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Tuesday, March 30, 2004

International Development Trust Funds 

Sen. Richard Lugar made the news today for proposing that the G8 countries establish a new development trust fund for the Middle East. Lugar hopes the fund, which he suggests should be sensitive to Islamic financial principles, will also get donations from rich countries within the region.

Lugar also proposed modeling the trust fund on the "Global Fund to Fight AIDS," a major UN effort started three years ago. It's worth noting, though, that the NY Times reported just two days ago that the Global Fund has fallen far short of initial expectations. Part of the problem has been utterly unrelated to the problems facing the Middle East, stemming from unresolved fights over AIDS drug patents. On the other hand, a major part of the problem has been that
Donations to the Global Fund to Fight AIDS, Tuberculosis and Malaria are now about $1.6 billion a year, barely 20 percent of what Secretary General Kofi Annan said was needed when he created the fund in 2001...

While Mr. Bush promised in his 2003 State of the Union address to spend $15 billion over five years on AIDS in Africa and the Caribbean, his budget requests have fallen far short of that goal. For the most recent donation to the Global Fund, he requested only $200 million, although Congress authorized $550 million.

Nor have Europe and Asia been as generous as the fund had hoped.
I think Senator Lugar has a good idea: it's going to take a lot of money to promote democracy, development and stability in the Middle East, and the G8 countries clearly have enormous interests at stake in this effort. But it's also clear that there may be better institutions on which to model any new trust fund. I'll post some ideas on this front tomorrow.

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