Oxfam predicts biggest cuts in aid in 15 years

G20 leaders must support Robin Hood taxes and carbon charges on shipping

Aid from rich nations is likely to fall by at least $9.5 billion by the end of 2012 – the biggest drop in aid for 15 years, according to new calculations by international agency Oxfam ahead of this week’s G20 Summit (Nov 3-4).

Oxfam calls the figures “shameless and depressingly predictable” and show that poor people are being asked to pay for rich country austerity cuts. It calls on G20 leaders to reverse the cuts and agree to pursue new ways of raising money for poor countries being hit by the economic crisis and climate change.

$9 billion would be enough to educate more than half the 67 million children who cannot afford to attend school today. Aid cuts are already hitting poor countries now, like Bangladesh, Benin and Mozambique which are losing around half their basic education budgets.

Oxfam’s figures are based on existing and predicted OECD government aid budgets for 2010-12. The cuts in overseas development assistance total around $11.2 billion with Italy, the US, Spain and Netherlands the major “cutters”. The cuts are only partly off-set by a big increase in Australian aid and smaller rises in the UK and Germany, which keep their aid spending constant as a proportion of national income. Meanwhile, aid levels are flat-lining in other countries, including France and Canada.

Oxfam joins Bill Gates who will press G20 leaders later this week to support “Robin Hood” taxes on transactions by banks, hedge funds and other financial institutions and to agree to a fair international carbon charge on shipping. Oxfam also says that developing countries are key in helping to drive global growth – so these aid cuts will only undermine that potential.

Oxfam spokesperson Max Lawson said, “This represents the gravest threat to aid levels in 15 years. Rather than cutting aid, rich countries need to deliver on the promises they have made to the poorest people who are suffering additional hardships caused by the economic crisis and climate change.”

“Aid is only a tiny fraction of rich nations’ income so these kinds of cuts are largely totemic – a soft target in hard times,” Lawson said. “There are more hungry people in the world than live in North America and Europe combined. How can we tell them there’s no money for aid while the bankers who caused the crisis are pocketing billions in bonuses?”

An Financial Transaction Tax (FTT) has attracted heavyweight support from France and Germany, financier George Soros, and 1,000 economists including Nobel Prize winners, among others. Oxfam is looking for a coalition of countries to take advantage of the G20 Summit to signal their willingness to press ahead with their own FTTs.

Oxfam is also pressing for a fair carbon charge on rising greenhouse gas emissions from international shipping. This could cut emissions while raising $25 billion a year to help boost the Green Climate Fund.

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Oxfam at the 2011 G20 Summit, Cannes, France