Urgent action is required to make the bailout work for poor countries, complete the crackdown on tax havens and speed up reform of the IMF and World Bank, Oxfam said as it published its initial analysis of the London Summit, What Happened at the G-20?
The analysis also raises question over how much of the $50 billion promised for poor countries will be new money. Money distributed through the Multilateral Development Banks, in particular, could come from existing aid budgets.
Oxfam's recommended next steps towards for a 'new world order' are:
"The G-20 could mark an historic turning point but we have been here too many times in the past to take rich countries' promises at face value," said Duncan Green, Oxfam spokesperson. "World leaders need to take decisive steps to turn their rhetoric about a new world order into reality.
"That means an end to the damaging conditionality imposed on poor countries when they ask for assistance from the IMF. If the price of a bailout is to close health clinics and schools then the financial medicine offered by the G-20 will make the patient worse, not better.
"And it means real action to tackle climate change. It would be a tragedy if having benefited from an economic bailout, the world economy and the millions of poor people at greatest risk, quickly become the victims of climate change."
]]>Against this backdrop, how did the G20 leaders perform?
]]>This brief looks at how current laws undermine US foreign aid as a strategic tool for fighting poverty today. Drawing from original legal analysis, it argues that foreign aid legislation:
Oxfam America is calling for ambitious reforms to US foreign assistance—from aid's legislation, strategy, organizational structure, and implementation, to a substantive rethink of development in the field. Our foreign aid should lead global development efforts, it should put developing states and their citizens in the driver’s seat, and it should strive to get as much value as possible for poor people out of every aid dollar.
]]>Oxfam says G-20 leaders could make a critical difference to the world's poorest people by diverting a tiny fraction of the bailout money to provide an economic stimulus, social safety nets and health services for those affected by the economic crisis.
Oxfam is calling for a $580 billion-a-year rescue package for poor countries made up of an immediate fiscal stimulus for the poorest countries of at least $24 billion, debt relief and fulfillment of existing pledges to increase development aid.
Urgent action is also needed to crackdown on tax havens, which deprive developing countries of hundreds of millions of dollars of tax revenue every year—much more than they receive in development aid.
"When you look at the amount of money that has been found for banks it seems inconceivable that G-20 leaders will stand aside and allow the economic crisis to destroy poor people' lives," said Raymond C. Offenheiser, president of Oxfam America.
"Developing countries are reeling from dramatic declines in trade, remittances and foreign investment. Rich governments whose policies contributed to the crisis have a responsibility to help those who cannot afford their own bailouts.
"Without urgent action, hundreds of millions of the world's poorest people will fall further into poverty. Losing your job is devastating wherever it happens but for millions people in poor countries, without benefits and health services to fall back on, unemployment will push them into destitution."
An Oxfam report, published earlier this week, revealed women are hit hardest and are often the first to lose their jobs as countries slide into recession. For many, in developing countries the recession comes on top of high fuel and food prices that have already stretched communities to breaking point.
Oxfam is pressing for rich country governments to promote a 'green new deal' by ensuring their domestic rescue packages help tackle climate change by accelerating the transition to a low-carbon economy.
Oxfam is also calling for reform of international financial institutions, including the IMF and World Bank, to give developing countries a real say in the decisions that affect them.
"We cannot return to the situation where the greed of the richest was allowed to take precedence over the needs of millions," said Offenheiser. "G-20 leaders have a real opportunity to take a significant step towards a fairer, more sustainable world."
]]>Global aid levels—published today by the Organization for Economic Cooperation and Development in London—are also minimal in comparison to the $8.4 trillion mobilized to bailout ailing banks, Oxfam said. At $173 billion, the American Insurance Group (AIG) alone has received $50 billion more than total global aid levels.
"Despite this welcome increase, aid levels remain tiny compared to the economies of rich countries—just 0.3 percent," said Max Lawson, head of development finance for Oxfam. "That is the same as it was in 1993. They have found 70 times more, $8.4 trillion, to save banks. Aid is an absolutely vital lifeline for the poorest people, especially in these brutal economic times. Far more is needed, and needed now."
"While aid alone is not enough for the poorest countries to escape the poverty trap—quality, long-term aid does make a huge difference. Poor country governments have used aid to scale up spending on education and health to help fight poverty," said Lawson. "The Tanzanian government used its aid income to offer free schooling to its primary-aged children—and now 3.5 million more children are now in school. Tanzania also used aid to strengthen its health services, helping to reduce the number of children dying in their first year of life by almost a third."
"Rich countries can come up with the money when they want to. AIG's executive bonuses alone could have paid for enough teachers for 7 million children in Africa. We need to see the G-20 move fast in London this week to rescue babies not just bankers," Lawson said.
Foreign direct investment into developing countries has collapsed by more than $700 billion since 2007—more than six times total aid levels. Remittances are also falling rapidly as unemployment rises in the rich world. Global trade has ground to a virtual halt. Aid is needed now more than ever to help the poorest countries weather the economic tsunami.
The OECD's figures show that aid has increased by 10 percent in real terms in 2008 to $120 billion. However, Sub-Saharan Africa—despite being the poorest region on earth—only saw a tiny increase of just 0.4 percent to $22.5 billion.
Most rich nations still have a mountain to climb to meet their 2005 promises to increase global aid by $50 billion by 2010, with half of this going to Africa. Italy, the G8 chair in 2009, is the worst offender. The OECD calculates that Italy will need to increase its aid spending by 145 percent to meet its promise. The shortfalls must be acknowledged and a clear timetable set to increase aid to meet pledges.
]]>"President Obama has said that promoting development is an essential part of the strategy for Afghanistan. But our development tools need major reform if we want them to deliver results," said Raymond C. Offenheiser, president of Oxfam America.
"Our foreign aid must focus on poverty reduction and empowering Afghans to lead their own development, which is the surest way of meeting Afghan needs," said Offenheiser. "The Obama Administration has an important opportunity to enhance the effectiveness of US aid to Afghanistan—and other countries—by creating a US national strategy to support global development.
"The strategy must have clear objectives for all US foreign aid: focus on fighting poverty, streamline and coordinate all sources of US funding, and give recipients the lead in determining the needs of their communities."
The Oxfam report, Smart Development In Practice—Field Report from Afghanistan, is based on a series of interviews in Kabul with individuals involved in the delivery of US aid, including employees of the US Agency for International Development (USAID), other foreign donor contractors, consulting companies, Afghan and international nongovernmental organizations, as well as Afghan government officials.
According to interviewees, there has been limited success in part because the US uses foreign aid to achieve short-term or security objectives. The report also identifies insufficient US support for long-term capacity building and an excessive volume of funds absorbed by private contractors. Agriculture and rural trade sectors, which are critical to the daily lives of Afghans, have not received the focus and resources they require.
However, the report also highlights success stories, where development initiatives have had clear development objectives and a high level of local ownership. One example is the Afghanistan community midwifery program, started in 2002 by the government of Afghanistan, which USAID is funding.
The program, trains women as midwives to improve chances of both mother and child surviving childbirth, and has begun to reduce some of world's highest maternal and neonatal mortality rates. With the help of the program, the number of facilities with skilled female health workers increased from 39 percent in 2004 to 76 percent in 2006.
The real success of the program can be seen in the active participation of individuals and communities: there were huge number of female volunteers for the program, often supported by their fathers and husbands; and women who are trained by this program can go on to earn good salaries in health clinics around the country.
"Programs like this show how critical local ownership and engagement are to the success of foreign aid projects. If we work closely with Afghans, and ultimately give them more control over their own development initiatives, we dramatically improve the chances of achieving positive change," said Offenheiser.
]]>"Oxfam welcomes the G20 Finance Ministers' commitment to help emerging and developing economies cope with this crisis, which was not of their making. But we are disappointed that the G20 finance ministers did not commit to an immediate rescue package for low-income countries of at least $24bn. Poor people need help now.
"A significant share of the new resources for the World Bank and the IMF must be reserved for the world's poorest countries and funding must come without harmful conditions.
"As we speak, some rich G20 countries have cut their development aid budgets, it is vitally important that leaders of rich countries get back on-track with their aid commitments at the April Summit."
"The recognition that emerging and developing economies, including the poorest, should have greater voice and representation within international financial institutions is both welcome and long overdue—as is the decision that the Head of the World Bank and the IMF should be appointed on merit.
"Now G20 leaders must guarantee equality between developed and emerging and developing countries within these institutions at the April Summit. It is time these institutions were made fit for purpose for the 21st century."
"Finance ministers have failed to agree the coordinated global action that is needed to solve the problem of tax havens. Tax havens currently cost poor countries up to $120 billion a year in lost tax on individuals' incomes and many billions more as a result of tax evasion by companies. This money could and should be used to help people out of poverty.
"If world leaders are serious about cracking down on tax havens they must commit to a multilateral agreement which all countries can sign on to and insist on automatic exchange of information between tax authorities. These steps are vital to enable developing countries to collect the money they are due."
"The commitment to fight all forms of protectionism is welcome. But it is vital that trade is regulated in a way that allows it to be used to help poor countries develop as promised at the World Trade Organization in 2001."
]]>Oxfam America congratulates you on your inauguration as the 44th president of the United States. This historic moment provides an occasion to reestablish the role of the US as a global leader in fighting poverty and social injustice. And we believe you will make the most of this opportunity.
We ask that you take decisive and early action to shape how we engage in the international community. At a time when the US economy is in trouble and Americans are understandably concerned about their own economic well-being, we must not forget the needs of vulnerable populations around the world. If the US leads in the fight against global poverty, we can create positive long-term change that will result in a more just, prosperous, and secure world for all.
As your administration moves forward, you face an excellent opportunity to restructure US Foreign Assistance. Our current aid system is broken, which undermines American leadership and standing in the world. We ask that you work with foreign policy leaders in Congress to fix US foreign aid—a move that will fight poverty more effectively with no additional cost to taxpayers.
We encourage you to take bold action on climate change. The world?s poorest people—who are least responsible for climate change—are often the hardest hit by its consequences. Climate change is likely to increase economic and social instability, migration and refugee crises, and conflict over natural resources, and is quickly becoming a major driver of poverty and instability around the world. It is essential that your administration re-engage in international negotiations for a post-2012 agreement that includes significant cuts in emissions and additional funds to assist developing countries adapt to climate change. World leaders cannot create the next international climate agreement without US leadership. We also urge you to help bring about strong US legislation that not only dramatically cuts US emissions, but also provides significant assistance to poor and vulnerable communities.
Internationally, numerous conflicts continue to ravage civilian populations. We ask that you serve as a leader in prioritizing the protection of civilians in foreign assistance programs and cooperating with allies to remove obstacles to peace and stability. Yours is a unique opportunity: to build a 21st-century State Department by doubling the number of core diplomatic personnel and moving more personnel to potential and ongoing conflict zones. We know that we can rely on you to work closely with Secretary of State Clinton to achieve this vision.
In the US, we encourage you to turn your attention to the failed recovery of the Gulf Coast following Hurricanes Katrina and Rita. The inadequate US response to the desperate calls of her own citizens must not continue. Your administration can restore faith in government by helping to provide quality jobs and affordable housing for the low- and moderate-income families still unable to return to their former lives.
We look forward to working with you and members of your administration. We firmly believe that your leadership can help to improve the plight of millions of people who suffer from hunger, injustice, and violence around the world.
Sincerely,
Raymond C. Offenheiser
President, Oxfam America