There may well be many bankers and financial gurus crying into their hand stitched, Saville Row hankies right at the moment but one of the over looked aspects of the current financial meltdown is the effect it will have on Western governments commitment to international development.
Aid budgets are likely to be hit hard as rich nations realign their priorities to shore up a convulsing market. Whilst these nations have the kinds of reserves that they can toss into black, economic pits in the hope that they will stem the slide towards meltdown developing nations have no such luxuries.
Surging food and fuel costs have hit the poorest in developing nations the hardest and it's at this moment that the global financial crisis has pushed them further down into desperation. As United Nations General Secretary Ban Ki-Moon said;
"The situation would be alarming enough if it were confined to a matter of hunger, but a wide-spread lack of food triggers other threats, from social unrest to environmental degradation.So a global system that was failing the people of developing nations yesterday is upping the stakes in the most terrible way today. Jacques Diouf, the director general of the UNFAO ( United Nations Food and Agriculture Organisation), has warned that despite record harvests in 2008 millions more will be going hungry this year than last.
"Even before prices started rising, 800 million people were going to sleep hungry every night. At the same time, the effects of climate change, including increased exposure to drought, more erratic rainfall and extreme weather events, threatened to confront millions more with malnutrition and water shortages. And now, with energy costs rising and the price of food having more than doubled in the past year alone, an additional 100 million people could be pushed into hunger and poverty."
"The great uncertainty now enveloping international markets and the threat of global recession may tempt countries towards protectionism and towards reassessing their commitments to international development aid... Borrowing, bank lending, official development aid, foreign direct investment and workers' remittances - all may be compromised by a deepening financial crisis.That is, whilst there is plenty of food and no shortage of hungry people the way we choose to distribute that food, capitalism, cannot deliver. We might see chief executives on the news but it is those at the bottom of the financial food chain, who were always closest to starvation, who are the invisible victims on the deepening crisis.
"It is vital that this momentum be maintained... Unless political will and donor pledges are turned into real and immediate action, millions more may fall into deeper poverty and chronic hunger. The global financial crisis should not make us forget the food crisis. Agriculture needs urgent and sustained attention too to make hunger and rural poverty part of history,"
According to the World Bank;
"Sub-Saharan Africa already has seen some effect as a result of the crisis, according to Michael J. Fuchs, lead financial economist in the World Bank’s Africa Region. Stock markets in Africa’s larger economies – Nigeria, Kenya, and especially South Africa -- are mirroring those of developed markets, and international bond issues that were growing have slowed. The small size of African markets also means that even limited withdrawals could have significant impact."In a global system no stone gets thrown in the pond without causing ripples, and when it's a big stone slap bang in the centre of the pond - those ripples will be felt where ever you are. The danger that the crisis in one sector creates a crisis in the next is clear to see right now, but as priorities shift small, inconsequential departments, like International Development, could well get squeezed as rich nations tighten their belts.
The UK's International Development Secretary Douglas Alexander said;
"There is a real risk that efforts to eradicate global poverty will be undermined by the global financial and commodity price crises... The World Bank is forecasting that a sharp deceleration in the growth rate of developing countries - from 6% to 4% - could have a similar impact to a recession. "In our natural concern for our own economic well being let's not forget that we have the slack to accommodate financial ruin in a way that those who are closest to the edge have no hope of doing. Internationalism is more needed now than ever and it is up to us in the West to ensure our governments don't turn their backs on those commitments they made in more prosperous times.
This post is part of Blog Action Day: Various people have discussed the utility of action days like this one, like John Hilary and Benjamin Solah, but I've taken a vow of getting on with it so wont be discussing whether highlighting topics via days of blogging action are worthwhile or not.