Grants and debt swaps should be explored in Bali Summit

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.