Inequalities, super-profits, speculation and the burden of debt starve the world, “Austerity is not the answer”

ROME – Support measures for families and businesses against the cost of living and the cost of energy are at the top of the institutional agendas of governments around the world. However, the room for maneuver is particularly limited in poor nations, trapped in the debt grip and forced to pay debt service to the G20 countries at the rate of 136 million dollars a day in the current year. At a time when 828 million people face hunger and the incidence of extreme poverty has increased for the first time in decades during the pandemic. It is the alarm raised by OXFAM on the eve of the G20 scheduled for 15 and 16 November in Bali in Indonesia.

The poor spend 4 times more on debt than on health care. Since the beginning of the health emergency, poor countries have paid 113 billion dollars to G20 creditors. In 2021 alone, low-income countries spent, on average, 27.5% of public resources on debt service: four times the expenditure on health care – compared with the number of deaths from Covid-19 in poor countries four times higher than in rich nations, in the first two years of the pandemic – and 12 times the spending on social protection.

Low-income countries tested by climate and hunger. Even 71% of the public funding for climate change adaptation and mitigation that poor nations are receiving from rich countries – including many G20 members – was in the form of loans, with the risk of further exacerbating the spiral. of the debt. Meanwhile, humanitarian aid to tackle food insecurity is far from adequate: the United Nations has launched an appeal for 17.1 billion dollars to respond to the global food crisis in 2022, but so far major donors have allocated only 7 billions of dollars. A dramatic delay if one considers that in the coming months on average 1 person every 36 seconds could die of hunger in East Africa, due to the drought that shows no signs of easing, and millions of people are already on the verge of famine.

The other side of the crisis: record profits and growing assets. If the “cost of living” crisis unfolds its devastating effects on people in conditions and contexts of greater vulnerability and does not seem destined to stop anytime soon, there are those who are drawing undoubted benefits from the crisis. The big monopoly food and energy companies are making record profits and the super-rich who control them continue to see their assets grow, at the rate of half a billion dollars a day.

The enormous profitability of the big energy companies. With 9 out of 10 of the largest fossil fuel companies based in the G20 countries, little data is enough to appreciate the size of the profitability of the big names in energy, food and the financial intermediaries that finance them. In the second quarter of the current year, British Petroleum made profits of 7.1 billion pounds, a record figure in the last 14 years; BNP Paribas – Europe’s main lender to the fossil fuel industry – raked in profits of 2.76 billion euros in the third quarter of 2022. The billionaires who control the heavily concentrated agribusiness firms have seen a surge the value of their assets overall by 45%, or 382 billion dollars since the beginning of the pandemic.

The impact of inflation on the erosion of purchasing power. “In the current public narrative – says Misha Maslennikov, policy adviser for economic justice of Oxfam Italy – the impacts of inflation on the erosion of purchasing power and savings and on the deterioration of families’ living conditions are strongly accentuated, but less emphasis is given to those who are benefiting from the crisis, to those who are potentially part of the problem and to whom it should undoubtedly contribute to remedy itThe record profits forfeited in the current situation by monopoly companies in the energy and food sectors, also accused of taking advantage of the inflation crisis, manipulating prices to further increase margins, are at odds with growing poverty and deprivation worldwide. The G20 governments – concluded Maslennikov – must not hesitate to ask for a significant contribution from those who, among the wealthiest companies and individuals, are seeing their incomes and assets grow dramatically in the current context of crisis”.

The appeal to the G20: “Tax the richest”. The crisis requires decisive interventions, new and conspicuous resources and a change of direction with respect to the recent past. In fact, in the two-year period 2020-2021, 143 out of 161 governments examined by a recent Oxfam survey did not resort to levy increases on higher incomes or assets and 11 countries even reduced the tax burden on the wealthiest citizens. Over the same period, half of the countries analyzed by Oxfam it has reduced the share of public expenditure destined for social protection and 70% of countries have cut that destined for education. Over the next five years, three quarters of the countries of the globe are also planning spending reductions of over 7.8 trillion dollars.

“Austerity is the wrong answer.” “Indiscriminate cuts in public spending are the wrong response to the crisis and for the years to come, a response that undermines social stability and risks further exacerbating poverty and inequality – added Maslennikov – The G20 countries should instead face decisively the long-term causes of poverty and growing economic and social gaps, and commit more profusely to support the most vulnerable countries”

In detail Oxfam calls on the G20 to:

– adopt long-term strategies to counter growing inequalities and monitor progress, by increasing public spending on health and education, making tax systems more progressive and endorsing measures that expand rights and raise workers’ wages;

– grant new moratoriums on debt service payments and provide for fair restructurings of the debt of the poorest countries;
subject or increase the taxation on large estates and introduce forms of extraordinary levy on corporate extra-profits;

– issue a greater number of Special Drawing Rights, reallocating a substantial share to the poorest countries;
increase funding for climate change adaptation and mitigation in poor countries most affected by extreme weather events;

– accelerate the process of drafting and negotiating an international instrument to strengthen pandemic prevention, preparedness and response.

And again, to counter the increase in global hunger it is necessary:

– allocate as soon as possible the resources necessary to deal with the main humanitarian emergencies in progress;

– address the root causes of the current global food crisis, including climate change, conflict and food price inflation;

– ensure that economic sanctions and military activities in all countries do not hinder food and agricultural supplies, especially to areas affected by conflicts;

– rebalance power in food supply chains to create a more just and sustainable system.