OVERSEAS, ENDANGERED LARGESS
Wall Street Greed? Not in This Neighborhood.
Saturday, October 11, 2008
NEW DELHI -- With freshly cut keys to their new brick-and-cement homes, families in an impoverished settlement on the outskirts of India's capital honored a surprising hero this week: Richard S. Fuld Jr., head of the now-defunct Wall Street giant Lehman Brothers.
Before the 158-year-old investment firm went bust, it sponsored construction of low-cost housing with Habitat for Humanity in the destitute Bhalaswa neighborhood. Although the $50,000 contribution was a pittance for a multibillion-dollar Wall Street firm, it was enough to help build 100 single-room houses for about 500 people, mostly children, who were living in shanties of tarpaulins and old clothes.
The largess of Wall Street has fed hungry children in Haiti, funded trauma centers in Sudan's war-torn Darfur region and paid for rescue boats for flood-prone Bangladesh. But with the economic crisis deepening, aid groups and economic experts fear that those donations will dry up as quickly as easy credit.
"This is a very real issue, which people are just beginning to think through," said Simon Johnson, a former chief economist at the International Monetary Fund and a professor at the MIT Sloan School of Management. The school has an internship course called Global Entrepreneurship Lab, one section of which works with health-care projects in Africa. "A top priority now is to find new sources of funding in a hurry, because aid will fall," Johnson said.
The fear of shrinking aid comes as the poor in developing nations struggle to keep pace with inflation and sharply rising prices of food and fuel. At least 100 million people who did not need food aid six months ago can today no longer afford food, aid experts said.
U.S. corporations, foundations, charity organizations and individuals together gave more aid to the developing world than the U.S. government did in 2006, according to the Hudson Institute's Index of Global Philanthropy: Private donations totaled $34.8 billion, compared with the government's $23.5 billion. But with the U.S. economic meltdown -- and its worldwide ripple effects -- aid experts doubt those numbers can be sustained on either the private or the government side.
"Undoubtedly, overall funding -- from business, private individuals and government sources -- will come under pressure," said Tom Arnold, head of Concern Worldwide, an aid group that assists 12 million people across Africa, Asia and the Caribbean. "The world has changed in the past week, and we're really in uncharted waters. Just this week at headquarters we were having a very tough conversation about some difficult choices in 2009."
Those in the humanitarian community say the backlash will be felt in the coming months as fundraising for next year begins. But the impact on the world's poor is already being debated at conferences in Geneva and in classrooms at MIT.
Many leaders in the humanitarian field have started lobbying to keep funds. The United Nations has announced efforts to ensure aid is spent more efficiently during lean economic times.
Antonio Guterres, the U.N. high commissioner for refugees, told donors at a meeting in Geneva this week that it would be "tragic if there was a reduction in financial help."
Both U.S. presidential campaigns have suggested that they may have to scale back their plans for foreign aid because of the economic crisis.
Speaking at the vice presidential debate in St. Louis, the Democratic candidate, Sen. Joseph R. Biden Jr., said a campaign promise to double foreign aid might have to be "slowed down." Strategically important countries, especially those perceived as critical in fighting terrorism, are unlikely to see a decrease in aid, said Steve Radelet, a senior fellow at the Center for Global Development and a former U.S. Treasury Department official. "The government won't take a dime out of funding Iraq or Afghanistan or Pakistan," Radelet said. "But they will be unlikely to spend money in, say, Tanzania or Senegal."