A new report from the Institute for Policy Studies documents how much more money is spent to bail out banks and other financial instutions than to address other global crises, e.g. climate change and poverty. Here’s the press release:
Washington, D.C.—A new report finds that the approximately $4.1 trillion the United States and European governments have committed to rescue financial firms is 40 times the money they’re spending to fight climate and poverty crises in the developing world.
The report is being released in advance of two summits, where rich country governments are widely expected to use the cost of their financial sector bailouts as an excuse to backtrack on global aid and climate finance commitments.
From November 29 to December 2, representatives of United Nations member states will converge at the Financing for Development conference in Doha, Qatar to review aid obligations made six years ago. From December 1 to 12, international negotiators will convene in Poznań, Poland to hammer out commitments to fighting climate change, including climate-related financial assistance for developing countries.
“The financial crisis is only one of multiple crises that will affect every nation—rich or poor,” explains IPS Director John Cavanagh. “Skyrocketing poverty and unemployment in the developing world will mean even more brutal global competition for jobs. Climate change imperils the very future of the planet. And yet thus far, 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.”
RATIO OF FINANCIAL BAILOUTS TO DEVELOPMENT AID: U.S. and European governments have committed approximately $4.1 trillion to aid struggling banks and other financial institutions. That’s more than 45 times the sums they spent on development aid last year.
AIG BAILOUT ALONE TOPS AID: The U.S. government’s $152.5 billion rescue plan for one single company—AIG—far exceeds the $90.7 billion U.S. and European governments spent on development aid in 2007.
BEAR STEARNS REAPS MORE THAN U.S. AID RECIPIENTS: The U.S. government spent $23.2 billion in aid to all developing countries in 2007—far less than the $29 billion bailout for investment bank Bear Stearns.
FANNIE/FREDDIE BAILOUT NEARLY 1,000 TIMES U.S HAITI AID: The U.S. government has committed $200 billion to prop up mortgage lenders Fannie Mae and Freddie Mac, a figure that dwarfs the $209 million in economic aid in 2007 to Haiti, the Western Hemisphere’s poorest country.
RATIO OF FINANCIAL BAILOUTS TO CLIMATE FINANCE: Although the climate crisis poses catastrophic risks to the global economy, U.S. and Western European governments have committed 313 times more to rescuing financial firms than the $13.1 billion in total new commitments made to help developing countries respond to the climate crisis over the next several years.
UBS BAILOUT FIVE TIMES CLIMATE FINANCE: The Swiss government has committed $60 billion to rescue the ailing investment bank UBS. That’s more than five times the amount that all Western European governments have committed, above and beyond development aid, in climate finance for developing countries.
U.S. CONTRIBUTIONS TO CLIMATE FINANCE = $0: The U.S. Congress hasn’t approved any contributions to the developing world’s climate change efforts, in part because the Bush administration insisted such financing be channeled through the World Bank, an institution with a poor environmental track record.
“Such extremely lopsided priorities will come back to haunt the United States and the rest of the global North in the long run,” says IPS Global Economy Project Director 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.”
The 16-page report “Skewed Priorities: How the Bailouts Dwarf Other Global Crisis Spending” is available online at: http://www.ips-dc.org/reports/#912
Authors include: Sarah Anderson, IPS Global Economy Project Director; John Cavanagh, IPS Director; and Janet Redman, Researcher with the Institute’s Sustainable Energy and Economy Network.