U.S. should do its part in fighting poverty

DAVID CHANG
Daily Trojan (USC)

(U-WIRE) LOS ANGELES -- The G8 nations have agreed to cancel the debt of 18 of the world's poorest countries. These nations will have $40 billion forgiven, thus freeing an annual $1.5 billion for the states to spend on health care and education. To qualify for debt relief, each nation must meet standards in government transparency and economic liberalization; an additional 20 countries could qualify if they take steps toward these goals. To finance this loan cancellation, the industrialized nations have pledged to replenish the money owed to the World Bank, the International Monetary Fund and the African Development Fund. Proponents of these lending institutions proclaim the power of free trade and open markets to create wealth and to promote peace. However, recent events around the world reveal local resistance to global capitalism.

Brazil has retaliated against pharmaceutical and technology companies over intellectual property rights. In the late 1990s, the state threatened to release generic versions of AIDS drugs to force firms to cut prices, which they did to prevent losing the 180 million person market. More recently, Brazil is currently switching government computers from Microsoft Windows to Linux, a free operating system, to save money on licensing fees. Whereas the debate over patents and copyrights in America (such as recording industry lawsuits against music downloads and film industry efforts against movie bootlegs) has focused on the protection of these rights, Brazil is concerned with sharing intellectual property with the developing nations. Although American firms claim losses from copyright violations total a billion dollars annually and the United States has threatened to deny Brazil's favored trade status if the nation does not take action against piracy, Brazil is beginning to persuade the world in its favor; the United Nations will debate exceptions to intellectual property law later this year.

In Bolivia, transnational corporations have taken interest in the country's natural gas reserve, the second largest in South America. Former President Carlos Mesa was forced to resign because of violent street protests over the perceived loss of natural resources to foreign firms. Despite the fact that the nation's Supreme Court invalidated existing oil and gas contracts since Congress had not approved the agreements and the government doubled taxes and royalties that corporations would have to pay to sell the reserves, civil unrest in the streets suggest the masses are dissatisfied with foreign firms tapping their natural resources. Similar political instability exists in Venezuela where President Hugo Chavez has faced two recall elections because of class warfare over the distribution of benefits from the oil industry (last summer's hikes in American gas prices were due partly to political uncertainty in the region). On the other side of the world, Iraq's oil pipelines -- built by investments from foreign firms -- are constant targets of insurgent bombings. These examples suggest natural resources do not necessarily lead to wealth creation as promised by free market advocates. Without stable governance, natural resources can actually hinder capitalist development -- let alone democracy.

The problem at the heart of global capitalism is the fear of capital flight, the movement of wealth from local economies to transnational corporations and industrialized nations. Opposition members -- from South American presidents to street protestors -- are concerned profits reaped from local economies will not be returned to the developing world. Although debt relief is an admirable start toward the end of poverty, it does not address suspicions that Western nations and limitless corporations perpetuate poverty by plundering natural resources and cheap labor from developing countries. This does not bode well for the war on terror. In 1996, America established the Qualifying Industrial Zones initiative, which set up areas in Jordan and Israel where goods can be produced to be traded duty free in America. This program was meant to build economic cooperation between Arabs and Israelis as a means of promoting peace -- that is, counter terror with trade. However, Arab workers see foreign investors (American or often Israeli) as exploiting their labor, and since workers are unable to organize due to political repression, a view of government collusion with foreign capital is fostered. Under such conditions, it is hard to believe in the power of government transparency and economic liberalization promoted by the world's lending institutions.

However noble the cancellation of debts by the industrialized nations may be, we are far from eliminating poverty -- or terror, for that matter. The annual $1.5 billion freed up by the G8 agreement is infinitesimal compared to the United Nations' estimate of an annual $100 billion needed to reduce poverty by half -- just by half -- in the next 10 years; in fact, 62 of the world's poorest nations -- 44 more than the 18 states whose debts were forgiven -- would have to receive debt cancellation to meet the 2015 goal. But the world must start somewhere and hopefully, we will keep our promises on the way. In 2002, the Bush administration pledged $5 billion "to those countries that rule justly, invest in their people and encourage economic freedom," but the president requested only $3 billion for the Millennium Challenge Corporation in next year's budget. The MCC has yet to disburse any grants and has announced only one project, Madagascar. Despite this slow start, let's hope the industrialized nations keep their promises so we may see an end to poverty one day -- or at least, movement toward that goal.