Grants and debt swaps should be explored in Bali Summit

Bahtiar Arif, Center for Indonesia Reform, Lecturer, University of Pancasila, Jakarta, bahtiararif@yahoo.com

The preparatory meeting for the World Summit on Sustainable Development is currently taking place in Bali.

The Bali meeting will draw a final draft which will be brought to Johannesburg where the summit will run from Aug. 26 to Sept. 4.

The main agenda of the Summit is to push for a sustainable development agenda that calls for improving the independent relationship between people and the environment and to address the needs of the more than one billion people who presently lack access to clean water, sanitation and modern energy services.

Implementation of the agendas will be focused on building partnerships between government and private sectors, known as Public-Private-Partnership (PPP).

As Nittin Desai, Secretary General of the Summit, said: The government cannot fight poverty and protect the environment alone, so it is important to build a partnership.

The Bali meeting will discuss and formulate the partnership initiatives, and the results will be submitted for further consideration and adoption at the Summit.

But, who truly gains from the sustainable development agenda? How effective do the partnership initiatives need to be to obtain the objectives? Are poverty alleviation and environmental protection the main and sincere agendas?

The sustainable development promoted by the United Nations World Commission on Environment and Development (UNWCED) and based on the Brundtland Report has challenged the development ideology which primarily focuses on economic growth without consideration for the environment or human matters.

The premise is to design and implement "safe" development programs in terms of environment and human matters.

However, the costs involved to save our planet will be expensive in monetary terms.

Even for developing countries burdened by huge amounts of debt, it will be difficult to finance such development programs.

Therefore, a private finance initiative may be the best alternative to finance the sustainable development program.

If the proposal for a private finance initiative is agreed upon, private sectors, which have sufficient funds, will obtain the projects.

They have enough funds to be used for such programs. But, it is common in the private sector that profits come first. Based on the UK's experience, there has been "a hidden subsidy" from the government budget to the private sector. For profitability reasons, the private sector intentionally re-treats some unfinished projects, so that the government is obliged to give "a hidden subsidy" to the private sector to finish the projects.

Second, which countries have multinational enterprises ready for such an initiative? Developed or developing economies? If firms in developing countries are not ready to participate in the initiative, those from the developed countries will seize the opportunity -- and therefore, there will profit from the compensation from recipient countries for the initiative. There will be two questions: Who will guarantee that no "hidden subsidies" will occur and how effective will this make the overall sustainable development program?

Sustainable development has affected countries to obtain sustainable growth. In developing countries, some development programs supported by the international agencies -- the World Bank and IMF, have been designed and implemented. However, poverty alleviation and other human development have not been good. In addition, environmental destruction such as pollution, lack of clean water, deforestation are by-products of the World Bank and IMF programs.

Then, who should be responsible? It is not only the responsibility of the private sector or governments, but all people. All humans -- in developed and in developing countries -- live on the same planet. Environmental destruction in some countries will usually affect others. So, saving the earth is not solely the responsibility of any particular country.

Poverty, uneducated people, pollution, floods, lack access to clean water, sanitation and modern energy services are all of our problems, both rich and poor countries. In the global society, it is thus the main responsibility of the rich countries. It is important to know the motives of transferring their money to poor countries whether for a moral reason or an economic/political reason.

Two alternatives may be better than private finance initiatives. First, financing environmental and human development projects must be done with more grants from rich countries to poor countries. The commitments of the rich countries to save the earth and its people should be proven by giving more money for sustainable development to poor countries. This is a moral obligation for the rich, that will not necessitate Mahatir-style (Malaysian Prime Minister) radical ideas of taxing the rich people in poor countries, because such a tax would be rejected by those rich people.

Second, the rich countries and international organizations can ask indebted countries to redirect their debt repayment allocations in their respective state budgets for sustainable development programs. This can be done by swapping debts for nature and human development as has been suggested of late.

More grants from the rich countries and debt swaps may be better alternatives than a private finance initiative. Delegations who are preparing for the Summit need to consider these alternatives to save our planet and people. Hopefully the Summit will sincerely push for these objectives -- with a "shadow agenda", especially from the rich countries.