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G20 Must Work To Fight Poverty At Economic Summit

For Release: Thursday, November 13, 2008

G20 Must Put Fight Against Poverty At The Center Of Global Economic Reforms

The G20 must avoid small-scale tinkering and instead take immediate, aggressive action to tackle poverty while laying out an ambitious vision for reforming the world economy at its Financial Crisis Summit in Washington DC, November 15. New Zealand and other countries without representation at the summit are also suffering from the effects of this crisis and need a strong and coordinated outcome.

In a new report, 'If Not Now, When?', international relief and development agency Oxfam notes that few developing countries are represented and that people living in poverty will be hit hard by the financial crisis unless urgent action is taken, adding that the poor should not have to pay for rich countries’ mistakes.

“This crisis has primarily arisen from poor regulation of the finance sector in the rich nations, yet poor people around the world will carry the heaviest burden. There has, as yet, been little attention paid to the impacts that are emerging in the smaller and poorer countries. Farmers across much of the developing world are unablῥ to get credit to buy seeds and fertilizers and children are dying in countries like Mali for want of basic medical care," says Oxfam New Zealand Executive Director, Barry Coates.

The International Labor Organization estimates the number of workers living on less than one dollar a day ($US) may increase by 40 million and those living on less than two dollars a day could increase by more than 100 million. All of this while poor countries are still reeling from the impact of food and oil price increases, and increasing droughts, floods and other climate-related weather shocks. Grain-price increases cost developing economies $NZ550 billion last year “ more than three times what they received in aid.

Oxfam spokesman Gwain Kripke said there is a risk that recessions in rich countries will lead politicians to take the short-sighted approach of cutting aid.

“Given the tiny amounts of money involved compared to rich country economies, this would do little more than offer symbolic budget savings, but at huge human cost,” Kripke says.

“Aid to all developing countries last year was $NZ176 billion. In comparison, the US and EU mobilized nearly 30 times this – around $NZ5 trillion – in the last few months to help bail out their banks.”

Barry Coates adds: “The incoming New Zealand government has undertaken to maintain the former government’s spending plans for increases in New Zealand’s overseas aid. This will be essential to support our Pacific neighbours through this crisis and to contribute to multilateral and regional action.”

“Beyond the immediate needs for support, there must be reform of the international financial system, including the role of the IMF and the World Bank. As with previous crises, there are one set of rules for the rich – expansionary fiscal policy, easing of credit and stronger financial regulation, and increased government intervention “ and entirely the opposite requirements for developing countries in order to access funding from the IMF. If these double standards are continued, the crisis will cause massive economic losses and suffering in tῨe developing world," he says.

“New Zealand contributes funds to the IMF and the World Bank and has a voice in their governance systems. We must use our influence to push for reform.”

In 'If Not Now, When?' Oxfam says that global leaders should immediately develop a new international regulatory institution with teeth, to prevent future financial crises and protect the interests of workers, consumers, and the environment. This includes taking on the secretive tax havens which undermine regulations and rob poor countries of vital revenue that could be spent on schools and hospitals. It also calls for leaders to build a new representative global governance structure to tackle the economic, climate, food and energy crises.

“We’re dealing with a whole new world – the G20 is facing a seismic shift in global power,” said Kripke.

“It’s painfully clear that the world’s multilateral institutions are out of date and ill-equipped to deal with the multiple crises that are now upon us, whether related to finance, food, fuel or climate. Reform must include far greater roles for developing countries as well as the poorest. Rich countries are going to have to concede some power on governing bodies like the G20 because they are desperate to get their hands on the huge financial reserves held by emerging markets.

Oxfam urges global leaders to see the opportunity to develop a new 21st century political and economic system that puts people and planet before profits. Oxfam calls on the G20 leaders to do three things:

• Honor the OECD pledge not to cut development assistance, and increase aid instead by an additional $NZ240 billion necessary to meet the UN target of 0.7 per cent of GNI immediately. In addition, urgently extend credit to emerging markets facing liquidity crises.

• Rewrite global financial rules and regulations, including tackling tax havens and moving towards a more stable exchange rate system, in order to make the market work for all and not just for the few.

• Build a new representative global governance system that can effectively tackle the economic, food, and energy crises.

Coates adds: “Political changes in the US provide more opportunity for strong and coordinated action. The new government in New Zealand must take on its responsibilities to provide support, not only for New Zealand’s policy responses, but also for reform of the international system and close support for the Pacific and the poorer countries in Asia."

ENDS

Editors notes:

• The members of the G20 are the finance ministers and central bank governors of 19 countries: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom and the United States of America. The European Union is als` a member.

• The G20 member countries represent around 90 per cent of global gross national product, 80 per cent of world trade (including EU intra-trade) as well as two-thirds of the world's population.

ENDS

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