Oil giants to earmark 10 cents per barrel for development in LDCs
Thalif Deen
UNITED NATIONS: The world's 50 poorest nations - ranging from
Cape Verde and Haiti to Nepal and Sierra Leone - are turning to the
major oil-producing nations for urgently needed assistance for
development.
Anwarul Karim Chowdhury, U.N. under-secretary-General for Least
Developed Countries (LDCs), has proposed that oil-producing nations
should consider earmarking just 10 cents per barrel from their rising
incomes for infrastructure development in LDCs in the next 10 years.
"This is a part of our efforts to secure new sources of development
finance for LDCs," Chowdhury told IPS. "We need an expressed willingness
on the part of producers and companies directly involved in oil
production."
"If major charities like the Gates Foundation, Bennet Foundation,
Turner Foundation and Soros Foundation can decide in recent years to
focus on the neediest countries, why not oil producers, whose revenues
have multiplied in a big way?" Chowdhury said.
The 50 LDCs, described as the poorest of the world's poor, include 34
countries in Africa, such as Angola, Benin, Burkina Faso, Burundi,
Comoros, Malawi, Mali, Liberia, Rwanda and Somalia.
As oil incomes generate massive currency reserves in countries like
Saudi Arabia, Kuwait, Qatar and Iran, the United Nations says that gross
export revenues in the Middle East alone are expected to reach over 400
billion dollars in 2006 compared with 307 billion dollars in 2005.
This is based on an average price of about 57 dollars per barrel,
according to a U.N. study released last April. But since then, oil
prices have hit over 70 dollars per barrel - tripling since 2001.
If the world's top 17 oil producing countries - including Algeria,
Canada, Venezuela, China, Norway, Mexico, Indonesia and the United
States - earmark 10 cents per barrel for LDCs, the amount per month
could reach as high as 17.6 million dollars on a total income of 176.6
million dollars, according to a chart prepared by Chowdhury's office.
Chowdhury told IPS there is already a precedent set by the
Organisation of Petroleum Exporting Countries (OPEC), whose "remarkable
action" in favour of LDCs in the mid-1980s resulted in a decision to
"pick up the tab for the contribution of all LDCs to the newly-created
Common Fund for Commodities (CFC) based in Amsterdam." He said the OPEC
Fund is still continuing to do this.
"LDCs already have many un-funded or under-funded infrastructure
projects which could be supported by new money, when available," he
added.
Chowdhury, who made the formal proposal at a recent meeting of the
U.N. Economic and Social Council (ECOSOC) in Geneva, is hoping for a
positive reaction from oil producers. But there have been no firm
commitments so far. One Arab diplomat told IPS that Qatar, a country
rich in oil and gas reserves, initiated a special fund last year to help
the 132 members of the Group of 77 developing nations, which includes
the 50 LDCs.
"But most of the Middle Eastern oil-producing nations are currently
preoccupied helping the reconstruction of war-devastated Lebanon," he
added.
Arun Karki, president of LDC Watch based in Nepal, told IPS he
"strongly supports" the proposal made by Chowdhury. "This will help
raise a special fund without affecting any other earmarked development
funding." He said there should also be other "innovative sources of
funding" for LDCs development. "One good example is the current
surcharge on airline tickets," he added.
Bill Fletcher, Jr., a visiting professor at Brooklyn College in the
City University of New York and former president of TransAfrica Forum,
told IPS that in the 1970s, the oil shock devastated many non-oil
producing countries in the global South, including some countries that
stood in solidarity with the Arab oil embargo of 1973.
"This devastation had a long-lasting impact on the living standards
in the global South. It is, therefore, correct today to ask of the oil
producing countries that they do put aside a certain percentage of oil
income to assist development in the global South," he added.
Fletcher pointed out that Venezuela's President Hugo Chavez has
demonstrated how oil can be a vehicle for support rather than
strangulation.
"At the same time we must recognise that it is the largely the oil
companies that must be scrutinised. The massive profits they have gained
in the last year - as prices continued to increase - demonstrate the
completely a moral attitude that oil companies take toward the world's
peoples and issues of energy necessity," he added.
Most political parties and institutions will rhetorically go after
the oil companies but shy away from any significant practical steps to
recoup even a portion of the massive gains that these companies have
secured, he said.
Anuradha Mittal of the Oakland Institute said that hunger and poverty
in poorer nations is really a paradox in a world of plenty.
"The latest U.N. proposal for oil-producing nations to earmark a mere
10 cents per barrel for infrastructure development in the LDCs is an
attempt to address growing inequities. However, one has to be cautious
given the past record," she told IPS.
As far back as the 1970s, the U.N. General Assembly urged the world's
22 richest countries to provide 0.7 percent of their gross national
product (GNP) as overseas development assistance (ODA) to developing
nations, but only five countries have met this target: Norway, Denmark,
Sweden, The Netherlands and Luxembourg.
She said the United States, which spends 0.1 percent of its GNP on
aid, has not even provided a timeframe to reach the U.N. target, or set
goals for interim targets, putting Washington last among the 22 major
nations.
Also, aid as a fraction of rich country income is not a meaningful
measure of the adequacy of aid flows.
"It would be far better to estimate aid needs by starting on the
recipient side with a meaningful model of how aid affects development,"
she added.
Meanwhile, in report to the next session of the General Assembly in
September, U.N. Secretary-General Kofi Annan says that despite improved
economic performance, "Extreme poverty appears to be decreasing in very
few of the LDCs, and increasing in many." "In unprecedented reversal of
historical trends, life expectancy is declining in several LDCs, most
affected by HIV/AIDS and civil strife."
He also points out that climate change is emerging as "a new
challenge to sustainable development of the LDCs, in particular those in
Africa and the small islands."
Prepared by the Geneva-based U.N. Conference on Trade and
Development, the 27-page report says that most LDCs are constrained by
many factors: structural weaknesses of their economies; limited human,
institutional, technical, trade and productive capacity; inadequate
infrastructure and unsustainable external debt. |