the most effective use of scarce resources in the
development of infrastructure, productive capacities,
markets, research and training, etc.
(h) The need to diminish the amount of resources devoted
to armaments, and to make renewed efforts to reduce
tensions and conflict.
2. Missions to Developed Countries
11. By virtue of its membership the InterAction Council is
well placed to promote increased efforts by the developed
countries in parallel with those of the LDCs themselves.
In close co-ordination with the missions to the Least
Developed Countries proposed above, the Council should
undertake to send high-level missions to the capitals of
key developed countries. Among other points the missions
should stress the following:
Increasing Assistance
(a) The LDCs are critically dependent on help from the
developed countries, and assistance of all kinds should be
increased in a coherent manner, through increased ODA,
debt relief, food assistance, energy assistance, trade
measures, etc.
At the UN Conference in 1981 specifically focussed on
LDCs, it was agreed that aid flows should double, to $
14.1 billion by 1985 representing 0.15% of the GDP of the
developed countries. In this respect developed countries
have entered into commitments in the past which some have
not fulfilled. In spite of the current difficulties
encountered by many developed countries of both East and
West, official development assistance on concessional
terms to the LDCs must be substantially increased in real
terms and provided on a more predictable basis.
(b) Besides a real increase in assistance to LDCs there is
a clear need for improvement in the orientation and
co-ordination of assistance from different sources to
ensure the greatest impact from the resources made
available. This requires the strengthening of mechanisms,
such as Round Tables and consortia to secure greater
assistance and to improve the coherence of domestic and
international inputs within the framework of agreed longer
term objectives and policies.
(c) The governments of developed countries should also
take particular measures to encourage the flow of
assistance through the private sector, through
non-governmental organisations and academic institutions,
etc.
Reducing The Debt Burden
(d) Developed countries which have not already done so
should consider reducing, deferring or cancelling debt
service liabilities for bilateral ODA.
(e) In a similar way, the terms of multilateral ODA debt
should be renegotiated either to conform to IDA terms, or
to reduce interest rates or to extend the repayment period
or to combine some or all of these options. The
unpredictability of interest and exchange rates, and of
financial flows from trade and assistance have adverse
effects on the fragile economies of LDCs. Measures to
improve predictability would make a major contribution to
successful economic management and development planning in
these countries.
Debt Structure of LDCs in 1982
Private Debt $ 3. billion
Multilateral ODA
$ 14.5 billion
Bilateral ODA
$ 16.3 billion
===============
Total debt burden
$ 34.6 billion
Private debt service
$ 453 million
Multilateral ODA service
$ 241 million
Bilateral ODA service $ 321 million
===============
Total debt service
$ 1,015 million
Use of IMF resources cumulative to 1984: $ 2,208
million
Improving Market Access
(f) The LDCs, relying heavily on the export of a few
commodities, have been particularly hard hit by the
decline in terms of trade for their products and by
reduced access to developed countries' markets. In 1981,
the LDCs exported a total of $ 7.3 billion, which declined
to $6.8 billion in 1982. The governments of developed
countries should make particular efforts to increase
access to their markets for products from the LDCs and, in
general, to provide some degree of predictability for the
export earnings of these countries.
Food and Energy Assistance
(g) As a result of declining per capita food production,
many LDCs have become regularly dependent on food
assistance from other countries, importing about 5m tons
of cereals per year of which food aid accounts for around
3m tons. In Africa, aggravated by the current crisis
brought about by natural catastrophe,desertification and
conflict, food production has fallen by 14% between 1981
and 1983.
These problems of food production - and of environmental
degradation - are aggravated by the shortage of available
energy resources and the high price of energy imports. The
developed countries, and where possible, other developing
countries should arrange to make available on a long-term
basis, food and energy supplies to LDCs on stable and
concessionary terms. They should also ensure that
emergency measures are compatible with more fundamental
measures to revive and sustain the process of development
to solve the underlying problems.
Reducing Armaments Expenditures
(h) In this situation of economic and social decline, the
governments of these countries continue to spend
substantial resources on the purchase of armaments from
the developed countries. The governments of developed
countries should also consider what measures might be
taken to reduce the flows of arms to these countries, to
promote the resolutions of conflicts and the reduction of
tensions so that the maximum amount of scarce resources
can be devoted to social and economic development.
Public Education
(i) To provide a sound basis of political support for
increased efforts to assist the LDCs, the governments of
developed countries should take particular measures to
promote public education and wide understanding of the
need for increased assistance. It is also essential to
counter widespread criticism of the effectiveness of aid
activities by emphasizing the many examples of successful
bilateral, multilateral and non-governmental co-operative
projects, and explaining in realistic terms what can be
achieved over a period of time.
3.Consultations with leaders of International and
Non-Governmental Organisations and of the Private
Sector
12. In conjunction with the missions to governments
proposed in 1. and 11. above, members of the Council
should undertake consultations with leaders of the key
international organisations and non-governmental and
private sector interests. The role of multilateral
co-operation is of particular importance to the LDCs in
such fields as investment, public finance and human
resource development as well as in most sectors of
economic activity.
13. The Council should take advantage of presently planned
international events to advance its proposals,
particularly the OAU summit and the Review and Appraisal
of the Substantial New Programme of Action for LDCs to
take place later in 1985.
14. The expert group devoted considerable attention to the
mechanisms which might be proposed to promote increased
and more efficient flows of assistance to the LDCs. Among
the points to be raised are the following:
(a) Increased co-operation is needed between those
international organisations which are concerned with a
different aspect of the development problems. In
particular, the activities of the World Bank in supporting
major long-term development programmes must be more
clearly linked to those of UNDP and other UN agencies
concerned with specialised sectoral problems, which create
the conditions within which investments can succeed.
(b) As each LDC faces specific problems in its own unique
situation, further efforts must be made to establish where
necessary and to strengthen Consultative Groups or Round
Tables for each country, through which the various donors
and international organizations can co-operate in a
carefully considered effort to provide assistance.
Increased co-operation between the World Bank and UNDP is
very important in this respect.
Aid groups, Round Tables or Consultative Groups for
individual countries or groups of countries should focus
on: 1. Assessment of the economic setting; 2. Policies and
programmes of the recipient countries; 3. Needs for
technical assistance, investment finance, and budgetary
support; 4. Modalities for the provision and use of the
assistance required; 5. Follow-up on performance by donors
as well as recipients.
(c) The potential of new institutional approaches at the
international level for increasing assistance to LDCs and
their trade performance should be carefully examined. The
group considered three such possibilities:
A special facility to be established for Africa as a
channel for increased assistance; increase in the
allocations to LDCs within the framework of the IDA; and
measures, such as a widened STABEX scheme to increase and
make more predictable the export earning of the LDCs.
The group recognized the difficulties attendant on the
creation or adaptation of international mechanisms, but
considered that as a long-term objective, such options
should be considered.
(d) In addition to the efforts of governments and
inter-governmental organizations, increased efforts should
be made by the private sector - both companies and banks -
and by non-governmental, academic and charitable
organizations. The expert group underlined the important
role which could be played by commercial banks in
providing new credit and in enterprises in providing
know-how and commercial expertise to improve productivity
and increase output in the agricultural and energy sectors
in particular. There is also a major opportunity for
increased assistance in training, research and human
resource development in general, through greater
assistance from non-governmental, academic and
professional organizations in developed countries.
4. An Effort to Obtain Public Support
15. The Council has already expressed its intention to
launch an extensive campaign to mobilize public opinion
throughout the world to promote a dramatic increase in
resources for the deprived peoples of the LDCs.
16. As a result of the deep crisis in Africa, there is now
widespread concern in Western developed countries and a
willingness to provide assistance. It is essential that
every effort be made to face the urgent problems which now
confront the LDCs, but it is also important that
short-term crisis efforts should be compatible with the
necessary measures to strengthen and sustain the
longer-term processes of development. Public opinion must
be brought to understand that early results and easy
solutions are not attainable although positive progress
can certainly be demonstrated. A carefully considered
campaign should be undertaken, under the auspices of the
Council, to promote a more profound understanding of the
problems of poverty and underdevelopment faced by the
LDCs, so as to create solid public support for longer-term
assistance.
17. The group suggests that the Communications Committee
be asked to advise on the conception and implementation of
such a campaign.