Will Any Crumbs Remain After Bankers' Feast?
UNITED NATIONS - The vast resources the U.S. and Europeans are pouring into ailing financial firms could lead to disastrous consequences for global efforts to reduce poverty and mitigate the impacts of climate change, warns a new study by an independent think tank.
The study, entitled "Skewed Priorities: How the Bailouts Dwarf Other Global Crises", points out that the U.S and European governments are willing to help financial firms in crisis with more than 4 trillion dollars -- an amount estimated to be 40 times higher than what is being spent on measures to fight climate change and poverty.
According to researchers at the Washington-based Institute for Policy Studies, which released the study's findings Monday, governments of the rich industrialized countries are very likely to use the cost of their financial sector bailouts as an excuse to backtrack on global aid for poverty and climate change financing commitments.
The study comes as the United Nations is preparing to hold two major international meetings to advance its agenda on environment and development.
The three-day conference on financing for development is scheduled to commence in Doha, Qatar next weekend, while the U.N. conference on climate change is set for in Poznan, Poland next week.
The Poznan conference will last for more than a week, with more than 8,000 delegates expected to attend. It is supposed to hammer out further international commitments to fight climate change, including climate-related financial assistance for developing countries.
U.N. officials hope the meeting will prove to be a "milestone on the road to success" for the negotiation processes launched at past conferences, because it is tasked with setting the agenda for final talks on the future of the climate change treaty at another meeting due to take place in Denmark next year.
But considering the fact that the U.S. and most governments in Europe are currently preoccupied with addressing their own financial crises, observers say it is highly unlikely there will be a major breakthrough in regard to the issue of global funding for climate change mitigation.
Whether or not the rich nations come forward to make fresh commitments on climate change, the fact is, as the study's authors note, that the current financial crisis is hurting all the countries, no matter how rich or poor.
"Skyrocketing poverty and unemployment in the developing world will mean even more brutal global competition for jobs," said the study's lead author John Cavanagh. "Climate change imperils the very future of the planet."
To Cavanagh, the richest nations in the world "appear fixated almost entirely on responding to the financial crisis, and specifically, on propping up their own financial firms."
The report's key findings show that the amount the U.S. and the European governments have committed to the ailing banking industry is way beyond what they spent on development projects in poor countries last year.
According to the study's authors, the U.S. government's 152.5-billion-dollar rescue plan for one single company -- AIG -- far exceeds the 90.7 billion dollars the U.S. and European governments spent on development aid in 2007.
They note the U.S. government had spent about 23 billion dollars on aid to all developing countries last year. By contrast, the bailout amount it gave away to the failed investment bank Bear Stearns was 29 billion dollars.
The United States also committed 200 billion dollars to prop up mortgage lenders Fannie Mae and Freddie Mac, a figure that dwarfs the 209 million dollars in economic aid in 2007 to Haiti, the Western Hemisphere's poorest country.
According to the report, the U.S. and European governments have committed over 300 times more to rescuing banks, as compared to 13 billion dollars in new commitments made to help poor countries address the climate crisis over the next several years.
Researchers note that the Swiss government has committed 60 billion dollars to rescue the ailing investment bank UBS. This amount is five times more than what all Western European governments pledged for climate finance to help poor countries in 2007.
The U.S., according to the study, has made no commitment to fund climate change-related projects in the developing world. The U.S. is not a signatory to the climate change treaty, although it is responsible for more than 25 percent of carbon emissions on the planet, which is considered by scientists as the main cause of global warming.
"Such extremely lopsided priorities will come back to haunt the United States and the rest of the global North in the long run," said the study's co-author Sarah Anderson. "The richer countries not only have an obligation to clean up the messes they've made abroad. It's also in their interest."