Western Aid Declines, Financial Bailouts Mount

Published on
by
Inter Press Service

Western Aid Declines, Financial Bailouts Mount

by
Thalif Deen

A child sits near his makeshift house underneath a toll road in Jakarta June 25, 2009. . The economy is the main battleground issue in Indonesia's presidential election campaign in a country where unemployment remains high and even small changes in prices of basic goods can trigger social unrest. Indonesia's presidential candidates are holding a series of televised debates ahead of the July 8 vote. Thursday's debate is on poverty and unemployment in Southeast Asia's biggest economy. REUTERS/Supri (INDONESIA POLITICS SOCIETY BUSINESS)

UNITED NATIONS - As the world's poorer nations warn about the gravity of the global financial crisis on their fragile economies, the United Nations has exposed the hypocrisy of Western donors who cry poverty even while they raise trillions of dollars to rescue their beleaguered financial institutions.

Secretary-General Ban Ki-moon has warned that the current financial meltdown should not be an excuse to slash development aid or marginalise developing nations, specifically the world's 49 least developed countries (LDCs) - ranging from Bhutan and Benin to Sierra Leone and Solomon Islands.

The United Nations Millennium Campaign, which is battling to help eradicate extreme poverty and hunger worldwide, points out that since the inception of overseas development assistance almost 50 years ago, donor countries have given some 2.0 trillion dollars in aid.

And yet over the past year, 18 trillion dollars has been found globally to bail out banks and other financial institutions.

"The stark contrast between the money dispersed to the world's desperately poor after 49 years of painstaking summits and negotiations and the staggering sums found virtually overnight to bail out the creators of the global economic crisis makes it impossible for governments to any longer claim that the world can't find the money to help the 50,000 people who are dying of extreme poverty every day", says Salil Shetty, director of the Millennium Campaign.

The amount of total aid over the past 49 years represents just 11.0 percent of the money found for financial institutions in one year, he added.

Addressing the three-day U.N. summit on the global financial crisis Wednesday, the secretary-general reinforced the same argument.

The annual aid to the crisis-stricken continent of Africa, he said, was at least 20 billion dollars below the promises made by the leaders of the industrial world in Gleneagles, Scotland back in 2005.

"Surely, if the world can mobilise more than 18 trillion dollars to keep the financial sector afloat, it can find more than 18 billion dollars to keep commitments to Africa," Ban said.

But would it?

The challenge to the industrial world will come up once again at a summit meeting of the G8 countries - the United States, Britain, France, Italy, Germany, Japan, Canada and Russia - in L'Aquila, Italy Jul. 8-10.

"We need clear priorities," Ban told the U.N. summit. "That is why I have just sent a letter to G8 leaders urging concrete commitments and specific action to renew our resolve."

A 16-page outcome document, to be adopted by political leaders Friday, says the evolving crisis, which began within the world's major financial centres, has spread throughout the global economy, causing severe social, political and economic impacts.

"This crisis is negatively affecting all countries, particularly developing countries, and threatening the livelihoods, well-being and development opportunities of millions of people," the draft says.

The bottom line: millions of people all over the world are losing their jobs, their income, their savings and their homes.

The document specifically says that developing countries, "which did not cause the global economic and financial crisis, are nonetheless severely affected by it."

The Food and Agriculture Organisation (FAO) says the economic meltdown has resulted in 100 million more people going hungry, with the total number of the world's starving population reaching over one billion this year.

The World Bank projects a finance gap of up to 700 billion dollars, desperately needed by developing nations, with the possibility of a "lost generation", resulting in added deaths of 1.5 to 2.8 million infants by 2015.

Asked why rich countries keep ignoring the pleas of the world's poorer nations while they bail out banks and other financial institutions, Shetty of the U.N. Millennium Campaign told IPS: "The leaders in rich countries don't face any short-term political consequences by not acting on the needs and aspirations of poor people living in poor countries."

He said the only long-term solution is to build public support through sustained public education on these issues in rich countries.

"The decision-makers in rich countries don't see the same self-interest and mutuality as they now see in climate change, swine flu/pandemics, the so-called war against terror and to a lesser extent in trade on which the need for multilateral action has become painfully clear," he added.

Shetty pointed out they did realise the possible consequences in the case of Eastern Europe, where they live physically next to poor countries.

"They forget that there is less than 10 miles of water separating Europe from Africa," he noted.

Asked if developing nations, who are now part of G20, have a role to play in convincing their rich partners to respond to the call, Shetty said: "Yes, like climate change the growing economic importance particularly of China has certainly rebalanced the highly asymmetric power relations between rich and poor countries."

The members of the G20 are the finance ministers and central bank governors of 19 countries: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom and the United States of America, plus the European Union.

Shetty said: "The challenge we now face is to make sure that the BRICs (Brazil, India and China) themselves don't forget the 49 least developed countries (LDCs), as they bargain for a better deal for themselves with the richest countries."

"Otherwise, we could be back to the historic game of divide and rule," he stressed.

Shetty also said it is crucial that the emerging nations continue to place the achievement of the Millennium Development Goals (MDGs) at the forefront of their negotiations at the G8 in Italy in two weeks time and the G20 in September in the United States.

 

Share This Article

More in: