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Analysis: O'Neill and Bono to rock Africa

By SHIHOKO GOTO, UPI Senior Business Correspondent   |   May 8, 2002 at 11:36 PM
WASHINGTON, May 8 (UPI) -- They're an odd couple, to be sure, a middle-aged rock star and a silver-haired bureaucrat. But they have the blessing of the international community.

U.S. Treasury Secretary Paul O'Neill and rock band U2's lead vocalist Bono will be traveling across Africa for a week starting May 20 to raise awareness of poverty in the region and to muster more financial support from the richer countries.

O'Neill's office said he will be traveling to schools, hospitals, factories, and other facilities of Ethiopia, Ghana, South Africa and Uganda, although it has declined to comment on which specific segments the Irish rock star will be accompanying him.

By touring Africa together, the two will certainly bring more media attention to the plight of African nations that have largely failed to be an integral part of the global economy. And gaining public interest save at times of famine and political upheaval has been a major struggle for the region over the decades.

But do Bono and O'Neill actually see eye to eye on the key issues that continue to bog down Africa?

Bono's commitment to poverty alleviation and more specifically, debt relief in developing countries comes as no surprise. The singer has been actively involved with providing assistance to Africa from the pop music initial efforts in 1984 to help relieve the 1984 famine in Ethiopia. Since then, Bono has been leading efforts to eliminate the debt burden of the world's most indebted countries, most of which are found in Africa. Bono's commitment to the cause has, in fact, led him to grace the cover of Time magazine earlier this year.

What is surprising, however, is O'Neill's interest in the world's poorest continent. He clearly appears to be almost as excited about what will be his first visit to Africa as treasury secretary as much as his new-found friendship with the rock star.

The secretary told members of the Republican Party's Capitol Hill Club on Wednesday that the singer was "a world-famous person who cares very much" about the problems of third-world debt, poverty, and health care.

But while Bono has focused on calling upon industrialized nations to write off their debts under the heavily indebted poor countries (HIPC) scheme supported by the World Bank and the International Monetary Fund, O'Neill has been largely critical of the international financial institutions altogether, pointing out that little progress has been made in developing countries in spite of the billions of dollars spent over the past decades to alleviate poverty.

As a result, the Bush administration has called for global agencies to provide more grants that are given away to the poorest countries to provide for immediate needs such as healthcare and agriculture, instead of providing loans to less needy countries such as Argentina which need to be paid back. That would ultimately mean that lending institutions like the IMF and the World Bank would have to fold, or alter their business operations considerably.

Still, O'Neill's "bashing over issues has been quite helpful," said the World Bank's manager of partnerships for the Africa region, Jeffrey Katz. He pointed out that the secretary's concerns about the ineffectiveness of financial assistance has been a matter of concern within the bank, although he emphasized that the institution is making considerable headway in improving matters.

Meanwhile, the World Bank's chief economist for the Africa region Alan Gelb argued that the most important thing was to ensure that countries could ultimately stand on their own two feet, and be an integral part of the global economy.

For that, equal access to trade in international markets was crucial, Gelb said.

"All aid to the region (from the international community thus far) is offset by the decline in income of commodity prices," Gelb said. He pointed out that the continued fall in commodity prices such as coffee and coca, two of the continent's biggest exports, has been as large as the total sum of financial assistance to the region over the past decade.

Development assistance to Africa currently stands at around $12 billion each year.

At the same time, South Africa's Finance Minister Trevor Manuel pointed out last month at the World Bank's semi-annual meetings that industrialized nations provided $300 billion in agricultural subsidies last year alone, while their contribution to development assistance worldwide was only a sixth of that.

"There's no point in pouring in money when that money can't stimulate the economy," Manuel said. "Even increasing ODA (overseas development assistance) by three times won't help in that case."

Interestingly enough, most recipient nations have stayed away from the grant versus loan debate that has been heating up in the United States and Europe. Instead, they have been united in reproaching industrialized nations for putting up trade barriers and providing subsidies to their own industries, which makes it nearly impossible for developing countries to compete in global markets.

As such, O'Neill may have a lot of explaining to do should African nations prefer greater access to world markets rather than more free money from the U.S. government.

But one thing is certain. This treasury secretary's visit will put Africa in the spotlight, especially with those who have never really given much thought to the continent until now.

© 2002 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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