EU Development Policy Milestones / Main Tenets EU and HIPC Initiative Economics Behind ▪ The Vicious Circle of Poverty EU Reality Check: Ghana Ghana and HIPC Initiative Ghana and the Vicious Circle of Poverty Conclusion
June 2, 2009 Group 9 Team A - EU Development Policy – An Ambiguous Case
1950: Schuman Declaration “Development of the African continent” 1957: Treaty of Rome Development assistance officially introduced in EC 1975-1995: Lomé Conventions Geographical widening (ACP countries) & trade arrangements 2000 (revised 2005): Cotonou Agreement June 2, 2009 Group 9 Team A - EU Development Policy – An Ambiguous Case Built on 3 Complementary Pillars: 1. Development cooperation 2. Economic and trade cooperation 3. Political dimension Objective 1: Eradication of poverty in the context of sustainable development (to achieve MDGs) Objective 2: Economic cooperation to integrate economies gradually and smoothly into world economy African, Caribbean, Pacific (ACP) countries June 2, 2009 Group 9 Team A - EU Development Policy – An Ambiguous Case Rationale The HIPC Initiative funds debt relief for all ‘Highly Indebted Poor Countries’ (HIPCs) Initiators Established 1996 by World Bank & IMF / EU support since $51 bn funded in total / EU: $1.6 bn Objectives Lower external debt burdens of HIPC governments Finance add. government spending on poor people Conditions Eligibility is based on external debts and income per capitaGroup 9 Team A - EU Development Policy – An Ambiguous Case June 2, 2009 Debt Relief as Soluti on ?
June 2, 2009 Group 9 Team A - EU Development Policy – An Ambiguous Case
2002: Ghana’s initiative to revive economic growth Application for HIPC programme (set an end to debts)
Pre-2004: Successful efforts to restructure:
Efficienc Administration (combating corruption) Procedures y Practices
2004: HICP completion point reached after:
Poverty reduction Improved macroeconomic performance (e.g. inflation) Group 9 Team A - EU Development Policy – An Ambiguous Case June 2, 2009 IMF Resident Representative in Ghana stated:
“Ghana has achieved relatively strong
economic growth with significant reduction in the rate of inflation and other efficiency related improvements. The progress is overall satisfactory.” (IMF, 2005) June 2, 2009 Group 9 Team A - EU Development Policy – An Ambiguous Case Magic Formula: 1. Reform system 2. Remove corruption 3. Insert aid 4. Flourish Set of conditions and assessments made sure Ghana will be able to act under the right measures when receiving debt relief through HIPC
consider economic AND political
infrastructure to prevent wasted aid June 2, 2009 Group 9 Team A - EU Development Policy – An Ambiguous Case After all this, sneaky trade barriers remain: Major obstacle to the eradication of poverty Example 1: EU’s export restriction on Ghanaian cocoa using the chocolate directive (main export product to the EU) Example 2: Strict EU regulations on banana exports, regarding ▪ Size ▪ Weight ▪ Colour ▪ Shape ▪ Texture ▪ Quality
June 2, 2009 Group 9 Team A - EU Development Policy – An Ambiguous Case
June 2, 2009 Group 9 Team A - EU Development Policy – An Ambiguous Case Adjei Henaku, the Executive Secretary of the Ghana Farmers’ Association, put it like this:
“It is extremely difficult to figure
out how the dumping of cheap poultry parts-like legs, wings, necks - that have no markets in the EU anyway, could be permitted in the name of free trade that is supposed to promote competitiveness.” June 2, 2009 Group 9 Team A - EU Development Policy – An Ambiguous Case In order to escape the poverty cycle an income high enough to allow savings must be achieved investment! Sneaky export restrictions and dumping prevent exactly that So the EU is making efforts to eradicate poverty while partially being the source of it ▪ Going 2 steps forward, and 1 back each time? June 2, 2009 Group 9 Team A - EU Development Policy – An Ambiguous Case No, 2 steps forward and 1.5 back: ▪ It can be good though: With the support of international donors Ghana has been able to curb economic growth between 1991 and 2002 by 4.2 percent per annum (European Commission, 2006). ▪ However, Ghana has a much higher potential, still largely depends on primary products deteriorating terms of trade... EU’s economic interests still main priority, interest groups still dominant Aid could have a much bigger positive impact! June 2, 2009 Group 9 Team A - EU Development Policy – An Ambiguous Case http://www.youtube.com/watch?v=Bl Dhd_0f-r4 Aim: Eradicate poverty and integrate economies into world economy Ghana: HIPC partly helps to break vicious circle of poverty EU trade barriers and Directives hinder sound economic growth Works on poverty reduction but hinders economic integration Statement confirmed: EU Development Policy reveals ambiguousness What should be done? Remove barriers to trade Stop dumping June 2, 2009 Group 9 Team A - EU Development Policy – An Ambiguous Case The World Bank (2009). Poverty. Retrieved May 5, 2009, from: http://www.worldbank.org/depweb/beyond/beyondbw
GAWU, D. C. (2004). New ACP-EU Trade Arrangements: New Barriers to Eradicating Poverty? Brussels: Eurostep.
Damned by Debt Relief (movie)
(2007). Retrieved May 28, 2009, from: http://www.youtube.com/watch?v=BlDhd_0f-r4 June 2, 2009 Group 9 Team A - EU Development Policy – An Ambiguous Case ¿ June 2, 2009 Group 9 Team A - EU Development Policy – An Ambiguous Case