The Politics of Poverty

Ideas and analysis from Oxfam America's policy experts

G8 leaders “cooked the books” yesterday, and the world’s poor were left holding the bill

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Leaders promised an additional $50bn in aid commitments to fight global poverty. That commitment has not been met, at great cost to the world’s poor.

The G8 is in decline. After years of serving as one of the premier international platforms for international negotiation and agenda-setting, it is increasingly overshadowed by the G20, which now includes the emerging powers like China, India, and Brazil.

But the G8 has been the forum in which great leaders made great promises – at least in the development sector. The biggest example was the 2005 Gleneagles summit hosted by Tony Blair. Back then G8 leaders promised to significantly increase their foreign aid levels – with a special focus on increasing assistance to Africa. Bono approved.

The G8 promised $5 billion of aid over 3 years in Muskoka
Photo by Victoria Marzilli/Oxfam

Yesterday, the G8 released an “accountability report”, which attempts to show how the G8 members fared in keeping their aid promises. Not surprisingly, the report shows they did a pretty good job. Of the $50b promised in increased aid, the G8 came up with $48b, according to the report. That’s pretty good.

But….

There’s a little trick: price to ignore inflation.

It’s pretty standard to include inflation in any multi-year analysis of economics or finance. No one would want to get paid the same as they were paid in 2005. If you did, you’d be making a lot less in real (inflation-adjusted) dollars.

But the G8 has ignored standard economic analysis conventions and counted their aid delivery in nominal dollars rather than inflation-adjusted dollars. If they’d used inflation-adjusted dollars, as do other analysts of foreign aid, then the G8 aid increase would come in at $31 billion. Simply put, the G8 invents $17 billion in foreign aid out of thin air by pretending price inflation doesn’t exist.

Sad.

In the scheme of things, $17b is just 6 days of G8 military spending and less than 0.06% of their combined national income. For the money promised, every one of the 67 million children that still don’t attend primary of school could be getting an education. They also could have paid the salaries of 800,000 midwives in Africa and provided 1 million life-saving bed nets.

If the G8 want to continue to be seen as a credible voice on development, then next week at Deauville they must fulfill their existing aid commitments. The G8’s reputation is at stake – and maybe their legacy.

How the G7 have really performed since their 2005 Gleneagles commitment

Aid commitments and disbursements

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