Tuesday, 16 November 2010

Reflection group on global development launched

An alliance of civil society groups, networks and foundations, including Third World Network, Social Watch, DAWN, the Friedrich-Ebert-Foundation, Global Policy Forum, terre des hommes, and the Dag Hammarskjöld Foundation, has launched the Civil Society Reflection Group on Global Development Perspectives. The group (>>> www.reflectiongroup.org) consists of about 15 leading civil society activists, experts and academics from around the globe. The group will assess conventional and alternative models of development and well-being, reconsider development goals and indicators, including the Millennium Development Goals (MDGs), draw conclusions for future development strategies and provide specific policy recommendations for the UN Conference on Sustainable Development 2012.

The Group starts its work at a crucial point in time – fast approaching the 2015 deadline for the MDGs, while preparing for the 2012 Conference on Sustainable Development. Today’s unprecedented coincidence of global crises – economic, financial, food and climate – reveals the dead end to which the dominating models of development have led. “It is now time to break old ground, to draw lessons from these crises and to fundamentally rethink our goals and measures of development and social progress – in North and South”, says Jens Martins who is a group member. “The time between the Summits 2010 and 2012 provides a unique window of opportunity to reconsider the current development paradigm and to develop strategies towards a holistic, rights-based approach of global development and well-being.”

Four meetings of the Reflection Group are scheduled to take place throughout 2011. The expected outcome will be presented in a report to be published prior to the 2012 UN Conference on Sustainable Development.

Group Members
Barbara Adams (Global Policy Forum, US), Beryl d’Almeida (Abandoned Babies Committee, Zimbabwe), Alejandro Chanona Burguete (National Autonomous University of México), Chee Yoke Ling (Third World Network, China), Ernst Ulrich von Weizsaecker (Germany), Filomeno Santa Ana III (Action for Economic Reforms, Philippines), George Chira (terre des hommes India), Gigi Francisco (Development Alternatives with Women for the New Era, Philippines), Henning Melber (Dag Hammarskjöld Foundation, Sweden), Jorge Ishizawa (Proyecto Andino de Tecnologias Campesinas, Peru), Karma Ura (Centre for Bhutan Studies, Bhutan), Roberto Bissio (Third World Institute/Social Watch, Uruguay) Victoria Tauli-Corpuz (Tebtebba Foundation, Philippines), Yao Graham (Third World Network-Africa, Ghana), Jens Martens (Global Policy Forum Europe, Germany), Hubert Schillinger (Friedrich-Ebert-Foundation, Germany), Danuta Sacher (terre des hommes Germany)

Saturday, 13 November 2010

ActionAid International: G20’s temporary ceasefire

As the G20 in Seoul discussed the ‘currency wars’, ActionAid International called on world leaders to remember the poor and vulnerable that will be most affected by their decisions. Soren Ambrose, ActionAid International’s International Finance policy expert said from Seoul: “The G20 leaders may sign a temporary ceasefire in Seoul, but the ‘currency wars’ will persist. Leaders must acknowledge that a ‘system’ of massive deficits, surpluses, and accumulation of dollar reserves, with developing countries subsidising the US economy, is simply no longer sustainable.

According to Ambrose, the casualties in this war will be the developing countries that can’t defend against hot money flows and the threat of rising prices. The G20 leaders must act now to aim for a lasting peace by examining new proposals for a neutral world reserve currency that can end the distortions before next year’s summit.

Trade unions see mixed outcome of G20 Seoul Summit

Trade unions have welcomed the recognition by the G20 that decent jobs are at the heart of the recovery and their commitment to provide social protection for the most vulnerable, while expressing deep concern about the global consequences of premature austerity measures. “Unions now want to see real action to fix the bitter and unprecedented social crisis of global unemployment between now and the G20 meetings in France in 2011, and remain opposed to slashing fiscal deficits in the short-term before employment is back on track,” stated ITUC General Secretary Sharan Burrow. “We are worried that without coordinated investment in jobs and social protection, the G20 stands to become a transmission belt for communicating recession from one G20 country to another, ultimately damaging the entire global economy.”

“The global economy is far weaker than the G20 admit and far from reassuring the financial markets, a headlong rush to austerity and cutting deficits prematurely will further depress investment, and hit sovereign debt ratings as current growth forecasts are downgraded,” explained TUAC General Secretary John Evans. “Governments are trying to talk up growth by calling for structural reform, but the Seoul Action Plan looks too much like the old agenda of reducing benefits and weakening job protection and will sap the confidence of households. We need a G20 action plan for jobs that promotes fairer income distribution and a demand-led recovery.”

In Seoul, the 50-strong global trade union delegation discussed trade union demands with the summit host President Lee Myung-bak and many other heads of government as well as the chiefs of major international institutions and the European Commission. “G20 Labour Ministers must now meet as soon as possible to discuss best-practice measures for decent work and the ILO’s Global Jobs Pact, and how to stop a recurrence of the labour market inequalities that were a major causative factor in bringing about the crisis,” Burrow added.

Trade unions welcome the G20 commitment to engage with unions in the G20 process, while at the same time warning that the G20 remains unduly tilted towards the narrow self-interest of the financial community. Unions warn that without genuine financial reform, the introduction of a financial transactions tax and an end to tax havens, the resources needed for investment in jobs, development and tackling climate change will be lacking. While the Seoul Development Consensus for Shared Growth is important, it does not compensate for the absence of concrete commitment of resources for the Millennium Development Goals or for the establishment of a global social protection floor, Trade Unions pointed out. Great hopes have been set into the French G20 Presidency for 2011.

Wednesday, 10 November 2010

G20: Take Action on Financial Transaction Taxes

A global alliance of 183 organisations from 42 countries has just released the following open letter to the G20 Heads of State and Government meeting to their fifth summit later this week in Seoul:

International Civil Society Statement to the G-20 Leaders Summit in Seoul

We, the undersigned 183 civil society organisations from 42 countries collectively representing over 200 million people, urge G20 leaders to make concrete progress towards the introduction of an internationally coordinated financial transactions tax (FTT) at the upcoming summit in Seoul.

Our organizations have long advocated that such taxes are a practical way to generate revenues needed to fill domestic and international financing gaps, discourage the type of short-term financial speculation that has little social value but poses high risks to the economy and serve as a desperately-needed and sustainable source of financing for health and development. In recent months, the case for an FTT has been strengthened with new inputs from sometimes unexpected sources. Several developments have contributed to building a solid foundation for going beyond discussion of options to implementation:

IMF research commissioned by the G-20 recognizes technical feasibility of FTTs
At the 2009 Summit in Pittsburgh, the G20 charged the International Monetary Fund (IMF) with preparing a report on various financial sector taxation options. While the IMF report delivered in June 2010 favoured an alternative approach (devoting only 3 of its 74 pages to FTTs), it did confirm the administrative feasibility of this option. A follow-up IMF technical paper has pointed out that most G20 countries have already implemented some form of transaction tax, and offered useful information on how to design the taxes to make them most effective. The paper also confirmed that such taxes can generate substantial revenues.

A report by the ‘Leading Group on Innovative Financing’ endorses one form of FTT
In July 2010, a group of international finance experts confirmed the feasibility of taxing financial transactions, with a view to financing international commitments for health and development made to developing countries. The experts had been commissioned to produce a feasibility study for a group of 12 governments -- Germany, UK, Japan, France, Belgium, Korea, Norway, Senegal, Brazil, Spain, Austria and Chile. These countries are part of the Leading Group on Innovative Financing for Development, comprised of 60 nations (including 75% of G20 member states). In their report, the experts point to foreign exchange transactions between banks as the easiest option for collecting a solidarity tax. They calculated that an extremely small tax of only 0.005% on such transactions would generate $33bn per year.

European Union and UN High-level Advisory Group on Climate Change Financing consider FTT
Meanwhile, the European Commission is considering the possibility of introducing an FTT at European level, following the support shown by the European Parliament earlier this year. A European Commission report notes that, depending on the rate and coverage, an FTT could potentially generate more than $1 trillion per year. The FTT is also being addressed by a workstream of the High Level Advisory Group of the UN Secretary General on Climate Change Financing (AGF). The Group, made up of heads of state, high-level officials from ministries and central banks, and other finance experts, is expected to release a report on climate finance options this week.

The need for FTTs has grown more urgent

FTTs are one of the few available options that could generate the enormous financial resources required to pay for the continuing costs of the global financial and economic crisis, including reducing the unacceptably high rate of job loss, and to achieve key development, health, education and climate change objectives in developing countries. Several hundred billion dollars worth of untapped revenue could potentially be harnessed. This new financing is required in addition to official development assistance in order to meet the Millennium Development Goals. Alternative financial sector taxes as proposed by the IMF would fall far short of the volume required. At the same time, the potential benefit of FTTs to enhance market stability is of equal interest as the world has become more aware of the dangers posed by automated high-frequency trading that increasingly predominates in financial markets. Even extremely low transactions tax rates would reduce the incentive for such speculative activities.

At the recent UN Summit on Millennium Development Goals, French President Nicolas Sarkozy made a very welcome vow to press for an international agreement on FTTs during his term as G-20 chair in 2011. There is, however, no reason to delay. We call for G-20 action on this critical issue to begin in Seoul.

The complete list of signatories can be accessed >>> here.

Tuesday, 9 November 2010

South Centre: The missing issues on the G20 agenda

The hopes of a rapid global economy recovery have recently been dashed by renewed turmoil in the world economy. The sovereign debt problems in several European countries, the gyrations in currency exchange rates, volatility in capital flows, and the war of words among major economies over “trade sanctions” and “competitive devaluations” are some of the many troubling signs of a new crisis that may be worse than the 2008-9 crisis triggered by the US sub-prime mortgage problem.

A new South Centre report, Why the IMF and the International Monetary System Need More than Cosmetic Reform, authored by the Centre's Special Economic Advisor, Yilmaz Akyüz argues that these recent problems reflect the lack of international mechanisms to prevent financial crises that have global repercussions and that threaten to spill over to the trading and economic systems. The report points out that:
* There are no effective rules and regulations to bring inherently unstable international financial market and capital flows under control.
* There is no multilateral discipline over misguided monetary, financial and exchange rate policies in systemically important countries despite their strong adverse international spillovers.
* National and international policy makers are preoccupied primarily with resolving crises by supporting those who are responsible for these crises, rather than introducing institutional arrangements to reduce the likelihood of their recurrence. Through such interventions, they are creating more problems than they are solving, and indeed sowing the seeds for future difficulties.

The South Centre report is being issued on the eve of the G20 Summit 10-12 November in Seoul. The G20 has established itself as the forum to deal with the financial crisis. According to the report, however, the G20 and the IMF agendas do not include some of the most important issues that need to be addressed to deal adequately with the financial crisis or prevent future crises. The missing issues include enforceable exchange rate and adjustment obligations, orderly sovereign debt workout mechanisms and the reform of the international reserves system.

Developing countries are especially vulnerable to the effects of the global financial problems, and they also have limited capacity to respond to shocks. They thus have a special interest in the reform of the international financial and monetary system, including the IMF. The reforms should lead to the establishment of an orderly and equitable international monetary and financial system. However, if this does not materialise, developing countries should find ways and means of protecting themselves and looking after their interests through regional mechanisms. These include arrangements regarding regional currencies and exchange rate mechanisms, intra-regional provision of international liquidity, policy surveillance and regulation of financial markets and capital flows.

Global solutions are better than such regional arrangements and developing countries should strive to realise them. But if major economic powers do not cooperate in building the new global system, it is definitely better to have the regional arrangements than to have a “non-system” in which the developing countries continue to be the victims of global financial crises.

Please find the report >>> here.

Thursday, 4 November 2010

ITUC calls on World Bank to complete overhaul of Doing Business

The 2011 edition of the World Bank’s Doing Business report includes a welcome first step for revising the report’s past practice of encouraging countries to dismantle labour and social regulations, which it did by granting its best ratings to countries with the lowest levels of workers’ protection. Doing Business 2011 has removed the “Employing Workers Indicator” (EWI) from the “Ease of Doing Business Index” and country rankings, although the basic data from which the EWI is calculated remains in an annex to the report. The Bank has furthermore, according to Doing Business 2011, “instructed staff not to use the [EWI] indicators as a basis for providing policy advice or evaluating country development programs or assistance strategies”.

ITUC general secretary Sharan Burrow invited the Bank to complete the process of overhauling Doing Business. “By considering labour regulations only from the view of whether they are deemed to be good for business, the World Bank has caused enormous damage to workers by advising borrowing countries through its highest-circulation publication that labour standards should be dispensed with,” said Burrow. “The global economic crisis has made clear that well-designed and enforced labour regulations and social protection are essential for securing employment and for providing adequate income for those who lose their jobs. The Bank should carry through on the positive step it has made in Doing Business 2011 by removing the EWI from all future editions and, instead, adopting policies on labour issues that recognise and reward the importance of adequate labour regulations and comprehensive social protection.”

The ITUC noted that even though Doing Business’s annex on “Employing Workers” speaks positively of countries that provide financial support for reduced working time programmes designed to prevent lay-offs or that have increased unemployment benefits, the report penalizes countries that require any sort of contribution by employers for unemployment insurance, workmen’s compensation, old-age pensions, maternity leave or other social protection programmes. Through its “Paying Taxes Indicator”, which has not been modified in Doing Business 2011, the Bank continues to advocate that business should be exempt from all forms of taxation, whether it be corporate income tax, property tax, social security contributions, property tax, capital gains tax or financial transactions tax. Doing Business 2011’s top ten best performers for their very low total tax rate on business include Timor Leste, Vanuatu, Maldives, Macedonia, United Arab Emirates, Saudi Arabia and Georgia.