The arithmetic of interdependence

DOWN TO EARTH

Our world did change in 2003. The US war on Iraq made sure that the rules of "engagement" were changed, perhaps for a long time to come. The most visible change I see is that the world has become overtly aggressive and rude.

And it is not just the US. Let us be clear that the stamp of "aggressor" politics where terms are set with singularly determined self-interest built on raw power (money or caste), has left a visible emboss in our part of the world as well. It is certain that the boundary between right and wrong, just and unjust is getting blurred and re-engineered.

But if our world is changing, it is equally not changing. On the one hand, we have the challenge of learning to live and share the resources of each village, each region and each country, in a manner that is both equitable and sustainable. On the other, there is the challenge of living in an increasingly interconnected and interdependent world.

Indicators on the growing interdependence of the world are fascinating and should help us to realise the imperative to understand the impact of the rich on the poor better.

Simon Upton, the former New Zealand minister who now heads the roundtable on sustainable development at the Organisation for Economic Cooperation and Development (OECD) in Paris, has worked with colleagues to put together indicators about how national policy impinges on global developments. The trends clearly point towards the need for international policy reform.

In 2000, a total of $ 53.6 billion was received by the many low and middle income countries of the world from global multilateral banks and bilateral aid agencies. In that same year, these countries returned "" in repayment and interest on loans "" a total of $ 77.6 billion. But with the net outflow of $ 24 billion, who can say the rich are supporting the poor?

In fact, ironically, in these circumstances, the rich are being supported by the increasing tax burden on poor countries. Peru ended up paying as much as 25 per cent of its tax revenue in repayments and interest. On the other hand, foreign investors earned a whopping 42.5 per cent on their investments in the country in 2000 alone.

Combine this with the fact that the bogey of foreign direct investment (FDI) is exactly that. A bogey. The reality is that the whole of Africa received as little as $ 7.5 billion in FDI; even Asia (except China) got a pitiable $ 18.6 billion or 1.2 per cent of the world's investment. China was the exception, with $ 100 billion. China and OECD countries, therefore, made up for 92.7 per cent of the world's FDI.

This combines with the problems of declining terms of trade "" particularly, for agricultural and commodity trade "" to put poor nations in a real squeeze; these countries are forced to overuse and degrade their natural capital even further. Another indicator that Upton and his colleagues have cobbled together is to understand the percentage of demand and supply of cropland and grassland in different regions of the world.

And whereas the rich parts of the world have an excess of supply over demand, the situation in the poorest part of the world was reversed. In these countries, there was, in 1999, 9.5 per cent shortfall in the demand from grasslands over supply. It is no wonder that these countries increase the intensity of the use of these lands to eke out whatever they can to survive.

In fact, what this means is that these countries do not only devalue their currency. They literally devalue their land as well as their natural resources so that they can pay for the imports they need to manage their economies.

Many years ago, the United Nations Environment Programme (UNEP) had similarly looked at interdependence and had found that because of the declining terms of commodity trade that the poor depend upon, in 1971, whereas one tonne of banana was enough to buy one steel bar, by the 1980s the same tonne could only purchase half that steel bar.

Similarly, it took 10 times more beef exports to buy the barrel of oil in the 1980s than it did in the 1970s. This is when the rich world's cattle and agriculture is massively subsidised "" $ 2 per cow is paid each day in subsidies in Europe alone, which makes it even more difficult for the poor world to compete.

When we put together all this, some things are crystal clear. The poor end up massively subsidising the gargantuan consumption of the rich. They have precious little to invest in their future. And in spite of all this, they still try and do the best they can "" whatever's possible within their abilities "" to conserve their environment and make sustainable use of it. This arithmetic has to become the sums of tomorrow.