Will Any Crumbs Remain After Bankers' Feast?
UNITED NATIONS - The vast
resources the U.S. and Europeans are pouring into ailing financial
firms could lead to disastrous consequences for global efforts to
reduce poverty and mitigate the impacts of climate change, warns a new
study by an independent think tank.
The study, entitled
"Skewed Priorities: How the Bailouts Dwarf Other Global Crises", points
out that the U.S and European governments are willing to help financial
firms in crisis with more than 4 trillion dollars -- an amount
estimated to be 40 times higher than what is being spent on measures to
fight climate change and poverty.
According to researchers at the Washington-based Institute for
Policy Studies, which released the study's findings Monday, governments
of the rich industrialized countries are very likely to use the cost of
their financial sector bailouts as an excuse to backtrack on global aid
for poverty and climate change financing commitments.
The study comes as the United Nations is preparing to hold two
major international meetings to advance its agenda on environment and
The three-day conference on financing for development is
scheduled to commence in Doha, Qatar next weekend, while the U.N.
conference on climate change is set for in Poznan, Poland next week.
The Poznan conference will last for more than a week, with
more than 8,000 delegates expected to attend. It is supposed to hammer
out further international commitments to fight climate change,
including climate-related financial assistance for developing
U.N. officials hope the meeting will prove to be a "milestone
on the road to success" for the negotiation processes launched at past
conferences, because it is tasked with setting the agenda for final
talks on the future of the climate change treaty at another meeting due
to take place in Denmark next year.
But considering the fact that the U.S. and most governments in
Europe are currently preoccupied with addressing their own financial
crises, observers say it is highly unlikely there will be a major
breakthrough in regard to the issue of global funding for climate
Whether or not the rich nations come forward to make fresh
commitments on climate change, the fact is, as the study's authors
note, that the current financial crisis is hurting all the countries,
no matter how rich or poor.
"Skyrocketing poverty and unemployment in the developing world
will mean even more brutal global competition for jobs," said the
study's lead author John Cavanagh. "Climate change imperils the very
future of the planet."
To Cavanagh, the richest nations in the world "appear fixated
almost entirely on responding to the financial crisis, and
specifically, on propping up their own financial firms."
The report's key findings show that the amount the U.S. and
the European governments have committed to the ailing banking industry
is way beyond what they spent on development projects in poor countries
According to the study's authors, the U.S. government's
152.5-billion-dollar rescue plan for one single company -- AIG -- far
exceeds the 90.7 billion dollars the U.S. and European governments
spent on development aid in 2007.
They note the U.S. government had spent about 23 billion
dollars on aid to all developing countries last year. By contrast, the
bailout amount it gave away to the failed investment bank Bear Stearns
was 29 billion dollars.
The United States also committed 200 billion dollars to prop
up mortgage lenders Fannie Mae and Freddie Mac, a figure that dwarfs
the 209 million dollars in economic aid in 2007 to Haiti, the Western
Hemisphere's poorest country.
According to the report, the U.S. and European governments
have committed over 300 times more to rescuing banks, as compared to 13
billion dollars in new commitments made to help poor countries address
the climate crisis over the next several years.
Researchers note that the Swiss government has committed 60
billion dollars to rescue the ailing investment bank UBS. This amount
is five times more than what all Western European governments pledged
for climate finance to help poor countries in 2007.
The U.S., according to the study, has made no commitment to
fund climate change-related projects in the developing world. The U.S.
is not a signatory to the climate change treaty, although it is
responsible for more than 25 percent of carbon emissions on the planet,
which is considered by scientists as the main cause of global warming.
"Such extremely lopsided priorities will come back to haunt
the United States and the rest of the global North in the long run,"
said the study's co-author Sarah Anderson. "The richer countries not
only have an obligation to clean up the messes they've made abroad.
It's also in their interest."