Rome exceeded expectations: will the G8 do the same?

The Food Summit in Rome turned out better than expected. It was not derailed by Robert Mugabe. It survived the unedifying wrangling over a final communiqué. It gave the topic a good hearing. It confirmed some practical actions. And it passed the torch successfully to the G8 in Japan in July.

As usual, delegates spent too much time arguing about statements of principle and too much time on political issues only loosely linked to the summit theme. Not surprisingly, they found it hard to reach agreement on contentious issues, like biofuels. But there have been some large new pledges, and a high degree of consensus on the twin issues of agricultural development and social protection for the poorest.

The Summit showed that the UN works best when it works as one. There was good cooperation between the Rome agencies and the World Bank, for example.

The G8 has work to do, however.

An unremarked feature of the current focus on the world food crisis is that large financial pledges are being made by donors, but there is, as yet, no clear evidence that current pledges are additional to existing aid budgets. This raises questions about who or what will lose out. When the World Bank pledges $1.2bn, for example, this is not new money, but comes from the existing budgets of the World Bank Group. The same is true of other big multilateral pledges, like the $500m offered by the Asian and Inter-American Development Banks, and by the many bilateral pledges of food and cash, for example to support the humanitarian programmes of the World Food Programme. This is at a time when donor aid funds overall are falling way below the pledges made at the G8 Summit in Gleneagles in 2005 – by as much as $30bn a year. Who will pay the price? The knock-on effects of this crisis will need to be watched, and the pressure kept on donors to keep their promises.

There is one exception to the lack of additionality, which is the funding promised by non-traditional donors. Saudi Arabia, for example, gave WFP $500m the other day, helping that agency to exceed its appeal target for emergency aid. That’s a generous, one-off gift. But, of course, Saudi Arabia is reaping huge windfall profits from the rise in the price of oil. When the price of oil goes up by, say, $30 per barrel, then Saudia Arabia is gifted nearly $300m a day in extra revenue – so the gift to WFP represents the windfall profit from one weekend. Saudia Arabia is not alone, of course. The top ten aid oil exporters include Russia, Iran, UAE, Venezuela, Kuwait, and Algeria, none of them mainstream aid donors.

Some have suggested a windfall tax on oil producers. A better suggestion might be to sign up large and rich oil exporters to the club of aid donors. One-off gifts are very welcome. Even better would be long-term commitments, predictable and accountable, delivered bilaterally or through the UN, the World Bank and the Regional Development Banks. The richer oil producers should commit themselves to the UN target of providing 0.7% of GNP as aid, and sign up to donor best practice on issues like predictability.

Authors

Senior Research Associate
Simon was Director of the Overseas Development Institute from 1997-2009. He is an economist who [...]