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1. Conceptional approaches to a reform of Lomé co-operation
Reform proposals should generally be made under the assumption that development cannot be achieved through development co-operation. Co-operation can make both positive and negative contributions. Proposals for reform are, above all, concerned with reducing negative influences and to reform both the instruments and the active implementation of development co-operation in such a way that the positive strengths of those reforms can be developed. Discussions pertaining to the German Lomé policy should naturally take into account the fact that a) Germany is not the sole protagonist, b) Germany is bound in a European partnership policy and c) particular attention should be paid to France with regard to German-French rapports. But since Germany has only marginal interests in the ACP, they only might collide with French interests in very limited areas. Thus, there is a wide scope of action open to Germany as far as efforts towards a European option are concerned.
The experience of newly industrialising countries is a clear indication that development co-operation cannot substitute ones own efforts. This is one of the lessons to learn from the successful industrialisation of several Asian countries. ACP states will only be able to emerge from the shadow of marginalisation in the world economy through their own efforts. ACP states are counting on increased aid and additional preferences within the framework of Lomé negotiations. This cannot possibly be the right direction. My proposals for reforming the Lomé Treaty are geared towards strengthening endogenous economic and decision-making potentials. Co-operation between two very different partners should in my opinion aim at finally getting rid of development co-operation so that co-operation between equal partners can get underway as soon as possible. Measures that stand in the way of this goal should thus be reformed or abolished altogether. Measures which, on the other hand, correspond to this reform perspective, should be reinforced.
Numerous suggestions are under discussion, ranging from the total discontinuation of the treaty, to regionalisation, to a reform of the instruments. In the following pages, I will presume a fundamental need for reform. The option of completely eliminating the Lomé model will thus not be dealt with any further. However, legitimate criticism of individual instruments will be taken up and incorporated in the reform perspective. In general, the paper will be looking at the possibilities to remove asymmetrical tendencies and structure reform in such a way that Lomé co-operation will have positive effects on development. Reform and fine tuning (see overview) should comprise the basic principles outlined below.
It is of little use to carry out fine tuning without first carrying out the necessary fundamental reforms. Fine tuning should therefore fit into basic revision, and thus improve existing instruments and processes. There are, without doubt, numerous approaches both within the Lomé Treaty and based on experience, which can be optimised through fine tuning. Exposition 10 comments further on this aspect.
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2. German demands for a European development policy
Even in Germany, development is influenced by various interests. It is "normal" to focus more on ones own policy due to development fatigue and "europhobia". Furthermore, it is easier to prove political success in the national development policy. The greater national orientation, as far as development policy is concerned, is a trend recognisable in many European countries. Yet national development should with all its corresponding peculiarities, points of emphasis and strengths engage in a European development policy, actively participate in its formation and not view it as either an obstacle, or as a disadvantage. Despite the shortcomings and weaknesses (which incidentally sometimes apply to bilateral policies to an even greater extent) brought to the fore in the analysis, development co-operation with ACP states contains many starting points for further development (e.g. the partnership principle). Further strengthening national development co-operation at the cost of a coherent and effective European development policy would, however, lead to a weakening, rather than strengthening of all parties involved. This can be proved at various levels, for example the European position in international organisations such as the World Bank and the International Monetary Fund and in institutions such as UNIDO, UNCTAD and even with regard to the African Development Bank.
Until now, the EU only rarely showed a common profile in this respect. She never brought her full weight to bear and thus did not take full advantage of her possibilities, despite being clearly stronger than the USA and Japan. This holds true in all international contexts. Increased re-nationalisation of development policy would be a step back with regard to what has already been achieved. The Federal Republic of Germanys policy, which has hitherto taken a moderate position, should not climb on the bandwagon recommended by the Scientific Council for Economic Co-operation and Development which is, strengthening bilateral policy at the cost of common policy. This policy is counterproductive and incomprehensible. Instead, the further enhancement of European development policy should be enforced, while simultaneously integrating the strengths of German development policy for example, co-operation with non-governmental organisations, concepts towards human rights protection, experience with participation, etc.
It would hence be desirable for Germany to commit herself to the following proposals for reform in Lomé development co-operation.
1. An increase in funds allocated for Lomé co-operation as a sign of greater commitment to a European development policy. German conduct during the last round of negotiations on Lomé IV/2 damaged her reputation in as far as Lomé co-operation and development policy in general are concerned. The willingness to once again increase funds would show that reforms in Lomé co-operation do matter a great deal to Germany. This position can act as an impetus to other member states and help counteract the general pessimism towards development.
At the same time, intentions to finance the Lomé Convention in the long term through the EU budget should also be made clear: with greater common competence and responsibility, but with less influence of nation states.
2. As Germanys most important ally, France intends to work towards a greater Europeanisation of development co-operation. Even though this can be traced to Frances strategic and political objectives, this wish should still be complied with.
Other EU countries, too, should play a significant role in Germanys development policy. Sweden, Finland and the Netherlands have achieved excellent and exemplary development co-operation in a large number of areas. Conceptionally, their national experiences as well as the knowledge gained by NGOs in all EU countries should be increasingly taken into account in Germany.
As opposed to French and British policy, it is considerably easier for German policy to go
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beyond the specters of its past and that of its future, too (with regard to sustainable development). This is because Germanys immediate interest in ACP states is rather marginal. As far as Great Britain and France are concerned, conflict potential arises on account of their "vested interests" (regional, owing to the interests of Belgium, Spain, Portugal). Germanys advantage in this respect should be utilised. Germany should not put her own long term and indirect interests behind the particular interests and clientelistic relations of other European states, especially since this nationally-oriented co-operation has already found its way into the EU Commission. Germany could appose this established policy through true partnership with ACP countries (fair trade relations, development co-operation aimed at poverty elimination, etc.). The policy would hence find support among EU states willing to make reforms. There are increased indications of putting an end to post-colonial clientelistic relations, even in France and Great Britain. On a long-term basis, the prescribed steps towards reform correspond better to EU interests. Dependent co-operation based on trade prefernces, subsidy systems and inadequate structural adjustment programmes contradicts the European Unions development concept
[This also includes the policy of sustainable development which has not been achieved previously, because European development policy itself is not sustainable.].
3. In the interests of long-term sustainable development in ACP states, which would, in the long run, be advantageous even to the EU (creation of trade relations, markets, less development aid, fewer migrants and fewer ecological problems), all EU efforts should also go hand in hand with bilateral development co-operation. In the process, full attention should be paid to the following approaches:
Developing endogenous potential as a guideline in eliminating poverty and underdevelopment. The approach (see Exposition 6) is based on the fact that ACP states can only make their way out of the crisis through their own commitment to development. Co-operation can only help to support these efforts. The Federal Republic of Germany should hence see to it, that counterproductive instruments are either re-conceptionalised or discarded altogether, i.e.
All instruments previously implemented have contradicted the goals of endogenous development and hence the concept of "help towards self-help" as well.
Regional co-operation: Germany, on her part, should become increasingly involved in this area, if one is to move away from the traditional project approach, thereby introducing new experiences. Experiences with SADC in southern Africa could be referred to in order to see a) where economic co-operation could be reinforced and b) how African regional co-operation can be strengthened. The CDI and EIB should have a significant function in co-operating with ACP institutions. It is also important to expand the World Banks structural adjustment programmes to include regional aspects, as well.
4. New European reform perspectives can be worked out on the basis of common European responsibility. Reform proposals should be based on the following aspects:
5. The European voice should finally be heard within international organisations. With regard to development co-operation, Germany should work towards enforcing a European development policy with more vigour, particularly within the World Bank and IMF. There are huge deficits, but equally great opportunities (e.g. humane structural adjustment programmes, promotion of small and medium-sized enterprises, sustainable development, regional co-operation, participation and co-operation with NGOs).
6. European development policy is a largely unknown affair, with inherent strengths and weaknesses. The weaknesses are a result of several
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aspects including the fact that dialogue with NGOs, experts, research institutes and universities is carried out on a very low level virtually outside recognisably large units. EU development policy makes little use of the special skills and interests of experts and is hardly engaged in any critical dialogue. The result is that particularities and clientele structures are still able to prevail within the EU. The German government should increasingly work towards dialogue with NGOs, experts and research institutions both in ACP countries and in the EU. This would eventually help EU development policy out of its highly inscrutable and neglected state. Using openness and the material flow that is more or less accessible to all interest groups, the World Bank has shown the necessity behind permanent and open dialogue.
3. Components of a Lomé reform
Numerous proposals are under discussion. These range from the total discontinuation of the Treaty, to regionalisation of co-operation, to reforms in the instruments.
1. Dissolve the treaty and reform co-operation as with other regions of the world; i.e. do some "house cleaning " [Comp. for example Jochem/Sell 1995: 86.], which also applies to the Lomé Treaty. This option may seem plausible from a neo-liberalist point of view, but it does not take historical continuities into consideration, nor the experiences with post-colonial co-operation, as well as the close ties between Europe and Africa. Co-operation between the EU and ACP countries, as well as other third world regions presumes that the Lomé model is unfavourable to other third world regions. This is, indeed, the case. From a development point of view, there is need to strive for equal treatment of all "poor countries". A reform in European development policy would, therefore, have to transfer positive aspects of the Lomé model to other regions, as well. Agreements reached with Mediterranean third world countries and improved co-operation relations with Latin America and Asia both point in this direction. Development policy is in need of comprehensive reform.
2. Regionalise co-operation while simultaneously improving the instruments. There is a dispute as to whether the Lomé Convention is still manageable considering the fact that it now has 70 ACP member states. In the face of globalisation pressure, in conjunction with fragmentalisation tendencies, it seems that Lomé co-operation could still make a contribution to cohesion. Even if the contribution generally hasnt had any far-reaching effects, the post-colonial model still had something of mutual responsibility to it, despite all the condemnation and crisis. Whether regionalising would be of further help here, is certainly not an easy matter to settle. The question arises as to whether the ACP can still be regarded as a unit, or whether it is, perhaps, more reasonable to sign separate treaties with the Africa, the Caribbean and the Pacific states. Numerous arguments can be brought up in favour of regionalisation, including similar economic structures, orientation of foreign trade, proximity to (or distance from) Europe, common institutions (such as the OAU) and regional forms of co-operation, as well as huge cultural similarities. It mainly depends on ACP states to what extent they desire a common Lomé umbrella despite their heterogeneity, in order to better assert their interests. Differentiation due to existing structural heterogeneities would not result in a weakening of the Lomé model, but rather serve as a key to greater flexibility. Since regional co-operation will certainly be more emphasised in the globalisation process, regionalisation within the Lomé framework would definitely be judged in a positive way. This would also help to simplify the creation of regional institutions within the Lomé framework and thus contribute to reducing the Brussels decision-making competence as well as the prevailing EU control of development co-operation.
In my opinion, further sub-regionalisation according to the seven regions created within the framework of regional programmes (e.g. West Africa, southern Africa) would not be advis-
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able, since, in general, these regions can only attain greater attention in the long run, at best. They have hardly shown any progress in regional co-operation in the past.
3. Reform instruments, keeping in mind, that previous instruments have, in some cases given rise to false incentives. In the light of its past mistakes and in view of ACP marginalisation, particularly in Africas case, the instruments should in my opinion comprise the following components of reform: an end to subsidisation systems, a transformation of the preferential trade regime into a free trade agreement, monetary co-operation, a reform in structural adjustment programmes, agreements to secure and promote capital transfers, differentiation between regions, decentralisation, positive measures in civil society, etc. The above mentioned components will be dealt with in more detail below.
On the following pages, I shall be presuming need for fundamental reform. The option of abolishing the Lomé model shall not be dealt with any further. I shall, however, take up legitimate criticism of individual instruments and incorporate it into the reform perspective. In general, the paper looks at ways to remove asymmetrical tendencies and shape reform in such a way that Lomé co-operation will have positive effects on development.
1. Discontinuation of the subsidisation systems STABEX and SYSMIN
The two subsidisation instruments STABEX and SYSMIN should be set off within a maximum period of 15 years. The available funds should be cut down by at least 10% per annum (see model calculation, Table 8). The reduced means should enter a special fund dedicated to the promotion of the private sector (including CDI activities), particularly agriculture as well as small and medium-sized industries in. Developing agriculture and informal sector enterprises would be the most effective way of securing employment and increasing income. Hence, this would contribute to poverty control. With this fund, the desperately needed means for CDI activities (the CDI being one of the joint ACP and EU institutions) could be provided. Incidentally, the CDI, which according to me, is capable of both reform and extension, should decentralise and localise its activities in conjunction with the IFC (International Finance Corporation), regional development banks, the African Development Bank and national economic promotion institutions and banks. In this way, the CDI can contribute far better to industrialisation and the development of the informal sector.
CDI activities have hitherto been highly limited due to very modest funding. A remedy is urgently required, especially, since the CDI is a joint institution and thus closest to the partnership concept. The CDI could definitely provide useful support in promoting small and medium-sized enterprises including the informal sector. This would be possible if it had suitable concepts and adequate funds at its disposal. The CDI could, above all, become active in setting up national and regional industrial promotion activities and in the provision of expertise.
2. Trade reform
Fundamental reform should be carried out in the preferential trade agreement. Either way, this is necessary because of the World Trade Organisations (WTO) resolutions, on the one hand, and due to the constant erosion of preferences, on the other. Special regulations will continue to exist solely for LLDCs. This so-called waiver system can only be implemented in the case of least developed countries and only on a short-term basis. But (as experience has shown), since economic advancement is not brought about by preferential agreements and special treatment, the ACP should no longer count on the waiver system. Non-reciprocal trade relations have not been able to prevent the erosion of African trade. In contrary, asymmetry has intensified.
The ACPs non-reciprocal trade co-operation with the EU is currently dependent unilaterally on the EU. This fact constitutes the main problem for trade. Existing discrimination against other states through the Lomé treaty has, on the one hand, been reversed, and reinforced, on the
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other. These tendencies pose a great danger to trade prospects. Once the EU loses her interest in the ACP group of states, the latter will automatically lose not only their current preferential status, but also the framework for reciprocal trade relations. International liberalisation is however eroding non-reciprocal trade preferences. At best, Africas position will only be slightly worsened by this situation. Only a few countries, e.g. Mauritius, have been able to draw benefits from special preferences. For the majority of countries, the problem does not lie in preferences that are too low, but rather in extremely low productivity combined with (with a few exceptions) an incompetitive product range. The developing of industrial and agricultural economies that are internationally competitive has incidentally been structurally hindered or made impossible in CFA countries due to a constantly overvalued currency.
Taking into account the fact that Lomé trade preferences were never in conformity with GATT conditions (thus putting other groups of states at a disadvantage) and that the waiver system will only run until the year 2000 (i.e. non-reciprocal trade relations will be possible only until then), it is recommendable to make use of the transition phase and start searching for alternatives. In the long run, a free trade zone between the EU and ACP states should be envisaged, which would certainly meet with resistance in France on account of her "chasse gardée", as well as in agriculturally oriented EU countries (when markets are opened to all agricultural products).
Ongoing negotiations with South Africa are probably an indication of the direction that future trade co-operation will take, even where a trade regime with ACP countries is concerned [Comp. Stevens/Kennan 1995.]. The preferential agreement for ACP states will no longer be sustainable, particularly not if South Africa is to become a member of Lomé co-operation. Everything currently points to the need for the ACP group of states to take action geared towards new reciprocal trade co-operation, i.e. the creation of a Free Trade Area (FTA).
What appropriate steps remain to be taken by the ACP states? [See Collier/Gunning 1995.]
Institutional regulations between the EU and the ACP should be determined jointly.
An EU-ACP Free Trade Area would have three advantages:
The CFA Zone model could serve as an example for a customs union. The result would doubtlessly be (voluntary) ties to the stronger trade partner, the EU (as is practised for example by EFTA states and several East European countries).
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Reciprocal trade relations and the creation of an African (or Caribbean, or Pacific) customs union may be a necessary prerequisite for Africa (or the Caribbean, or the Pacific) to make her way out of the development dead end. But this is in no way sufficient. There are different national paths of development to be taken, depending on the level of development, progress in economic reforms and the industrial level. South Africa will adopt a much more export oriented and regional strategy, assuming a locomotive function for southern Africa. Countries that export raw materials will be pursuing their comparative advantages. The following is true for almost all countries: they can only reduce their dependence on OECD countries demand by systematically promoting agriculture and rural industrialisation, as well as by diversifying production, i.e. by promoting small and medium-sized industry which is central to developing endogenous potentials.
3. Monetary co-operation
The Lomé agreements do not conceptionally take the monetary integration of the West and Central African CFA Zone into consideration. Neither the EU nor CFA countries as part of the ACP community have hitherto brought monetary integration into discussion. In accordance with the subsidiary principle, the Maastricht Treaty does, in principle, support monetary co-operation similar to the one that has existed between France and CFA countries for over 40 years. Due to the crisis in the CFA Zone, however, it seems that there is need for reform within the Lomé framework. Discussions concerning monetary co-operation will definitely give rise to questions regarding costs and benefits (France vs. EU countries). One should strive for a common economic and monetary zone with the EU, which includes West African countries that have hitherto belonged to the CFA zone. This would provide a new basis for trade relations between West Africa and Europe. Access to this monetary co-operation should be open to all ACP countries. Co-operation should be established on a voluntary basis within the framework of the Free Trade Area. This would also mean that a new co-operation model becomes necessary, a model that would take leave of philanthropic ideas and instead view itself as co-operation aimed at mutual benefits, an EU-Africa or EU-ACP trade block. It would, hence, be one which makes better use of trade agreements than before and safeguards currency stability, thus improving the economic atmosphere. Monetary co-operation with the EU would lead to the transfer of Frances hitherto financial policy command to the EU. Member countries as well as the EU would be subject to institutional restrictions of monetary policy [Comp. L’Heriteau 1993 and Hugon 1992 and 1993.]. Joint institutions would thus be created (see Exposition 5).
4. Sustainable development
The concept of sustainable development has to a certain extent found its dynamics in the OECD world in a concept of growth based on ecological modernisation. The development dilemma does, however, continue to exist. It is only when the development dilemma threatens the OECD world, when underdevelopment becomes a "Global Commons" and "future anarchy" is threatening, that an international regulation process is set in train and a subsequent solution becomes possible. The debt crisis, the spread of civil wars, fragmentation processes with global threat potential (e.g. through the spread of the international refugee problem), the increase in ominous weapon arsenals, and even increased dependence on energy supplies from the third world, all these factors could boost international regulations for development. Discussions revolving around the 20:20 resolution passed at the World Social Summit in Copenhagen refers to this now well-known problem. The concept of sustainable development may represent a relative progress, but it contains conceptional deficiencies and regulations whose reforms currently show hardly any progress. The concept is thus no more than just a beginning. In the face of the mentioned circumstances, three options remain to solve the development dilemma.
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For EU-ACP relations, these assessments mean that co-operation relations should make a preventive contribution against ecological damage, environmental destruction in cities, desertification, the over-exploitation of raw materials, the destruction of tropical rain forests, overgrazing, etc. The problem of sustainability makes it clear how little development co-operation can actually achieve. As such, past measures have definitely had less effect than the famous drop in the ocean, but little more can be achieved through the Lomé Convention. Poverty control and safeguarding survival, i.e. also the creation of employment, have greater priority in most ACP countries, than the sustainability principle. Ecological and economic policies are certainly inadequate in reflecting threat potentials.
In 1995, the World Food Organisation (FAO) pointed out that 14 African countries [FAO (1995) mentions Angola, Burundi, Eritrea, Liberia, Malawi, Mozambique, Rwanda, Sierra Leone, Somalia, Sudan and Zaire.] were affected by an extremely critical food shortage. In addition to drought and supply problems, internal strife and expulsion of the rural population are also factors that have served to intensify the problem. One can speak of entrapped economies (local demographic entrapment) when,
These aspects have definitely contributed to the catastrophe in Rwanda. In addition, Kenya, Malawi, Zimbabwe, Burundi and Madagascar could be considered as further entrapped economies. This problematic situation calls for a new approach to cope with trouble spots.
There are certainly more questions than possible answers:
In view of the complex nature of possible catastrophe, completely new and even unpopular measures may be necessary. The first step would definitely comprise admitting that there are objective limits to an ecosystems capacity and resilience. Discussions regarding the incorporation of the sustainable development concept into the Lomé Treaty is thus urgently overdue.
5. Poverty and population growth
The majority of ACP countries are among the poorest states on earth. Almost all of them have such a high rate of population growth, that it counts among the highest in the world. It is not population growth that is the main cause for poverty and underdevelopment, poverty is rather the central reason for high birth rates. Problems such as limited access to education and health services, lack of social security systems and, above all, the underprivileged status of women should take centre stage in population politics discussions. An effective strategy towards poverty alleviation would involve an attempt to support the economic potential of poverty groups (informal sector and agriculture).
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Development nationalism is still a basic necessity (this is developed from within and not from the outside). Beneficiaries of unearned income, "economies of affection" and clientelistic relations, which have developed within the Lomé framework, are detrimental to endogenous processes and potentials. To express it in harsh terms: development co-operation should have as little influence as possible on endogenous processes. Reforming the central instruments as described above would offer a more suitable framework for development as compared to development aid, conditionalities and the refined employment of instruments. As such, the following are significant components in developing endogenous potentials: trade reform, reform in structural adjustment measures, decentralisation of industrial promotion, promotion of the agricultural and informal sectors, creation of common institutions, a wider scope of action through participation, localisation and decentralisation, as well as decentralised co-operation.
It is not imperative to increase funds, but there is a need to restructure the available means in favour of the above mentioned areas (see Exposition 1). Once the subsidy systems are removed, enough funds would be available for the promotion of endogenous potentials in industry, as well as in the agricultural and informal sectors.
6. Structural adjustment/conditionalities/ debt
In the face of the conflicting results of the World Banks structural adjustment programmes (SAPs) in ACP states [Comp. Berthélémy 1995.], the structural adjustment measures outlined in the Lomé Convention are due for evaluation. According to official statements, the EU has come up with a positive assessment of its own efforts to partially supplement the SAPs. Whether this assessment is truly accurate remains to be proved [Comp. Petit 1993.]. Increased conditionalisation (e.g. slicing of payments) does not seem to be the way to foster increased internalisation of structural adjustment measures. Instead, it leads to greater EU control, a higher level of bureaucratisation, thus turning out to be more counterproductive. Development-political insights are thereby negated: these insights presume that the concerned countries can only achieve development success through participation, effective national institutions and greater responsibility [Comp. Koning 1995; Parfitt 1996.]. In the final analysis, there should be no special EU conditionalities. The EU and ACP states should, instead, press for a change in World Bank and IMF structural adjustment measures to a greater extent than they have previously done, if the negative effects of SAPs (social problems, poverty, etc.) are to be alleviated. The objective must be to integrate SAPs (which are certainly necessary) into a long-term development strategy. Discussions, which have been underway since 1987, concerning the concept of more humane development (UNICEF), should be continued in greater depth. A new offensive towards debt reduction should, therefore, be part of the development strategy. All the problems broached here are, however, an indication of the fact that the Lomé Treaty cannot take a special path. This insight is also supported by the fact that a) the special path taken by France with their "ajustement réel" has not had any promising success and b) the EU does not have the necessary competences at its disposal.
In early 1995, the American journalist William Pfaff wrote an article in the journal "Foreign Affairs", calling for a re-colonisation of Africa by former colonial countries and the EU. According to him, the Europeans had not fulfilled their mission and should now take responsibility for the crisis continent of Africa, a proposal that must be dismissed. This study pleads for a totally different concept, namely a credible development policy, as well as co-operative foreign and economic relations which promote the development of ACP states out of their own
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interest. The German government has previously shown too little commitment to Europeanising development co-operation to this end. It even tends towards re-nationalisation. To augment her own credibility, Germany should advocate for the reform of development co-operation with the inherent goals of endogenous development, i.e. fair trade relations, partnership, development co-operation whose objective is "help to self-help", promotion of industrialisation processes, decentralised co-operation and democracy.
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5. Overview: Proposals for a Lomé reform
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© Friedrich Ebert Stiftung | technical support | net edition fes-library | April 2002