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Why aren't rich nations giving more?

By James Ensor - posted Friday, 31 December 2004

Before being browbeaten into retreat by the US administration, UN aid official Jan Egeland this week accused the rich world of being "stingy" with both its tardy response to the Indian Ocean tsunamis and more generally with aid. Is he right?

At this stage only a minority of rich countries have made significant and timely initial contributions to the tsunami response. In this regard, the Australian Government and ordinary Australians have been standout performers. The Australian Government's initial $35 million contribution to the disaster response throughout the region is clearly reflective of community views, with the public donating millions of dollars to aid agencies during the week.

However, other donors have been slow to respond to and understand the scale of the emergency. Contributions from Britain, the US and European Union so far fall well below what is required. Time is running out if the international community is to meet the immediate needs of people affected by the tsunamis.


These needs are the basics of human survival: food, shelter, sanitation and clean water. In coming days the threat of disease and infection will rise exponentially as millions of people begin their search for adequate food, clean water to drink and shelter.

Meeting these needs is not complicated: money is needed for plastic sheeting, water tanks, soap, temporary toilets and basic food.

In more general terms, Egeland is right in accusing the rich world of being stingy with aid. At a gala summit in 2000, governments from around the world made a commitment to meet the Millennium Development Goals. The MDGs are a commitment by global leaders to halve impoverishment and hunger, provide education for all, improve standards of health, halt the spread of major diseases such as HIV-AIDS and slow down environmental degradation by 2015. Their promises remain unfulfilled.

Even before this week's events, modelling by Oxfam suggested that if the world fails to act to meet these goals and current trends are allowed to continue, 45 million more children will die between now and 2015; 247 million more people in sub-Saharan Africa will be living on less than $US1 a day in 2015; 97 million more children will still be out of school in 2015 and 53 million more people in the world will lack proper sanitation facilities.

A vital aim of these goals is that the poorest countries can afford to achieve them. To do this, rich countries have promised to provide a very small fraction of their wealth – just 0.7 per cent of their national income – and to improve the way in which they give aid, to make it work best for poverty reduction.

Meeting the UN target of allocating just 0.7 per cent of national income to aid would generate $US120 billion ($154 billion), enough to meet the MDGs and other vital poverty-reduction goals. But only five of the 22 bigger donors are meeting that target. Australia is not one of them. We allocate only 0.26 per cent of our national income to aid and have no timetable for reaching the target of 0.7 per cent.


It is no surprise that vital poverty-reduction programs are failing for lack of finance. Global initiatives to support poor countries to achieve universal education and combat HIV-AIDS are starved of cash. The global fund to fight AIDS, tuberculosis and malaria has only one-quarter of the funds that it needs for 2005. And poor countries continue to pay out more to their creditors than they spend on essential public services. Low-income countries paid $US39 billion to service their debts in 2003, while they received only $US27 billion in aid.

Yet aid works. Millions of children are in school thanks to money from debt relief and aid. Roads built with foreign aid mean that farmers can reach local and international markets to sell their crops more readily, while children in rural areas can travel to schools more easily and people can reach hospitals more quickly, which is often a critical factor affecting maternal and infant mortality rates. Aid plays an essential role in rebuilding countries such as Sri Lanka shattered by conflict.

Rich countries can easily afford to deliver the necessary aid and debt relief. On average, rich countries spending 0.7 per cent of their national income on aid equal to a mere one-fifth of their expenditure on defence and half of their expenditure on domestic farm subsidies. The US is spending six times more on its military program as it would cost to increase its aid budget to 0.7 per cent. Cancelling the debts of 32 of the poorest countries would also be small change for the rich nations. The cost to the richest countries would amount to $1.8 billion each year over the next 10 years or on average a mere $2 for each of their citizens every year.

In 2005, the leaders of rich countries, including Australia, have the opportunity to lift millions of people out of poverty. Issues critical to the future of the world's poorest people, including trade rules, aid and the unsustainable debt of developing countries, will be up for discussion at a series of important meetings over the next year.

The events of this week will make it even more imperative for leaders of the rich world to deliver on their rhetoric of making poverty history.

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This article was first published in The Australian on the 20th December, 2004.

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About the Author

James Ensor is Director of Public Policy at Oxfam Australia.

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UN Millenium Development Goals
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