Setting aside politics to help the poor
New York — Bring together delegates of three political blocs that rarely see eye-to-eye about money -- rich states of the industrialized West, poor countries of the developing world, and the wealth-laden Organization of Petroleum Exporting Countries.
Give each bloc an equal share of votes. Then ask them to decide how to spend a billion dollars to help the most destitute of the world's poor.
A sure blueprint for chaos?
Despite all the logic of conventional realpolitik, the answer is no.
Operating by these rules, the International Fund for Agricultural Development (IFAD) has somehow been steering clear of the world's most clogged political bottlenecks.
In the three years of its existence, its diverse members have agreed to grant a total of $900 million for development schemes to 70 countries in Africa, Asia, and Latin America.
It's the first time OPEC has cooperated with the Western countries in dishing out development aid.
And everything has been decided without having to take a single vote -- an exercise in consensus-building that should find its way into the Quaker book of records.
Even the president of the IFAD, Abdelmuhsin M. alSudeary, seems a trifle amazed that it still manages to stay afloat.
This soft-spoken Saudi Arabian first floated the idea for the fund before the World Food Conference in 1974.
It was formally instituted in 1977. Since then, he has been shuttling across the planet taking in nearly three dozen countries a year just to keep IFAD's odd bedfellows happy. (Which is why he came to the United States -- one of the many international officials trying to figure out why the US is cutting back funds at a time when huge leaps in the war against hunger seem possible.)
What keeps IFAD going when other United Nations ventures bog down? I asked Mr. Sudeary one day as he stopped in New York between talks with American government officials.
"Each political bloc, "he said, "has somehow come to fancy this baby as its own."
The developing countries are delighted to cooperate with a world fund dedicated to improving the lot of the poorest of their poor. OPEC likes being a major voice and moneymover behind the fund's operations. And the industrialized countries -- the Organization for Economic Cooperation and Development -- which have traditionally borne the financial brunt of development aid, are relieved to see some of OPEC's vast oil profits benefiting the impoverished.
OPEC wealth has usually been invested in securities in the West, not developing countries. (Saudi Arabia, according to one US State Department official, has $75 billion invested in securities in the US alone.)
But when it came time to fund IFAD, the oil bloc surprised everyone by donating 47 percent of the $1 billion fund.
Mr. Sudeary says he's not at all surprised.
During the world food crisis of 1974 he was Saudi Arabian ambassador to the UN Food and Agriculture Organization. Politicians meeting in Rome had been cracking out ideas for separate funds to provide irrigation, fertilizers, and all the elements of agricultural development.
"I though instead that we should try to convince the governments of my country and other OPEC countries to concentrate on a single world fund to help all these areas," he explains.
"So we sent a messenger with a handwriten letter to King Faisal. In Less than 24 hours he replied that Saudi Arabia would back it. Soon Iran and Venezuela had agreed, then the rest of OPEC. And by the end of the World Food Conference, many of the developed and developing countries were with us."
IFAD's low-interest loans are supposed to put assets in the hands of poor farmers, either in the form of credit or of programs that give them land and technology. IFAD also backs projects to organize poor farmers into groups that receive credit, and collectively market their products.
The attractiveness of those goals, he reasons, explains the continued support of IFAD's participants, even though they don't always get their way. And if Mr. Sudeary is right, the IFAD objectives have at last started to supply vital missing links for the war on world hunger."
"In the past most institutions that finance development have been interested in increasing food production per sem . They have tended to back the bigger farming projects," he says.
"Unfortunately, the vast majority of the world's impoverished -- the small farmers -- do not have much land. They don't have access to credit. So they don't benefit from such projects. There has simply not been an awareness that bottlenecks of poverty in the poor countries came about because these people haven't been reached.
"Yet once you concentrate on the small farmers and landless, you not only boost production, but also improve their standards of living, involve people in development, and the whole economy of a country changes tremendously. In drawing attention to the problem, I think IFAD has made an enormous breakthrough."
The latest Sudeary progress report shows dozens of projects dotting the map in developing countries: an agricultural credit project to benefit some 200,000 small farmers in nothwestern Bangladesh; aid to coastal fishing communities in drought-ridden Djibouti; settlement of some 1,620 farm families on their own lands in West Beheira, Egypt; a cattle project to benefit 45,000 migrant farm families in the outer Sumatran islands of Indonesia; credit for small farmers in the economically depressed highlands of Peru; a maize project to assist 150,000 farm families increase their food and fish production in Mexico's poorest state, Oaxaca; a loan to pasture and forage farmers in northern China, the first development loan given by an international financial institution to that country.
It is too early to judge IFAD's effectiveness. And development experts are watching -- with considerable skepticism -- to see if Sudeary can pull off the incredibly delicate political changes that are needed before its benefits can reach the world's malnourished. Bureaucratic elites in developing countries, corrupt middlemen, and entrenched economic interests have tended to siphon off aid moneys, or have favored the better off at the expense of the poorest of the poor.
Some critics argue that IFAD has had to conform more to the demands of governments than governments have to IFAD.
Mr. Sudeary concedes the difficulties.
"But still," he insists, we are encouraged by the way governments have responded to us by changing their policies to accommodate out mandate to help the poorest of small farmers."
IFAD's $30 million load to Pakistan's Agricultural Development Bank is his showpiece. According to IFAD requirements, 50 percent of that credit had to go to small farmers. But to do that, big adjustments were needed in Pakistan's laws.
Our studies concluded that the major bottleneck to Pakistan's small farmers increasing their food production was that they were simply not getting credit. Most are too poor to put down the collateral that is required by law to get loans.
"We asked the government if the Agricultural Development Bank could waive the legal requirement. We suggested an alternative by which farmers in a village might band together to promise the bank as a group that a loan to one of their members would be paid back. This, then, puts pressure on the individual recipient to pay back, for fear they will disqualify others in his village from getting loans. The government agreed, and the credit situation has changed."
IFAD is supporting imaginative schemes to actually take credit to farmers who would never even think of going to a bank to ask for money.
In a plan carried out by Pakistan's Agricultural Development Bank, IFAD credits will be delivered to the farmers by bankers on motorbikes. They will educate farmers about getting credit, the community's responsibility for ensuring that the money is repaid, and how all can share in decisions on what to use the credit for.
Most IFAD decisions have not forced its three power blocs into explosive confrontation. But IFAD has had its internal contradictions. And Western observers and participants are still amazed that IFAD can make decisions without taking formal votes.
Each bloc knows that it could wield one- third of the total 1,800 votes -- if push came to shove. But so far the opinions of the blocs have been clear enough for decisions to be reached without voting. And no one has wanted to spoil the record by forcing a vote.
When OECD arguments sound too politically motivated, the developing countries lean in other directions; the same holds true with OPEC arguments.
IFAD is also going ahead with loans to poor farmers in Egypt despite the objections of Arab countries in OPEC; just as it is implementing a project in Cuba despite the United States feelings toward that country.
OPEC, so far as IFAD is concerned, seems to have become a different breed. Despite its usual identification with politics of developing countries, it now finds itself one of the two major IFAD donors (OECD is the other). And when the developing countries sound economically "unreasonable," OPEC tends to lean more toward the views of OECD.
Though the vast majority of grant proposals have not caused any political catastrophes, political confrontation has always been a danger. Observers are amazed at IFAD's ability to go on -- bottlenecks nowwithstanding.
Despite OPEC's tremendous voting influence, for example, Israel has been allowed representation in IFAD, thanks to a compromise that prevents it from receiving any loans from the organization.
IFAD also continues to yield bonuses that please American development officials. The simple existence of IFAD, they say, may have moderated last year's controversy over Arab demands that the Palestine Liberation Organization be given observer status in the World Bank.
The demand was finally dropped, they speculate, due partly to OPEC's desire not to endanger the smooth operation of IFAD.
IFAD has also been a force for encouraging private enterprise where the state had previously controlled agriculture, Mr. Sudeary says. No loans will be given , he insists, if governments do not allow small farmers to run their own shops.
In Egypt's West Beheira region, for instance, farmlands that used to be state controlled now are to be contracted out to private farmers. Meanwhile, Mr. Sudeary faces one of the severe challenges to IFAD, now that the US has cut back its support. What used to be a $250 million US contribution over three years has shriveled to $180 million.
Mr. Sudeary had hoped to increase the overall fund from $1 billion to $ 1.5 billion its next three-year cycle.
(The $1 billion IFAD has allocated over the past three years rather pales in comparison with the vast world hunger needs. International investment in agriculture in poor countries comes to about $7 billion each year, considered to be only half the minimum needed to deal with present malnutrition.)
But whether he succeeds or not, observers and participants seem agreed that the cooperation IFAD has set in motion could be significant far beyond its monetary value.
"Sudeary's is one international venture," one American diplomat says, "that has for the first time succeeded in bringing OPEC into the community of nations -- even the radicals like Libya, Iraq, and Algeria. And in the process it is encouraging all of its members, whether North an South, East, or West, to play according to mutually accepted international rules of the game."