Dancing the Robin Hood Tax

Broken promises: Aid shortfall of $21bn

Aid to developing countries in 2010 will reach record levels in dollar terms after increasing by 35% since 2004. But it will still be less than the world’s major aid donors promised five years ago at the Gleneagles and Millennium+5 summits. Though a majority of countries will meet their commitments, the underperformance of several large donors means there will be a significant shortfall, according to a new OECD review. Africa, in particular, is likely to get only about $12bn of the $25bn increase envisaged at Gleneagles, due in large part to the underperformance of some European donors who give large shares of official development assistance (ODA) to Africa.

In 2005, the 15 countries that are members both of the European Union and of the OECD Development Assistance Committee (DAC) committed to reach a minimum ODA country target in 2010 of 0.51% of their Gross National Income (GNI). Some will surpass that goal: Sweden, with the world’s highest ODA as a percentage of its GNI at 1.03%, is followed by Luxembourg (1%), Denmark (0.83%), the Netherlands (0.8%), Belgium (0.7%), the United Kingdom (0.56%), Finland (0.55%), Ireland (0.52%) and Spain (0.51%) – all figures are in 2004 dollars and relate to net ODA. But others will fall short: France (0.46%), Germany (0.40%), Austria (0.37%), Portugal (0.34%), Greece (0.21%), and Italy (0.20%).

Other DAC countries made varying ODA commitments for 2010, and most, but not all, will fulfil them. The United States pledged to double its aid to sub-Saharan Africa between 2004 and 2010. Canada aimed to double its 2001 International Assistance Envelope level by 2010 in nominal terms. Australia aimed to reach $A4bn. New Zealand plans to achieve an ODA level of $NZ600m by 2012-13. All four countries appear on track to meet these objectives. Norway will maintain its ODA level of 1% of its GNI, and Switzerland will likely reach 0.47% of its GNI, exceeding its previous commitment of 0.41%. Japan’s Gleneagles promise was to give $10bn more over the period 2005 – 2009 than if they had stayed at their 2004 base-line. In 2008 it was still $4bn short of this undertaking. Japan’s ODA for 2010 is not yet known, and the OECD calculations are based on an assumption that it will maintain the same level as in 2008.

Overall, these figures result in additional aid of $27bn from 2004 to 2010, but a $21bn shortfall between what donors promised in 2005 and the OECD estimates for the 2010 outcome. Of this shortfall, $17bn is the result of lower-than-promised giving by the donors and $4bn is the result of lower-than-expected GNI because of the economic crisis. All these figures are estimates based on countries’ national 2010 aid budget plans where available and on early GNI estimates.

Barroso II should put development at the heart of its agenda, CIDSE says

Following last year’s approval of the Lisbon Treaty and the election of a new European Parliament, 2010 has begun with the appointment of President Barroso’s newly selected European Commission (EC) line-up. CIDSE, an international alliance of Catholic development agencies, while wishing the new Commission success, points to the need for ambitious and fair policies. In the next five years leading up to the 2015 deadline for the Millennium Development Goals (MDGs) these should benefit both citizens at home and people living in poverty in developing countries to ensure our common future.

“In light of the recent food, economic and climate crises, which have left poor countries struggling with dire consequences, which will be felt for many years to come, it is imperative that the new Commission reaffirms the EU’s leadership in development cooperation by placing poverty eradication at the heart of its agenda and, crucially, ensures the coherence of all EU policies with this goal,”. Recent studies show that the EC is not meeting this goal with only 44% of its aid money going to poor countries in comparison to the average 65% rate of EU member states.

One of the main priorities of the Commission, and Development Commissioner Piebalgs in particular, should be to not only push EU member states to stick to their aid commitments but also to promote innovative and predictable sources of development and climate finance. “After having firmly declared his support for financial transaction taxes during his EP hearing, we expect Commissioner Piebalgs to match words with deeds. The Commission should urge EU member states to promptly implement these taxes,” said Bernd Nilles, CIDSE Secretary General.

Furthermore, the EU must adopt a policy framework for food security that focuses on the potential of small scale farming for development, a framework which is supported rather than undermined by the EU's own trade and agricultural policies. According to Nilles “the appointment of a climate commissioner presents an important opportunity for the EU to rethink and reinvigorate its engagement in international climate negotiations. The Commission must work with its member states to reach out to its negotiating partners and ensure that 2010 secures the fair, effective and binding climate agreement that both science and justice demand.” Credible and coherent policies on domestic climate mitigation efforts and support to developing countries are crucial to protect the world’s most vulnerable people from the impacts of the climate crisis.

Economists launch blog on “Triple Crises” in finance, development, and environment

On February 1, new voices joined the policy debate on the global crises in finance, development, and the environment. The “TripleCrisisBlog,” with an initial roster of economic analysts from nine countries, was launched by the Global Development and Environment Institute (GDAE) at Tufts University (USA), India’s Economic Research Foundation (ERF), and the Washington office of the Heinrich Boell Foundation. The initiative is chaired by GDAE’s Kevin P. Gallagher and ERF’s Jayati Ghosh.

“Crises are not new to the world economy nor to developing countries,” Gallagher and Ghosh write in their introductory post. “Indeed, our current predicament is a convergence of at least three crises: in global finance, development, and environment. These areas are seemingly disparate but actually interact with each other in forceful ways to reflect major structural imbalances between finance and the real economy; between the higher income and developing economies; between the human economic system and the earth’s ecosystems. This blog seeks to contribute to a more open and global dialogue around these three crises: about how they interact, and how they can collectively be solved.”

The TripleCrisisBlog starts with a wide diversity of analysts from the global North and South. In addition to Gallagher and Ghosh, the roster includes: Jeff Madrick, Sanjay Reddy, Mehdi Shefaeddin, Charles Abugre, Martin Khor, Alejandro Nadal, Matias Vernengo, Adil Najam, CP Chandrasekhar, Jim Boyce, Ilene Graebel, Gerhard Schick, Timothy A. Wise, Lyuba Zarsky, and Frank Ackerman. Ghosh and Gallagher will co-chair the project, with Wise serving as "managing editor."

Visit the TripleCrisisBlog >>> here.