As long as the rich can speculate on food, the world’s poor go hungry
July 01, 2012
WHEN we think of overseas aid, we think of helping people who need it. The government says aid helps people overcome poverty. But does it?
Obviously, to overcome poverty we have to overcome the causes of poverty, and the big causes of poverty today are untouched by aid. Poor countries are still forced to pay off unpayable debts. The global poor are facing ever-higher food prices, driven by speculation. And climate change is already destroying lands and livelihoods.
The United Nations warns that these three factors are now reversing global development. To stop this we need radical change.
We need complete debt cancellation. We need to dismantle financial institutions that use debt to control poor countries, and we need to require banks to finance public goals, not derivatives.
We need to ban food speculation and protect the peasant farmers, who produce the bulk of the world’s food. We need to halt ”market access” rules and limit large-scale agribusiness.
We need real action to leave fossil fuels in the ground – to stop mining coal, oil and gas. And we need to pay our climate debts to poor countries that are facing climate change now.
Utopian? Yes, but necessary now, to overcome the wholesale reversal in development the UN is warning of.
Our global financial crisis began in 2008 – the financial crisis in poor countries began in the late 1970s, and hasn’t stopped for breath.
Billions of dollars each year are still transferred from poor to rich. In 2008, $100 billion was given in overseas aid; in the same year, rich countries pocketed $600 billion in debt repayments.
The debt burden of developing countries became unpayable when the interest on development loans was suddenly hiked in the early 1980s. Just like subprime mortgages in the US, development loans turned into a debtors’ prison.
After the 2008 financial crisis, rich countries spent more than $20 trillion in bank bailouts and economic stimuli (incredibly, $20 trillion is a fifth of global income). The total debt of all 128 developing countries stands at $3.7 trillion. It can be cancelled if we want it to be.
Scandalously, the food crisis in developing countries has passed us by, almost unnoticed. Yet it is the biggest threat to poverty reduction.
Farming in many developing countries has been decimated by ”free trade” rules under the World Trade Organisation. Countries have become dependent on food imports, leaving the poor vulnerable to price hikes.
From 2006 to 2008, the global price of food doubled, forcing an additional 180 million people into destitution. Why is food suddenly so expensive? The answer came in 2008, when prices halved with the financial collapse, and then doubled again with the financial recovery.
Speculation on food prices was big business after the US lifted its ban on the practice in 2000. About $13 trillion surged into food commodities from 2006, and then out again in 2008, and then back in again by 2011. That’s why we should reverse the WTO’s ”market access” agenda and support peasant agriculture – rather than global agribusiness – and reimpose the ban on food speculation.
The third threat to poverty reduction – climate change – is already having a devastating impact on the global poor. Nine of the 10 people displaced by climate change live in developing countries. Poverty is already on the increase due to floods and shortages of fresh water and sea-water inundation related to climate change. The World Bank says $100 billion is needed now, each year, to help poor countries cope with the impacts of climate change. Obviously, rich countries are most able to stop burning fossil fuels. We are most to blame for the problem and yet still we stall. And aid donors (including Australia) still refuse to accept that climate aid should be in addition to development aid.
The debt, food and climate crises are the key drivers of global poverty. Rich countries are responsible for all three crises, and can address them if they have the political will. Why don’t they?
The Occupy movement told us that governments are captured by the new global rich. In 2012, the World Economic Forum calculated that 1 per cent of the world’s population – just 70 million people – own half of the world’s wealth. That ”1 per cent” is the problem. They have no interest in addressing the causes of poverty because they profit from rising food prices, spiralling debt repayments from poor nations and the booming carbon economy.
The WEF – ironically, the forum for the ”1 per cent” – says this unprecedented scale of global inequality now poses the biggest risk to its interests. It is high time that risk was made real.
James Goodman is in the IQ2 debate Foreign Aid is a Waste of Money, Melbourne Town Hall on Wednesday. He is an associate professor at the University of Technology, Sydney.
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