How to "Double" Aid with No New Money

The Olympian is a difficult foe to oppose.

Homer, The Iliad

It was the juxtaposition that caught the eye. It was the fact that the G8 meeting began on the same day as the site of the next Olympic games was announced. Each occasion was important. Each demonstrated civilization’s priorities.

As the New York Times observed in an editorial before the G8 began its meeting:

“The choices President Bush and his fellow leaders make this week in Scotland will help determine whether more than two million children under 5 will keep dying every year of diseases that can be easily and cheaply treated, whether 40 million young people will still be unable to go to school and whether 300 million Africans will continue to lack access to clean water.”

If 300 million people in the United States lacked access to clean water no one in the country would have clean water. Not even President Bush. That’s because there are only approximately 295,734,134 of us living here. The results of the meeting of the G8 look good on paper- especially Mr. Bush’s commitment.

The leaders at the meeting (including Mr. Bush) promised to double aid to Africa from $25 billion to $50 billion by 2010. That’s only 5 years from now, not all that long for Africa to wait in the overall scheme of things, even though a lot of people will get sick and die while waiting for potable water.

It was a generous gesture and what makes it even better is that it didn’t cost Mr. Bush a penny. As Faryar Shirzad, a deputy national security adviser explained to the press at the end of the conference, the aid commitment involves no new money from the United States. It is money that had already been promised.

By committing no new money Mr. Bush did not jeopardize the United States’ standing as the leader of the country that contributes the smallest share of its national income to foreign aid. It currently contributes $.16 for every $100 of national income compared with the major European nations that now give $.36 for each $100 of national income and have pledged to raise that to $.51 by 2010.

The choice the Olympic committee made was whether to break with tradition and let cost play a role in determining what country would host the 2012 games. Paris already has the infrastructure and sporting venues to accommodate many of the Olympic sports. According to CBC news, the IOC gave Paris “glowing reviews” because its plan would enable the games to take place at reduced cost. When the chips were down, however, London won out. The idea of putting on the games at a reduced cost did not have sufficient appeal to give Paris the prize. If the IOC cared about money it might have given Paris the games. It might have been influenced by looking at what the Olympics have done for some of the earlier lucky winners. The most recent was Greece.

It budgeted $5.5 billion to put on the games. As of July 7, 2005 the bills were still being added up but had come to $13 billion. The Olympics did, however, help Greece attain one new height. Its deficit reached 6.1 per cent of its gross domestic product. To compensate for that the government has decreased spending on public works and increased its value added tax. According to Matthew Lynn of Bloomberg.com, it is auctioning off some of its Olympic facilities including the kayak slalom course that cost 26 million Euro to build. That should sell really fast.

Greece isn’t the only country that was surprised when all the costs of hosting the games were calculated. According to a PricewaterhouseCoopers study completed in 2004, the Montreal Olympics ended up with a $1.2 billion deficit. Annual maintenance on publicly owned facilities in Montreal is approximately $22 million according to CNN /Money. Barcelona, Atlanta and Sydney broke even although Sydney is reportedly spending $32 million a year to support some of the underused venues left over from the 2000 games.

Given the financial history of the games and the needs of those like the Africans who, lacking food and water will not be attending the games, some might ask why the games are not always held in the same places so that there is no need to spend money on infrastructure in new venues each time the Olympics are presented. The money thus saved could be spent on the many other causes that need the help of the countries that can afford to put on the Olympics.

The answer is the Olympics give a boost to the local economies and have a unifying effect on the host countries. Greece and Montreal demonstrate the effect on the local economies. Sarajevo demonstrates the unifying effect the games have on the host country. It hosted the games in 1984.

CHRISTOPHER BRAUCHLI is a lawyer in Boulder, Colorado. He can be reached at: Brauchli.56@post.harvard.edu or through his website: http://hraos.com/

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Christopher Brauchli is an attorney based in Boulder, Colorado.