Help the Poor Help Themselves

HELSINKI – One early result of today’s global recession is that many donor governments are trimming their foreign aid programs. Before taking office, President Barack Obama had promised a doubling of American foreign assistance, from $25 billion to $50 billion, but since then Vice-President Joe Biden has warned that this commitment will probably be achieved more slowly because of the downturn.

Here in Finland, our aid decreased by 62% in the early 1990’s, a period that Finns still call “The Depression.” Japan’s overseas aid declined by 44% when that country hit hard times. The current worldwide slump could bring a cut in official development assistance (ODA) of 30%.

It is also easy to predict that donor governments will be looking carefully at the ever-growing expenditure on the United Nations’ 14 peacekeeping operations around the world. The total bill for all UN operations in the 12 months to mid-2008 reached $6.7 billion, about twice the level 15 years ago. One can only imagine the grave consequences if operations that are already spread thin are cut. Recall that the Rwandan genocide was preceded by a similar lack of enthusiasm for financing the UN mission there. Recent events in Congo and elsewhere suggest that there is no room for complacency.

But by far the biggest transfer of assets from rich countries to the developing world takes place through migrant workers’ remittances. Few decision-makers seem aware of this. In 2006, around 150 million migrants sent roughly $300 billion to their families in developing countries. The number of transactions is huge, estimated at 1.5 billion remittances annually. Most are for sums of only $100-$300, and they normally go towards immediate household consumption.