Last year’s G8 summit was going to “make poverty history,” and world leaders agreed to cancel the debts of 18 impoverished countries in Africa and Latin America.
This year, with skyrocketing world oil prices, energy will top the agenda of the summit. But rather than working to build on last year’s promises, G8 leaders are undermining those efforts by pushing increased oil investment in developing countries, despite research showing oil production actually increases a country’s debt burden. (See American Progress’ comparison of debt savings to cost of oil here.)
And what about debt-burdened countries that don’t have domestic oil supplies? Spiking oil prices hit their economies the hardest — an estimated ten times as much as the United States. For many well-performing countries in sub-Saharan Africa, the increased cost of oil in 2006 will exceed the budgetary resources freed by debt relief:
— Tanzania will save $140 million through canceled payments to the World Bank and IMF, but it will have to pay more than double that amount on the increased cost of importing oil.
— Sierra Leone will spend almost twice as much this year to cover the hike in its oil bill as it will on health and education services for the entire country.
Passing this burden off to people who make less than two dollars a day is neither a viable nor moral way to handle the energy crisis that the world’s poorest countries face. The G8 countries shouldn’t be spreading their oil addition to others. A better solution is making investments today in an affordable and clean energy future for these countries, a future that preserves their environment and natural resources and ensures a capacity to absorb the shocks of fluctuating global energy markets.