Leaders of the G-20 nations will try to figure out how to jump-start the world economy when they meet in London next month. Can President Obama push them to relieve those hit the very hardest by world poverty—women living in poor nations riddled with debt?
In his presidential campaign, Barack Obama promised to double foreign assistance, expand debt relief and grant support for poor nations, and reform the IMF and World Bank. The next 30 days will tell us a lot about the kind of world leadership he is able to exercise to achieve these goals.
On April 2, President Obama will attend the G-20 meeting in London, where the leaders of the world’s most powerful economies will coordinate their response to the global financial crisis. This weekend, Treasury Secretary Timothy Geithner is meeting with G-20 finance ministers and central bankers to prepare for the leaders’ summit.
The World Bank predicts that the global recession will push 53 million people in the developing world into poverty this year, leaving them to live on less than $2 per day.
Women and their families are being hit the hardest. Even before the crisis, 70 percent of the world’s poor were women. Since women earn less than men everywhere on the planet, they have less to fall back on when times turn tough.
UK Prime Minister Gordon Brown, the host of the G-20 summit, will be pressing for a global “new deal,” designed, in part, to alleviate global poverty. His plan would have international financial institutions like the IMF and World Bank lend massive new amounts, anywhere from $500 billion to $1 trillion, to poor countries.
This may sound like the right approach, but longtime observers of the World Bank and the IMF are saying, “Not so fast.”
The problem is that these international financial institutions have a long history of imposing harmful conditions on the countries receiving loans. In order to get a loan, a developing country must agree to cuts in social spending, the privatization of government services, or other changes that, all too often, create more poverty.
For example, one condition imposed by the IMF and World Bank requires countries to open their markets to heavily subsidized goods, often from the United States. In sub-Saharan Africa, Southeast Asia and Latin America, where women produce between 60 and 80 percent of the food, small farmers cannot compete with cheap imports.
Without significant reforms at the IMF, World Bank and other international financial institutions, Prime Minister Brown’s proposal will create new debt in the developing world, increasing its existing burden of $2.7 trillion. It will not achieve its intended purpose of preventing a global depression.
Other ideas, such as providing grants to developing nations and canceling their existing debts, would do much more to alleviate poverty. As it stands now, developing countries are paying debt service rather than providing education, health care, food, clean water, and other necessities for their people. For every dollar the African continent receives in aid, it pays $2.30 in debt service. The impoverished African nation of Lesotho spends as much on debt service as it does on education, leaving more than a third of its children unenrolled in school.
Few people disagree that debt relief would go a long way to providing more resources for poor nations, although some worry about the costs. But again, there is a solution. The IMF has amassed significant gold reserves over the past several years. These reserves could be sold to pay for anti-poverty efforts during this historic global crisis—if G-20 leaders, under President Obama’s leadership, can muster the political will.
Kristin Sundell is the deputy director of the Jubilee USA Network, an alliance of 75 religious denominations and faith communities, human rights, environmental, labor, and community groups working for the definitive cancellation of crushing debts to fight poverty and injustice in Asia, Africa, and Latin America. Her work has taken her to all regions of the United States as well as to Kenya and Zambia, where she spoke at the 2007 World Social Forum and met with debt campaigners from across the continent and around the world. She has been featured on Pacifica Radio’s Democracy Now! and MSNBC among other news outlets.
Originally posted at The Women's Media Center, a non-profit organization founded by Jane Fonda, Gloria Steinem, and Robin Morgan, dedicated to making women visible and powerful in the media.