Latest Developments, July 20

In the latest news and analysis…

As expected, the UN has officially declared a famine in southern Somalia. French agriculture minister Bruno Le Maire writes in Le Monde that hunger in this day and age is a “scandal,” and a Globe and Mail editorial decries the slow international response to the food crisis in the Horn of Africa: “When an alarm of impending famine is sounded, the whole world should be galvanized into action.” But even though USAID’s Famine Early Warning Systems Network predicted the food crisis nearly a year ago and Islamist insurgents controlling much of Somalia recently lifted their ban on foreign aid, there are still legal obstacles to large-scale US assistance.

Earlier this year, the World Food Programme also launched an emergency operation in North Korea and an EU mission recently reported “widespread consumption of grass.” As of last week, the UN had received less than a quarter of the funds it was seeking for North Korean food assistance. The Brookings Institution’s Roberta Cohen says politics have prevented South Korea and the US from helping so far. “But taking no decision is really a decision, which gives the impression that there may be no urgent or extensive food crisis in North Korea requiring immediate action.”

But Columbia University economist Jeffrey Sachs says responding to food shortages, such as the one currently unfolding in the Horn of Africa, is not the way to go. The focus should instead be on lifting people out of poverty permanently, dealing with climate change and reining in population growth.

A Guardian editorial says the British public’s lack of enthusiasm for the government’s pledge to increase aid to 0.7 percent of GDP is understandable, given the frustratingly predictable cycle of development policies. “Fashions in giving have come and gone, interspersed with bursts of retrospective analysis purporting to show both why previous programmes have failed and how to reshape them so that they really will work and really will add to the sum of peace and prosperity in the world.” Nevertheless, the authors encourage the Cameron government to stick to its aid promise before concluding: “If we get it right this time, the public might eventually come round.”

A major problem with foreign aid, according to Bottom Up Thinking, is an accountability deficit resulting from the fact that its “‘customers’ are not the same people as those who pay the bills and that leads to massively misaligned incentives.” But the main reason why people have such little faith in aid’s usefulness is, paradoxically, the high expectations set up by an industry obsessed with sending out positive messages: “The problem, as I see it, is that we are very rarely upfront about the risks of failure. Far too much of the conservation and development industry is extremely reluctant to admit to failure (or even just disappointing results); glossy brochures proclaim an unending procession of success stories.”

The Center for Global Development’s Wren Elhai warns that a six-word amendment to proposed US legislation would make all American assistance to Pakistan conditional on the South Asian country’s demonstration that it is committed to preventing the Taliban and other perceived undesirables from operating within its borders: “The notion that a relatively small amount of civilian aid will change the strategic calculus of the Pakistani military is simply ludicrous. Meanwhile, attempting to use civilian aid as security leverage would upset the fragile two-track strategy that has guided U.S. strategy in Pakistan for the past several years.”

In a blog post entitled “Yes, South Sudan Can,” World Bank economist Shantayanan Devarajan lays out the three keys for South Sudanese success: stimulating sustained economic growth, implementing “home-grown solutions,” and embracing information and communications technology. Drawing on Africa’s recent history for inspiration, Devarajan points to “a number of countries, such as Mozambique and Uganda, which emerged from civil conflict and sustained above-7-percent GDP growth for over a decade.” In the UN’s latest Human Development Index ranking, Mozambique sat 168th out of 172 countries and Uganda scored better than only two non-African countries: Afghanistan and Haiti.

After discussing a recent study that suggests resource extraction is more often a blessing than a curse, Michael Levi of the Council on Foreign Relations turns to the specific possibility of a Liberian oil industry, reminding us the authors’ “analysis is statistical: while it might say that on average there isn’t a resource curse, that should be little reassurance for any particular country that’s diving into extraction.” Nor does the analysis, which focuses on political freedom, take socio-economic or environmental indicators into account. Of the 12 sub-Saharan countries whose daily crude production currently exceeds 50,000 barrels per day, only Gabon, South Africa and Congo do not rank in the bottom quintile in either the UN’s Human Development Index or Yale University’s Environmental Performance Index.

Reuters correspondent Peter Apps asks if Britain is more corrupt than it thinks. According to one expert quoted in the article: “If you look at the way we talk about and measure corruption in the West, it’s either Africa or Asia which comes out worse. But we are using a distorted prism.” Apps’s question is inspired by the UK’s ongoing phone hacking scandal, but there are also new developments concerning British companies behaving badly overseas. A parliamentary committee slammed military contractor BAE Systems for misusing funds in Tanzania and not paying the penalty imposed after a plea bargain. And miner Monterrico Metals has settled out of court on charges of collusion in the detention and torture of protesters in Peru.

The European Network on Debt and Development’s Alex Marriage sees an “apparent conflict of interest” in the fact that the European Commission assigned PricewaterhouseCoopers, an international accounting firm which boasts 415 of the Fortune Global 500 among its clients, to prepare a report on how poor countries can minimize financial losses due to corporate transfer pricing.  The practice allows large multinational corporations to reduce their tax bill by creatively billing themselves for transactions between subsidiaries so as to maximize declared expenses and minimize declared profits. “Transfer pricing is the single biggest source of illicit financial flows in the world costing developing countries hundreds of billions of dollars every year,” according to Marriage. PwC claims its own 2011 report on global transfer pricing – a separate document from the EU-commissioned one – “offers practical advice on a subject where the right amount of effort can produce huge dividends in the form of a low and stable tax charge, coupled with the ability to defend a company against tax auditor attack.”

Oxfam’s Duncan Green asks why development experts pay so little attention to “how poor people ‘do’ development.” And the Center on International Cooperation’s Alex Evans points out that poor people will not get a fair share of the world’s limited resources unless “developed countries and the “global middle class” dramatically reduce their consumption levels.”

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