Information You Can Use: A Bi-monthly Service for the UN and Civil Society
Volume 2, Issue 1, January - February 2005
Rich Nations, Other Donors Must Prevent 'Poverty Crisis' in Tsunami-Hit Countries
January 18, 2005
Source: OneWorld US
By: Jim Lobe
Despite unprecedented aid commitments by international donors, rich and even not-so-rich countries, much more needs to be done to ensure that the victims of last month's tsunami can put their lives back together, according to several overseas aid groups.
Even though the humanitarian crisis caused by the disaster--which killed more than 175,000 people and rendered two million more homeless--is not yet over, the "poverty crisis" created by the tsunami has only just begun, according to the groups.
They are calling for donors not only to follow through with the aid that they promised, but also to take other steps to ensure that as many as two million people across the Indian Ocean do not fall into absolute poverty.
According to a new report from the international development agency, Oxfam, wealthy western countries in particular, should take measures to ease the external debt burden of the affected countries, and import more of their products.
"In the immediate aftermath of the tsunami, the public and governments--of wealthy countries--responded admirably," said Bernice Romero, Oxfam's International Advocacy director. "Pledges were made and the world focused on the disaster. But three weeks on, rich country governments sadly appear to be dragging their feet on vital trade and debt reforms to help relieve poverty in the long term."
Other relief agencies are calling on the international development banks, such as the Washington-based World Bank, to take steps to more urgently promote debt relief for the affected nations. The groups want the bank to consider using its own reserves to help cancel debt of the poorest nations--such as Sri Lanka--and design projects more carefully to reduce poor people's vulnerability to disasters.
ActionAid and Christian Aid, two UK-based groups, noted that projects funded by the World Bank and regional development banks--as well as policies promoted by the International Monetary Fund (IMF)--sometimes have the effect of increasing the vulnerability of poor people to major disasters, such as drought, flooding, and landslides.
On the eve of the World Conference on Disaster Reduction in Kobe, Japan, the two agencies point at the example of an expressway project funded by the Asian Development Bank in Sri Lanka. More than five thousand households were displaced by the project, most of them were forced to move to low-lying land along the coast where there was substantial risk of flooding.
"Disasters are as much human-made as natural," said ActionAid's emergencies policy adviser, Khurshid Alam. "Failure of the World Bank and the international financial institutions to implement risk reduction policies will cost lives."
Meanwhile, Jubilee USA Network and the American Friends Service Committee (AFSC) released another new report which urged the World Bank to use US$10 billion from its reserves to cancel the official debt owed by Sri Lanka and other poor nations--not just in the Indian Ocean, but in sub-Saharan Africa and elsewhere.
The report--released late last week after the Paris Club of western donor nations agreed to a moratorium on some debts by tsunami-hit countries--also noted that the Bank could commit an additional $7.5 billion in future profit for debt cancellation without jeopardizing its AAA credit rating.
"The nations affected by the Asian Tsunami need more than a moratorium - they need full debt cancellation," said Neil Watkins, national coordinator of Jubilee USA Network. "Nations like Sri Lanka and dozens of impoverished nations across Africa, Asia, and Latin America face tremendous debt burdens and must receive 100 percent multilateral debt cancellation. This report shows that the World Bank has ample resources to fully cancel the debts for impoverished nations and should do so without delay."
The report was issued in advance of the London meeting of the Group of Seven (G7) finance ministers on February 4-5. Both the U.S. and UK governments are expected to come out in favor of total multilateral debt cancellation for three dozen of the world's poorest countries.
Donor nations and international agencies so far have committed some $4 billion in aid and loans to the 12 countries most affected by the December 26 tsunami. Some of the total amount consists of aid that they had already planned to provide before the disaster, according to Oxfam.
Despite these commitments, donor governments have so far provided only $723 million out of a total of $977 million the UN appealed for in urgent humanitarian response to the disaster.
While Oxfam welcomed the Paris Club's agreement last week to freeze debt repayments for tsunami-affected countries, it wants creditor governments to go further by canceling significant proportions of debt, especially for the poorest countries.
A temporary freeze, it said, would do little to ease debt service because interest will likely still be charged on the debt, so repayments would actually grow once the countries resumed payment.
Instead, creditor governments should do an urgent reassessment of what level of debt is now sustainable for each of the debtor countries and cancel the remainder, Oxfam urged.
Despite some early suggestions by U.S. and European trade ministers that they were willing to open their markets wider to the textile and clothing exports of tsunami-affected countries, U.S. tariff barriers have remained in place while the EU is expected to make an announcement next week, according to Oxfam
"Increased exports could ensure tens of thousands of jobs, raise incomes, and generate the foreign exchange that the affected countries need for essential imports and the enormous challenge of post-tsunami reconstruction," said the report.
"We need more than a simple patch up job," said Romero. "The public will be rightly outraged that its generosity is being undermined if we simply rebuild the poverty [in these countries before the disaster]. We urge people to tell their governments not to let them down, and to embrace these vital reforms."