When the elephants fight it is the grass that suffers. So goes the ancient proverb of Kenya’s Kikuyu tribe. And at the moment, the adage is particularly apt.
The war in Ukraine is creating an energy and food crisis. This is combined with the effects of climate change, recession and the continuing effects of the Covid pandemic. The world is in the thick of a perfect political and economic storm of global proportions.
Within the developed world, allies are starting to bicker as rich countries use their buying power to outbid their less well-off neighbours in order to hoard dwindling resources.
Money allocated for the welfare of people at home and abroad has been redirected to pay for the wasteful costs of war. $350 billion has been set aside for rebuilding ravaged Ukraine.
Meanwhile drought, famine and war are ravaging the Horn of Africa. In Kenya the UN reports that 4 million people are “food insecure.” In Ethiopia the fifth drought season in succession is exacerbated by a civil war. And in Somalia Islamic fundamentalists and drought are estimated by the UN High Commissioner for Refugees to have displaced 6 million people.
On the other side of Africa, desertification in Mali, Niger and northern Nigeria is forcing farmers off the land and providing fertile recruiting conditions for Boko Haram. Nigeria is also suffering from recent floods which destroyed 175,000 acres of farmland and displaced 1.4 million people.
Africa is not the only continent to suffer. It will take Pakistan years to recover from its recent floods. A quarter of the farmland was lost in a country where a quarter of the country’s national income is dependent on the agricultural industry. The total damage will exceed $40 billion or about one-sixth of the country’s GDP.
In the meantime, Western countries are borrowing heavily to finance subsidising energy price. This is on top of record borrowing related to the Covid pandemic. The World Bank and IMF have declared their financial policies “unsustainable.”
Britain and Sweden – two of the leading lights in the foreign aid business – have significantly cut their aid budgets in response to increased pressure on their welfare budgets. Germany and Italy are expected to follow suit in the coming weeks.
Two developed countries have increased their aid budgets. Norway and Spain. Norway can afford it. Their $1.9 trillion oil-fuelled sovereign wealth fund provides each Norwegian with $250,000. But their $4.7 billion aid budget fails to make up for the roughly $20 billion lost from the British and Swedish cutbacks.
Of course the world’s biggest aid donor is the world’s biggest economy – the United States, although the roughly $40 billion it allocated this year is only a small proportion of its GDP. In fact, the US is near the bottom of OECD countries in terms of aid as a proportion of national GDP.
The Biden Administration hopes to take steps towards correcting this position by increasing the aid budget to $60 billion. But this is likely to be blocked if the Republicans win the mid-term elections.
China does not publish its aid budget. It has, however, become a significant donor on the world stage, although a lot of its financial support is in the form of loans for infrastructure projects. This is starting to create worries about a Chinese-fuelled debt crisis similarly to the one the West faced in the 1980s and 1990s.
Repayments on Chinese loans for the development of Hambartota International Port and Mattala Rakapaksa International Airport contributed to the riots and collapse of the Sri Lankan government. Thirty percent of Pakistan’s foreign debt is owed to Beijing.
In Africa, Angola, Ethiopia, Djibouti, Kenya, Nigeria and Zambia are heavily indebted to Chinese bankers. Recently there were fears that Kenya was on the verge of defaulting on its debt to Beijing because of difficulties in financing a Chinese loan to build a $4 billion railway.
A few years ago much ado was made about Xi Jinping’s pledge to invest $60 billion in Africa. Then last December he announced that the investment was being reduced to $40 billion because of Covid, and at the recent Chinese Party Congress there were hints that the slowdown in the Chinese economy meant that the Chinese aid budget and loan terms would need to be “reviewed.”
Aid is not pure philanthropy. In the quarter of a century before the pandemic the number of people judged by the UN to be in extreme poverty fell to 750 million – ten percent of the world’s population. These slightly wealthier people had more cash to spend on goods from developed countries. They were also more likely to stay at home instead of becoming economic migrants and their governments were more stable. This was a major benefit for the developed world whose economies also saw major growth.
Now the developing world is going into reverse. Over the past 15 years Ethiopia enjoyed an average growth of 9.5 percent a year. It is now heading towards recession. According to the IMF the world economy has more than halved from six percent growth in 2021 to a prediction of 2.7 percent in 2023.
Of course, that is not to say that money has disappeared. There are more than 2,200 billionaires in the world. The richest of them, Elon Musk, just spent $44 billion to buy Twitter. He is worth $220 billion.
* Tom Arms is foreign editor of Liberal Democrat Voice and author of “The Encyclopaedia of the Cold War” and “America Made in Britain".
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13 Comments
I was once told by an EU Minister, when we were looking for ways to improve the law on International Child Abduction. You don’t make peace by dropping a bomb.
War is destructive and I remember having it explained to me that The Stabilisation Unit had helped in some areas after war.
The good that could be done with 35 million pounds.
Prevention is better than cure.
Johnson’s refusal to be reasonable with some situations has left them open to conflict.
We now have another Prime Minister, not elected hardly democracy.
@Helen Dudden
“We now have another Prime Minister, not elected hardly democracy.”
Unless and until our constitution is amended it’s the democracy which passes for democracy in the UK. We do not elect a prime minsiter – we are not a presidential democracy. We elect members of the House of Commons and from among them shall come a Prime Minister.
We have had so many changes in policy. I fully understand about elections and how they work as I have spent some of my time in Westminster.
As we work the way through two in Party elections, where only the Conservatives voted or was I mistaken.
Apologies, but that is my view.
It’s not just the inflation cased by Russia aggression (and by Brexit) that is causing the problems. We (Britain) have do do our share of supporting Ukraine’s military effort, and that is costing a huge amount of money.
It would calamitous if Ukraine were engulfed, not just because it would be a defeat for liberal democracies by an authoritarian regime (thus emboldening China which has its eye on Tiawan) but also because food prices will stay high while Russia controls the Black Sea.
Unfortunately the consequence is that military spending has to be protected meaning there is less for schools/education, environment, health, pensions benefits, etc etc ad infinitum.
Clearly huge amounts
The Russian invasion of Ukraine has followed a familiar path of decolonization and will most likely have the same outcome. Post WW2, when former imperial powers like Britain and France faced popular independence movements that could not be defeated militarily, they could look for corrupt leaders sympathetic to and subservient to the former colonial powers to take over control of the government.
Russia has done the same with Ukraine. Firstly, by installing Kremlin puppets as President and when they were ejected by popular revolt then Military intervention. It Failed for Britain in Kenya and Malaysia and for France in Vietnam and Algeria. France is even now trying to withdraw from its residual security commitments to former colonies in sub-saharan Africa.
The war in Tigray is as bad, if not worse, than that in Ukraine. WW1 trench style warfare with up to 1 million soldiers engaged in an offensive is seeing huge casualties on the battefield and refugees in their millions with an estimated 1 million at risk of starvation.
Foreign aid is but a sticking plaster on these gaping wounds. The United Nations was created to maintain international peace and security and the African Union was created for peacekeeping missions. There seems little prospect of resolving these conflicts while Russia is waging war against its neighbour Ukraine.
@Tristan Ward …. Ukraine could hardly be called a liberal democracy….More guns more bombs more death more misery…Hardly a progressive approach.
The inflationary pressures on fuel & food are a disaster for the poor in the UK and beyond – who let’s be honest are not at all concerned about Ukraine – to busy trying to survive.
How much tax revenue prevented from reaching governments by tax cheating and lack of tax equity?
Might a generalisation from Helen Dudden’s first comment be that we do not live in a valid democracy?
Might the fact that between 25% and 30% of our children live with chronic hunger/starvation support this view?
“The war in Ukraine is creating an energy and food crisis. This is combined with the effects of climate change, recession and the continuing effects of the Covid pandemic. The world is in the thick of a perfect political and economic storm of global proportions.”
Yes, and desperation and dwindling resources underpinned by lack of response to climate crisis will likely see different “strong man” leaders act more aggressively leading to greater likelihood of war or damaging economic positions.
By the time you post your next review we’ll know the outcome of the Brazilian elections. It’s hugely important for how the world responds to climate crisis.
@ Martin Grey
Giving in to authoritarians is not liberal and usually doesn’t work.
Yes war is a terrible waste of blood and treasure, but sometimes it is necessary.
We could focus our plans for international development on helping countries to mitigate and adapt to climate change. This would direct aid to those countries who contributed least and are effected most by climate change. The policy would also show distinction to the Conservatives and help in Tory facing seats.
Peter, Indeed we could focus our plans for international development on helping countries to mitigate and adapt to climate change, but it wouldn’t generate even a minor headline in the media, and for two main reasons 1) “Lib Dems would be better focussed” isn’t a great headline – Get Brexit done was. 2) To most people international aid is not one of the major problems they face – however much we wish it was.
We have to focus on being relevant to the problems being faced by voters, not just on nice things we would like to do. Being relevant to voters wins votes and that wins elections. Winning elections gives you the opportunity to solve voters’ problems and to do some nice things as well. Losing elections simply means we fail to do anything once again.
Brexit and Putin between them have caused chaos. The UK must strive to become self sustainable in energy and get as close to that as it can on food. Only to be matched by a drive to make sharing resources between those nations who have, with those who do not if conflict is to be avoided.