Even as more money is found to rescue yet another banking giant, additional resources are scarce for the developing world. Yet without strong action by world leaders at the Financing for Development conference in Doha, Qatar, which begins on November 29, this subject will likely be another victim of the financial crisis, with grave repercussions for global poverty and the achievement of the Millennium Development Goals.
As the dust starts to settle from the historic election of our nation’s first African-American president and first president who ran on fair trade, we have some time to contemplate other impressive changes voters brought to Congress. At least 41 new fair-traders were elected to House and Senate seats, which represent a net gain of 33 in Congress’ overall economic justice contingent. This comes on top of the 37 net fair-trade pick-ups in the 2006 congressional elections. These new members campaigned to oppose further NAFTA-style agreements and advocate for positive alternatives that ensure widely shared prosperity. Obama himself made many fair-trade commitments, including a pledge to replace "fast track" trade negotiating authority, renegotiate the North American Free Trade Agreement, and oppose a NAFTA-like pact with Colombia.
Africa, the poorest and least robust part of the global economy, could be the region most severely affected by the financial crisis that began in the rich countries and is now metastasizing into a global economic crisis. Its export earnings are being hit by the recent decline in commodity prices (some prices have dropped by more than 50% since July). Its access to international finance, never exactly robust, is receding: economists estimate that private financial flows to developing countries will be 30-50% lower next year and it’s not yet clear if aid and other official flows will fill the gap. In addition, the World Bank expects remittances from emigrants, which represent about 2% of GDP for all sub-Saharan African countries to decline, and that will directly impact millions of individual households. Growth rates in 2009 will be lower than 2008 rates, and inflation rates will be higher. These developments will set back African efforts to meet the Millennium Development goals and lead to an increased number of extremely poor people in Africa. And already 320 million out of a total population of about 500 million live on less than $1 per day.
Just a few weeks after releasing its official forecast for the next year, the International Monetary Fund (IMF) adjusted its growth estimates downwards, predicting that poorer countries will see big losses in GDP over the next two years as a result of the global financial meltdown. Independent assessments estimate that developing countries’ losses between now and 2010 will be in excess of $300 billion.
Rumors of the International Monetary Fund’s demise appear to have been greatly exaggerated. While the IMF has spent most of the last three years looking for clients and “relevance,” the end of the U.S. housing bubble and the resulting global credit crunch seem to have given the institution a new lease on life.
When the Mexican dictator Porfirio Díaz said the great tragedy of Mexico was that it was so far from God and so close to the United States, the comment summed up the long and tortured relationship between the Colossus of the North and Latin America.
Following several weeks of widespread global financial turmoil, leaders of several of the world’s most powerful countries are planning a summit and a series of meetings to address this burgeoning crisis. The November 15 summit and an accompanying series of smaller meetings will weigh the potential for reforms of the international financial system. Some are calling these meetings “Bretton Woods II,” in reference to the New Hampshire conference held in 1944 that created today’s main global financial institutions, the World Bank and the International Monetary Fund.
The first of the 388 workers arrested in the immigration raid on the Agriprocessors meatpacking plant in Postville, Iowa, were deported in mid-October, having spent five months in federal prison. Their crime? Giving a bad Social Security number to the company to get hired. Among them will be a young man who had his eyes covered with duct tape by a supervisor on the line, who then beat him with a meathook. The supervisor is still on the job.
Given the magnitude and scope of the current economic crisis, the world will no doubt experience a significant economic downturn — of what degree and duration, no one can say — profoundly affecting all aspects of U.S. and international society. Of the many areas that will be impacted by the downturn, the environment stands out in particular. It’s closely tied to the tempo of resource consumption, and significant efforts to ameliorate environmental decline will prove very expensive and out of reach for already-stretched budgets. The question thus arises: Will the crisis be good or bad for the environment, especially with respect to global warming?
Rarely in politics do we witness such a rapid transformation as Senator John McCain’s recognition of America’s current financial crisis. Until the middle of September 2008 — throughout myriad home foreclosures, personal bankruptcies, and even the failure of hallowed Wall Street firms — the candidate stuck with his mantra that “the fundamentals of the economy are strong.” The true believers who gathered with him in Minnesota for the Republican National Convention gave this sentiment a hearty cheer.