Articles by President Cheddi Jagan
(1992-1997)
MEMORANDUM to the Hemispheric
Summit Conference On Sustainable Development Bolivia,
December 7 - 8, 1996
UNEMPLOYMENT, poverty, hunger and social, including
family disintegration are major problems in the present world
situation.
As the rich get richer at the expense of the poor in
the developed North as well as the developing South, and the gap
in living standards between the North and the South continues to
widen, there is generally a mood of gloom and concern about the
future.
The President and founder, Klaus Schwab, and the
Managing Director, Claud Smadja, of the prestigious World Economic
Forum described this mood in a recent article "Globalisation
Backlash is Serious" in the International Herald Tribune.
They wrote:
"Economic globalisation has entered a critical phase. A mounting
backlash against its effects especially in the industrial
democracies, is threatening to disrupt economic activity and
social stability in many countries. The mood in these democracies
is one of helplessness and anxiety. This can easily turn into
revolt, as December's unrest in France showed."
The Economic Commission on Latin America and the
Caribbean (ECLAC) sometime ago pointed out that nearly half of the
population was living at the edge of poverty. The Head of ECLAC
told a recent IDB Strategy Conference in Washington that, if
absolute poverty was to be reduced by half in the next fifty
years, there will be the need for an annual 6 percent economic
growth rate and national savings of about 28 per cent of GDP.
Considering recent trends, this will be a herculean task. In the
"lost decade" of the 1980s, the rate of growth of GDP of the Latin
American countries, which had averaged 5.4 per cent per year in
the 1970s, went down to only 1.5 per cent in 1981-88; as
population growth exceeded 2 per cent per year, per capita GDP
declined.
In the first four years of this decade, there was an
average annual growth rate of about 3.5 per cent. But in 1995,
the rate was only 0.6 per cent.
The fact is that there has been retrogression. In a letter to
The New York Times (5 December 1993) it was pointed out that
Juan de Dias Parra, leader of the Latin American Association for
Human Rights, summarised the recent trends at a meeting in Quito,
Ecuador, noting that:
"In Latin America today, there are 70 million more hungry, 30
million more illiterate, 10 million more families without homes
and 40 million more unemployed persons than there were twenty
years ago . . . There are 240 million human beings who lack the
necessities of life and this when the region is richer and more
stable then ever, according to the way the world sees it."
"The coming year will be quite difficult for these
countries," said Peter Jensen, regional coordinator for human
settlements at ECLAC in Santiago. "Growth has been really on only
one end of the spectrum, the wealthy. The rich are getting richer
and the poor getting poorer, and this will generate social
conflict.”
A recent Newsweek feature story, with the face
of a masked guerrilla fighter on the front cover, noted that the
failure of the "Washington Consensus" and the endemic poverty,
homelessness and corruption were the root causes of the return of
the guerrilla movement in Mexico, Peru and Colombia, reminiscent
of the 1960s and 1970s. Time, a little later, on the same theme,
referred particularly to the Mexican situation, pointing out that,
when NAFTA was created three years ago, Mexico was mooted to
emerge into first world status. But a virtual collapse occurred
soon after in 1994, which had repercussions in the rest of Latin
America, particularly Argentina and Brazil.
In the light of these global and regional
developments, it is important that we review the major issues of
the Miami Summit -- democracy and free trade.
Democracy is vital for development. Guyana is a vivid
example of the all-round degradation which resulted from
bureaucratic/state authoritarianism, political and ethnic
discrimination, extravagance, bribery and corruption.
Consequently, Guyana descended from a most-developed-country
status in CARICOM, when I was Premier in the early 1960s, to being
among the least-developed countries in the Hemisphere, and our
capital city Georgetown was degraded from a "garden city" into a
"garbage city".
That was why at the Summit of the Americas in Miami,
in 1994, I had fully supported the concept of democracy -- an
all-inclusive democracy (representative, consultative and
participatory); a democracy which ensures not only civil and
political rights, but also economic, social and cultural rights.
I supported also the concept of a Free Trade Area of
the Americas (FTAA), because in this era of mega-competition and
highly-technological means of production, economies of scale are
essential for survival. However, with hemispheric states at
different levels of development -- most developed,
middle-developed and least-developed -- it was essential to link
free trade to economic, social and cultural development.
Consequently, I had proposed:
1) A Regional Development (Integration) Fund (RDF)
2) Debt Relief
3) An American Volunteer Development Corps (AVDC).
4) A Forests Monitoring and Management
Training Fund.
The Regional Development Fund was modelled after a
similar fund in the European Union for the lesser-developed
countries -- Spain, Portugal, Greece and Iceland.
Debt relief is essential as the huge debt burden is
strangling development, hinders economic recovery, breeds poverty
and increases the spread of disease, drug trafficking, migration
and political instability.
Poverty is a factor of underdevelopment; development
and debt are inextricably linked.
UNICEF in its 1992 publication CHILDREN OF THE
AMERICAS, noted:
"Between 1981 and 1990 Latin America spent US$503 billion on
foreign debt payments (US$313 billion in interest). At the same
time, the region's consolidated external debt rose from US$297
billion in 1981 to US$428 billion in 1990. This mechanism whereby
the more you pay the more you owe is perverse and must be
stopped."
The underdevelopment and poverty in Latin America and
the Caribbean is partly due to the vast net outflow from this
sub-region, estimated, according to ECLAC, at an annual average of
US$36 billion in the 1980-85 period in the form of profits,
dividends and debt payments. In 1994, it was actually US$32
billion.
Editorialising on the Caribbean debt problem, the
Daily Nation (Barbados, 7 July, 1994) stated "In a community
of some seven million souls, involving member and observer
countries of the Anglophone region, the combined debt stands at
some US$10 billion, including over US$800 million for Barbados;
approximately US$2 billion each for Guyana and Trinidad and Tobago
and some US$4 billion for Jamaica.
"Guyana is generally considered as the worst-off of
the externally-indebted countries, with approximately 70 per cent
of government revenues currently being consumed to merely service
debt repayments.
"With unemployment at totally unacceptable levels,
ranging as high as some 32 per cent in some countries, and faced
with declining aid and trade concessions, the CARICOM countries
need all the understanding they can get from the international
financial institutions and the donor community in general.
"In this context, debt forgiveness, as distinct from
debt rescheduling, becomes an issue of significance to CARICOM
countries desperately in need of a breathing space from the aid
donors. This would allow them to come to grips with pressing
domestic problems, including poverty and deteriorating social
services."
In a letter to the Managing Director of the IMF,
Michael Camdessus, in early 1994, I had written:
"Sir Neville Nicholls, President of the Caribbean Development Bank
(CDB), estimates one third of the population of the Commonwealth
Caribbean is living in poverty. Recent surveys indicate the
incidence of poverty at about 43 per cent in Guyana, 33 in Jamaica
and 23 in St. Lucia. Sir Neville told a two-day regional
consultation on poverty reduction that in the 1970s there had been
“a general improvement in living standards of the broad masses”,
due to “rapid expansion in public expenditure on social services,
such as health and education.”
However, since the 1980's many countries had been
unable to sustain this level of spending because of “adverse
external events, inadequate or negative growth, chronic balance of
payments and debt service difficulties, budget deficits".
About the same time, Sir James Mitchell, Prime
Minister of St. Vincent and the Grenadines told the World
Bank-sponsored meeting of the Caribbean Group for Cooperation in
Economic Development (CGCED) that it was "astounding that our
region should be a net exporter of capital in the face of the
daunting challenges of adjustment and transition that we face".
The CARICOM economies are extremely vulnerable not
only to external shocks from the international marketplace but
also to natural disasters. Much of the Region is prone to
hurricanes and floods, earthquakes, volcanoes and droughts. There
is also the constant threat of marine accidents in the Caribbean
Sea -- a heavily transited Sea for all kinds of cargo, including
highly dangerous cargoes.
The CARICOM leaders told the President of the World
Bank, James D. Wolfensohn, and the Prime Minister of Canada, Jean
Chretien at recent conferences in early 1996 that small-island
states face many challenges to sustainable development. For small
island states such as CARICOM, sustainability is very dependent on
the quality of the environment and human resources. Critical
sectors of economic activity - agriculture including fishing,
mining, as well as human settlements - put great pressure on the
environment. The major economic activity in most of these
countries - tourism - also puts pressure on the environment but
simultaneously depends, for its existence, on the quality of the
environment.
The Caribbean Sea which links the islands, is used as
a major international water-way for the transport of a range of
hazardous and dangerous material and wastes. It is, at the same
time, the world's largest and preferred cruise corridor. Waste
from cruise ships, as well as the possibility of accidents by
ships carrying hazardous and dangerous materials, pose problems
for CARICOM states.
The Caribbean experienced 8 hurricanes, and 24 other
disasters between 1994 and 1995. Some Member States have been
visited several times. Dominica, for example, has been hit by two
hurricanes and one tropical storm in 1995.
CARICOM countries are also very likely to be affected
by sea level rise caused by global warming and their environment
is being subjected to the impact of severe weather systems. There
is need therefore, for increased cooperation and collaboration
within the wider Caribbean region, and between the Caribbean and
the rest of the world, in the field of environmental protection,
conservation, and enhancement for sustainable development.
In Guyana, during the first year (1993) of my
government, debt payments amounted to 80 per cent of government
revenues from all sources, and the foreign debt of over US$2
billion necessitated payments amounting to 50 per cent of all
income from exports. During each of the two past years, there was
a net outflow of capital due to huge foreign debt payments. In
the last three years, Guyana paid US$308 million. If foreign debt
payments had been limited to only 10 per cent of export income,
payments would have been only US$108 million. The savings of
US$200 million would have made a significant impact to advance
physical and social infrastructure development in the creation of
a more conducive environment for private investment, and to raise
wages and salaries from a minimum of US$50 and a maximum of
US$1000 per month, which hinder human resources development and
perpetuates the vicious circle of poverty.
We have made significant progress during the past
years: a high economic growth rate averaging over 6 per cent with
equity -- social justice and eco-justice -- for which my
government has been praised by the IDB, the World Bank, the
European Union, UNDP, UNICEF and the last two US Ambassadors. An
IDB consultant said that "we are a small country with big
ambitions . . . a shining example of a country on its way out of
the abyss."
However, we need to grow much faster if we are to
address the legacy of socio-economic problems we inherited -- a
wrecked economy and infrastructure; 60 per cent of the people
below the poverty line; 40 percent of farm households with five
acres and less and 68 per cent of them below the poverty line;
over 30 per cent unemployed; high infant and maternal mortality;
22 per cent of child dropouts from primary school; functional
illiteracy; about half of high school children failing in English
Language and Literature, Mathematics and Science.
An American Volunteer Development Corps (AVDC) is
essential because of the huge brain-drain, administrative
incapacity and the high cost of consultants and advisers.
A Forests Monitoring and Management Training Fund is
necessary because our huge debt payments rob us of the capability
to adequately man and equip our Forestry Commission. Our rich
forest resources if developed on a sustainable basis, can provide
rapid economic growth which is necessary for the eradication of
poverty.
We are informed that our proposals at the Summit of
the Americas, though objective, rational and sound are not
realisable in the context of budget and balance of payments
deficits. What then? Industries which provided employment and
incomes in Barbados, Trinidad and Tobago, Jamaica and elsewhere
have closed and are being closed. And one of the biggest
Caribbean conglomerates, Neal and Massy, declared a loss of nearly
TT$100 million (approximately US$16m) in the first six months of
1996. And the CARICOM countries have not yet realised the end
point of the lowering of their Common External Tariff (CET) to 20
per cent in 1998. Moreover, Hemispheric Free-Trade is looming by
the year 2005.
The banana industry in the Caribbean Windward Islands
-- Dominica, Grenada, Saint Lucia, Saint Vincent and the
Grenadines -- is imperilled. Bananas account in these countries
as a group for approximately 50 per cent of total production (GDP)
and employs some 13 percent of the labour force. In Dominica for
example, over 70 per cent of total export earnings is from
bananas. The Industry earns annually some US$200 million for the
Region.
The banana industry in the Caribbean is based on small
independent farmers. The industry employs an estimated 100,000
persons in the Caribbean Community with about 250,000 persons
dependent on it for their livelihood. It maintains the stability
of farm/rural household incomes and provides economic
justification from much of the rural development initiatives,
including infrastructure such as roads and electricity, and is the
major factor containing rural poverty. Its Infrastructure - in
particular transportation - will be critical to any programme of
agricultural diversification in the Windward Islands.
This Industry is threatened by Chiquita Brands
International, which has annual sales of US$2.5 billion,
equivalent to six times the gross domestic product (GDP) of Saint
Lucia. This giant monopoly, under the banner of Free Trade, wants
the abolition of the Banana Protocol of the Lome Convention, and
the European Union Banana Regime under Regulation 404/93, which
offers a special price to banana producers in the ACP (African,
Caribbean and Pacific) countries that supply only 16 per cent of
the European Market, a drop from 20 per cent in 1975.
If the European market is lost by a decision of the
World Trade Organisation (WTO), economic and social upheavals will
follow in the Caribbean countries, which depend on banana as their
major foreign currency earner.
A recent study, commissioned by the Caribbean Banana
Exporters Association, found that the banana industry would indeed
be destroyed if adverse changes are made to the European Banana
Regime. The Industry forecasts that such an eventuality would
cause widespread social and economic instability not only in
banana exporting countries but the wider Caribbean Community.
Financial resources are required for modernisation and
the lowering of production costs. But Caribbean small island
states are told that they do not qualify for soft loans: they
have "graduated". However, "graduation" will bring in its train
all the ills of poverty, described by the World Health
Organisation (WHO) as "the world's greatest disease."
And more time is necessary for rationalisation and
diversification, especially for the "one-crop"/"one-mineral"
economies.
Perhaps, the free trade formula of the APEC (Asia
Pacific Economic Cooperation), which was launched at the same time
as NAFTA, should be adopted for the Americas -- 10 years for the
more-developed countries and 20 years for the lesser-developed
countries.
In this regard, it should be noted that after the
upheavals in the Caribbean Basin countries in the 1970s, when the
region was declared by the US administration as one of the global
"circles of crisis", the US Caribbean Basin Initiative (CBI) and
the Canadian CARIBCAN, did not substantially assist the Caribbean
states. Because of their narrow production base, they could not
take advantage of the non-reciprocal trade concessions offered by
the USA and Canada, and also the European Union under the Lome
Convention. During the first ten-year period of the CBI, US
exports doubled to the Caribbean, while Caribbean exports to the
United States increased by only 17 per cent!
It is necessary to take a holistic approach of
development and the environment, especially sustainable human
development: In the past, they saw environmental degradation as a
product of industrial/economic development. Now, it is becoming
increasingly evident that poverty is the biggest enemy of the
environment.
Development is not simply economic growth. There are
many examples of growth without equity, without social justice and
ecological preservation. The "Brazilian miracle" was not
sustainable. Nor did it lead to human development.
Privatisation in the first four years of this decade
led to an influx of speculative foreign capital and relatively
high economic growth rates. But the Mexican collapse of December
1994 is demonstrating that much more than globalisation,
liberalisation deregulation, devaluation and privatisation is
needed.
Economic growth is necessary for social and human
development. Equally, human development is necessary for economic
development.
We need our own strategy of development. The Latin
American and Caribbean Commission on Development and Environment,
sponsored by the Inter-American Development Bank (IDB) and the
United Nations Development Programme (UNDP), in their report "Our
Own Agenda", pointed out that we followed a model of flawed
growth:
"More than a half century of flawed development has produced total
stagnation for those of us in Latin America. The burdensome
external indebtedness which derives us of the capital needed for
growth and the grave economic crisis which for 10 years has
further exacerbated the condition of our underprivileged class are
not the causes of our problems but rather manifestations of an
outworn model of growth."
The Commission noted the need for a special strategy.
The Commission reported:
“There is no universal strategy for sustainable development. The
most successful strategies are based on an analysis of our own
regional institutional, economic and social peculiarities and of
our environmental problems. The achievement of sustainable
development also requires the establishment of a medium - and
long-term planning mechanism.”
Another problem which is gaining in importance in the
developing countries because of its grave and immediate
consequences is the growing threat of becoming a kind of dumping
ground for the industrialised countries. The danger implicit in
this situation may reach a dimension similar to that of the drug
traffic, with all the corruption and environmental destruction and
that such entails.
Beside problems with direct environmental
connotations, to which we have referred in part, other problems of
an economic nature include:
* The outflow of capital from Latin America and the
Caribbean to the developed countries.
* The constant deterioration of prices of the raw
materials produced by countries of the region.
* The fluctuation of interest rates, fundamental in the
worsening external debt problem;.
* The introduction of inappropriate technological
patterns; and
* Commercial protectionism, among others.
Such a development strategy must combine good
governance, internationally, regionally and nationally. With
North/South partnership, cooperation and solidarity; a
national-democratic state of all classes and strata with the
working class not being dominated, exploited and marginalised; the
mobilisation of physical, natural and social capital; and
self-help and self-reliance.
Democracy must have as its objective "life, liberty
and the pursuit of happiness". This would be ensured when it is
embracing -- not only representative (5-minute voting), but also
consultative and participatory, particularly of women -- and when
not only civil and political rights but also economic social and
cultural rights are realised. A person must exercise his/her
right to vote, but that right will be exercisable only if the food
necessary for life is available.
No doubt, that is why His Holiness the Pope, in his
address to the World Food Summit in Rome advocated the right to
food, and remarked that "countries bearing the sometimes stifling
weight of international debt" would not count on being able to
feed all of their people.
The Pope's remarks were supported by the President of
the World Bank. Perhaps, in the face of cuts in bilateral ODA
assistance from the OECD countries, and the reluctance of the G7
industrialised states to agree for the sale of a substantial part
of the IMF gold reserves for aid particularly to the
very-impoverished least-developed countries, a limit should be
placed on foreign debt payments -- a limit not to exceed 10 per
cent of export earnings, which has been proposed by former
Presidents Kenneth Kaunda of Zambia, Alan Garcia of Peru and Oscar
Arias of Costa Rica and the British Labour Party among others.
Since, however, there will also be opposition to such
a 10 per cent limit on debt payments, the international community
should aim to create a separate Global Development Fund, like the
one proposed at the end of World War II (UNRRA) by the United
Nations for the reconstruction and rehabilitation of Europe.
Such a Fund could be administered by the ESOSVC/UNDP
for disbursement to both the developed North and the
underdeveloped South.
Such a Fund is necessary to alleviate, if not
eradicate, poverty.
In December 1992, the lead document of the Carnegie
Commission on Science, Technology and Government for the
North/South Cooperation Conference, called by President Jimmy
Carter and UN Secretary-General, Boutros Boutros-Ghali, noted
that world hunger could be reduced by 50 per cent by the year
2000.
Regrettably, no answers are forthcoming. My New
Global Human Order proposals to attain this objective include
radical reforms embracing:
The Roosevelt New Deal type of Works Programme
involving physical, social and cultural infrastructure in order to
create more jobs as at the time of the 1930s Depression;
A reduction of the work week as mooted in Germany from
5 to 4 days or 40 to 35 hours in order to create more employment;
a reduction of the pensionable age without loss of benefits.
Debt relief in the form of debt cancellation, grants
and soft loans will cause greater economic growth in the South,
which in turn will help to access goods and services from the
North, thus creating opportunities for employment.
A new EU/ACP Lome Convention with enhanced assistance
for the developing countries.
A refashioned Alliance for Progress for Latin America
and the Caribbean.
Financial resources for the Global Development
Cooperation Fund can be found from:
Demilitarisation funds - three per cent cuts in global
military expenditure can yield US$460 billion in the 1995-2000
period;
A global tax on energy. A Tax of US$1 on each barrel
of oil (and its equivalent on coal) would yield around US$66
billion annually.
Pollution taxes.
A $5 to $10 tax on long distance air travel.
Taxing global speculative foreign exchange movements.
A tax of 0.05 per cent on the value of each transaction can yield
US$150 billion annually. Nobel Prize Winner, economist James
Tobin recommends a 0.5 per cent tax, which will yield a much
greater sum.
Payments for services by poor countries can also be
made to ensure global human security. This can be for
environmental controls, destruction of nuclear weapons and
controlling communicable diseases and narcotics. Compensation
should also be paid for brain drain, exclusion of unskilled labour
and restrictions on trade.
The 1930 Depression spawned President Roosevelt's "New
Deal" Programme. And after the Cuban Revolution President
Kennedy's "New Frontier" introduced the Alliance for Progress.
In introducing his Alliance for Progress on March 13,
1961, President Kennedy pleaded for reforms:
"Those who possess wealth and power in the poor nations must
accept their own responsibilities. They must lead the fight for
those basic reforms which alone can preserve the fabric of their
own societies. Those who made peaceful revolution impossible will
make violent revolution inevitable."
However, those reforms were not carried out by the Latin American
oligarchy - the triarchy of power (the military, the upper Clergy
and the latifundistas) - with tragic consequences for the people.
Today, the OECD countries are calling for a Global
Partnership for Sustainable Development for the reduction of
absolute poverty by 50 per cent by the year 2015. The World Food
Summit in its Action Plan has set the same goal.
Let us demonstrate the necessary political will. The
United Nations must play a integral role in global economic growth
and human development, for radical reforms toward the creation of
a New Global Human Order.
© Nadira Jagan-Brancier 2000