Apr 12, 2022
The combination of the coronavirus pandemic--prolonged by uneven access to vaccines, which is worsening material conditions in low-income countries--and Russia's war on Ukraine, which has driven global food prices to record highs and contributed to a spike in energy costs, is threatening to push over a quarter of a billion more people into extreme poverty in 2022.
"We reject any notion that governments do not have the money or means to lift all people out of poverty and hunger and ensure their health and welfare."
That's according to Oxfam, which warned Tuesday in a new report that urgent international action, including canceling impoverished nations' "unpayable" debt obligations and taxing the windfall profits of corporations along with the wealth of multimillionaires, is needed to prevent rising food and fuel costs from further exacerbating global economic hardship and inequality.
First Crisis, Then Catastrophe--published ahead of next week's World Bank and International Monetary Fund (IMF) meetings in Washington, D.C.--shows that by the end of this year, 860 million people could be living in extreme poverty and 827 million people could be undernourished.
Before Russia's invasion of Ukraine, the World Bank had projected that Covid-19 and intensifying inequality would increase the ranks of the extreme poor by 198 million in 2022. Building on research by the World Bank and the Center for Global Development, Oxfam now estimates that surging food prices alone will force an additional 65 million into extreme poverty this year, for a total of 263 million more people--equivalent to the combined population of the United Kingdom, France, Germany, and Spain--scraping by on less than $1.90 a day.
"Without immediate radical action, we could be witnessing the most profound collapse of humanity into extreme poverty and suffering in memory," Oxfam International executive director Gabriela Bucher said in a statement. "This terrifying prospect is made more sickening by the fact that trillions of dollars have been captured by a tiny group of powerful men who have no interest in interrupting this trajectory."
Roughly 3.3 billion people--"approaching half of humanity"--are expected to be living below the poverty line of $5.50 per day in 2022, according to Oxfam. The report adds:
Meanwhile billionaire wealth has seen its biggest increase ever. Large corporations appear to be exploiting an inflationary environment to boost profits at consumers' expense: soaring energy prices and margins have pushed oil company profits to record levels, while investors expect agriculture companies to rapidly become more profitable as food prices spiral. Moreover, low-income countries--their foreign reserves largely depleted by their Covid-19 responses and debt servicing--are dependent on a handful of grain exporting nations. The fragility and inequality of global food and energy systems is being profoundly exposed.
As they "struggle now to cope with sharp cost-of-living increases, having to choose between eating or heating or medical bills, the likelihood of mass starvation faces millions of people" who are already suffering from malnutrition and other forms of deprivation, Oxfam notes.
As Common Dreams has reported, the situation is particularly dire in drought-stricken and war-torn countries such as Yemen--where the U.S.-backed, Saudi-led military assault has entered its eighth year--and Afghanistan, whose central bank reserves have been seized by the Biden administration. Tens of millions of people are also facing a growing hunger crisis in Egypt, Lebanon, Libya, Sudan, Syria, the occupied Palestinian territories, and in parts of East Africa.
"A wave of governments is nearing a debt default and being forced to slash public spending to pay creditors and import food and fuel," Oxfam points out. "The world's poorest countries are due to pay $43 billion in debt repayments in 2022, which could otherwise cover the costs of their food imports."
"It is the poorest who are being hit hardest," states the report. "The IMF estimates that food costs account for 40% of consumer spending in Sub-Saharan Africa, more than double what it does in advanced economies. But even within these advanced economies there is deep inequality: the poorest 20% in those societies are spending four times more than the top 20% on food, as in the case of the U.S."
Soaring prices are depressing the purchasing power of wages, says Oxfam, with especially harsh consequences for women, who are struggling to find paid employment "after suffering greater pandemic-related job losses."
"Entire countries are being forced deeper into poverty," the organization stresses. "Covid-19 has stretched all governments' coffers but the economic challenges facing developing countries are greater, having been denied equitable access to vaccines and now being forced into austerity measures."
Oxfam notes that despite the costs of the pandemic "piling up and billionaire wealth rising more since Covid-19 than in the previous 14 years combined, governments--with few exceptions--have failed to increase taxes on the richest."
According to the organization, "An annual wealth tax on millionaires starting at just 2%, and 5% on billionaires, could generate $2.52 trillion a year--enough to lift 2.3 billion people out of poverty, make enough vaccines for the world, and deliver universal healthcare and social protection for everyone living in low- and lower-middle-income countries."
"We reject any notion that governments do not have the money or means to lift all people out of poverty and hunger and ensure their health and welfare," said Bucher. "We only see the absence of economic imagination and political will to actually do so."
"Now more than ever, with such scale of human suffering and inequality laid bare and deepened by multiple global crises, that lack of will is inexcusable and we reject it," Bucher added. "The G20, World Bank, and IMF must immediately cancel debts and increase aid to poorer countries, and together act to protect ordinary people from an avoidable catastrophe. The world is watching."
To prevent the rapid unraveling of a quarter-century of poverty reduction and to protect the most vulnerable from the "harsh impacts" of the convergence of a public health emergency, skyrocketing inequality, and food and energy price inflation accelerated by the war in Ukraine, Oxfam is calling for a "global economic rescue plan."
Specifically, the organization is urging the leaders of the world's 20 wealthiest governments (G20), the IMF, and the World Bank to:
- Introduce one-off and permanent wealth taxes to fund a fair and sustainable recovery from Covid-19. Argentina adopted a one-off special levy dubbed the "millionaire's tax" that has brought in around $2.4 billion to pay for pandemic recovery;
- End crisis profiteering by introducing excess profit taxes to capture the windfall profits of big corporations across all industries. Oxfam estimated that such a tax on just 32 super-profitable multinational companies could have generated $104 billion in revenue in 2020;
- Cancel all debt payments for developing countries that need urgent help now. Canceling debt would free up more than $30 billion in vital funds in 2022 alone for 33 countries already in or at high risk of debt distress;
- Boost aid and pay for Ukrainian assistance and the costs of hosting refugees with new funding, rather than shift aid funds earmarked for other crises in poorer countries;
- Reallocate at least $100 billion in Special Drawing Rights (SDR), without burdening countries with new debt or imposing austerity measures. The G20 promised to deliver $100 billion in recycled SDRs but only $36 billion has been committed to date. A new SDR issuance should also be considered and distributed based on needs rather than countries' quota shares at the IMF; and
- Act to protect people from rising food prices, and create a Global Fund for Social Protection to help the poorest countries provide essential income security for their populations, and maintain these services in times of severe crisis.
"The G20, IMF, and World Bank all meet in the next two weeks," the report notes. "Sticking to the status quo is not without consequence--it will result in harm to people the world over. Amid exceptionally challenging political circumstances, it is urgent that leaders take responsibility to advance action that averts catastrophe for billions of people."
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