JOHANNESBURG, 13 June 2008 (IRIN) - UK-based development agency Oxfam has called for clarity on funds promised by rich countries to help the world's poor cope with the global food crisis and adapt to climate change.

In a report released ahead of the G8 finance ministers' meeting, which began on Friday, Oxfam said G8 leaders must ensure that all the money – including the US$6 billion pledged at the Rome food crisis summit last week – comes on top of existing aid commitments. G8 Leaders will meet next month.

Lots of money has also been pledged to help poor communities cope with the effects of changing weather patterns, including a proposed set of funds called the Climate Investments Funds (CIF). But, the money is either being taken from existing aid budgets or being turned into loans, said the Oxfam report, 'Credibility Crunch: Food, poverty, and climate change: an agenda for rich-country leaders'.

"It is very unclear whether the $6 billion announced at the food summit is new. Is it in the form of loans or grants and over what time frame the funds will be made available?" asked Frederic Mousseau, policy advisor at Oxfam GB. "Besides, the money is still short of the $14.5 billion that we have calculated is needed to respond to the immediate needs of people suffering from the crisis – this money does not include funds for agriculture."

A UN response plan to the food crisis, which includes investment in agriculture, will need at least $15 to $20 billion a year.

Debt relief is "arguably the best thing the G8 has ever agreed to do for poor countries" noted the report, and called for more cancellations particularly for countries such as Bangladesh, which have been affected by the global food crisis.

Bangladesh pays $754 million a year to rich countries, according to 'Únfinished Business', the latest report by the Jubilee Debt Campaign'. The lobby group says that $400 billion needs to be cancelled simply to enable poor countries to meet their basic needs. So far around $88bn has been cancelled.

Violation of Polluter Pays Principle

Japan, the chair of the G8 has announced that it will promote the CIFs, which have come under fire from civil society. The CIFs, to be managed by the World Bank, comprise two funds – one to help provide clean technology and the other to build adaptive capacity in the poor countries.

"The money under both these funds will be provided in the form of loans, which is a violation of the Polluter Pays Principle (PPP)," said Antonio Hill, Oxfam International's senior policy advisor on climate change. PPP is widely acknowledged as a general principle of international environmental law and is one of the fundamental principles of the European community's environment policy.

The World Bank in a statement on the CIFs pointed out that the money will be in the form of highly concessional loans. "But the point is that it is still a loan," said Hill.

The Oxfam report has also cautioned that while additional money is "of course welcome", the housing of new funds at the World Bank could undermine ongoing climate change negotiations.

"At [the climate change conference in] Bali in December 2007 the UN Adaptation Fund was agreed. This was expressly designed and established after several years of negotiations to address adaptation needs in developing countries under the UN Climate Convention, and represents a major step forward. It is crucial that rich countries now show political will and start putting up money for the UN Adaptation Fund".

"Money should also make its way into the existing Least Developed Countries Fund (LDCF) as well," said Hill. The LDCF is the other fund set up by the UN Framework Convention on Climate Change to help the world's poorest countries adapt to global warming. 

Countries were required to draw up a national plan of action to adapt. "Almost all the countries will have drawn up their plans by next year and would need funds soon," noted Hill. 

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