Author: Tim Costello,
chief executive of World Vision Australia
The efforts of the nearly 200 nations who pledged, through the Millennium Development Goals, to halve world poverty by 2015 are being dismantled by the global financial crisis. Without a concerted effort on a global scale, another 53 million or more people are likely to be pushed back into extreme poverty.
The crisis cuts across what had been a positive trend. With help, emerging nations were making strides. Since 2000, child deaths have dropped by 2 million a year to 9.2 million annually. But without concerted action, the World Bank warns, the numbers will again rise.
For the wealthy West, the global financial crisis was a banking and regulatory crisis that began in New York, with governance failures on many fronts, and which is costing taxpayers trillions of dollars for a still distant rescue. The bonuses paid to Wall Street bankers even last year amid the market mayhem were shameful. Its wider impact has been catastrophic. In human terms, the ripple effect from these market events is that more poor people may pay with their lives.
The downturn in trade forecast by the IMF this week means that developing nations which rely on exports will have their incomes slashed. Their ability to raise finance in global markets to keep their struggling economies ticking – let alone afford a stimulus – has been all but eliminated. And it is becoming clear that foreign investment going into developing countries is rapidly drying up.
The World Bank believes developing countries face a shortfall of up to US$700 billion this year; the United Nations believes more than US$1 trillion in additional funding is needed to help developing countries get through a crisis that was no fault of their own.
Next week in London the world’s biggest nations – developed and developing - have an opportunity to act.
There are hopeful signs. The host, British PM Gordon Brown has been visiting nations ahead of the summit including Brazil and Argentina. China, India, Mexico, Turkey and Indonesia will take their seats around the table. Prime Minister Kevin Rudd has called for rich nations to meet their commitments to increase development assistance, and to identify problems in financial systems earlier, before they develop and cause terrible problems in poor countries.
This week Mr Rudd stood with World Bank president Robert Zoellick. Together they spoke of the needs of developing countries. Without action, they warned, nation’s such as Pakistan, Afghanistan - and others in our region - would become more unstable and our world more dangerous.
The G20 nations should commit to maintain open trade and not retreat behind protectionist walls, to reform international financial and banking arrangements so emerging nations’ tax and other revenues are safeguarded, and ensure governance reforms make international bodies such as the IMF and World Bank more democratic and representative. This seems the least we can do for those who are the innocent bystanders to the greatest financial crisis since the Depression.
Columbia University economist, and UN advisor, Professor Jeffrey Sachs believes the G20 forum is the opportunity to present a new vision and practical action for global co-operation. But he warned that the debates have focussed on financial architecture and the poor have so far been left out of the equation.
The evidence that poor countries are hurting is clear. When you live on less than a dollar a day a decrease in income can literally be a matter of life or death.
Rising food prices in Australia may mean we eat out less often, and shop more carefully. In some countries, the price of basic foodstuffs means poor people do not eat. Commodity price falls have been matched by currency devaluations for many poor nations, meaning the global food crisis – the other GFC – has not ended. The World Bank has estimated that without action an extra 2.8 million children could die of poverty over the next six years.
Almost every issue now is global. We can no longer afford to think of only local effects. The G20 should be a precursor to the global cooperation which is desperately needed to combat climate change, and to make world trade work for emerging nations.
The PM and Foreign Minister have both reiterated the Government’s commitment to increase aid to 0.5 per cent of GNI by 2015 – this is a very important first step for which they should be congratulated. It is important that the path to this increase starts now and is not left til after the financial crisis is over and the damage is done.
The assistance that developing nations require is relatively small by the standards of our rich country economies - only around 2 per cent of the domestic stimulus packages of rich countries – but it can make a huge difference for the very poorest people.
Ensuring that developing countries are given adequate support through this crisis and protecting the poorest people is not only the right thing to do but also likely to be the most cost effective strategy in the long term.
Tim Costello is chief executive of World Vision Australia.