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.

Curious Approach to Development in Liberia

BET founder Robert L. Johnson's plan to build a luxury hotel in Liberia strikes me as a particularly strange approach to post-conflict development. On one hand, his assessment that providing would be investors with a posh place to sleep will probably help convince them to spend their money in Liberia is probably not far off the mark. Yet on the other hand, this project probably won't do much for Liberians in the area of the hotel.

Arguments against the project would probably include the following:

• Yes, it will create short-term construction jobs, but long-term will likely only offer a relatively small number of low-paying service jobs, which won't do much to foster economic growth.
• Think of how many schools that could be built and wells that could be dug with $8 million.
• Isn't it just downright offensive to build a place that luxurious that is surrounded by so much poverty?

Then again, maybe he's onto something here. No, this project may not in itself do much to boost the Liberian economy, and because it will employ mostly service workers, won't do a whole lot to boost educational and thus economic achievement in the surrounding area. Then again, jobs are still hard to come by in Liberia, and people will probably take what they can get. Furthermore, as an exceptionally wealthy corporate executive himself, Johnson probably knows how to entertain his peers. He may be quite correct in his belief that without a nice place to stay, would-be investors would never come for a visit, and thus probably would spend their money and build their projects in other countries. Is this, then, a backdoor approach to development, or is it just the precursor to the development of another Western enclave in a non-Western country -- self-contained and disinterested in its surroundings? Time will tell, but one can only hope it works.