The Real Economic Crisis
Today I want to highlight an example of remarkably good and important journalism, namely, a story in the Washington Post by Karin Brulliard that opens the door, a crack at least, on the effects of the worldwide economic crisis on the most vulnerable: people who live in Africa and other "least developed" countries.
The story is called: "Zambia's Copperbelt Reels from Global Crisis."
It's important because it points out that the effects of the crisis, while bad here at home, are magnified a hundred-fold in many poor countries, which are being pushed over the brink toward societal disintegration.
First a quote:
Mines here in Zambia's Copperbelt region drive this poor nation's economy, but a plunge in global trade has slashed demand for the copper used to construct electronics and houses in the United States and Asia. That is prompting mines here to slow and shut, limiting tens of thousands of Zambians' access to schooling, health care and regular meals.
And it's continent-wide:
Africa's resource-fueled economies have grown steadily in recent years, improving the lives of millions of people. Now, as prices drop for Botswana's diamonds, Chad's oil and Tanzania's cotton, a crisis that began in the rich world is threatening to drive millions more into poverty, according to the World Bank, and raising the specter of unrest.
The article points out that the IMF has identified 26 countries as "highly vulnerable" to the crisis, half in Africa. (Of course, that understates the problem, since the entire Third World is suffering enormously. Even Iraq, oil rich, can't pay the army and police it needs to guarantee the peace as the US withdraws.) The article continues:
The problem is not just a collapse in commodities prices. Foreign investment is receding in countries such as South Africa and Kenya. Remittances are dropping in Liberia. Aid flows from economically stressed donor countries might retreat. Much will depend on how quickly advanced economies recover, according to experts and African leaders, who warn that a prolonged downturn could stir turmoil.
At the IMF's website you can read the entire report, in a .pdf document, which is depressing indeed, and scary. The point is, while the United States is spending literally trillions to bail out banks and insurance companies and to build infrastructure, etc., the needs in the Third World are measured in billions, not trillions. But the lives at risk are measured in billions, too.
Some quotes from the IMF report:
The study finds that the global crisis is squeezing exports of low-income countries severely, while also curtailing inflows of foreign direct investment and remittances, which had become important sources of financing in recent years. As a result, many countries will face sharply lower fiscal revenues and some may also experience pressure on their foreign exchange reserves.
The IMF analysis identifies 22 low-income countries that face the most acute financing constraints. To keep their external reserves at safe levels (around 3-4 months of imports), at least US$25 billion in additional concessional financing is needed in 2009. This represents about 80 percent of annual aid to all low-income countries in recent years.
If global growth and financing conditions deteriorate further, the number of vulnerable countries could almost double, while additional financing needs could approach US$140 billion.
It seems to me that adding $140 billion to the multi-trillion dollar stimulus effort is pocket change, now.
© 2009 The Nation