By Baher Kamal
MADRID, Sep 6 2022 – Both mainstream media, international bodies and human rights defenders continue to rightly denounce the Taliban’s inhuman abuses against the Afghan people’s basic rights, in particular those of women and girls.

In doing so, they use a similar vocabulary, saying that since the Taliban “seized the power” on 15 August 2021 everything has collapsed. Shouldn’t it be more accurate to say that the power was “knowingly” “delivered” to them by the United States of America following negotiations between the two parties under Donald Trump’s administration?

How come the Taliban managed, in just weeks, to push Afghanistan’s economy into “free fall” as defined by the UN Emergency Relief Coordinator, already in December 2021 – that’s only four months since the power was handed to them?

Other statements talk about how the Taliban’s regime has in just a few months erased with a stroke of a pen all the “great achievements” made over 20 years of US and allies’ massive military attacks on Afghanistan’s unarmed population.

Has all this happened in just 12 months?

How come the Taliban managed in just weeks to push Afghanistan’s economy into “free fall” as defined by the UN Emergency Relief Coordinator, already in December 2021 –that’s only four months since the power was handed to them?

How come that in such a relatively short time the Taliban have hurled into hunger as many as 23 million people – around 60% of the total population?

Have they in one year pushed over 6 million Afghans away to neighbouring countries like Pakistan and Iran?

Then, how come that “Over one year after the Taliban takeover, an estimated 24.4 million people – 59 per cent of the population in Afghanistan – are dependent on international aid and emergency relief in their day-to-day lives,” as stated by the International Organization for Migration (IOM)?

“Since August 2021, nearly all Afghans have plunged into poverty and the country has been facing the risk of systemic collapse,” states IOM.

Add to this the reiterated UN disparate appeals for funding to provide “lifesaving” assistance to 21 million Afghans or 50% of the whole population.

By the way: weren’t the United States who helped, funded –and armed– the Taliban “moderate” predecessors, over the 70s and 80s, to expel the Soviet Union’s troops from Afghanistan?

Weren’t the US and allies aware that the “narco lords” in Afghanistan, the world’s largest opium producer, have also been providing money and weapons to the Taliban in exchange for protection?

Operation “Enduring Freedom”

Whatever the case is, the Afghan war narrative should also remind us of other “great achievements” made during the two-decade-long “Enduring Freedom” operation launched against this country by the then US president George W. Bush and allies.

Has this Operation Enduring Freedom really brought food, health, education, safety, democracy, stability… and freedom?

Regardless of the arguments used to “justify” them, wars are also a “good” business.

Indeed new weapons have been tested; killing-drones perfected, troops casualties lessened; fully-equipped private armies made big profits as did the giant weapons industry. And the strategic concept of “war on terror” has definitely been settled.

Another under-reported war trophy

Anyway, there seem to be other under-reported “great achievements.” One of them appears to be Afghanistan’s treasure of precious mineral resources that the technology and war business needs.

Just see this: the 2019 official report: Mining Sector Roadmap, published by Afghanistan’s Ministry of Mines and Petroleum [PDF], and introduced by the then Afghan president Mohammad Ashraf Ghani, states the following, among other facts:

– Afghanistan has “extensive” mineral resources, located in every province of the country;

– Afghanistan has world-class deposits of iron, ore, copper, gold, rare-earth minerals, and a host of other natural resources… And oil and gas;

– Other minerals include aluminium, gemstones; lead, zinc, mercury; chromite; sulphur; hydrocarbons; asbestos; marble, lapis lazuli, emeralds and rubies; …

– Afghanistan holds more than a trillion dollars worth of mineral resources;

– Afghanistan “must’‘ leverage the expertise of the “private sector“ to harness the potential of its mineral sector, the official report highlights.

This Afghan government official report was published in 2019, i.e., while the United States and allies were still ruling the country.

Too many questions left unanswered

Just take a look at what a brilliant analyst and Nobel Peace Laureate, John Scales Avery, wrote in his recent must-read article: Making Money from War.

“If the aim of the “War on Terror” had been to rid the world of the threat of terrorism, acts like illegal assassination using drones would have been counterproductive, since they create many more terrorists than they destroy,” said Scales Avery, chairman of both the Danish National Pugwash Group and the Danish Peace Academy.

“But since the real aim is to produce a state of perpetual war, thus increasing the profits of the military-industrial complex, such methods are the best imaginable. Urinating on Afghan corpses or burning the Koran or murderous night-time raids on civilian homes also help to promote the real goal, perpetual war,” said Scales Avery.

Now back to the more than a trillion dollars worth of Afghanistan’s mineral resources –those that are much required by the giant technology and other business: would it be too naive to connect the dots?

By Sania Farooqui
New Delhi, Sep 6 2022 – “I must say that I had a premonition of a war with Russia in 2014 when Russian troops had started to occupy Crimea,” said Mykola Zhuravel, a contemporary painter and sculptor, in an interview with IPS. Zhuravel, with his partner, Daria Tishchenko-Zhuravel, have used art to communicate and express the horrors of the war since 2014.

Their work has been presented at the Viennese Biennale, and they have exhibited a multimedia project titled Invasion Redux, which is poignantly used to transform their memories of the 2014 uprising and its aftermath into vivid abstract portrayals – artworks, sculpture, photography and films.

Artists Mykola Zhuravel and Daria Tishchenko-Zhuravel

For many, war and displacement in Ukraine began almost eight years ago, when Russia first started to invade Crimea, warning of a full-scale war and vast troop buildup near the Ukrainian border. They use their art as a mirror of Ukrainian resistance, “the invasion project is my reflection, as an artist on the tragic events associated with Russian aggression, where I showed the true image of the occupier through an artistic lens,” said Zhuravel.

Invasion Redux was first presented in 2016 in New York at the Ukrainian Institute of America, showcasing surreal images of “an invader and an occupier”, their aim to show a mass audience “the truth and warn them of the imminent dangers not only to Ukraine but the entire western world with a nuclear strike,” said Tishchenko-Zhuravel.

“Until this terrible war that began in 2022, I lived with my family in Kyiv, we had a studio in the city centre, and as a photographer, I regularly held photo shoots and worked on art projects. But in just one moment, our whole life seems to have turned upside down. The war took away our dream, everything that we built,” Tishchenko-Zhuravel said.

On February 24, 2022, the world watched as Russia started its invasion of Ukraine, attacking the country from the north, south and east and surging troops towards the capital Kyiv making it Europe’s worst conflict since World War II. Almost 193 days later, the magnitude of the ongoing conflict has “wrought death on a mass scale, displaced hundreds and thousands of Ukrainians and forced millions to leave the country.”

Zhuravel said the morning of February 24 was a day when he and his family went into a state of shock, something they are yet to recover from. They had little time pack their bags and move to a safer spot.

Artwork by Mykola Zhuravel and Daria Tishchenko-Zhuravel.

“It was a horror. That morning there were cannon shots being hit on Kyiv, sirens echoed through the city, and people were rushing to hide in bomb shelters,” Zhuravel says. “We had less than an hour to pack our lives in one suitcase and leave. We started by heading to the west of Ukraine, and from there on, it has been quite a journey till we found our way to Canada.

“We didn’t know how to react, but the instinct of self-preservation worked, and we then left for the west of Ukraine, crossed the border with Poland and then flew to Canada. All I took was a small suitcase, a camera, years of experience and faith that everything would be fine,” added Tishchenko-Zhuravel.

From the beginning of the Russian invasion of Ukraine, Ukrainians have found ways to respond to the war, as reported here by TIME. The opposition included mass protest rallies with blue and yellow flags in the cities where Russian forces had already entered; unarmed civilians blocked roads and lay on the ground in front of Russian tanks, and girls threw Molotov cocktails at Russian military vehicles from car windows. Women hit enemy drones with jars of pickled tomatoes, and civilians united to help Ukrainian soldiers and their fellow citizens affected by the war. The steadfastness of Ukrainians in defence of their country surprised many, and their resistance continued even when they had to leave the country.

In April 2022, the Zhuravels held their first exhibition in Canada to continue telling the Ukraine story. The Canadian National Exhibition Association presented Invasion Redux at the CNE’S Withrow Common Gallery in Canada, through which Zhuravel says he will “continue telling the world truth about the military conflict through his artistic images and means as well as continue to glorify Ukrainian culture in Canada and rest of the world.”

Dasha Smovzh, designer and founder of Virna.

The war also threatened another artist’s life, a fashion designer working with her team in Kherson, a port city in the south of Ukraine. Dasha Smovzh, the founder of Virna, a clothing brand that employed many local Ukrainians and designers, had to flee when Russian troops bombed her city.

“We lost everything, Kherson, which is now almost occupied by the Russian army. We simply had to leave. We just packed our bags, kept our work documents, took cash and ran away as far as we could from the war,” Dasha Smovzh said.

According to this report, until the war in Ukraine began, a generation of Ukrainian brands flourished in recent years as trade with Europe had eased. However, The World Bank has now estimated the Russian invasion to shrink Ukraine’s economy by 45 percent this year.

Like many others, Smovzh had to pause production as many factories were destroyed and shipments were delayed.

Dasha Smovzh with her team at Virna production house.

“All our family, relatives, and employees are still in Kherson. They have no work. They are struggling due to the ongoing bombings and attacks; sometimes, they have to turn off water and electricity. We did move a few of our clothes to storage and are trying to resume selling again now. None of it is easy or done in the usual way.

“My husband and two-year-old son are safe here in Canada, and we are grateful to the country for their support and opportunity. I can only hope that I can bring Ukrainian culture and beauty here in Canada. Kherson is our home, and I hope we can go back someday.

The uncertainty and fear brought by the war have threatened and impacted lives in ways one can imagine – splitting families and stranding many in Ukrainian war zones. At the same time, others escaped to other countries across or across Europe to seek safety. Human Rights Watch has documented cases of Russian military forces committing laws-of-war violations against civilians in occupied areas of the Chernihiv, Kharkiv and Kyiv regions of Ukraine, including repeated rapes, unlawful violence and threats against civilians.

The large-scale displacements being seen could have lasting consequences for generations to come. By early August 2022, more than 6.6 million refugees from Ukraine had been recorded across Europe, and 10.3 million people, mostly women and children, had crossed borders from Ukraine to the neighbouring countries in the European Union. More than 5 million children need humanitarian assistance. This requires an immediate and steep rise in humanitarian needs. The United Nations estimates that 12 million people inside Ukraine will need relief and protection. At the same time, more than 4 million Ukrainian refugees may continue needing protection and assistance in neighbouring countries in the coming months.

IPS UN Bureau Report

Follow @IPSNewsUNBureau
!function(d,s,id){var js,fjs=d.getElementsByTagName(s)[0],p=/^http:/.test(d.location)?’http’:’https’;if(!d.getElementById(id)){js=d.createElement(s);js.id=id;js.src=p+’://platform.twitter.com/widgets.js’;fjs.parentNode.insertBefore(js,fjs);}}(document, ‘script’, ‘twitter-wjs’);  

By Robert Sandford
HAMILTON, Canada, Sep 6 2022 – Monsoon flooding has occurred often in Pakistan but never to the catastrophic extent presently happening.

A distinguishing feature of this disaster is that no one blames the flooding’s unprecedented intensity and destructiveness on anything but climate heating. The clear link between the warming atmosphere and the frequency and duration of extreme weather events of this scale should not be lost on the rest of the world.

Pakistan’s monsoon-related flooding in 2010 and 2011 was blamed by several observers on land-use changes that had altered natural drainage patterns, with some commenting that Pakistan and other countries most at risk from climate disruption were also the most dysfunctional.

Five years later, however, researchers discerned the fingerprints of climate change all over those floods, which killed 2,500 people, displaced 27 million and caused economic losses estimated at USD 7.4 billion, setting back Pakistan’s development severely.

Climate science confirmed that global warming was accelerating the global hydrological cycle and causing the loss of its relative stability and natural variability — “hydrological stationarity” — on which we had come to depend.

Simple atmospheric science tells us that warmer air holds more water, about 7% more per degree Celsius or about 4% per degree Fahrenheit.

In addition, satellite sensing has enabled us to recognize the existence and dynamics of atmospheric rivers — corridors of intense winds and moist air measured at 400-500 kilometres across and thousands of kilometres long.

These atmospheric rivers can carry the equivalent of 10 times the average daily discharge of North America’s massive St. Lawrence River.

Climate heating is causing these atmospheric rivers to become more powerful, more devastating, and more unpredictable.

And when they touch down, they can cause rainfall of never-before-imagined intensity and duration, as experienced not just by Pakistan, but in highly developed countries including Australia, Canada and elsewhere.

As this is written, a third of Pakistan is under water, at least 1,000 people are known to be dead, at least a million homes have been destroyed and 33 million people have become climate refugees.

So just how much more intense was this year’s supercharged monsoon in Pakistan? In July, 2010, a record 257 millimetres of rain was recorded in one day. This year, Karachi recorded more than 400 millimetres in under 24 hours.

Some 680 millimetres fell in Sindh Province, more than five times the average, with similar records set elsewhere. And it is not over.

It doesn’t take much imagination to know what a flood disaster would look like if 400 or 500 or 600 millimetres fell on any part of the world in just 24 hours.

And it is not just the behaviour of the monsoon that is changing. Weather patterns in Pakistan are increasingly unpredictable. This year, for example, the country essentially went from winter conditions directly into the intense heat of summer, which in much of Pakistan can mean temperatures of up to 50°C, more often now for weeks at a time.

The cumulative and compound effects of this year’s whipsawing heat waves and hitherto unimaginable monsoon flooding have left the country on its heels.

Government officials argue that Pakistan is unfairly bearing the consequences of irresponsible environmental practices elsewhere. Yes, they admit that corruption, unenforced building codes and rebuilding in known floodplains have had an impact on the country’s vulnerability, as they have in earlier floods.

But Pakistan, they note, is responsible for barely 1% of the global greenhouse emissions causing the climate change that is so clearly responsible for ferociously more powerful monsoons. In Pakistan’s view, the world should pay to restore the country.

In developing countries, climate disruption has devastating national effects: fiscal crises, unemployment, profound social instability, governance failure, interstate conflict, and terrorist and cyber attacks.

Several observers now hold that accelerated warming will weaken several developing world states until they are incapable of effective action.

What we learn from Pakistan is that in a warmer climate, mega-storms are not just possible but inevitable, and they could happen as frequently as every 10 years. We simply cannot afford the infrastructure damage, economic disruption and human suffering that will surely accompany disasters of such greater magnitude. We have to see that, unless we act, that is what is coming.

And yet developed countries are effectively getting nowhere in terms of climate action. That failure could cost us the world.

Even just 1.1°C of warming is already causing a cascade of impacts which together are beginning to take a big economic toll. The cost of inaction is now clearly greater than the cost of climate action. And climate change is just starting to kick in.

To prevent even greater disasters from happening, to save nations like Pakistan, we have to slow and halt climate change, developed countries must lead the way, and we need to do it now.

Robert Sandford holds the Global Water Futures Chair in Water and Climate Security at the United Nations University Institute for Water, Environment and Health, based at McMaster University, Hamilton, Canada

IPS UN Bureau

Follow @IPSNewsUNBureau
!function(d,s,id){var js,fjs=d.getElementsByTagName(s)[0],p=/^http:/.test(d.location)?’http’:’https’;if(!d.getElementById(id)){js=d.createElement(s);js.id=id;js.src=p+’://platform.twitter.com/widgets.js’;fjs.parentNode.insertBefore(js,fjs);}}(document, ‘script’, ‘twitter-wjs’);  

By Melissa Leach
BRIGHTON, UK, Sep 6 2022 – The UK’s new Prime Minister (and former Foreign Secretary), Liz Truss, enters Downing Street with a full and urgent in-tray, dominated by the highest inflation rate for 40 years and concerns across the country about the cost-of-living crisis.

Whilst urgent domestic policy is required, these national issues are symptomatic of a broader set of global crises, including the ongoing impacts of the Covid-19 pandemic and the war in Ukraine.

Therefore, the Prime Minister also has an urgent foreign policy agenda to address, within which international development has a vital role to play.

The FCDO’s long-awaited International Development Strategy was published in May, but the vision it set out broadly failed to meet the scale of the global challenges we face. These are the eight international development priorities we believe the new PM should be addressing:

1. Climate justice

Climate and environmental change are creating pervasive threats to the UK and all other countries, highlighted most recently by the UK’s record-breaking summer temperatures and the devastating floods in Pakistan. Ahead of the COP27 climate summit, where the UK hands over the COP Presidency to Egypt, the new PM should take the opportunity to show global leadership in the pursuit of climate and environmental justice.

This means prioritising support for those most disadvantaged and already experiencing the worst impacts and ensuring that their voices and knowledge count in decision making. It also means investing in effective mitigation and adaptation initiatives, which are purposefully connected to interconnected issues, such as access to water, food, healthcare, gender justice, education and land rights.

2. Health security

The UK’s expertise and investment in tackling epidemics has been world leading. The production and roll-out of technologies such as Covid-19 vaccines, and in health systems strengthening and universal health coverage (UHC), are valued by low-income countries and have been a critical part of the UK’s soft power.

As the Covid-19 pandemic proved how globally interconnected our health is, investment in future pandemic preparedness, that embraces institutional, knowledge and system questions (not just pharmaceutical interventions), and is guided by inclusive, localised and context-specific evidence, is critical for the UK, as well as globally.

3. Multilateral Cooperation and the SDGs

Universal challenges such as climate change and global health require co-ordinated international responses, which link local and national action with global level commitments and solidarities. Multilateral agencies such as the UN are best placed to lead these. Whilst there is room for reform, it’s short-sighted for the FCDO to have cut support for multilateral agencies without a clear assessment of the impact this will have.

IDS research shows that today’s crises – conflict in Ukraine and Ethiopia, climate change induced floods and heatwaves, pandemics, and rising inequalities – are all interconnected and require a rounded response, not a strategy that handpicks a few priorities in isolation. The UN’s Sustainable Development Goals (SDGs) provide the framework for addressing development challenges as a whole and should be at the core of the Government’s strategic planning.

4. Food equity

Whilst exacerbated by the conflict in Ukraine, rising global food insecurity is the result of a vastly unequal global food system, where power is held by vested interests and low crop yields are aggravated by drought or flood, conflict, and economic instability.

In the short-term, the UK needs to help stabilise global food supplies, but longer-term reforms are also needed, such as supporting more regenerative methods of food production and agro-ecological approaches that enhance agricultural biodiversity and resilience.

By investing in ‘bottom up’ research working with smallholder farmers and pastoralists in low-income countries, the FCDO can help identify what works best where, preventing the ‘one-size-fits-all’ technological solutions that often cause more problems than they solve.

5. China

Development has a great role to play in support of UK diplomacy. For the UK-China relationship where official channels of communications and diplomacy may deteriorate, strong relationships fostered by development and knowledge exchanges provide alternative channels for constructive dialogue.

There is particular potential around issues such as the vast Belt and Road Initiative, climate change, global health and the SDGs. Liz Truss is reported to be planning to take a more robust stance on the UK’s approach to China but we believe constructive dialogue with China around approaches to development co-operation should continue.

6. Transparency

In July, the department was downgraded in the Aid Transparency Index and the FCDO has been repeatedly criticised for its poor record on transparency since the DFID/FCO merger, including from the cross-party International Development Committee, Bond, the UK network of International Development NGOs and from the National Audit Office.

At a minimum the FCDO must be transparent about forward-looking budgeting and provide public data on planned ODA spending. To ‘stand up for freedom around the world’ as set out in the International Development Strategy, the FCDO must lead by example and have a clear framework for transparency, monitoring and evaluation, by which it can be held accountable.

7. Restoring 0.7

Reducing the UK’s ODA budget from 0.7% of GNI to 0.5% in 2021 resulted in a real terms reduction of £4.6bn. This dramatically reduced the UK’s ability to deliver the high-quality aid and interdisciplinary research essential to improving the lives of people around the world. It also dismantled international science partnerships and damaged the UK’s global reputation.

Other countries such as the US, Japan, Canada and Australia increased international aid budgets in light of Covid-19 and other global crises, yet the UK Government downgraded its contribution.

Re-instating the Conservative manifesto commitment to 0.7, along with appointing an International Development Minister at FCDO would demonstrate to the rest of the world the UK’s commitment to international development, and tackling the challenges that affect us all – poverty and inequalities, disease and climate change.

8. Investing in international research

There is a vital role that the knowledge generated from UK-led international development research can play, with a threefold benefit to the UK as well as to global communities – contributing to the Government’s goal for the UK to be a science superpower, benefiting the UK directly through lessons learnt and new discoveries that can apply to challenges at home, and finding effective and value for money support for lower and middle-income countries.

Whilst we welcomed the commitment to evidence and expertise in the International Development Strategy, this should go further. It is important to ensure that social science contributions are valued as much as technical science ‘solutions’. It is important to champion the importance of working with and from the perspectives of people living in poverty and marginalisation, and not overlooking the capabilities of low-income countries in generating knowledge for vital transformations.

The commitments to UK science must be complemented by investing in the equitable, interdisciplinary and international research partnerships needed to find contextual solutions that will benefit marginalised people around the world, and in many cases, here in the UK as well.

In conclusion, through UK-led international development, the new Prime Minister has the opportunity to help tackle the significant crises we all face. As new disasters around the world unfold with increasing frequency and severity, we are constantly reminded that the cost of delay or denial is far too high.

Melissa Leach is Director, Institute of Development Studies, UK.

IPS UN Bureau

Follow @IPSNewsUNBureau
!function(d,s,id){var js,fjs=d.getElementsByTagName(s)[0],p=/^http:/.test(d.location)?’http’:’https’;if(!d.getElementById(id)){js=d.createElement(s);js.id=id;js.src=p+’://platform.twitter.com/widgets.js’;fjs.parentNode.insertBefore(js,fjs);}}(document, ‘script’, ‘twitter-wjs’);  

By Anis Chowdhury and Jomo Kwame Sundaram
SYDNEY and KUALA LUMPUR, Sep 6 2022 – As rich countries raise interest rates in double-edged efforts to address inflation, developing countries are struggling to cope with slowdowns, inflation, higher interest rates and other costs, plus growing debt distress.

Rich countries’ interest rate hikes have triggered capital outflows, currency depreciations and higher debt servicing costs. Developing country woes have been worsened by commodity price volatility, trade disruptions and less foreign exchange earnings.

Anis Chowdhury

Rising debt risks
Almost 60% of the poorest countries were already in, or at high risk of debt distress, even before the Ukraine crisis. Debt service burdens in middle-income countries have reached 30-year highs, as interest rates rise with food, fertilizer and fuel prices.

Developing countries’ external debt has risen since the 2008-09 global financial crisis (GFC) – from $2 trillion (tn) in 2000 to $3.4tn in 2007 and $9.6tn in 2019! External debt’s share of GDP fell from 33.1% in 2000 to 22.8% in 2008. But with sluggish growth since the GFC, it rose to 30% in 2019, before the pandemic.

The pandemic pushed up developing countries’ external debt to $10.6tn, or 33% of GDP in 2020, the highest level on record. The external debt/GDP ratio of developing countries other than China was 44% in 2020.

Borrowing from international capital markets accelerated after the GFC as interest rates fell. But commercial debt is generally of shorter duration, typically less than ten years. Private lenders also rarely offer restructuring or refinancing options.

Lenders in international capital markets charge developing countries much higher interest rates, ostensibly for greater risk. But changes in public-private debt composition and associated costs have made such debt riskier.

Private short-term debt’s share rose from 16% of total external debt in 2000 to 26% in 2020. Meanwhile, international capital markets’ share of public external debt rose from 43% to 62%. Also, much corporate debt, especially of state-owned enterprises, is government-guaranteed.

Meanwhile, unguaranteed private debt now exceeds public debt. Although private debt may not be government-guaranteed, states often have to take them on in case of default. Hence, such debt needs to be seen as potential contingent government liabilities.

Jomo Kwame Sundaram

Sri Lankan international capital market borrowings grew from 2.5% of foreign debt in 2004 to 56.8% in 2019! Its dollar denominated debt share rose from 36% in 2012 to 65% in 2019, while China accounted for 10% of its external borrowings.

Private borrowings for less than ten years were 60% of Lankan debt in April 2021. The average interest rate on commercial loans in January 2022 was 6.6% – more than double the Chinese rate. In 2021, Lankan interest payments alone came to 95.4% of its declining government revenue!

Commercial debt – mostly Eurobonds – made up 30% of all African external borrowings with debt to China at 17%. Zambian commercial debt rose from 1.6% of foreign borrowings in 2010 to 30% in 2018; 57% of Ghana’s foreign debt payments went to private lenders, with Eurobonds getting 60% of Nigeria’s and over 40% of Kenya’s.

More commercial borrowing
Thus, external debt increasingly involved more speculative risk. Public bond finance, foreign debt’s most volatile component, rose relative to commercial bank loans and other private credit. Meanwhile, more stable and less onerous official credit has declined in significance.

Various factors have made things worse. First, most rich countries have failed to make their promised annual aid disbursements of 0.7% of their gross national income, made more than half a century ago.

Worse, actual disbursements have actually declined from 0.54% in 1961 to 0.33% in recent years. Only five nations have consistently met their 0.7% promise. In the five decades since promising, rich economies have failed to deliver $5.7tn in aid!

Second, the World Bank and donors have promoted private finance, urging ‘public-private partnerships’ and ‘blended finance’ in “From billions to trillions: converting billions of official assistance to trillions in total financing”.

Sustainable development outcomes of such private financing – especially in promoting poverty reduction, equity and health – have been mixed at best. But private finance has nonetheless imposed heavy burdens on government budgets.

Third, since the GFC, developed economies have resorted to unconventional monetary policies – ‘quantitative easing’, with very low or even negative real interest rates. With access to cheap funds, managers seeking higher returns invested lucratively in emerging markets before the recent turnaround.

Large investment funds and their collaborators, e.g., credit rating agencies, have profitably created new means to get developing countries to float more bonds to raise funds in international capital markets.

Making things worse
Policy advice from donors and multilateral development banks (MDBs), rating agencies’ biases and the lack of an orderly and fair sovereign debt restructuring mechanism have shaped commercial lending practices.

Favouring private market solutions, donors, MDBs and the IMF have discouraged pro-active development initiatives for over four decades. Hence, many developing countries remain primary producers with narrow export bases and volatile earnings.

They have urged debilitating reforms, e.g., arguing tax cuts are necessary to attract foreign direct investment (FDI). Meanwhile, corporate tax evasion and avoidance have worsened developing countries’ revenue losses. Thus, net revenue has fallen as such reforms fail to generate enough growth and revenue.

Credit rating agencies often assess developing countries unfavourably, raising their borrowing costs. Quick to downgrade emerging markets, they make it costlier to get financing, even if economic fundamentals are sound.

The absence of orderly and fair debt restructuring mechanisms has not helped. Commercial lenders charge higher interest rates, ostensibly for default risks. But then, they refuse to refinance, restructure or provide relief, regardless of the cause of default.

When will we learn?
Following the 1970s’ oil price hikes, western, especially US banks were swimming in liquidity as oil exporters’ dollar reserves swelled. These banks pushed debt, getting developing country governments to borrow at low real interest rates.

After the US Fed began raising interest rates from 1977 to fight inflation, other major central banks followed, raising countries’ debt service burdens. Ensuing economic slowdowns cut commodity exporters’ earnings.

In the past, the IMF and World Bank imposed ‘one-size-fits-all’ ‘stabilization’ and ‘structural adjustment’ measures, impairing development. Developing countries had to implement severe austerity measures, liberalization and privatization. As real incomes declined, progress was set back.

With the pandemic, developing countries have seen massive capital outflows, more than in 2008. Meanwhile, surging food, fertilizer and fuel prices are draining developing countries’ foreign exchange earnings and reserves.

As the US Fed raises interest rates, capital flight to Wall Street is depreciating other currencies, raising import costs and debt burdens. Thus, many countries need financial help.

Debt-distressed countries once again seek support from the Washington-based lenders of last resort. But without enough debt relief, a temporary liquidity crisis threatens to become a debt sustainability, and hence, a solvency crisis, as in the 1980s.

IPS UN Bureau

Follow @IPSNewsUNBureau
!function(d,s,id){var js,fjs=d.getElementsByTagName(s)[0],p=/^http:/.test(d.location)?’http’:’https’;if(!d.getElementById(id)){js=d.createElement(s);js.id=id;js.src=p+’://platform.twitter.com/widgets.js’;fjs.parentNode.insertBefore(js,fjs);}}(document, ‘script’, ‘twitter-wjs’);