Commission renews call for aid to poor countries

Press, 10 February 1983, Page 6

Commission renews call for aid to poor countries

NZPA-Reuter London

Giving a warning of possible anarchy and a slide from recession into depression, an international commission called yesterday for urgent action to aid poor nations and so help revive the world economy. The group, led by a former West German Chancellor, Willy Brandt, called for reforms to the international economic and monetary system and emergency action to help debt-burdened countries in Asia, Africa, and Latin America.

Especially urgent, it said in a new report, was a big increase in resources of the International Monetary Fund and the World Bank to benefit developing countries. < Echoing its influential first report, issued in 1980, the

Brandt Commission emphasised the interdependence between industrial nations of the “North" and the developing “South." “It is increasingly obvious that we are all in the same boat, that the North cannot contemplate with unconcern the fact that the ‘South's,’ end of the boat is sinking," the new report said. “The North’s end of the boat is already none too buoyant, either."

The group’s first report prompted a 22-nation “NorthSouth” summit conference in 1981 at Cancun, Mexico, but the results had been disappointing, Mr Brandt said in an introduction. But the commission said that there was a strong case for a second summit meeting, with adequate preparation, to give political impetus

to the so-called "North-South dialogue.” It also proposed the creation of a Third World secretariat, urged the United States to act as “an enlightened leader of the world community,” and said that the Soviet Union and Eastern Europe should be more active in “North-South” issues.

The report accused industrial countries, striving to curb inflation, of “excessive concentration on monetary control, often accompanied by perverse fiscal policies.” It said that the plight of developing countries, burdened by crushing debt and low commodity prices, was desperate. They were part of a wider “spiral of contraction which, without remedial action, could drag the countries in the world economy from recession to trade sane-

tions. withdrawals of credit, competitive devaluations and mutually imposed loss of output .. ."

“Such a contraction is the start of the descent from recession to depression, which shows little sign of being halted,” it said. Mr Brandt gave a warning that further economic decline “is likely to cause the disintegration of societies and create conditions of anarchy in many parts of the world.”

The 18-member commission proposed remedies covering finance, trade, food, energy, and the “NorthSouth” negotiating process.

It said that I.M.F. resources should be boosted by a doubling of lending quotas and a new allocation of reserve assets called special

drawing rights to benefit developing countries. (At talks in Washington today, advanced by two months because of Third

'World debt problems, the I.M.F. is expected to approve an increase of nearly 50 per cent in lending quotas its 146 members must pledge.) Among other urgent steps the Brandt commission said that the 1.M.F., regarded by many countries “with mistrust. even hostility.” should make it easier for the poorest countries to borrow.

The World Bank's resources should be increased and more funds provided for its soft-loan arm, the International Development Association, it said. The commission said that aid to the poorest countries should be doubled by 1985. In the long-term, the I.M.F. and World Bank should be reformed “in the direction of greater powersharing.” the report said.

It urged governments to undertake to resist protectionist pressures and backed calls for creation of an international energy agency to increase production in developing countries. Mr Brandt called especially for an end to the arms race as a condition for world economic recovery.

"We may be arming ourselves to death — without actually going to war — by strangling our economies and refusing to invest in the future,” he said. The emergency steps proposed by the commission should be on the table of future international meetings, and especially the next meeting of the United Nations Conference on Trade and Development, at Belgrade, in June, he said.