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Monday, July 6, 2020
STOCKHOLM, Oct 26 2009 (IPS) - It seems that, once again, Africa and the rest of the developing world have been short-changed, given the broken promises in the wake of the global economic implosion.
The developed world has not acted in good faith towards with Africa and other developing regions in the aftermath of the global financial crisis. Much of the stimulus packages promised have gone to benefit banks in those countries, rather than to help those who have become victims of a problem they did not cause, argued Josef Berger, policy officer at CONCORD, the European Non-governmental (NGO) Confederation for Relief Aid and Development.
IPS interviewed him in Stockholm on the fringe of the European Development Days conference (Oct 22-24), an event held by the European Union Presidency and Commission to "showcase the European Union’s continuing and enduring commitment to development".
Berger pointed out that when the global financial crisis erupted, leaders in the West promised significant assistance. Unfortunately, "these promises are yet to be rolled out. The response has so far not been helpful.
"What we have seen, in general, is the provision of huge sums of money to bail out banks in their respective countries, rather than protect countries that have been made to suffer because of what these banks have done," he added. CONCORD represents more than 1,600 developmental NGOs across Europe and seeks to enhance their influence vis-a-vis European institutions.
Berger believes that civil society organisations in the developing world need to be strengthened to hold their governments accountable so that they would be able to speak out on behalf of their citizenries on issues like this.
"Over one billion people go hungry every day and, this year alone, up to 100 million people will fall below the one-dollar-a-day poverty line. The poorest people have been hardest hit, yet there is no bail out for the poor," added Igbuzor.
According to him, as the prognosis for developed countries improves, millions of people in the developing world are still struggling to keep their heads above water. But over 150 billion dollars was mobilised for banks such as Northern Rock, Dexia and Commerzbank. "This is more than double the amount of EU development aid in 2009."
Igbuzor noted that the EU countries have slashed their aid budgets, with deeper cuts expected in 2010.
Instead, the international community should have delivered financial reforms and clamped down on financial outflows from developing countries, including tax evasion and avoidance, he added.
The African Development Bank's president, Donald Kaberuka, sketched a grim picture: "The crisis has wiped out 10 years of economic growth in Botswana and Mauritius."
When the crisis started, some thought Africa would be buffered because of its marginalised status in the global economy, he continued. But it has been worst hit, which is why the continent should be part of all the reforms that have been instituted to fight the crisis.
International financier and philanthropist George Soros told the plenary that the crisis was different from all others since the end of World War Two. "It originated in the centre and affected the periphery."
Governments had to effectively guarantee that no other institution at risk of endangering the system would be allowed to fail, added Soros. "Countries at the periphery could not provide credible guarantees therefore financial capital took refuge in the centre."
He suggested that developed countries offer some of their International Monetary Fund (IMF) resources to poor countries to compensate for the fall in development aid. The IMF could use its gold reserves to pay the interest that became due when countries' special drawing rights are converted into hard currency.
Managing director of the IMF, Dominique Strauss-Kahn, sounded amenable to the suggestion. He stated that "the IMF has changed and is still changing and would be changing in the forthcoming months". The Fund has moved away from its past which was an "accumulation of conditions rather than solution". It has put behind it one-size-fits-all policies.
"We are now flexible, taking into account the realities of countries," he added.
He suggested that low-income countries must have a voice on bodies that make decisions on global problems that need global solutions.
Maybe with these suggested changes, a way out could be found from the current crisis. And, perhaps, the globe could be changed from what Igbuzor described as "a world of contrasts: opulence and poverty, obesity and malnutrition, bail-out and out-in-the-cold".
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