Dhaka Dialogue for LDC 4th UN Conference in Istanbul next year

Dhaka Dialogue for LDC 4th UN Conference in Istanbul next year

The Least-Developed Countries are categorized by the UN on the basis of three criteria since 1971:
• A low-income criterion, based on a three-year average estimate of the gross national income (GNI) per capita (under $905 for inclusion, above $ 1,086for graduation or getting out of it);
• A human capital status criterion, involving a composite Human Assets Index (HAI) based on indicators of: (a) nutrition: percentage of population undernourished; (b) health: mortality rate for children aged five years or under; (c) education: the gross secondary school enrolment ratio; and (d) adult literacy rate; and
• An economic vulnerability criterion, involving a composite Economic Vulnerability Index (EVI) based on indicators of: (a) population size; (b) remoteness; (c) merchandise export concentration; (d) share of agriculture, forestry and fisheries in gross domestic product; (e) homelessness owing to natural disasters; (f) instability of agricultural production; and (g) instability of exports of goods and services.

A country must satisfy all three criteria to be included in the category. In 1971, 25 countries were included in the category. Bangladesh was admitted in the LDC group in 1975.

The idea was that through aid and support of both affluent countries and the UN, the list of countries would be diminished. But in fact, the opposite has happened.

In 1971, in South Asia, only Bhutan, Nepal and Afghanistan were listed but now Bangladesh and Maldives are added. Myanmar has also now joined as LDC.

In 1990, 42 countries were included in this category and now there are 49 countries. The statistics means the weak and poor countries are become poorer day by day.

Out of 49 countries, 33 are in Africa, 15 in Asia and Pacific and 1 in the Caribbean. Two graduated from the category: Botswana and Cape Verde. There are 16 land-locked and 12 small Island countries.

The combined GDP of the LDCs was $550 billion as of 2008, which was less than 1.0% of the world GDP and their share is 1% per cent of the global trade and share of Foreign Direct Investment (FDI) is only 0.7% of global FDI.

Only 12 of the 29 LDC World Trade Organisation (WTO) members have offices in Geneva. WTO has approximately 50 meetings per week, which are well beyond the capacity of most developing countries to participate.

It has been seen developed countries tend to corner LDC negotiators in “corridor chats” and offer both promises and threats about aid and investment which many LDCs are ill equipped to fend off. It is psychologically very difficult to oppose those who are giving money—the dynamic is that of bribery.

Resource –flow from donor countries is very poor. They are expected to provide aid 0. 1.5—0.2% of their Gross National Income but only 0 0.9% is given.

Dhaka Dialogue:

A three-day international dialogue commenced in Dhaka on 24th November to highlight the challenges facing the poorer nations in the run up to a key United Nations conference on the LDCs.

The dialogue seeks to contribute to the articulation of a new programme of actions for the LDCs to be adopted at the Fourth UN Conference on LDCs (UN LDC IV), which is scheduled to take place in Istanbul in May 2011, according to organizers, CPD, a private think-tank together with Commonwealth Secretariat, OECD, UNDP and ICTSD and French Embassy in Dhaka.

Trade experts, economists, bureaucrats, academics and civil society members from Africa, Asia and Europe took part in the dialogue to formulate strategies for LDCs at the forthcoming UN Conference in Turkey in May next year.

On the opening day, Finance Minister A.M. A. Muhith came up with an innovative idea of a new category of countries. He described the category as “the geographically and ecologically vulnerable countries” which would confront difficulty for variety of reasons including global climate change.

He also included the land-locked countries and the coastal countries in the category. For example, if coastal areas of Bangladesh are submerged under the sea, 25-30 million people will be displaced and where they will go?

He told of single overarching strategy at the UN conference and that would be resource-flow to LDCs at 0.2% of GNI.

On the concluding day, the dialogue ended with a call for more active role of development partners. A few recommended strategies for the UN conference are described below:

• The term “world’s weakest economies” be redefined in the light of the post-global economic and financial crisis
• To design a new strategy to come out of the category of LDCs
• To look for new opportunities within the environment of rapidly changing global economic order
• To place four demands of LDCs—food security, climate change security through adaptation fund, access to foreign markets and foreign direct investments.
• To urge early conclusion of WTO Doha Round of Trade Negotiations
• To redefine the rule of origin
• To underscore the need of capacity-building
• To get access to sector-wise technology
• To urge for flexibility in intellectual property rights

Bangladesh’s strategy:

Bangladesh should come out of the category of LDCs. Out of the three criteria, two must be satisfied before the country can come out of the trap. It is noted that Bangladesh has met one criterion, that is economic vulnerability index. Another criterion must be met. It could be either income or human capital index.

It has been suggested that Bangladesh may concentrate on improving human capital index instead of income index. Experts say that the year 2027 is the earliest by which Bangladesh can meet the human asset index by sustaining economic growth momentum and reducing the population growth together with substantive improvement of under nourished share of the population, mortality rate (maternal and child), literacy rate and secondary school enrolment (not primary). Another view is that Bangladesh can out of the LDC trap by 2030.

Should Bangladesh be as LDC ?

Bangladesh is a member of the Least-Developed Countries since 1975. Ordinarily, a country whose population is more than 20 million people is not classified as a Least- Developed country.

Bangladesh had to argue robustly to be classified as a Least-Developed country because it had 75 million people by 1975. The members of the UN Committee for Development Planning (CDP) were reluctant to make Bangladesh a LDC. ( Under existing UN rules, no country over 75 million people can be listed as LDC)..

The then Deputy Chairman Planning Commission (1972-75), and noted economist, Prof. Nurul Islam and a member of the UN CDP, in his book “Making of a Nation” (2003: UPL) writes how Bangladesh joined the LDCs Club:

“ After a long discussion, the opposition group gave up and agreed to include Bangladesh I was able to win the aregument single handedly, primarily because I was a dealing with a group of highly sophisticated independent professional economists with no agenda and no political interests… it was an established tradition of CDP that decisions were taken by consensus… since there was no consensus the committee had to accept my argument and agree to include Bangladesh” ( Prof Islam left the UN CDP when he joined FAO in mid-1977).

He further writes that : “ It was a sheer accident that due to my persistence and the Committee’s tradition of decision by consensus, Bangladesh became a Least-Developed country.”

Prof. Islam, in restrospect, was not sure whether he did the right thing for Bangladesh in getting the country classified as a LDC.

He writes: “ In wonder whether this status has not aggravated the propensity of Bangladesh to engage in aggressive pursuit of special treatment in external economic relations and foreign assistance. In other words, Bangladesh believes—and it has coloured all her external negotiations—that as a poor country she not only has a claim on the generosity and charity of donors, but as the poorest of them, has in fact a prior claim”

Prof. Islam has questioned whether dependence syndrome on donors because of poverty is consistent with a proud nation. Did it encourage a certain amount of complacency about national shortcomings? Did such a frame of mind detract from various domestic efforts to improve economic performance and was it a detriment to progress?

Two countries- Ghana and Zimbabwe–were invited to join the LDCs club by the UN CDP but they refused. The UN cannot compel a nation to accept such a status. Some view that since the UN CDP classifies a country as LDC, it has no option but to join. This view is not correct.

In my experience at the UN in Geneva, I also felt that Bangladesh should come out of the LDCs group because the concessions that the LDCs receive in terms of development assistance are the same as those of low-income counries, i.e. very long term interest bearing loans.

This means that Bangladesh would receive development assistance as it did before. Furthermore donors in giving development assistance to a country take into account of political and strategic considerations.

It is only in respect of obligations under the WTO that the LDCs receive a longer period for meeting commitments. This concession may not be sufficient to justify a country with the poorest group of the UN, where most countries belong to Africa, Carribbean and Pacific region.

In a perverse sense, it is cited that Bangladesh can become a leader of LDCs at the UN. Does any country want to lead the poorest countries at the UN? It goes against the pride of people of Bangladesh because Sri Lanka and Pakistan do not belong to this status of LDCs.

After almost 40 years of independence, the issue must be debated objectively by stakeholders including think-tanks as to whether Bangladesh should continue to be a member of the LDCs as a self-respecting nation.

By Barrister Harun ur Rashid
Former Bangladesh Ambassador to the UN, Geneva.

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