Corruption, trade liberalisation and environmental degradation are all crucial to tackling global poverty, argues Lynne Featherstone

[This article is based on a speech made by Lynne Featherstone in the Commons during a debate on global poverty.]

When I first assumed my Front-Bench position and met all the non-governmental organisations and people who populate the world of international development, I formed the impression that the former Secretary of State for International Development walked on water - I am sure that the current one will follow - in as much as DFID has vast amounts of money to give out to a great number of countries and causes. However, as an Opposition party we need to establish whether, in terms of those billions that go to the developing world, we are spending our money well. Do we get bangs for our bucks? Is the funding delivering? Is it being spent in a way that addresses global poverty, not just in terms of the great humanitarian need of sustaining life, but in terms of moving from poverty and dependence to independence, which must ultimately be our aim?

I think that we would all agree that Make Poverty History was a phenomenal campaign whereby people across the developed world joined hands to put pressure on their governments to make them give substantive promises at the G8 at Gleneagles. Great Britain can hold its head high in some respects. We provided £6.85 billion in aid last year - an increase from 0.47 to 0.52 per cent. of gross national income - although that is still some way short of the 0.7 per cent. target. Other promises, particularly from other countries, remain undelivered. Indeed, the Africa Progress Panel, headed by Kofi Annan, claimed that the western world is only 10 per cent. of the way towards fulfilling its Gleneagles commitments. In 2006, for the first time in a decade, total aid from the west fell.

I welcome this debate. It is a timely reminder of the progress we have made and the challenges that remain, coming as it does at the mid-point between the setting of the millennium development goals and the 2015 deadlines. It is now becoming increasingly obvious that those goals will not be met - at least, not by many countries. Liberal Democrats are committed to a target of 0.7 per cent. of GNI by 2011 at the latest; it was a manifesto pledge. I was pleased to read the first recommendation of the Conservative review because it shows that they agree that the 0.7 per cent. target should be met sooner than 2013, although today’s motion does not make that leap.

I want to address three key issues that are pre-eminent in the fight against global poverty: the nature of sustainable development, the tackling of corruption and climate change. If we do not make the tackling of those our priority, we shall fail in perpetuity to lift poor and vulnerable countries out of dependence, poverty and misery. As has been discussed already, we must remove unfair trade barriers against low-income countries. I hope that it is obvious that a key objective of international trade policies has to be to stimulate sustainable development, because no country has ever been lifted out of poverty by aid alone. An over-reliance on debt relief and aid leads to an unhealthy dependence, which creates a vicious circle that can be impossible to escape from.

It is vital that we reinvigorate the Doha talks to ensure a positive outcome for developing countries. We must reduce agricultural subsidies and trade barriers to guarantee a level playing field for all. The World Trade Organisation operates on a principle of one country, one vote, but we fail to give the poorest nations a voice in international trade negotiations.

It is easy to blame the international community for the desperately unjust situation we are in, but we also need to look a bit closer to home. The European Union’s record on free trade is deplorable, despite our best efforts. I cannot help thinking that our real chance to push that issue home was when we had the presidency of the EU in 2005. We have to help developing countries to build up their economies and civil society so that they can move away from dependency. China and India have pulled huge portions of their populations out of poverty through economic growth, which has primarily been driven by international trade. We also have to realise that it is in our own interest to liberalise the trade agenda.
Farming subsidies come out of the public purse; taxpayers’ money is being diverted away from where it is most needed in order to fill the pockets of a small, but powerful minority.

Another part of the motion on global poverty mentions the need for

“independent accounting as well as increased independent scrutiny of the United Kingdom’s aid budget”.

We think that that is a very good idea, but corruption robs the aid budget of so much of its full value. We need to make sure that our money is delivering, and that the 10 per cent. take all the way along the line is stopped in its tracks.

Aid donors can take four direct actions to strengthen the hand of political leaders in developing countries that need help in reducing corruption, as well as some less direct measures. First, there is a need to tighten up procurement rules, in terms of the legal framework and the rules on the use of aid. Corruption can add 20 to 100 per cent. to the cost of our aid. Obviously, it is easier to tackle the rules than the legal framework - the World Bank, EU and Department for International Development rules have significant loopholes or latitude.

On another tack, as has been mentioned, there are lots of ways to trace the siphoning off of funds, but efforts at identifying the beneficiaries often appear half-hearted. The World Bank and others use specialists to trace funds. We can see how much Mobutu and Marcos money has been recovered after the fact. If governments, including Her Majesty’s government, possess or can get such information about how and where money has been siphoned off, why do they not act? We must track down criminals and recover the money.

We also appear to lack the will to use international law and United Nations institutions. Many developing countries are now signatories to the UN convention that requires an anti-corruption institution. Yet many signatories barely comply with the letter or spirit of the convention in practice or in law. There is much scope for extra leverage by donors if they help such fledgling institutions become robust.

Even more problematic, much corruption in developing countries is legal. It ranges from the absence of a prohibition on Ministers owning companies that are recipients of hugely inflated contracts to permissiveness in capital markets, which enables Ministers, parliamentarians or officials to benefit directly from privatisations, bond issues and share acquisitions. That must change if we are to tackle corruption. We should be in there, helping strengthen anti-corruption measures with a review of a host of matters, from bribery to anti-competition laws; from insider trading to state governance.

We need to start from the bottom up. Donors should channel more funds through local government because that can strengthen vital local democracy. Much large-scale corruption occurs via singular central elites, and that leads to the so-called “necessity” of single tribes or ethnic groups grabbing control of the reins of central government. One central target that holds all the power and wealth of a nation is a much greater danger than local government responding to local needs and demands. Clearly, strengthening local governance and local democracy, and concentrating on the grass roots would cut corruption.

I have been able to cast only a brief glance over the weighty tome that is the Conservatives’ policy review, which was launched today, but it contained little mention of local government and the importance of channelling funding, especially economic development, at the level of the company, the firm and the local market. If we are serious about strengthening countries through help to help themselves, local governance and local democracy is a must to defeat corruption. Simply monitoring and watching corruption and knowing that it exists is not enough.

A couple of months ago, Results UK arranged for me to meet a woman from Kenya called Lucy. She told me that, in Kenya, money from the Global Fund to Fight AIDS, Tuberculosis and Malaria had been suspended because the Kenyan government had failed to disburse the previous grants. It was only through grass-roots action and pressure from civil society groups such as hers that those blockages were removed - the Kenyan government had to respond to the local demand for honesty. The Kenyan national TB programme could then continue its work.

Sadly, advising on the necessary steps to tackle corruption abroad seems a bit rich coming from us at the moment. We can tackle corruption only if we are squeaky clean in our dealings across the world. Now is not the best time for us to hold up our heads.

I want to consider an issue that hon. Members of all parties have acknowledged to be overwhelmingly important for the developing world: the threat of environmental degradation.

Catastrophic climate change is not the only environmental problem but it is, clearly, the most urgent one, especially for poor countries, which are constrained in their ability to react to a rapidly changing climate. Climate change will hit the poorest and the most vulnerable countries in the developing world first. A recent WWF report demonstrated that, of all the millennium development goals, the goal on environmental sustainability - MDG 7 - is the only one for which the overall position is getting worse rather than better.

Although the poorest people in the world have done least to cause climate change, they are the ones predicted to be worst affected. Poor people depend most directly on the services delivered by natural resources and ecosystems. They depend on them for food, fibre, water, fuel and income. The developed world, which is mostly responsible for climate change, should therefore help the developing world with adaptation. Applying the “polluter pays” principle, the developed world has an obligation to help poor and vulnerable countries to adapt to climate change. Therefore, we need in partnership to find additional funding for adaptation. The UK should perhaps take a lead on that, because we are one of those countries responsible for much of the pollution.

Judging from the government’s past performance, as well as from my first impressions of the Conservatives’ report, I am not convinced that there is a real urgency about addressing the need for action. The Make Poverty History campaign was a brilliant example of civil society action to put pressure on the G8, but I wish that equal efforts had been made on the other G8 priority of that year - climate change. Uncontrolled climate change will undo all the good that debt forgiveness or higher aid can deliver. The hon. Member for Stone [Mr. Cash] is no longer in his place, but it is good, as he said, that the G8 agreed to a UN-sponsored process on climate change.

However, there is in fact already a process: the Kyoto protocol, which involves all the key developing countries. If President Bush had been serious about wanting to involve the US in climate talks, all he needed to do was to ratify the Kyoto protocol and join the ongoing talks about targets for the second commitment period, post 2012. Developing countries also need to accept emissions reductions. Equally, however, we cannot expect them to do that unless the industrial countries move further and faster. That principle is written into the UN framework convention on climate change, which almost every country has ratified, including the US.

International institutions also need to adapt much more urgently to the new world of an increasingly unstable climate. The World Bank still does not pay enough attention to the issue and the International Monetary Fund almost none at all. Similarly, the World Trade Organisation treats environmental issues as an unimportant sideshow. It is notable that the environmental components of the Doha agenda have been all but abandoned. We must work for universal climate-proofing of development assistance if we are to ensure that climate change is mainstreamed in development programmes and initiatives. That is going to require co-ordination among the World Bank, the IMF and the OECD group of export credit agencies, to ensure that development objectives fully support climate change mitigation.

In conclusion, development will be impaired, reduced, slowed and diminished, and we will not get value for money if we continue to refuse to liberalise trade. Our spend must be delivered effectively, which means tackling corruption, not just saying that we are tackling it. The driving imperative of development, in all its incarnations, must become inseparable from the environmental cataclysm that is climate change.

This article is based on a speech by Lynne Featherstone in the Commons on 24th July 2007.

Lynne Featherstone is Liberal Democrat Shadow International Development Secretary

Please click here to watch Lynne Featherstone’s speech on parliament live TV
(Note the video will only be available 28 days after the speech)