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Asian countries sink deeper in poverty as a result of foreign aid

by Henri Valot — last modified 2007-07-25 22:31

Press Release - July 25, 2007

Foreign aid to developing countries is insufficient and full of problems that serve only to negate its avowed intention of reducing poverty in the poorest regions. Instead, many aid recipient countries seemed to be mired in deeper poverty, or greater debt, as a result of aid. This according to the Global Call to Action against Poverty – Asia (GCAP-Asia), a coalition of anti-poverty campaigners, that sponsored a three-day international conference on Official Development Assistance (ODA) here in the country.

“ODA is critical in achieving poverty reduction for developing countries. Specifically, it is critical in achieving the Millennium Development Goals or MDGs, which aims to halve extreme poverty in the world by 2015. But the various assessments that have been made so far point to the fact that current aid flows are insufficient and way off from the MDGs. Worse, studies show that aid serves to pull poor countries deeper into debt. There seems to be a yawning gap between rhetoric and reality in the context of aid,” said GCAP-Asia Co-Convener Maria Victoria Raquiza.

“Building an Asian Peoples’ Agenda on Aid, which opened Wednesday at the Imperial Palace Suites in Quezon City, have brought together some 80 delegates from various aid recipient and donor countries in Asia.

ODA was identified as critical to achieving poverty reduction and the MDGs at the so-called Monterrey Consensus arising from the UN Summit on Financing for Development in 2002.

In Monterrey, Mexico, donor countries committed to increase their ODA to 0.7% of their countries’ Gross National Income (GNI) by 2015, representing a $38 billion increase at that time. This was taken further in Rome at a High-Level Forum on Harmonization in 2003, which aimed to support the delivery of the MDGs. Two years later, in 2005, the Paris Declaration was made, a practical, action-orientated roadmap to improve the quality of aid and its impact on development.

However, a 2005 report of the UN Millennium Project finds that the development aid system is not yet up to the task of the MDGs” and “needs to scale up its financial and technical support.” The report quotes IMF Managing Director Rodrigo de Rato as noting in 2004 that “current aid flows are insufficient, unpredictable, and often uncoordinated among donors.”

Furthermore, the ODA to GNI ratio of the major donor countries has remained at about one third below the UN-mandated share of 0.7 percent. The Organization for Economic Cooperation and Development (OECD) Development Assistance Committee (DAC) reports that the two top donor countries, the United States and Japan, rank nearly at the bottom from among 22 DAC member countries. The target is not expected to be achieved soon as donor countries have made only modest pledges to improve their respective ODA/GNI ratios.

Foreign aid increasing

On a global scale, foreign aid has increased over the past years, reversing the nineties’ trend. However, according to Eduardo Tadem, Associate Professor of Asian Studies at the University of the Philippines, this increase has been almost exclusively tied to events following the September 11, 2001 attacks in the United States. It has been concentrated on debt relief and rehabilitation efforts in Iraq and Afghanistan, both countries cornering two-thirds of the increase in ODA in 2005. Tadem is participating in the conference to present a paper on ODA effectiveness in the Philippines.

In Asia, number one donor Japan had revised its ODA Charter in 2003, a move that is seen as a shift away from humanitarian concerns to those that serve the country’s own national interests, particularly its “security and prosperity.” The new charter states that Japan’s full use of ODA will meet the country’s external need for resources and energy that can be sourced from developing countries that are ODA recipients.

Quezon City declaration on ODA

Raquiza said the conference would produce a Quezon City Declaration on ODA, which will form the basis for a regional campaign agenda of the various peoples’ organizations and coalitions in Asia. “We imagine a broad group of Asians speaking with one voice, with a clear and unified agenda on ODA, in such platforms such as the G8 Summit in Tokyo next year or the UN Financing for Development Review to be held in Doha, Qatar,” she said.

“This conference may not be the only regional initiative on ODA, but we hope this initiative makes a positive net contribution to the policy advocacy efforts of the broad civil society and social movements who have been working on this issue for a long time, and at various levels,” she added.

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ABOUT THE ODA CONFERENCE

‘Building an Asian Peoples’ Agenda on Aid: A conference on Official Development Assistance (ODA) is being held to review the key trends in ODA flows in Asia and the world, assess the impact of aid across recipient countries and identify the prospects and challenges for both donor and recipient countries. The conference will run from July 25 to 27 at the Imperial Palace Suites, Timog corner Tomas Morato Avenue, Quezon City, Philippines, Tel. No. +63 (0) 2 9278001-05, Fax: +63 (0) 2 9207884.

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ABOUT GCAP

The Global Call to Action against Poverty (GCAP) is a global alliance of trade unions, community groups, faith groups, and campaigners working together across more than 100 countries. GCAP is calling for action from the world’s leaders to meet their promises to end poverty and inequality.