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Monterrey and the World | The Nation

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Monterrey and the World

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How are we to read the International Conference on Financing for Development, which recently concluded in Monterrey, Mexico? Just another United Nations talkathon? Or have the world's rich societies put behind them their indifference to the poor majority of our planet? And has September 11 prompted a rethink of our shared responsibility for widespread poverty and deprivation? In short, does Monterrey represent an authentic break with the Washington consensus--the straitjacket used to confine development thinking since the Berlin wall fell and East-West tensions disappeared?

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Patrick Smith
Patrick Smith was a correspondent abroad for many years, chiefly for the International Herald Tribune. (reporting from...

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A year ago now, when the Bush Administration was preparing the world for an American invasion of Iraq, John le Carré wrote a column of scathing, sharp-toothed commentary for the Times

In a broad square not far from the center of Jakarta, a large obelisk of
concrete soars into the sky.

Yes, we now have the makings of a plan for increasing aid to developing nations. Even the Bush Administration agreed to increase its assistance budget by $5 billion each year over the next three years, to $15 billion--still a piddling sum but an improvement nonetheless. Developing countries are pledged to make needed economic and political reforms. "Monterrey lays out a big global bargain," said Mark Malloch Brown, who heads the UN Development Program. "If it succeeds, it will put development at the heart of global politics."

It's pretty to think so, but note the conditional. Monterrey could turn out to be yet another defense of the Washington consensus itself--another exercise in neoliberalism with a human face. We've been there before, certainly. The 1990s began with the imposition of the neoliberal model here, there and everywhere. Economies were to be privatized and deregulated, the state reduced to janitorial status, capital markets flung incautiously open--all on the preposterous notion that what worked in one place (and where would that be, actually?) would work anywhere. Aid would have little place in the progress of underdeveloped economies; the markets would do the job. The elites in an embarrassing number of poor nations bought into this notion--which one can put down partly to the sad fact that too few any longer had much capacity to think for themselves and partly to the fact that there was no other game in town.

As the failures came in--notoriously in East Asia and Latin America--the ameliorating voices rose at the World Bank and the International Monetary Fund with promises of poverty alleviation programs, gender empowerment and all manner of politically correct ornaments. But the essential terms never changed. And that is where the world stood as representatives of 171 nations and 700 nongovernmental organizations gathered in Monterrey on March 18.

Now that the conference is over, we can conclude only that the possibility of success has survived it. Along with their new commitment to aid, advanced nations say they are now willing to accept aid recipients as partners in the process of recreating the world economy. Developing countries profess to have grasped their duty to create the institutions and policies that make development possible. Both rich and poor, it seems, are prepared to consider a redesign of our global economic machinery.

There are some admissions of failure implicit in this. Chief among them is that private capital-flows, deified during the 1990s to the point of silliness, have not lived up to the promise of the decade. Another has to do with structures: Political and policy frameworks have to be rethought if not reinvented. The preoccupation at Monterrey was with mechanisms: how to mobilize domestic resources among developing countries, how to enhance fixed investment and control short-term capital flows, how to make trade genuinely free and fair, how to get aid moving under conditions agreed by all with disinterest.

Read the Monterrey Consensus, the document drafted to sum up the gathering, and the ambition is clear: It is about providing support for rethinking the old prescriptions and inducing a sense among developing countries that they are the originators and owners of national policies. It is also about reconstituting the globalization project so that authentic development can be paid for and aid can be applied effectively.

There is no shortage, even at this early point, of imaginative ideas within the UN framework and beyond it. Last autumn Gordon Brown delivered a much-noted call for a global new deal. Accepting the goals the UN has set for 2015--poverty cut by half, child mortality by two-thirds, primary education universally available--the British chancellor of the exchequer outlined a four-point how-to program. First come improved terms for the poorest countries--new rules and codes. Then higher standards of engagement for international business and an acceptance of business's responsibilities in the development process; a fairer trade regime; and "a sustainable transfer of additional resources from the rich to the poor in the form of investment for development."

This and other mini­Marshall Plans--Brown's term--have created new ways to measure national priorities. We know now what $27 billion spent on bombs in Afghanistan or Iraq [or other "rogue nations ?] could do if applied differently: Jeffrey Sachs, director of the Center for International Development at Harvard, tells us this amount could save 8 million lives annually if applied to infectious diseases in developing nations. We know what could be accomplished with that $48 billion increase in the defense budget the White House declared not long ago--it is almost exactly a year's worth of the increased aid that Monterrey has called for. We know what could come of the so-called Tobin tax on cross-border financial transactions: A levy of, say, 0.1 percent would have virtually no impact on capital flows but would yield substantial resources for development.

At Monterrey, George Soros elaborated on his plan to use a new issue of special drawing rights, the IMF's reserve instruments, to dispense aid. Funds would be administered by a board under the aegis of the IMF but independent of it; in theory, at least, aid would at last be divorced from political agendas and ideology. Out of this competitive process would come good government, Soros argues--the absence of which "is the single most important cause of poverty in the world today."

It is precisely such ideas that make the Bush Administration's proposals appear so inadequate. It's not just Washington's cheapskate aid commitment. The larger problem is how this aid is to be disbursed. Faced with the prospect of change, Bush and Treasury Secretary Paul O'Neill propose to go not forward but back--to a retrograde notion of aid as alms. "We are not asking for compassion but for a new global context," Argentine President Eduardo Duhalde told the gathering on March 21. Bush spoke the next day, replying more or less directly: You'll get the former in spare doses, and you can forget about the latter. Bush and O'Neill have given no thought to the disbursement mechanisms others called for--only the preservation of America's prerogative to direct change, if not force it. Taken together, the conditions attached to increased US aid amount to a vigorous reiteration of the Washington consensus.

No one knows yet how to engender economic growth and development. But Monterrey may have created a platform upon which to test new ideas. Americans can participate in this process--though it has been a long time now, we have acted with disinterest and imagination before. But we should be under no illusions that this can happen quickly, for it requires us to change nothing less than our minds. And we certainly cannot expect this Administration to join in the process that may have begun in Monterrey.

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