Fears grow that rich countries are set to turn their backs on global poor

“It is now very clear that we will need to redouble our efforts if the MDGs are to be reached.”
Ariane Arpa
Director General, Intermon Oxfam (Spain)
Published: 27 November 2008

As governments from across the world gather for a major international conference in Doha, Qatar, this weekend, international agency Oxfam is calling on rich countries not to water down their aid commitments.

“It is now very clear that we will need to redouble our efforts if the Millennium Development Goals are to be reached,” said Ariane Arpa, head of the Oxfam International delegation in Doha. “Already climate change and volatile food and fuel prices are threatening to undo the progress that has been made. Now the financial crisis is set to kick the poorest countries while they are down – yet another example of the poor paying the highest price for the mistakes that rich countries have made.”

For the world’s poorest nations, the UN conference on Financing for Development (28 November – 2 December) is one of the most important meetings for six years - and it comes at a crucial moment. According to the World Bank, an estimated 40 million people will be dragged into poverty in 2009 as a result of the financial crisis – meaning that it is more urgent than ever that ambitious, concrete commitments are made to ensure sufficient finance to fight poverty.

“This conference will send out a clear signal about the priority that rich country governments are giving to poverty and development issues as the economic crisis deepens,” said Arpa. “It will demonstrate whether they are serious about the commitments they have made, or whether they intend to use the financial turmoil as an excuse to turn their backs on the developing world.”

Despite the major importance of the Doha Conference, very few rich country leaders have chosen to take part. At this stage, only French President, Nicholas Sarkozy, has confirmed his intention to attend.

“The fact that so few Heads of State have seen fit to travel to Doha is a real cause for concern,” said Arpa. “They should be addressing the crisis of poverty with the same energy and coordination as they are showing in the face of the crisis of the banking system. Failure to do so would be a grave disappointment and a breach of numerous and repeated promises.”

The Doha meeting will be the follow up to the global conference on Financing for Development that took place in Monterrey in 2002, which resulted in the so-called ‘Monterrey Consensus’. With this, world leaders recognized the importance of financing for meeting the Millennium Development Goals (MDGs).

Oxfam International is calling for rich countries to:

  • Commit to keeping their aid promises and agree to specific timetables to reach the target of spending 0.7% of Gross National Income (GNI)
  • Propose bold measures to stop capital flight and increase transparency in the international financial system
  • Commit to participating in existing innovative finance mechanisms and to explore new mechanisms such as a Currency Transaction Tax (CTT)
  • Commit to radically overhauling the global financial architecture into a system in which the voices of poor countries are greatly strengthened.

Notes to Editors

Key facts

Impact of the financial crisis:

  • The World Bank estimates that 40 million people will be pushed in poverty in 2009 due to the financial crisis.
  • In the 1990-3 recession, aid fell by nearly 25% and did not return to 1992 levels until 2003.

Aid promises

  • For OECD countries to meet the UN target of giving 0.7% of their GNI in aid would cost an extra $140 billion dollars a year
  • Aid to all developing countries last year was $104 billion. Meanwhile, in Autumn 2008, the US and EU mobilized around $3 trillion (30 times this) to help bail out their banks.

Capital flight

  • For each dollar of aid given to the African continent, 7 dollars illicitly flows out as a result of capital flight.
  • Tax avoidance means that $160bn in revenues is lost to developing countries each year – more than half of the total amount needed to lift everyone on the planet above the extreme poverty line.
  • The main share of the leakage of funds is not the money of corruption or crime, which only account respectively for 5% and 35%, but is linked to tax avoidance and tax evasion by multinational companies, estimated at US$350-US$500 billion a year.

Overhaul of global financial architecture

  • Belgium and The Netherlands together currently have more votes on the board of the IMF than China.
  • The IMF/World Bank reforms of the last years have only increased developing countries’ share of the vote by 2%.

Innovative financing mechanisms

  • A small tax of up to 1% on foreign currency transactions could raise more than 3 times current global aid.