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ANALYSIS:
Credit crisis threatens disastrous squeeze on aid
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GENEVA(October
8,2008)
- Paying hundreds of billions of dollars to rescue the world's
financial industry looks set to squeeze humanitarian aid and crimp
international efforts to fight disease, feed hungry children, and
shelter refugees.
Charitable giving and foreign aid flows are likely to dry up as the
global economy sours, with rising unemployment and inflation pinching
already-tight household budgets, and as big corporate bailouts push
governments to the fiscal brink.
Celine Charveriat, Oxfam's deputy advocacy and campaign director,
warned of "disastrous consequences" for poor countries if
the bank crisis and related belt-tightening prompt donors to cut aid
from a current $104 billion a year, as many expect.
"Donors must not make overseas aid the first victim of the economic
crisis," Charveriat said.
Washington in particular would be under severe pressure to pare its
international aid spending after agreeing a $700 billion financial
rescue package, said Steve Radelet, a senior fellow at the Centre
for Global Development.
"It is imperative that this pressure be withstood," he said,
warning a U.S. pullback could prompt other Western donors to cut their
contributions as well, or delay coughing up pledged funds.
ECLIPSE
Radelet, a former U.S. Treasury Department official, said financial
woes were likely eclipse development issues in future meetings of
G8 world leaders, which until recently focused on anti-poverty goals
and aid pledges.
"Foreign assistance is not going to have the pre-eminent role
that it has had in past years," he told Reuters.
U.N. agencies said they were bracing for a difficult period.
"Will it have an impact? Of course. We are likely to face a period
of financial constraint," a World Health Organisation official
said.
The WHO's campaigns to fight diseases such as polio, malaria, tuberculosis
and AIDS are funded by governments and philanthropic institutions,
and "both are likely to be affected by the current financial
downturn", he said.
Antonio Guterres, the U.N. High Commissioner for Refugees, told donors
at an annual meeting on Monday that he recognised the financial environment
would raise challenges for those who have traditionally funded UNHCR
programmes.
"At the same time, I must point out that the resources required
to support the 31 million people we care for are very modest indeed
when compared the sums being spent to bring stability to the international
financial system," Guterres said.
"It would be tragic if the funds available to the humanitarian
community in general and the UNHCR in particular were to decline at
the very time when the demands upon us are increasing so dramatically,"
he said.
Charitable groups relying on donations from individuals, families
and private foundations whose fortunes are invested in volatile financial
markets are also worried the credit crunch could make it harder to
solicit and secure donations.
"We are in the process of determining where we may feel the impact
most," said Jo Hodges of CARE International, which runs anti-poverty
programmes in 70 countries around the world.
And Encho Gospodinov of the International Federation of Red Cross
and Red Crescent Societies said that if donors hold back funding,
humanitarian work would suffer.
"We are very, very worried that this could now affect our programmes,"
he said of the financial crisis.
At a U.N. summit in New York last month, where reports of struggling
Wall Street banks overshadowed talks between world leaders, French
Foreign Minister Bernard Kouchner said the credit crunch had restricted
budgets for development aid.
Oxfam's Charveriat said global development aid was already weakening
before the economic crisis set in, dropping to $103.7 billion in 2007
from $104.4 billion the year before.
"Aid levels have been falling even under the best economic conditions.
This crisis must not be an excuse to cut aid flows further,"
she said.
And British Prime Minister Gordon Brown also appealed to rich countries
not to use the crisis as a reason to not help the poor. "This
would be the worst time to turn back," he said. (Reuters)
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