by Jim Lobe
Unless the world’s wealthiest countries comply with their past pledges, some 45 million children in the world’s poor countries will die needlessly over the next decade, according a new report released Monday by the international development group, Oxfam.
Despite the fact that Group of Seven (G7) countries — Germany, France, Italy, Japan, Britain, the United States, and Canada — are richer than they have ever been, they are spending only half as much in real terms in development assistance as they did in 1960, according to the report, “Paying the Price.”
And of the paltry assistance they do provide — about US$50 billion a year — only about 40 percent of the money is actually spent in poor countries; the rest of it is spent in the wealthy countries themselves. Even, then, much of the aid is late in arriving.
“The world has never been wealthier, yet rich nations are giving less and less,” according to Jeremy Hobbs, Oxfam?s executive director. “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.”
Releasing the report on the eve of the launch of a global call to action against poverty by non-governmental organizations (NGOs) and high-profile personalities around the world, Oxfam is pressing for the G7 to immediately cancel all poor countries? debt and double development aid.
Failure to do so will almost certainly put the Millennium Development Goals (MDGs) for reducing poverty out of reach, according to the report. The entire membership of the United Nations agreed the Goals in 2000.
The MDGs 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; reduce by two thirds the mortality rate of children under five and by three quarters the maternal mortality rate; and halt the spread of HIV/AIDS and the incidence of other deadly diseases, such as malaria and tuberculosis.
While the G7 agreed to these goals four years ago, their aid budgets have not increased accordingly.
That failure is part of a pattern that began in 1970 when wealthy countries agreed to spend 0.7 percent of their annual gross domestic products (GDPs) at a special UN General Assembly development conference.
While Sweden, Norway, Denmark, the Netherlands, and Luxembourg have reached and sustained that target for some time, none of the G7 members is even close, although France and Britain have at least set a timetable for reaching it.
Indeed, 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 percent of GDP, U.S. foreign aid in 2003 ranked dead last among all wealthy nations. In fact, its entire development aid spending in 2003 came to only ten percent of what it spent on the Iraq war that year. U.S. development assistance comes to less than one-fortieth of its annual defense budget.
The G7’s combined aid budgets expressed as a percentage of GDP in 2003 — 0.24 percent — were only about half of what they were in 1960, when they stood at 0.48 percent, according to the report.
“The scandal must end,” said Hobbs. “Aid can get millions of children into school, save millions of mothers from dying in childbirth and lift even more out of poverty, but rich countries are failing the poor.”
Moreover, much of the aid is “tied” to purchases of G7 goods and services and, thus are not even spent in poor countries, according to the report. The worst offenders are Italy and the United States. More than 90 percent of Italian aid is spent on Italian goods and services, while about 70 percent of U.S. aid money is spent on U.S. companies.
The problem, however, is not only about aid and where it is spent, according to the report. The G7, which also exercises preponderant power on the boards of the international financial institutions (IFI), 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.
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 that were often contracted by dictators sustained in power largely as a result of Western or Soviet support in the Cold War. 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.
NGOs have been pushing the G-7 and the IFIs for years to cancel the debt and believed that they were on the cusp of victory at the leaders’ meeting in Georgia last summer. But the group could not achieve a consensus as a result of which the issue has been kicked over into next year.
In its latest report, Oxfam 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. It also noted that canceling the debt of 32 of those countries would cost the equivalent of $2.10 for each person living in rich countries per year.
The key to achieving the MDG targets thus lies both with increasing aid and debt cancellation. The governments of developing countries, according to the report, must also do their share — spend 20 percent of their budgets on basic social services designed to reduce poverty and implement reforms designed to institutionalize 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; 34 million more will be hungry; and 45 million children will have died.
“Unless world leaders act now to deliver a historic breakthrough on poverty,” said Hobbs, “next year will end in shameful failure.”