Poverty is a political problem, says Mikhail Gorbachev. There will be no development until we face up to its true causes – in Russia as much as in the developing world

The new century has already provided much proof that – although we have entered a new, global era – we still live by old habits and outdated methods. The wave of hope that swept the world when we ended the Cold War has been replaced for many by disenchantment and despair. Global security and environmental crisis are both pressing problems of our age, yet poverty is also one of the defining challenges of this century.

The 1990s were marked by a hope that the challenge of poverty reduction would somehow resolve itself through the curative powers of the so-called Washington Consensus – the set of free market proposals imposed on developing economies by international financial institutions.

The business community in general, and especially transnational corporations, strongly backed this approach, presumably with profit margins in mind. But such a one-sided approach never leads to much good: applying such a largely theoretical system has brought problems, primarily to the developing world, though also to the developed world.

This is part of the reason why the opportunities which arose at the end of the Cold War have been largely squandered. It has become clear that a new approach is needed.

Unfulfilled promises
World leaders took an important step at the UN Millennium Summit in 2000, by expressing their political will to address the problem of poverty and by adopting specific measures to fight this scourge. Four years later, however, the goals set at that summit are little more than pious wishes for hundreds of millions of people throughout the world, particularly in Africa.

The promises of increased development assistance, fair trade, improved market access and an easing of the debt burden of developing countries are not being kept. Concerned by this, Kofi Annan, the UN secretary general, has proposed to hold a conference this year to review the situation at the highest level, in the hope that we will finally begin to make progress. Yet it is clear to me that the efforts of politicians alone will not be enough to respond to the challenges that we face. What we need is the interaction of politics, business and civil society.

We addressed the problem of poverty at the 2004 annual assembly of the World Political Forum in Stresa, Italy. Our main conclusion was that poverty is, above all, a political problem. Today, when the world has enough resources and some proven and effective ways of fighting poverty, failure to solve this problem stems primarily from lack of political will. Instead of fulfilling their commitments, the leading powers seem to be more interested in looking for a panacea.

Today, free trade and good governance are seen as a kind of magic formula. There is no doubt that both are important, as are prudent economic policies and respect for the laws of market economics. However, the emphasis on these indisputable truths seems too often to be no more than a pretext to shirk obligations, such as allocating 0.7% of GDP for development assistance (as agreed in principle by all OECD countries), while at the same time finding billions of dollars for major military operations and new weapons systems.

Poverty is also a political problem because, unless it is addressed, we will face a new division of the world, the consequences of which will be even more dangerous than those of the divisions we overcame by ending the East-West confrontation. Dividing the world into islands of prosperity and vast areas of poverty and despair is more dangerous than the Cold War because the two regions cannot be fenced off from each other. Despair creates fertile ground for extremism and terrorism, to say nothing of migration flows, epidemics and new hotbeds of instability.

Finally, poverty is a political problem because it cannot be separated from the problems of democracy, human rights and fundamental freedoms. Democracy and development are by no means incompatible. But where the problems of poverty remain without solution for decades, people become willing to sacrifice democracy in favour of authoritarian-style politicians. This is what largely caused the rollback of the democratic wave that changed the world in the 1980s and early 1990s.

I am convinced that democracy cannot be imposed by tanks or pre-emptive strikes. In every nation it should be the result of its own evolution. Yet, more favourable prerequisites can be created for democracy: ending poverty is the essential condition. Poverty is not just a third-world problem. The paradox of globalization as a blind process is that the gap between rich and poor has grown both among countries and within them, including those that are seemingly most prosperous. At the same time, we have seen the erosion of the middle class, rightly seen as the pillar of democracy.

A challenge for Putin
Unfortunately, Russia too has been affected by these processes, though its resources and possibilities should allow it to provide at least decent living conditions for all its citizens. Instead, the failure of the economic reforms of the 1990s has put two-thirds of Russia’s population at or below the poverty line.

President Vladimir Putin singled out this problem from his first days in office. During his first presidential term Mr Putin had to turn his attention primarily to overcoming the political and economic chaos that he inherited from his predecessor. Not all of his actions were beyond dispute, but the dangers of social explosion and the country’s disintegration, which were real, have now been averted. Therefore new tasks have to be put on the agenda.

I would be disappointed if Mr Putin’s second presidential term were to focus on further consolidating power, while letting the opportunity for a breakthrough in the country’s development slip away. Our society is ready to forge ahead. I feel that the business community is ready too, for it understands that one cannot hope for sustained success in a poor country with a purely resource-based economy.

The challenges the world is facing today are daunting, but we should not panic. History is not preordained: it always leaves room for choices. A different world, and a more stable and secure world order are possible. Politics, business and civil society should work together to find a path toward that goal.

Mikhail Gorbachev
Mikhail Gorbachev was the general secretary of the Communist Party of the Soviet Union from 1985 to 1991 and president of the USSR from 1990 to 1991. He is the founder and president of the World Political Forum as well as of the Gorbachev Foundation.