Help the poor, European summit urged

European Network on Debt and Development

EU Summit risks turning a blind eye to the world’s poor

Wednesday 18th March

Tomorrow in Brussels, European Union leaders are expected to agree on the European position for the upcoming G20 London summit on measures to combat the effects of the financial crisis and reform the international financial architecture. European NGOs fear that EU Heads of State and Government may turn a blind to the world’s poor.

The financial crisis will push some 50 million more people in developing countries below the poverty line according to official estimates. Low-income countries do not have the resources to adopt the fiscal stimulus packages that Europe is adopting to protect their populations against massive unemployment and economic hardship. NGOs are concerned that the EU will not make additional financial commitments to support developing countries in coping with the crisis, and that the grand rhetoric on financial regulation efforts led by the EU will not result in specific proposals to plug the leaks that allow over $1 trillion of illicit money to flow every year from developing countries to the North.

Alex Wilks, Director of the European Network on Debt and Development, comments: “EU leaders are making a positive first step with their proposals on tax havens, one crucial part of reducing outflows from developing countries. But they must go further to overhaul the global finance system and to ensure countries get some resources very quickly to prevent the crisis causing worse damage.”

World Bank and the IMF reform are also on the table as a part of the EU deal. However, NGOs are concerned that rich countries may be pumping money into these institutions without considering urgent reforms in the way they deliver money to countries in need.

“World Bank and IMF loans have all too often attached conditions that promoted liberalization and deregulation, including in the financial sector. European countries must ensure that money channeled through the Bank and Fund is used for poverty reduction,” says Nuria Molina, Policy Officer at Eurodad who yesterday organized a meeting with all European board members of the World Bank where the Bank’s proposed Vulnerability Fund was discussed.

If the Summit fails to provide additional resources for development, and begin a comprehensive revitalization of the global financial architecture, this will be disastrous for 1 billion impoverished people in regions that had nothing to do with causing this crisis, and very counter-productive for Europe as well.

“The EU has to live up to its promises in both good and bad times”, adds Wilks.

Notes:

1.The World Bank estimates that as a result of weaker growth an estimated 46 million more people in developing countries will be pushed below the poverty line.

2.In developing countries, an estimated $1 trillion a year of illicitly generated money is shifted abroad through this system, constituting the most damaging economic condition hurting the poor, undermining poverty alleviation and delaying sustainable growth. See new report by Global Financial Integrity “Illicit Financial Flows from Developing Countries”: http://www.gfip.org/storage/gfip/executive%20-%20final%20version%201-5-09.pdf

3.The United Nations convened a conference in Doha in December 2008 to review progress towards the implementation of the Monterrey Consensus on Financing for Development, approved in 2002. In the run-up to the conference, the EU agreed a common position where it spelled out EU’s development commitments. http://www.consilium.europa.eu/ueDocs/cms_Data/docs/pressData/en/gena/103971.pdf