Intervention at the alternative conference to the ABCDE-conference

Intervention by Ms. Hilde F. Johnson,
Minister of International Development of Norway,
at the alternative conference to the World Bank ABCDE-Conference,
Oslo, 23 June 2002

Dear fellow activists

Being an activist in my soul, sitting in a minister’s chair, fighting for the rights of the poor -, I’m pleased to be here – and meet fellow activists – whom I understand will walk where I often have been – on the streets.

This is an opportunity to exchange views on how we can fight for the rights of the poor, a discussion which also will take place at the researcher’s conference tomorrow, - and where I’m sorry many of you have declined to participate. In my view – your views should be presented there, rather than here.

Globalisation has great potential, but also major risks. The greatest challenge is to avoid globalisation from leading to marginalization and exclusion of the poor. If billions of people are worse off, we have failed.

My first point is: What we really need is global governance; we need to strengthen global bodies. The only global institutions that exists – apart from the UN – is the World Bank, the IMF and the WTO. They are the most important multilateral institutions – whether we like it or not.

If you don’t believe in revolution, - in a global revolution for that matter, - then reform is the only alternative. Reform of the multilateral institutions’ policies.

Globalisation protesters have over the last 2-3 years shouted "shrink or sink" – about the WTO, the World Bank and the IMF. They, - and maybe some of you – want to get rid of the institutions - wipe them out or limit their powers significantly.

A globalised world without multilateral institutions, and without multilateral rules is a brutal world – where there are two groups of countries – and people – that will suffer: the small – and the poor. It will be a world that much more than today will imply – survival of the fittest – and of the fattest - a world of free market forces in unlimited display without rules, a world where the US - and not Britannia - are ruling the waves.

I don’t want such a world. And to join the words of my good friend Trevor Manuel, the finance minister of South Africa – from his heated discussion with the globalization protesters in Prague 2000; "If you really want to make the poor suffer, - get rid of the World Bank and the IMF. They are today – the only financial institutions that are willing to lend money to the poorest countries. No private bank will lend one single dollar to them because they are not credit worthy. If they are left with this as the only alternative, the conditions that will be in place will be such that the poor have never seen anything worse. Why? Because the free market forces will be at play, private banks are not in the mercy-business. There will be no mercy in terms of concessional or grant lending.

My second point – We need multilateral policies for poverty eradication. Given that I don’t want a revolution, but reform, and given that the best way to achieve that is to work through the multilateral institutions, - then the most important thing is to discuss which policies we need to put in place in these institutions.

This is what the ABCDE-conference is all about. The title of the conference is "Towards Pro-Poor Policies". This implies a clear goal: We want policies that are Pro-poor -–that are fighting for the rights of the poor – and for poverty eradication. It also implies that we’re not there yet: "Towards" – implies the need for discussion – where are we now, - we’re not satisfied, - we need to change – to where? Towards what? No conclusions. Just questionmarks.

You should have been there to discuss exactly that!

Because I sincerely believe that none of us has the quick fix-answer, the "fasit", as we say in the Germanic languages. We are to lift 1,2 billion people out of extreme poverty, - and help more than 2 billion to a decent life. It’s daunting. Halving the number of people who survive on less than one dollar a day within 2015 – is an obligation - and I think achievable - if both countries and institutions pull in the right direction and make major efforts.

What is the right direction? What policies deliver in terms of reducing and eradicating poverty?

In my view, the structural adjustment policies of the 80’s didn’t. Economic reforms were necessary, but the structural adjustment programmes went way too far. I have been one of their staunch critiques. Several findings of the SAPRIN–research confirm what has been well known to many of us – and to the Bank. The willingness to look critically at it’s past – and learn from it, - is also the reason for the Bank’s co-operation with, and for Norway’s and Sweden’s financing of, the research programme. As far as I am informed this was never halted by the Bank, and a new meeting will take place in July – with the World Bank President. But this is up to the Bank to comment on. I’m not here as their defender.

The Bank has done many mistakes and misjudgements. But, it has changed and gone through reforms. The Structural Adjustment Policies of the 80’s are over. There are three important changes that have taken place and are in process:

Change in macro-economic thinking

The trickle down-theory is dead. The World Bank has acknowledged that it does not deliver. This approach has been replaced by the view that massive investment in human resources – in education and health for the majority of the people delivers more in poverty reduction - and is necessary for economic growth. Today the Bank is the biggest contributor in all these areas. This is more of a bottom-up-approach, as debated at the Paris ABCDE-conference in 2000.

Change in the view on the role of the State

There is an acknowledgement that no economic growth and socio-economic development is possible without a functioning state, a sufficiently strong state, a state that delivers services to it’s people, a state which strives towards good governance and fights corruption. The Bank is advocating decentralisation of power and the involvement of civil society. Here, there are lessons learned from capital market liberalisation in Russia during the first years. The BWIs are now acknowledging that mistakes were made, and that functioning institutions is a precondition for functioning markets.

Change in the co-operation framework

With the exception of a few middle-income countries, structural adjustment programmes have been replaced by Poverty Reduction Strategy Papers; - as the co-operation framework for both the Bank and partner-countries.

The PRSP-process is based on country leadership – with the country in the driver’s seat, ensuring sufficient investments in health, education and the social sectors. It is the framework for co-ordinating all the donors and ensuring follow up and implementation of the Millennium Development Goals.

The PRSP-process is still in it’s initial phase. The first ones were pushed too quickly through because of pressure to get the debt-relief decision within the Millennium year 2000 by some G-7 countries. There was not sufficient ownership and consultation. Norway has criticised that. The PRSP-process is still under formation.

The other factor which hasn’t been given enough attention is the macro-economic dimension. Both within the Bank and from our side we want a critical examination of this. A regular social impact analysis is therefore about to be installed, for both the IMF and the World Bank, studying the social impact of the PRSC – the credit-conditionalities. This will provide the basis for critical debates and changes in the policies.

The Bank is changing. It is being reformed. It’s developing in the right direction. But it’s not there yet. As for the IMF, there is still a long way to go.

My third point: We need change that makes real difference in real people’s lives. And the question is: Can that be delivered by working with the Bank? I understand that for many of you the answer is: No. Mine is different.

Since 1998 an alliance of progressive development ministers, a majority socialist/social democrats, have worked together. Clare Short from the UK, Eveline Herfkens from the Netherlands, Heidemarie Wieczorek-Zeul from Germany and me from Norway, the Utstein 4, and from the summer now joined by the first man, - the Swedish minister Jan Karlsson. We have been a pretty radical voice with our main focus on the board of the World Bank, fighting for debt cancellation, country ownership, macro-economic change, poverty eradication through investments in education and health etc. Two of us have worked within the G-7. Two outside. We have called ourselves "the conspiracy of implementation".

An alliance of the U4, progressive finance ministers like Gordon Brown and Trevor Manuel, supported by grass root engagement and pressure from the leadership of the World Bank has lead to several breakthroughs:

- 1999/2000: Debt. A major breakthrough in debt relief and debt cancellation for the poorest. This made a difference in health and education for millions of poor people. Since then, poor economies have been hard hit by commodity price shocks, reminding us that we’re still not there, more has to be done.

- 2000: Poverty Reduction. Agreement on the Millennium Development Goals – getting the World Bank and the IMF to sign up to them and commit to examine their policies in relation to that. Implementation of the MDGs will be monitored. This is going to be a test case, both for the IMF and the World Bank.

- 2001: Trade. The Doha Development Round – WTO. Still a long way to go before there is justice in the international trading system. And the new round is still to be negotiated. But, the framework that has been agreed is still a breakthrough.

- 2002: ODA. Monterrey: Agreement on how to get there, - new commitments. Needed a doubling, got a 20-25% increase. Still: reversing the trend. A major breakthrough.

It’s not a revolution. It’s not even a sufficient reform. But it may make a difference in millions of peoples lives: And we have something to build on!

I have been talking to many ministers from developing countries telling they have experienced a major difference. They can spend much more on health and education for their poor than they could before.

Both as an anropologist – and as a minister - I have been sitting on many poor people’s strawmats, in shades and shelters, in mud huts and under trees. They are betrayed every day – by their own elites, their own leaders, their own MPs, and by international actors. However, quite a number have experienced changes the last couple of years.

ATTACs slogan is: Another world is possible. I agree. A world which lifts the poor out of poverty. But I think it is possible working for that from within. My slogan is: "Change is possible. Reform is possible. That’s my experience. Substantial change has taken place. More change is needed.

At the end of the day the test case will be whether we have managed to make a real difference in the lives of real people. I think we can. And I think we will.

But to get there – all progressive forces need to join hands. "Demonising" each other doesn’t get us anywhere. That’s my challenge to you.