Poor Are Paying The Price Of Rich Countries Failure

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A recent report from the London-based international humanitarian aid agency Oxfam reveals that 45 million more children in poor countries will die needlessly because rich countries are failing to provide the necessary resources they promised to overcome poverty.

The report, "Paying the Price," finds that rich countries' aid budgets today are half what they were in 1960 in percentage terms and poor countries are paying back a staggering $100 million a day in debt repayments. Oxfam also calculates that 97 million more children in poor countries will be out of school by 2015 unless urgent action is taken.

Launching the report, Jeremy Hobbs, Oxfam's executive director, said: "Rich nations are giving less and less (too poor countries). Across the globe, millions of people are being denied the most basic human needs - clean water, food, health care and education. People are dying while leaders delay debt relief and aid."

The Oxfam report urges the leaders of G7 countries - Canada, France, Germany, Italy, Japan, UK and the US - to "make history" in 2005 by cancelling poor countries' debt and increasing aid, alongside action to make trade more fair.

Of the $50 billion a year in aid provided by the G7 countries, only about 40 per cent of the money is actually spent in poor countries; the rest of it is "tied" to purchases of G7 goods and services and is spent in the wealthy countries themselves.

Even then, much of the aid is late in arriving. For example, 20 per cent of the European Union's aid arrives at least a year late and 92 per cent of Italian aid is spent on Italian goods and services, while about 70 per cent of US aid money in spent on US companies.

By contrast, the EU countries and the US give $350 billion a year in subsidies to their own farmers - making it virtually impossible for producers in developing countries to compete against them. The EU's and US's refusal to slash agricultural subsidies led to the collapse of the WTO ministerial trade talks in Cancun, Mexico, in September last year.

The Oxfam report came on the eve of the launch of a global call to action against poverty involving organisations and high-profile figures around the world mobilising to demand an end to poverty. It warns that unless aid is increased to at least $ 100 billion a year now (double the present amount) and debts are cancelled, the internatioally agreed Millenium Development Goals (MDGs) will not be met.

The MDGs were agreed by the entire membership of the United Nations in 2000 and set forth eight specific benchmarks to be achieved by the year 2015. They include achieving universal primary education; halving the number of people living in hunger and on less than the equivalent of one dollar a day; reducing by two-thirds the mortality rate of children under five and by three-quarters the maternal mortality rate; and halting the spread of HIV/AIDS and the incidence of other deadly diseases, such as malaria and tuberculosis.

While the G7 countries agreed to these goals four years ago, their aid budgets have not increased accordingly.

In 1970 rich countries agreed to spend just 0.7 per cent of their annual gross domestic products (GDPs) on aid at a special UN General Assembly development conference. Thirty-four years later, however, none of the G7 members have reached this target and many have not even set a timetable for reaching the target.

Indeed, as Jim Lobe noted in a recent article posted on the OneWorld.net, in some countries, the amount of aid expressed as a percentage of GDP has actually fallen, particularly over the last decade.

At only 0.14 per cent of national income, US spending on foreign development aid in 2003 ranked dead last among all wealthy nations and was only one-tenth of what it spent on the war in Iraq that year. According to the Oxfam report, the US won't reach the aid target needed to halve world poverty until 2040. Germany won't reach the target until 2087, while Japan is decreasing its aid commitments.

US development aid comes to less than 2.5 per cent of its annual military spending. Under the Bush administration, US military spending has soared to record levels. At $ 500 billion in US fiscal 2009 (which began on October 1, 2008), US military spending now accounts for 50 per cent of total world military spending.

Oxfam's executive director said: "The scandal must end. Aid can get millions of children into school, save millions of mothers from dying in child birth and lift even more out of poverty, but rich countries are failing the poor.

This year Zambia will spend twice as much on repaying its debts than it will on educating its children. Unless world leaders act now to deliver a historic breakthrough on poverty, next year will end in shameful failure."

There has been much talk in Pakistan about reducing military spending and using the money that would thus be saved to increase spending on education, health care and other social sectors. In fact, debt servicing and loan repayments now consume a much bigger chunk (37 per cent) of government revenue than military spending (25 per cent).

As Lobe noted, "The G7, which exercises preponderant power on the boards of the international financial institutions (IFIs), such as the World Bank and the International Monetary Fund (IMF), through their weighted voting systems, could, if it wished, cancel the unsustainable debt that is crippling the ability of the world's poorest countries to meet the MDG targets.

Most of the debt is held by the IFIs."

In November 2004, at the US's urging, the Paris Club member countries agreed to cancel $ 29 billion of Iraq's $ 120 billion foreign debt.

But what sort of message did this send to other developing countries? That the only way for a developing country to get a significant chunk of its foreign debt cancelled is to allow itself to be occupied by US troops! Or what?

According to the Oxfam report, low-income countries paid $ 39 billion to service debts in 2003 and received only $ 27 billion in new assistance; that is, for every two dollars they received in aid, they had to pay back almost three dollars to service debts.

As Lobe noted, "In the vast majority of cases, the people of these countries received virtually no benefit from what has become an unsustainable debt burden. As a result, at least ten of Africa's most indebted poor countries are paying more on debt service than on health services for their people, an especially difficult situation given the spread of HIV/AIDS in the region."

The Oxfam report said that the revaluation or sale of the IMF's gold reserves could raise more than $ 30 billion, more than enough to cancel all remaining debts of the world's 40 poorest and most indebted nations. The report noted that cancelling the debt of 32 of those countries would cost the equivalent of a little more than two dollars per year for each person living in rich countries.

The key to achieving the MGD targets thus lies both with increasing aid and debt cancellation, the report said. The report said that developing countries must also do their share by spending 20 per cent of their budgets on basic social services designed to reduce poverty and implement reforms designed to institutionalise democratic practices, the rule of law, and policies that address the challenges faced by the poor.

If, on the other hand, current trends are sustained over the next decade, Oxfam estimates that 247 million more people in sub-Saharan Africa will be living in absolute poverty by 2015; 34 million more will be hungry; and 45 million more children will have died.

To compound the problem, major arms exporting rich countries - most notably the United States (the world's biggest exporter of arms) - are breaking their promises on arms sales by failing to assess the impact such exports are having on poverty. As a result, arms sales are being authorised which are diverting much needed resources away from areas such as health and education.

"Government failure to stick to their own promises on arms exports means that children are denied an education, AIDS sufferers are not getting treatment and thousands are dying needlessly," said an Oxfam official.


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