Tuesday, October 21, 2008

The Trickle-Down of the Financial Crisis

Over the last several weeks, we have been hearing news about the financial crisis. First it was just in the United States and now it has circulated the globe with other markets going down. It is a scary time for the rich since a big part of their assets are in those investments that have now dried up, but it is also raising concern for global aid and how organizations' programs for the poor will be affected. With everyone penny-pinching, will aid to these organizations dry up, too? David Roodman of the Center for Global Development states "The contagions of freeze-up and slowdown will spread through many channels: trade, investment, migration, and more." After each previous financial crisis in a donor country since 1970, the country's aid has declined.

Sheila Sisulu, from the UN World Food Program, stated that "the voice for the hungry and poor has to be heard simultaneously alongside the crisis of the developed world, concerned about their stock portfolios." Kofi Annan predicted that because of the financial crisis, politicians will ignore poverty and that the aid pledges were and illusion. World Bank president, Robert Zoellick said that the financial crisis risks the efforts in place to help poor nations, and that high food and energy prices will push even more into poverty. Antonio Guterres, the UN High Commissioner for Refugees, emphasized that "A hungry man is an angry man." As the number of impoverished grows, Guterres predicts more conflict.

Nowhere else can the affect on peace be seen more clear than by looking at the Palestinian-Israeli conflict. In a blog from March 24, 2008 on www.bitterlemons.org, several Palestinians and Israelis wrote on this and made compelling arguments. One Israeli stated that the economic crisis will not change a thing since the conflict is political and not economic; and therefore, a better or worse economy does little for prospects for peace. A Palestinian, on the other hand, described a very different scenario, especially since Palestine is dependent on foreign aid; which comes in the form of the US dollar. Nonprofits earn their income in dollars, including universities, hospitals and countless aid organizations, and so nonprofit sector will be hit extremely hard by the financial crisis. Another Israeli thought the peace process would be weakened because attention will be diverted away from the Middle East peace process to the financial crisis alone.

Organizations that have been working in many countries all over the world depend on the charitable giving of international citizens, as well as by governments and large corporations. If this dries up, we could see a mass exit of aid organizations in places where important work is being done that is necessary for sustainable peace and development. The Middle East peace process is but one example of a situation that could go from bad to worse if aid agencies are no longer able to fund their efforts.