Inequality overshadows WTO Ministerial

The international trade union movement has warned of growing social unrest and increased social hardship if trade liberalization continues against the backdrop of harsh unemployment and austerity measures. Ten years since the Doha Round of trade talks opened in 2001, the global economy has witnessed a food crisis, a climate crisis, a financial crisis and a severe jobs crisis. “The existence of the WTO has done nothing to prevent trade imbalances growing to unsustainable levels accompanied by dangerously widening income inequality,” said Sharan Burrow, General-Secretary of the International Trade Union Confederation (ITUC).

The deal on the table at the 8th meeting of Trade Ministers in Geneva 15 -17 December 2011 will not help trade to drive economic recovery, employment creation and genuine economic development, and ultimately puts the multilateral trading system at risk. The trade union delegation attending the talks will be monitoring a number of issues up for negotiation by Ministers and will aim to maintain policy space and to keep new issues such as the Singapore issues (investment, competition policy and government procurement) out of the WTO negotiations. According to ITUC, the talks should provide a package for Least Developed Countries to have duty free and quota free market access for all products, the elimination of cotton subsidies and a waiver for commitments in services.

The ITUC is calling for an evaluation of the Doha round outcomes to assess its impact on providing decent work, improved living standards and diversifying the economies of developing countries. “Without measuring the impact on developing countries and workers, it makes little sense to move forward with trade liberalization. The developmental mandate of the Doha agenda must be reaffirmed if the round is to be concluded.” said Sharan Burrow.

* Find the Global Union Statement of Priorities for the 8th WTO Ministerial Conference >>> here.

Eurodad: ECAs push poor country debt and shrinks aid budgets

Campaigners are demanding tighter controls on the activities of so-called export credit agencies (ECAs) after a new report lifts the lid on how the shadowy government bodies force vulnerable developing nations ever-deeper into debt, while allowing European governments to count their own financial gain as development aid. “Almost 80% of developing country debt to European governments comes from loans that supported European commercial interest and not development,” says Núria Molina, director of the European Network on Debt and Development (Eurodad) which drew up the new report, Exporting goods or exporting debts? Export Credit Agencies and the roots of developing country debt. “They are undermining aid efforts, and keeping countries mired in poverty,” adds Molina.

ECAs are public bodies that provide credit guarantees to companies and financial institutions to ease exports from the country in which they are based. This allows exporting companies to invest in riskier projects than what would normally be the case, often in developing countries. Export credits to developing countries almost tripled in 2008 as compared to pre-crisis levels, showing the need to tighten up on controls. UN figures show that European government ECAs supported more than $1trillion in trade and investment in 2007. The figure increased by 35% in 2008-2009 as an effort by European governments to save their export industries at a time of dwindling global markets.

Export credits greatly reduce the amount of aid to developing countries, as when most European governments cancel developing country debt they charge that amount from the aid budget. According to the study, 85% of developing country debt cancelled by European governments and charged from the aid budget in 2005-2009 was actually debt created from export credits, which are in most cases driven by commercial, not development objectives. Counting cancellation of export credit debt as aid monies draws monies away from real aid, making fewer resources available for the world’s poor. The activities of these public bodies are hardly controlled at all, so the projects they support have often caused human rights violations and environmental damage in poor countries.

European Union regulations agreed in September, although welcome, don’t go far enough. Based on its Responsible Finance Charter, Eurodad is proposing concrete measures for governments to clean up their export credit operations including:
* Ensuring that ECAs and the projects they back are opened up to public scrutiny;
* Ending the use of aid money to cancel export credit debt;
* Introducing binding regulations to stop export credits being peddled aggressively to developing countries to the benefit of companies in industrialised nations.

Durban: Turning Green Climate Fund into Greedy Corporate Fund?

Today 163 civil society organisations from 39 countries released a letter exposing an attempt led by the US, the UK and Japan to turn the Green Climate Fund into a “Greedy Corporate Fund” at UN climate talks in South Africa. The Green Climate Fund was created to support people in developing countries – people who are the most affected by the climate crisis but are the least responsible for it. But at the climate negotiations this week, developed countries are trying to allow multinational corporations and financiers to directly access GCF financing. This means companies could bypass developing country governments and their national climate strategies to get to public money.

“Turning the Green Climate Fund into a Greedy Corporate Fund would be
shameful, yet this is what is being attempted at the Durban climate
talks,” said Meena Raman from Third World Network. “Led by the US and the UK on behalf of Wall Street and The City, this attempt to hijack developing countries’ funding is outrageous. Communities need this money to address climate change and to finance their own development – without repeating the same mistakes that the rich countries have made,” said Karen Orenstein from Friends of the Earth US. “The role of private investment in financing climate activities must be decided at the national and sub-national levels in line with countries’ priorities, not corporate bottom lines. The move to allow the private sector to go directly to the Green Climate Fund for money undermines the possibility of a democratic, participatory process for meeting the needs of communities struggling to fight climate change,” said Lidy Nacpil of Jubilee South Asia/Pacific Movement on Debt and Development.

Few adaptation measures in developing countries will be attractive to the private sector, as they will not generate revenue. Some key mitigation programs may also not be financially lucrative. Groups also warned against closed door negotiations on the Green Climate Fund by South Africa, the US, and other developed countries. “Whatever happens in Durban must be fully transparent. We are deeply concerned by reports that South Africa is informally consulting behind closed doors on the Green Climate Fund decision,” said Bobby Peek of groundwork / Friends of the Earth South Africa. “This will greatly undermine the legitimacy, and ultimately the effectiveness, of the Green Climate Fund.”

The concerns expressed in the letter come on top of the long-held
rejection by many in civil society of any role for the World Bank in the
Green Climate Fund.

Civil Society Reflection Group: Statement to Rio+20

“We have exceeded the ecological limits and ignore the planetary boundaries. With the climate change threat we are already living on borrowed time. However, we refuse to cut back on emissions and allocate the scarce resources to those who have not yet benefitted from their exploitation,” warned the Civil Society Reflection Group on Global Development Perspectives in its statement for the United Nations Conference on Sustainable Development (Rio+2012) to be held next June. “We live in a world where the top 20% of the population enjoy more than 70% of total income and those in the bottom quintile get only 2% of global income” and where “50% of carbon emissions are generated by 13% of the population,” adds the document of the Reflection Group, created a year ago by an alliance of civil society groups, networks and foundations to provide specific policy recommendations for Rio+2012, among other tasks.

The statements noted that “the ideals and principles” set in the Earth Summit held in Rio de Janeiro in 1992 “have been overshadowed, as implementation has mostly not occurred”. “Similarly, a host of international commitments to human rights and gender justice have not been fulfilled. World product per capita has more than doubled in the last two decades, yet with widening disparities. Globalization has yielded millions of poor quality jobs. Financial and commodity speculation has undercut food security and turned millions of hectares of land away from growing food and into unsustainable uses. Little has been done to change patterns of production and consumption that pollute, erode biodiversity and lead inexorably to climate change,” adds the Group, which members are Alejandro Chanona, Barbara Adams, Beryl d'Almeida, Chee Yoke Ling, Ernst Ulrich von Weizsäcker, Danuta Sacher, Filomeno Sta. Ana III, George Chira, Gigi Francisco, Henning Melber, Hubert Schillinger, Jens Martens, Jorge Ishizawa, Karma Ura, Roberto Bissio, Vicky Tauli-Corpuz, and Yao Graham.

The failure, said the group, happened because “states have reneged on their democratic values and governments have become less accountable to the people”, and because “universal norms and standards are being ignored or side-stepped by new rules that favour markets”. “Risks are being borne by those who had no role in taking them while a new classification of ‘too-big-to-fail’ has re-ordered the distribution of public resources. We are confronted with a hierarchy of rights with those protecting human and eco systems relegated to the lowest rungs Polluter pays principle. The simple message of this principle is that the costs of pollution have to be borne by those who cause it,” explained the Group.

The Reflection Group proposal remarked eight core principles: the “precautionary principle”, the “do not harm principle”, the “subsidiarity principle”, the “principle of free, prior and informed consent”, the “principle of peaceful dispute settlement”, and the principles of freedom, equality, diversity and respect for nature. “All governments agreed to these principles in general”, but “they have mostly failed to translate them into enforceable obligations and specific policies”.

The statement proposes to fix fiscal policies for “the four R’s”: “the raising of revenues in order to provide the necessary public goods and services; the redistribution of income and wealth from the richer to poorer sections of society; the repricing of goods and services in order to internalize ecological and social costs and discourage undesirable behaviour; and the justification for citizens to demand democratic representation and accountability.” It also suggested, in the area of public expenses, the abolition of harmful subsidies, the strengthening of public spending to stimulate sustainable production and consumption, cutting military spending, setting an universal social protection floor for all, the universal access to public healthcare, guaranteed state allowances for every child and support for unemployed and underemployed people, an universal basic pension provided by the state for persons in old age or with disabilities, the public provision of essential services, the strengthening participatory, gender and human rights budgeting initiative, the use of public procurement policies to promote sustainability and the use of sovereign wealth funds to finance sustainable investment.

The document also proposes a new global system of financial burden sharing beyond ODA and a compensation scheme to pay off climate debt. The Reflection Group finally suggested to “re-arrange and re-configure” international and national institutions in charge of the sustainable development, as the creation of a “Sustainable Development Council”, international ombudsperson (one for “future generations”) and special rapporteurs, a “Sherpa for Sustainability”, parliamentary committees on policy coherence on sustainability and upgrading the Committee on Development Policy.

The preliminary statement (full text >>> here) produced by the Civil Society Reflection Group is a “work in progress” and has not been fully discussed by all its members. Not every recommendation in the statement was explicitly endorsed by each of its members, but the text captures the ideas and the fundamental consensus formulated in previous meetings. A more comprehensive final report of the Group will be published in spring 2012.

Gates Report highlights role of innovation in expanding development resources

In a report about financing for development delivered today at the G20 Summit, Bill Gates, co-chair of the Bill & Melinda Gates Foundation, urged leaders to commit to increasing the pool of resources dedicated to development or risk causing irreparable damage to the livelihoods of millions of the poorest people. Underlying these recommendations is the idea that innovation can multiply the impact of the resources devoted to development. Gates’ report, Innovation with Impact: Financing 21st Century Development, was presented to heads of State and Governments in Cannes, France, at the request of G20 chairman French President Nicolas Sarkozy.

In his report, Gates stresses the need for rich countries to continue their generosity and meet their foreign aid commitments – which are generally between one and two percent of government’s budgets – while ensuring that aid is spent effectively in areas such as health and agriculture. Beyond rich countries’ responsibility, Gates says rapidly emerging economies represented in the G20 also play a growing role in driving progress in development. In his report, he proposes ideas for enabling speedier transfer of the innovations these countries are pioneering – particularly in the areas of health and agriculture, such as vaccines and seeds – to transform the lives of poor people in Africa and beyond. “I am particularly excited about the possibility of ‘triangular partnerships’ among rapidly growing countries, traditional donors, and poor countries, because they exploit the comparative advantages of many different countries,” Gates says in his report.

“Ultimately, developing countries’ domestic resources will be the largest source of funds for development,” according to Gates, who recommends measures the G20 could take to help poor countries’ maximize their own resources to reduce poverty. Ideas include directing foreign aid at helping developing countries better collect tax revenue, which could raise approximately $20bn a year at today’s GDP, and increasing transparency requirements for mining and oil companies. Gates calls on poor countries to focus resources on priorities which directly benefit poor people, like health and agriculture, and urged African leaders to meet the targets they had set in the Abuja Declaration to devote at least 15% of their budgets to improving health, and in the Maputo Declaration, which calls for devoting 10% of budgets on agriculture.

The report to G20 leaders also calls for adopting innovative ways to mobilize private sector finance and encourage private sector growth as a way to raise funds for development. Recommendations include making sovereign wealth funds available for infrastructure investments in poor countries, continuing to lower transaction costs of remittances by diaspora communities, and using pull mechanisms in agriculture to encourage innovation in agricultural technologies.

Gates also uses the report to identify new streams of funding, by directing a percentage of funds from a Financial Transaction Tax (FTT), Solidarity Tobacco Contribution, and an aviation and bunker fuel tax, to fund development and climate change. Concerning the FTT the report says: “Some modelling suggests that even a small tax of ten basis points on equities and two basis points on bonds would yields about $48bn on a G20-wide basis, or $9bn if it were confined to larger European economies. Other FTT proposals offer substantially larger estimates, in the S100bn to $250bn range, especially if derivatives are included.”

World of Work Report 2011: ILO warns of a new and deeper jobs recession

In a grim analysis issued on the eve of the G20 leaders summit, the International Labour Organization (ILO) says the global economy is on the verge of a new and deeper jobs recession that will further delay the global economic recovery and may ignite more social unrest in scores of countries. The new World of Work Report 2011: Making markets work for jobs says a stalled global economic recovery has begun to dramatically affect labour markets. On current trends, it will take at least five years to return employment in advanced economies to pre-crisis levels, one year later than projected in last year’s report.

Noting that the current labour market is already within the confines of the usual six-month lag between an economic slowdown and its impact on employment, the report indicates that 80 million jobs need to be created over the next two years to return to pre-crisis employment rates. However, the recent slowdown in growth suggests that the world economy is likely to create only half of the jobs needed.

The report also features a new “social unrest” index that shows levels of discontent over the lack of jobs and anger over perceptions that the burden of the crisis is not being shared fairly. It notes that in over 45 of the 118 countries examined, the risk of social unrest is rising. This is especially the case in advanced economies, notably the EU, the Arab region and to a lesser extent Asia. By contrast, there is a stagnant or lower risk of social unrest in Sub-Saharan Africa and Latin America.

The study shows that nearly two-thirds of advanced economies and half of emerging and developing economies with recent available data are once again experiencing a slowdown in employment. This comes on top of an already precarious employment situation in which global unemployment is at its highest point ever, surpassing 200 million worldwide.

The report cites three reasons why the ongoing economic slowdown may have a particularly strong impact on the employment panorama: first, compared to the start of the crisis, enterprises are now in a weaker position to retain workers; second, as pressure to adopt fiscal austerity measures mount, governments are less inclined to maintain or adopt new job- and income-support programmes; and third, countries are left to act in isolation due to lack of international policy coordination.

G20 leaders must put people before bankers

G20 leaders must meet the demands of working people at the G20 summit in Cannes on 3-4 November 2011 and deliver on their promises to reform the financial sector. As the economic and financial crisis enters its most dangerous phase so far, G20 leaders must deliver a co-ordinated response which puts people before bankers, warns the international trade union movement. Meeting alongside the G20, the ‘Labour 20’ Summit in Cannes will bring together elected trade union leaders from G20 countries for crisis talks on the economy and on attacks on labour rights.

International Trade Union Confederation General Secretary Sharan Burrow said unemployment is the largest single threat to recovery and has reached record levels with over 200 million people out of work and many more working in insecure jobs. Meanwhile, the financial system continues to be bailed out by governments who fail to take the necessary action to reform their destabilising and highly risky lending practices. “Public pressure for governments to act in the interests of people and not the bankers will grow and grow. People are angry. The international trade union movement will be in Cannes to demand action and reform to respond to that justified anger,” said Burrow.

Global Unions are calling on G20 leaders to adopt a four-point plan for jobs and recovery that stems the jobs crisis and re-shapes the world economy for working people:

* Establish a co-ordinated jobs target and immediate measures of job-intensive infrastructure programmes, green jobs investment and labour market programmes to raise skills;
* Reduce income inequality and strengthen workers’ rights;
* Put in place a social protection floor;
* Reform the financial sector and establish a financial transactions tax.

The proposals for recovery plans from the L20 will be delivered to G20 host President Nicolas Sarkozy and to other G20 Heads of State and Government, and must be taken into account in the final G20 conclusions. The statement of global unions to the G20 is >>> here.

No land investments without consent of local communities, CIDSE says

This week, the UN Committee on Food Security (CFS) held its 37th session in Rome, which looked at food price volatility, gender, food security and nutrition and agricultural investment. The session was meant to open with the adoption of new voluntary guidelines on land tenure, but governments were unable to finalise negotiations. The international alliance of Catholic development agencies CIDSE welcomes the efforts put into the talks so far, while urging governments to finalise negotiations as soon as possible and move towards putting the guidelines in practice. The Voluntary Guidelines on the Responsible Governance of Tenure of Land, Fisheries and Forests are meant to protect land tenure of small scale food producers, urgently needed in view of land grabbing which has dramatically increased in recent years.

CIDSE and other civil society organisations who participated in the negotiations in Rome highlight the progress made. Nearly three quarters of the text of the Voluntary Guidelines were successfully negotiated, including critical issues such as the recognition and protection of customary tenure, the tenure of forests and fisheries and the protection of rights defenders responding to the critical issue of their criminalisation. Several controversial issues, such as those relating to investments in agriculture remain open, however. According to CIDSE, “The land belongs to those who work it. Acknowledging the right of small farmers and local communities to cultivate their own land is an important step towards food security, as their right to food should always have priority over land investments.”

The issue of land governance is of growing importance. As much as 227 million hectares of land in developing countries (about the size of Western Europe) has been sold or leased since 2001. The bulk of these have taken place in the last 2 years, an overwhelming majority in Africa. The increase in land grabbing is linked to the 2007-2008 food price crisis which has triggered the interest of investors and governments in agriculture because of its profit making potential. The demand for food, timber, carbon sequestration and mineral exploration, as well as agro-fuels directives in developed countries, are key drivers of land grabbing. Investors include national elites, foreign companies and international governments, including oil rich states and China looking to secure food for their populations.

New CAP proposals exclude development obligations

The European Commission presented a draft proposal for a new Common Agriculture Policy (CAP) on 10 October for the period after 2013. The main aims of the draft are “to strengthen the competitiveness, sustainability and permanence of agriculture throughout the EU”, reads an official EU press release. Ten key points are stressed in this respect, including better targeting of income support, developing crisis management tools, greening agricultural production, stimulating rural employment and channelling additional funding towards research and innovation.

However, the Commission proposal does not mention Policy Coherence for Development (PCD). “Until now in the debates on the reform process, all EU institutions have made reference to take into account the principle that the CAP must seek to reduce its overseas impact through greater Policy Coherence for Development. Yet the Commission has not translated this into concrete measures in its proposals”, comments Oliver Consolo, Director of the Concord network.

Moreover, in a public hearing of the EP Development Committee (DEVE) taking place before the publication of the proposal, Agriculture Commissioner Dacian Cioloş maintained that food security is a global concern that needs to be taken into account in all policies. However, “the widespread support from the European Parliament (EP) to include global responsibility for food security in the CAP reform to improve the policies’ impact on developing countries and the world’s poor has been ignored”, reads the Concord press release.

Calling on the EP and the Council to design a CAP mechanism that complies with the Lisbon Treaty provision of PCD, the European Development NGOs outlined a series of recommendations for this purpose, mainly for the creation of grievance and monitoring mechanisms. Farmer organisation in developing countries should be granted a space to be heard and even an EU Ombudsman for PCD should be instituted. In addition, a CAP Impact Monitoring System should “include an indicator specific to the objectives of monitoring the consistency between the CAP and its development and trade policies”, proposes Concord. In addition, unfair trading practices such as export subsidies should be phased out, yet the new reform proposal mentions no commitment to completely stop this practice.

The present draft opens the ordinary legislative proposal in which the three institutions — Commission, Council and European Parliament — will decide on the future of the European Common Agricultural Policy after 2013.

IMF-inspired labour laws in Romania: Hardship for workers

Major changes in Romania’s labour laws, introduced at the behest of the International Monetary Fund, the European Commission and the European Central Bank, have stripped away key protections for the country’s workforce and are denying large numbers of workers the right to union representation. More people are now forced to take a second job to make ends meet as labour market conditions become more precarious and incomes stagnate. According to the International Trade Union Confederation (ITUC), the IMF prescription in Romania contradicts the positive signals about workers’ rights from its Washington Headquarters. The government has ignored the advice of the ILO despite promising to respect international labour standards.

“A small number of employers and foreign investors are getting the benefits of the government’s lack of concern for the men and women who produce the goods and provide the services that keep the economy running,” said ITUC General Secretary Sharan Burrow. The new laws, which the Romania’s trade union movement are trying to have amended, exclude workers in the “liberal professions” from the right to union membership, and introduced a series of legal and procedural obstacles to remove workers’ collective bargaining rights. Government claims that the laws have reduced unemployment are not supported by its own statistics.

“Powerful corporate and financial interests are succeeding in turning back two decades of democratic progress for Romania’s workers. These laws are a threat to the country’s economic and social stability, yet the government is putting ideology ahead of the interests of its own citizens,” said Burrow.

Agenda for Change: In whose interest?

The European Commission is seeking to attach more conditions to development aid and restrict it to fewer recipients. This is the message that is set out in the Commission Communication entitled ‘Agenda for Change’ adopted on 13 October. The most prominent innovation is the concept of ‘differentiated partnerships’ by which different countries will be eligible for different forms of assistance mechanisms. The Agenda emphasizes good governance as a more important prerequisite for development assistance and also focuses on the concept of inclusive growth — with development effects reaching those most in need.

This however seems to be counter to the goal included in the Age for Change of reducing the recipient countries. Middle-income countries where a large segment of the population lives below the poverty line would no longer be recipients of development aid. “Unfortunately the most important change in Piebalgs’ new agenda is that aid to the world’s poorest is being cut, diverting funds towards energy and private sector investments which are in the interest of the EU only, not the developing world,” says Concord Director, Olivier Consolo. Concord also highlights that poverty has not disappeared from countries now classified as middle income and these poor should not face reductions because of these categorizations.

Head of Oxfam International’s EU Office, Natalia Alonso, similarly points towards the negative implications this will have on the poor living in middle-income countries. Moreover, she calls attention to the limits of the private sector in its role in development. “We cannot sit on our hands and assume that the benefits of the private sector will simply trickle down and reach those most in need”, says Alonso. Concord also mentions that although the private sector can be beneficial for development, Official Development Assistance (ODA) should not be used “to guarantee private sector risk or to substitute public services.”

The Agenda for Change is accompanied by a paper on budget support outlining some of the implications it has on this modality of aid delivery. Oxfam International’s EU Office welcomes the EU determination to continue to use this system for poverty reduction objectives, but also warns against a politicization of aid that can result from more requirements. “We are surprised that the Commission suggests attaching more political conditions to recipient countries. Budget support must remain a poverty-reduction tool – not a political one”, stresses Natalia Alonso.

Actions in 70 countries to mark World Day for Decent Work

With unprecedented public demand for decent jobs, and pressure mounting on banks and the finance industry, the 2011 World Day for Decent Work today features over 400 actions across more than 70 countries, according to the International Trade Union Confederation (ITUC). More than 200 million people worldwide are unemployed according to official figures, and hundreds of millions more lack decent, secure jobs. “People’s rights at work are under attack as never before, and governments lack the vision and commitment to fix a global economy which is failing working people,” said ITUC General Secretary Sharan Burrow.

Actions on the World Day for Decent Work this year aim at tackling “precarious work” – the deepening trend towards casual, temporary and insecure jobs, often with little legal protection. Young people and women in the workforce are most likely to be affected, with their incomes and earning potential suffering as a result. Decent work – rights at work, job creation policies, social protection and social dialogue involving unions and employers – is seen crucial to turning the global economy around and generating the tax revenues for governments to tackle the fiscal situation.

“With the G20 leaders soon to meet in France, we are looking to them to take the steps needed and to stop following the failed policies which put the vested interests of banks and finance ahead of people’s lives and livelihoods,” said Burrow, who is addressing a special conference in Amsterdam today to mark the World Day. Today’s events include some 50 activities across Japan, with marches, conferences and youth meetings in several African countries and meetings and mobilisations throughout Russia and Ukraine. A series of activities in Latin America includes initiatives by trade unions in Peru and Chile to get official government recognition of the World Day for Decent Work.

EU FTT plan is a historic opportunity

Today, European Commission President José Manuel Barroso announced before the European Parliament that the Commission has adopted a proposal to set up a Financial Transaction Tax (FTT) in the European Union. Civil society organisation such as the international alliance of Catholic development agencies CIDSE call on the Finance Ministers of all EU member states to endorse the plan when they meet on 5 October 2011, making sure sufficient money is earmarked for the fight against poverty and climate change. Bernd Nilles, Secretary General of CIDSE, qualified the initiative as “an important victory for justice and solidarity” being in sight.

The Directive would establish an EU-wide tax applied on a broad range of financial transactions ranging from stocks and shares to futures and derivatives in organised markets and over-the-counter trading. Unfortunately, the Directive remains vague about what FTT revenues should be spent on. CIDSE reckons it is inconceivable that they would simply go to replenish the EU budget or national coffers.

A closer look to the draft version of the Directive reveals a mixed picture. Positive elements are:

* Establishment of an EU-wide tax applied on a broad range of financial transactions ranging from stocks and shares to futures and derivatives in organised markets and over-the-counter trading.
* It will be difficult to evade the tax, as the FTT will be applied on the basis of residence. This means that one of the parties to the transaction should be authorised to act, or be registered, or reside, or have a branch, in a member state for it to be taxable.
* The Directive could also contribute to fiscal transparency by taxing transfers even between daughter concerns within the same mother company. Such transactions are notorious for being non-transparent and under-valued. Taxes on such transactions will be calculated on the basis of the market price, making it more difficult for parties to ‘fix’ the value of a transaction to suit their own purpose.
* EU member states must implement an FTT by 2014, rather than the earlier mentioned implementation by 2018 at the latest.

Negative aspects include:

* There is no clear stipulation that the revenues of the FTT should be used to tackle poverty and climate change. While the Directive does acknowledge that the call for the FTT also stems from the desire to generate additional revenue among others for ‘specific policy purposes,’ it merely states that the tax would create a new revenue stream for the EU and its Member States.
* Trading in currency and commodities are exempt from the FTT which could reduce its revenue raising potential and have unforeseen implications on these markets.
* The Directive also recommends a low tax rate for derivatives to reduce the risk of tax avoidance, evasion and abuse. Yet, many other measures could be put in place to prevent tax evasion, especially with regards to the issue of where a party to the transaction is established.

Trade unions praise G20 Labour Ministers

The international trade union movement said Labour Ministers have set the standard for Finance Ministers and Leaders to follow as they prioritized employment and endorsed the social protection floor and rights for workers after their two day meeting in Paris, 26-27 September. ITUC General Secretary Sharan Burrow said that Labour Ministers have shown themselves to be champions of workers and the real economy where workers and employers are the actors, not bankers and rating agencies. Now the G20 Leaders and Finance Ministers must follow suit. The results of the meeting can be found in a Communiqué and the Conclusions endorsed by the Ministers.

“G20 Labour ministers have shown their Leaders the way to go. Now the Leaders must send the right instructions to their Finance Ministers, so that spending for jobs is increased while the G20 finally bring the financial markets under control as they promised to do when the crisis first broke three years ago. Complacency by G20 governments has meant no regulation of the financial sector and no action to meet the jobs crisis. We know that only workers will drive the world out of the crisis, not the bankers or the ratings agencies,” said Sharan Burrow.

The union movement also welcomed the creation of a task force on employment by the G20 Labour Ministers, and called for the group to put in place plans to build the green economy, tackle the severe crisis in youth employment, formalise informal economic activity and create sustainable jobs and businesses. OECD-TUAC General Secretary John Evans said Labour Minsters have set in place the basis for serious follow up to their work by establishing a task force on employment to be co-chaired by France and Mexico. “Its work needs to cover all the main challenges to employment at this time, from youth unemployment to the national employment targets that the G20 needs to establish. The union movement will devote maximum priority to working with the task force to help devise responses to the record levels of global unemployment,” said John Evans.

Trade unions further welcomed the Labour Ministers' endorsement of a social protection floor based on the ILO's four-part definition and workers’ rights. “When over 75 % of the world’s workers have inadequate social protection this is an economic as well as a social disaster and no more than now in times of great transitions. Developed countries built their social security systems when they were poor and coming out of the Great Depression of the 30s. These great social contracts became economic foundations as they work as economic stabilisers. When the finance ministers meet in Paris in October, they need to look at coordinated action for investment in jobs and social protection and to recognize the economic role of collective bargaining to reduce income inequality,” said Sharan Burrow.

The G20 Labour Ministers met following a tripartite dialogue with employers and unions. “A strong social dialogue with employers and unions laid the foundation for the G20 Labour Leaders discussion, which allowed workers to be put at the centre of recovery plans. Finance Ministers and Leaders need to take heed, and hear the voices of workers not just the bankers,” said Burrow.

G20 Labour Ministers in Paris: Addressing unemployment can boost economy

The international trade union movement called on the G20 Employment and Labour Ministers meeting in Paris on 26-27 September to step up to the plate and ensure that the G20 leaders tackle the jobs crisis as the central priority. Sharan Burrow, General Secretary, ITUC said time is running out, the G20 Finance Ministers meeting in Washington failed workers, now it up to the Labour Ministers to stand up for working people. “With unemployment come worsening social problems that will cause tension and strikes.”

According to Burrow, by addressing unemployment and putting people back to work politicians can boost the economy. “If boosting the economy is the problem G20 leaders are most worried about, jobs and social protection is the solution,” she said. John Evans, General Secretary TUAC said targeted investment in social spending such as health, infrastructure and green jobs will create jobs in the real economy. “The G20 promised to put quality employment at the heart of the recovery in their response to the financial crisis in 2008 - 2009, but their premature withdrawal of support for jobs has meant three years later we see a jobs emergency,” said Evans.

Labour and Employment Ministers are meeting for the last time before the Finance Ministers in October and the Leaders meeting in November. The ITUC, TUAC and Global Unions are calling on G20 Employment and Labour Ministers to:

* Ensure that their leaders put employment as the central government priority;
* Insist that their governments develop alternative sources of finance to provide funding for employment policies including making domestic taxation more progressive, combating tax evasion and tax havens, introducing a Financial Transactions Tax (FTT) and, for the Eurozone, “Eurobonds”;
* Set up investment in infrastructure and “green” jobs, skills development and other active labour market policies;
* Launch a G20 “Youth Pact” guaranteeing young people quality employment or education and training;
* Establish a G20 Working Group on Employment and Social Protection.

>> To read Sharan Burrow's statement to the G20 Labour Ministers click here.

>> To read the Global Unions statement to the Paris Meeting click here.

>> To read a joint ILO-OECD report on unemployment in the G20 countries click here.

Trade Union to IFIs and G20: Put job creation on top of agenda

Global economy is facing a surge in unemployment as record numbers of people out of work risk tipping the world into a 1930s-style downturn. G20 Governments and the International Financial Institutions (IFIs) have failed to deliver on their promises to attack joblessness and instead have turned their attention to fiscal consolidation, as money markets increasingly dictate policy. The International Trade Union Confederation (ITUC) and its Global Unions partners are calling on the IMF, World Bank and G20 Governments to assume leadership and put a halt to destructive economic policies as austerity measures contribute to a renewed economic downturn.

In the twice-annual letter sent to Ministers of Finance and Executive Directors of the IMF and World Bank, ITUC General Secretary Sharan Burrow said austerity measures threaten to create several million more job losses, making it even more unlikely that deficit targets will be reached. "We need programmes to stimulate employment through infrastructure and climate related investments and public services. The IFIs have a responsibility to protect public services vital to societies' development, such as education and health care, and support the introduction of a social protection floor in all countries," explained Burrow.

The Global Unions warned that policies of fiscal consolidation should only be considered when economic growth is self-sustaining and unemployment is falling. Instead of cutbacks, the IMF should lead a co-ordinated effort to establish a financial transactions tax to pay for job recovery programmes and meet development and climate-finance commitments. Unless the IFIs move to regulate the global financial system and create a solid foundation for millions of workers, jobs will remain unstable and we will forever be on a crisis footing, according to the trade unions.

Global Unions also called on the IFIs to
* contribute efforts to achieve climate resilience and reduce greenhouse gas emissions;
* provide supplementary assistance for developing countries affected by the increasing cost of food;
* reverse policies that increase gender inequalities.

In a targeted message to the IMF, Global Unions called on it to stop promoting labour market de-regulation. The ILO's expertise on working conditions should guide policy instead. The World Bank needs to ensure consistency within the World Bank Group in support of core labour standards and to put in place effective safeguards to ensure compliance.

* The ITUC, Global Union Federations and TUAC statement to the 2011 Annual Meetings of the IMF and World Bank from 23-25 September in Washington DC can be downloaded >>> here.

http://www.ituc-csi.org/IMG/pdf/No_30_Global_Unions_Statement-2.pdf

Oil transparency must underpin negotiations over Libya

Transparency of Libya’s oil wealth must be a key priority of Thursday’s negotiations over the country’s future, said Global Witness today. The meeting, which is to be co-chaired by UK Prime Minister David Cameron and France’s President, Nicholas Sarkozy, could mark a crucial step along the path to future peace and prosperity in Libya. With the UN in the process of ‘unfreezing’ $1.5bn of Libyan funds to the NTC, the National Transition Council, and with companies queuing up to do business in Libya, how the NTC and their partners manage Libya’s finances will set a precedent for decades to come.

"With billions of dollars now being unfrozen and returned to Libyans, the meeting on Thursday offers a great opportunity to put in place practices that will ensure Libya's wealth is managed well for the long-term," said Brendan O’Donnell, Senior Campaigner at Global Witness. “As hosts of the meeting on Thursday, the UK and France must ensure that the transparent management of Libya’s oil wealth is at the top of the agenda.” Given Libya’s recent past, the management of public wealth will be crucial to public perceptions of the trustworthiness of the transitional government. An important first step would be to publish all Gaddafi’s oil contracts, setting a precedent of openness from the outset.

Concrete transparency provisions should be written into the transitional constitution to ensure the just exploitation of Libya's natural resources. These should require the public disclosure of how Libya manages its oil sector and disclosure of all revenues associated with it. Public finances including unfrozen assets, funds raised against frozen assets, resource trading and aid should be made open to public scrutiny. The terms of existing oil contracts should also be disclosed and details of agreements made by the NTC with governments and companies involving sovereign funds or the exchange of cash, crude oil or 'IOUs' secured against frozen assets should be made public and open to scrutiny by Libyan civil society and NGOs. This is particularly important as the UN, EU and others start to unfreeze and return billions of dollars of Libyan assets held overseas.

All funds should be released through a transparent mechanism such as a strengthened Temporary Finance Mechanism which was set-up by the NTC and the Libya Contact Group to manage aid flows. Governments should assist the NTC to track down and recover the funds that Gaddafi and his cronies looted from the state, and punish those banks that accepted this money. Prevent new oil concessions should be brokered until an elected government is in place. Any deals at this time could raise concerns within Libya that international support for the NTC is driven by a desire for access to oil rather than for the benefit of the Libyan people. The NTC is likely to have to honour Qaddafi-era contracts in order to get oil revenues flowing. But no new deals for the exploration or exploitation of oil fields should be considered until an elected government can review existing rules and laws to ensure robust transparency and accountability, The Libya contact group should use its influence to ensure that companies in their markets do not attempt to broker deals at this time.

Note:
* In July this year Global Witness published a leaked document detailing $65bn worth of investments held by the Libyan sovereign wealth fund, the Libyan Investment Authority (see www.globalwitness.org). According to the document HSBC, Société Générale and Goldman Sachs were among the key western bankers for Colonel Gaddafi’s regime.

Pastoralism - Part of the answer to drought in Africa

Mobile pastoralism is part of the solution to the drought in the Horn of Africa, according to the IUCN-hosted World Initiative for Sustainable Pastoralism (WISP). “This crisis was predictable and predicted,” says Pablo Manzano, who works with IUCN in its East and Southern Africa Regional Office and is Global Coordinator of WISP. “Irrigated crop farming and abandonment of pastoralism are being proposed as solutions in order to prevent future crises. But analyses on the subject often don’t take into account the ecological, economic and social factors that make pastoralism highly sustainable in drylands.”

In the current crisis in the Horn of Africa, media and economic experts are accusing pastoralism of being an ineffective livelihood that is periodically subjected to similar crises. Irrigated crop farming is proposed as a panacea but it deepens overuse of water resources and exacerbates conflicts. Livestock mobility is a much more rational land use, allowing the exploitation of patchy resources in drylands and is also an important tool for climate change adaptation.

Securing land tenure for pastoralist communities is needed to conserve resources so that droughts are countered and capital inputs are leveraged for development. Long-term strategies should be based on allowing people to move with their livestock across manmade boundaries, which have been key during other food crises. But even if the present crisis was predicted almost a year ago, no action was taken. Famines are more related to political turmoil than to the amount of rainfall, and they do not occur unless pastoral areas have other problems.

“Investments in drylands by government and international aid agencies have to be reoriented, taking into account local ecological conditions as well as local capacities,” adds Manzano. “Investments should include infrastructure to export pastoralist products, financial services for remote areas, high-quality adapted education, and skills for securing land rights, ideally adapting traditional management to modern legal frameworks. Most of these solutions have been adopted by pastoralists themselves in different parts of the world, often with no external help. It becomes clear from overwhelming evidence from around the world that to use investment to support pastoralism, rather than replacing it, is the only realistic solution.”

Multiannual Financial Framework of the EU

On 29 June, the European Commission (EC) outlined its priorities for the next budgetary period. Overall, the communication was welcomed by development NGOs due to the EC’s plans to increase external spending by €14bn from 2014 to 2020. The extra funding allocated to achieving the Millennium Development Goals (MDGs) and the EU’s commitments to eradicate poverty. The document also outlined a potential Financial Transaction Tax (FTT) to generate EU resources and named climate action as a core priority. There is also an underlying emphasis on the role of the private sector in development.

According to the EC communication, the Commission proposes that €70bn shall be allocated to external instruments, including the Development and Cooperation instrument (DCI) and the European Neighbourhood Instrument (ENPI). In order to support the implementation of the Joint Africa-EU Strategy, the EC proposes the introduction of a pan-African instrument under the DCI, which “will focus on poverty eradication and the achievement of the Millennium Development Goals (MDGs)”. For the European Development Fund (EDF), which is expected to remain outside of the MFF, it is proposed that an allocation of €30 billion be made.

CONCORD welcomed the Communication, stating “The European Commission has shown courage in difficult times. It’s putting its money where its mouth is on giving priority to development,” said Olivier Consolo, Director of CONCORD. The Communication also argued for poverty eradication to be rooted in the promotion of democracy, human rights and equality by respecting the UN charter and international law — an approach applauded by CONCORD.

The Communication draws on the current thinking that gives an increased orientation on the role played by the private sector, not only for the implementation of activities (on the grounds that this levers more resources for development) but also in designing instruments and strategies. The Communication calls for the creation of a new Partnership instrument with industrialised and emerging economies to support EU business benefit from global economic transformation. In addition, the EU calls for greater risk sharing and guarantees so as to promote private investment in innovative business and infrastructure in developing countries. Whilst this emphasis on the private sector is not wholly unexpected in times of fragile economic recovery, there is a need to ensure that the EU’s global approaches are consistent with the EU’s international development commitments.

An orientation debate on the MFF will take place 12 September and 15 November 2011 in meetings of the General Affairs Council. Following this, the proposal for regulatory financial instruments will be agreed before the end of the year.

Union call for emergency G20 Summit on financial markets

As the collapse in world share values threatens to trigger renewed downturn and with it a surge in unemployment, union leaders have called on G20 leaders to convene an emergency Summit to take the initiative to regulate the markets and avert economic collapse. "Three years ago G20 leaders said they would never let the financial markets dictate economic policy again - sadly their actions were woefully inadequate, and we are now experiencing the consequences", stated ITUC General Secretary Sharan Burrow. "It is not too late; an emergency G20 summit must do what they promised then, and introduce effective regulatory measures backed by employment targets for their policies."

"Stock markets have responded predictably like panicking sheep to the vacuum of leadership from the G20" criticised TUAC General Secretary John Evans. "The only acceptable way to exit from this crisis is to stimulate growth and job creation yet the governments are talking of further austerity. The private sector will never generate jobs as long as companies see no reason to anticipate higher demand for their products. Decisive pro-employment measures are urgently needed."

Deutsche Telekom Social Responsibility Report conceals US union-busting

Deutsche Telekom’s annual Corporate Social Responsibility Report, released earlier this month, hides the truth about the company’s aggressive anti-union campaign in its T-Mobile USA operations, undermining its claim to leadership in the field of social responsibility. The report mentions Deutsche Telekom’s commitment to ILO, OECD and UN Global Compact standards, but excludes any reference to the problems faced by its huge US workforce to which the company is trying to deny union membership. “Germany has been a powerful voice in favour of ILO standards at the G20 and elsewhere, but here we have a company in which the German government is the dominant shareholder, actively and deliberately violating these very rights in its overseas operations,” said ITUC General Secretary Sharan Burrow.

T-Mobile USA management, supported by the German parent company, have engaged specialised anti-union lawyers to block employee’s attempts to get representation from the Communication Workers of America. The website of one of the firms openly advertises “union avoidance” as one of its specialties, listing T-Mobile as a “client it represents on a regular basis”. The company has launched a series of legal tactics to delay and frustrate election proceedings at the US National Labour Relations Board, rather than simply accept the worker’s wish for union representation as is allowed under US law. Groups of workers, most recently in Connecticut and New York, have also been made to attend management-organised “captive audience” meetings in recent days to convince them to change their decision to join the union. Efforts by the CWA to engage with T-Mobile management to ease the anti-union campaign have to date not succeeded, nor have discussions with the German parent company.

“I was with the T-Mobile USA workers on Long Island when they signed their union cards,” said UNI General Secretary Philip Jennings. “If these workers were in Germany, they would have become members of the union automatically, but T-Mobile USA management has launched a brutal intimidation campaign to keep the union out of the workplace and to scare the workers out of fighting for their rights.” Union representation in the US is established only when a majority of workers in a specific workplace indicate that they want it. Companies can then voluntarily recognise the union, or insist on a secret ballot supervised by the National Labour Relations Board. The NLRB has recently announced plans to streamline procedures, to avoid precisely the kind of tactics being used by T-Mobile.

CONCORD welcomes EU budget increase for development

Proposals for the 2014 to 2020 EU budget released on 29 June by the European Commission, revealed a planned increase in external spending from €56 billion to €70 billion. CONCORD, the European NGO confederation for relief and development, welcomes the renewed commitment to the Millennium Development Goals. "The European Commission has shown courage in difficult times. It’s putting its money where its mouth is on giving priority to development," said Olivier Consolo, Director of CONCORD.

CONCORD welcomes in the EU budget:
* the proposal to include a clear commitment to the 0.7% GNI development aid targets along with a clear focus on poverty eradication based on democracy, human rights, equality and the respect for the UN Charter and international law.
* a Financial Transaction Tax (FTT) to generate own EU resources.
* climate action as a core priority.

CONCORD calls:
* on Member States to support the proposal on development funding levels and to take responsibility at national level to meet their MDG commitments.
* for the new budget not to be used as an opportunity to cut aid to emerging and middle income countries where three quarters of the world’s poor live. Poverty eradication and fighting inequalities must be central to development cooperation.
* funds raised with a FTT must go to tackle poverty and climate change.
* for climate financing to be additional to official development assistance (ODA) commitments already made.

Civil Society Organisations are widely recognized as having a central role in development cooperation which must be translated by including them in the EU Multiannual Financial Framework (MFF) negotiations. A CONCORD paper on the main MFF Priciples can be found >>> here.

FTT gains momentum in Europe

EuroStep – Ahead of a European Council meeting last week, European Commission (EC) President José Manuel Barroso announced to table a communication on the imposition of a financial transactions tax (FTT) in the EU after the summer break. Following heated debates among the different EU institutions that were divided on this issue, Barroso’s announcement has been regarded as a significant breakthrough by FTT advocates. The European Parliament (EP) has continually advocated for an EU level FTT to make the financial sector actively contribute to the recovery of the current financial and economic crisis. Previously the EC has only supported such a tax only on a global level, thus stalling progress on an EU level FTT. The split between the EC and EP became specifically apparent when EU Commissioner for Taxation and Customs Union Algirdas Šemeta called the EP ‘premature’ for actively supporting the introduction of an EU FTT.

Despite the EC’s continued efforts to advocate for the introduction of a FTT at global level, Šemeta has now announced “there [were] ways to implement a financial transaction tax in the EU while mitigating the main risks identified”, and that he would recommend this to other commissioners as well. Activists have argued that this change of opinion can largely be explained by the overwhelming support for an EU FTT in the public consultations and the pressure from trade unions and civil society movements.

With efforts to agree on a global tax in the group of 20 major economies (G20) being blocked due to significant opposition by some of the G20's members, the EU should take responsibility and move ahead with the introduction of the tax, Barroso said. “Our analysis shows that there is a strong case for deciding on a financial sector tax in the EU as a first step” whilst in parallel continuing “to work for a global agreement on a financial transaction tax”, the EC President stated.

G20 action plan fails to address root causes hunger

According to CIDSE, the catholic development network, the G20 Agricultural Ministers’ Action Plan on Food Price Volatility and Agriculture contributes little to tackling global hunger. The alliance says the plan is more concerned with mitigating the consequences of price volatility than with addressing its root causes. It is “a band aid for a big gaping wound; it won’t cure the ailing global food system,” as Gisele Henriques, CIDSE’s food expert said. “Although the recent spike in commodity prices has worsened the situation, we should not forget that even before the 2008 food price crisis there were over 800 million hungry. We must look beyond the markets for an answer to this injustice.”

The action plan, which has been significantly diluted during the negotiations on 22-23 June in Paris, aims at improving agricultural production, increasing market information and transparency, strengthening international policy coordination, improving and developing risk management tools for governments, firms and farmers, as well as improving the functioning of agricultural commodities’ derivatives markets. G20 Agricultural Ministers propose the establishment of emergency food stocks, necessary to address food crises, ignoring regulatory stocks which could resolve food price volatility in the mid-term. CIDSE urges the G20 to support the re-establishment of regulatory stocks, at local, national and regional levels, which would help curb the excessive volatility in prices for both consumers and producers. Yet matters of financial regulation of the food markets agricultural ministers left to their fellow financial ministers and central bank governors.

CIDSE emphasises that current production models must be reconsidered. A recent report by the UN Special Representative on the Right to Food demonstrates that agro-ecological innovations can double production in a period of 3 to 10 years and it is precisely this kind of production model that must be supported. This also means creating food policies which strengthen local production by small holder farmers, because they account for 75% of the world’s hungry. The G20 also failed to take serious its own inter-agency report on price volatility. This report, coordinated by the FAO and the OECD, underlines the negative role of biofuels on price volatility and recommends a rethink of policies which incentivise biofuels, adopted by many G20 States members. “The poor progress made at the Paris meeting confirms once more that the G20 is not the most legitimate forum to pre-determine decisions on global food security. It should reinforce more democratic multilateral bodies such as the FAO’s Committee on World Food Security instead,” said Henriques.

Rio+20 must bring paradigm shift

EuroStep – Ahead of the UN Conference on Sustainable Development (UNSCD) to be held in Rio in June next year, also known as Rio+20, civil society organisations have described the official preparatory processes as being too slow and weak in content. If UNCSD is to live up to its commitment to achieving sustainable development, a fundamental paradigm shift in the global economic structure is needed. Any policy that is made within the current system that does represent such a paradigm shift will ultimately be unsuccessful, Eurostep has warned.

According to Hannah Stoddart from the Earth Summit stakeholder forum, progress in the preparatory discussions has been slow, as “no global leaders have come forward with a compelling vision for the Summit, and it has received little press attention”. This lack of ambition may be explained by the general struggle of international actors to agree on multilateral accords, as was the case in the climate change conferences in Copenhagen and Cancún, the expert stated. These concerns have further gained in importance after the UN Commission on Sustainable Development failed to adopt an outcome document at its meeting in May 2011. In light of the international community’s failure to live up to its commitments on sustainable development there have been concerns among developing countries that developed countries may use the broad sustainability agenda of the conference to “rewrite and replace the sustainable development narrative”, including the ‘green economy’ concept “with an associated weaker emphasis on social concerns”, Stoddart warned.

Rio+20 takes place at a crossroads. Voices have however grown louder, accusing the international community of predominantly focusing on environmental aspects of sustainability, lacking a sufficient focus on poverty alleviation and sustainable development. Moreover, current policy proposals for UNCSD do little to change the macroeconomic structures that leave millions in situations of chronic poverty. Any initiatives aimed at promoting sustainable development within these structures will ultimately be unsuccessful, since they fail to address the roots causes of poverty. That being said, UNCSD also represents an opportunity for such changes to be made and for this reason Eurostep shall be monitoring the developments surrounding UNCSD and in particular the EU’s approach to sustainable development closely.

G20 agricultural meeting: Biofuels, food reserves and stock transparency need urgent attention

The G20 must scrap their most damaging biofuel policies and demand more open information about food stocks as part of urgent measures needed to tackle global food price volatility. International agency Oxfam is also calling on G20 Agricultural Ministers meeting in Paris 22-24 June) to reconsider the case for food reserves so that countries can better handle the kind of price spikes that left an extra 150 million people hungry during the last food price crisis. Many poor people are continuing to be hurt by rising food prices.

An early draft of the G20 communiqué, leaked last week, was disappointing. Oxfam said it did not go far enough in trying to tackle the problems. Oxfam says that a recent expert report on price volatility into the G20 made it crystal clear that biofuels were part of the problem. The G20 must urgently remove the types of biofuels subsidies and mandates that are increasing price volatility and failing to tackle climate change. The G20 must have immediate contingency plans to adjust their biofuels targets when food supplies are endangered.

Oxfam also said the G20 must require major private sector traders and investors to provide governments with adequate and timely information on their food stocks in order to improve market transparency. In a new briefing paper, Oxfam says policy-makers should re-examine evidence from countries like Madagascar and Indonesia that show that properly designed food reserves combined with other measures could help developing countries to tackle food price volatility. Oxfam’s call comes with a warning that global grain stocks are again dropping alarmingly. When global cereal stocks fall below 15-20% of world consumption, price hikes and market break-down have followed. By the end of this year, Oxfam says, this ratio could be as low as 17%.

A global grain reserve of just 105 million tons would have been enough to help avoid the food price crisis in 2007-8, the paper said. The cost of maintaining this would have been $1.5bn “or just $10 for each of the extra 150 million people who joined the ranks of the hungry as a direct result of the last food price surge. The paper says that India managed to stabilize food prices in 2008 because the government made a massive purchase and release of rice and wheat. International institutions have warned G20 leaders that renewed food price volatility is now a high risk. However, the same institutions have summarily dismissed food reserves as one of the ways to stabilize prices,” report co-author Thierry Kesteloot from Oxfam said.

Oxfam acknowledged that in some cases food reserves may have been poorly managed in the past but that did not mean the policy itself was wrong – rather, it meant that the reserves themselves needed to be better implemented and governed. “The prevailing view that food reserves in themselves don’t work is unsophisticated and short-sighted. There are smart new ways that countries can maintain sufficient food reserves as part of a bundle of policies that could work to limit price surges. We’ve already seen the huge human cost of countries not having food reserves,” Kesteloot said. Oxfam says that G20 governments should agree to scale up national and regional reserves in developing countries and support public intervention of developing countries in buffer stocks managed in a durable, transparent manner. The G20 should commit technical and financial resources to establish these reserves and encourage other governments to do so.

South pledge more climate action than North

A new report of the Stockholm Environment Institute (SEI) shows developing countries have pledged to reduce carbon emissions more than industrialised nations, but the two combined fall short of a 2°C target. The report, based on an analysis conducted for Oxfam International, examines four recent detailed studies of countries’ mitigation pledges under the Cancún Agreements, for the purpose of comparing developed (Annex 1) country pledges to developing (non-Annex 1) country pledges. It finds that despite very diverse methodologies and assumptions, all four studies agree that developing country pledges exceed Annex 1 pledges. The three studies that estimate the total mitigation required for a 2°C pathway also find that even countries’ higher-level pledges fall short of the goal.

“There’s a false perception that we need to focus primarily on increasing ambition from emerging economies – these economies have put serious emission cuts on the table,” says Sivan Kartha, lead author of the report. “It’s the developed countries that need to actually reduce their emissions, and increase their commitment to provide finance and technology that will allow even greater reductions in developing countries, if we are to have any hope of keeping to a pathway that limits temperature rise to 1.5°C or 2°C.”

The studies also find that the Annex 1 pledges could be significantly diminished by several factors, such as lenient accounting rules on the use of surplus allowances, double-counting of offsets, and accounting methodologies for land use, land-use change, and forestry (LULUCF). Kartha and co-author Peter Erickson note that one of the studies, by the United Nations Environment Programme, estimates that surplus allowances from the first Kyoto Protocol commitment period alone, for example, could diminish effort by 1.3 GtCO2e in 2020. If such loopholes are not closed off, Kartha says, “developed countries could use them to be in technical compliance with even the upper estimates of their pledges, while their emissions are actually growing between now and 2020, and possibly even beyond.”

The SEI study does not prescribe a specific allocation of effort, but it does cite the foundational principle of the United Nations Framework Convention on Climate Change (UNFCCC) of “common but differentiated responsibilities and respective capabilities.” Developed countries are responsible for more than 75% of historical carbon emissions, Kartha and Erickson note, and even today, under a consumption-based accounting, they are responsible for about 60% of global emissions. In terms of capability, they write, “it is clear that the great majority of financial and technological wherewithal resides in the North,” which controls about three-quarters of the world’s GDP. Given all this, they conclude, “it seems self-evident that the developed world should take responsibility for much more mitigation effort than the developing world, and that this effort must have both a domestic and an international dimension” – the latter involving financial and technological support to developing countries.

IMF’s loan conditions still punishing the poorest, Oxfam says

With fuel costs on the rise and global food prices set to more than double by 2030, poor people are being hit hardest. Oxfam has major concerns about strings currently attached to IMF loans, especially for low income countries. Oxfam’s concerns, outlined in a submission to the IMF’s 2011 Review of Conditionality, are:
* An increasingly apparent return to “fiscal consolidation” and tighter fiscal targets after the crisis, which are preventing countries from accelerating progress to the MDGs
* Reduction in flexibility on inflation targets, requiring countries to take increasingly tough monetary and fiscal measures to offset the impact of renewed food and fuel price rises
* Evidence that social spending floors are not being taken seriously in program reviews and therefore having little effect on government spending
* Use of overall wage ceilings (in which social sectors are evidently included as they absorb most of the government wage expenditure in low income countries)
* Very slow and limited progress on the introduction of social protection measures, especially in low income countries
* Continued insistence in some countries on rapid abolition or reduction of fuel or food subsidies, before offsetting social protection measures are in place
* The continued introduction of regressive taxation measures (VAT, sales taxes)
* The lack of systematic analysis of the social incidence of tax and spending changes, as well as fuel and food price rises, on inequality and poverty

Oxfam is urging the IMF to:
* Increase fiscal space for spending in low income countries, by allowing fiscal deficits to remain in the 3-5% of GDP and inflation to remain in the 5-10% range
* Base its macroeconomic (fiscal and inflation) targets and social spending floors on spending levels which would allow the maximum number of countries to attain the MDGs
* Analyze at the earliest stage the impact of the social spending floors, including whether they will be sufficient to meet the MDGs, and why they are or are not being implemented
* Assess and present transparently to its Board the impact of overall wage ceilings on social sector real wage levels and bills across all low income countries with programs
* Conduct Poverty and Social Impact Analyses. A systematic analysis of the social incidence of tax and spending changes, as well as fuel and food price rises, especially their combined effects on inequality and poverty, especially the incomes and spending power of the poorest citizens, as well as the ability of countries to reach the MDG income and food poverty reduction targets
* Dramatically accelerate the introduction of social protection measures and increases in social protection spending, especially in low income countries
* Delay the abolition or reduction of fuel or foods subsidies until offsetting social protection measures are in place, and use increased levels of its own funding and other budget support to finance temporary resulting deficits
* Increase tax revenues by introducing more progressive taxation, focusing on tax avoidance by large corporations and high-income earners, and avoiding wherever possible the introduction of regressive tax measures (or exempting the basic foodstuffs consumed by the poor from such measures)

Further information:
* Find the Submission to the IMF’s Public Consultation >>> here.
* Find Information on the IMF’s conditionality review >>> here.

G20 must go beyond market tango to tackle global hunger

CIDSE – Measures to reduce price volatility in agricultural markets is one of the issues G20 Agricultural Ministers will discuss when they meet on 22-23 June next week in Paris. As food price volatility persists, with prices now fluctuating around a level twice as high as the average level in the period of 1990-2006, the issue can no longer be ignored according, to The international alliance of Catholic development agencies CIDSE. This increasingly frequent volatility is a result of a complex web of factors with dire consequences for the world’s poorest consumers who spend 50 – 70% of their income on food. CIDSE welcomes the fact that curbing of price volatility is high on the G20 agenda, while warning that poverty in general, and access to food in particular, are structural issues that must be addressed in order to reduce the number of hungry people in the world.

In an open letter to G20 Ministers CIDSE says that in order to achieve global food security the G20 is right to aim at preventing excessive speculation and regulating commodity markets as well as addressing the issue of food reserves. However, the alliance argues that regulating markets is but one piece of the puzzle and that the G20 should also support measures to strengthen local small holder production whilst supporting the harmonisation of the various global food security initiatives towards a multilateral food governance within the UN. “Food security cannot be addressed through markets alone; it is not because of a lack of production that nearly 1bn people go hungry. Sufficient food is produced globally, but tremendous quantities go to waste after production, during processing, transport or on supermarket shelves,” said CIDSE’s food expert Gisele Henriques, who will be attending the G20 meeting in Paris.

As agriculture is the mainstay of 75% of the developing world’s poor, CIDSE believes food policies should strengthen local production by small holder farmers, who account for 75% of the hungry in the world. It is extremely worrying that aid to the agricultural sector has decreased from 18% of Official Development Assistance (ODA) in 1979 to less than 4% currently. This trend must be reversed in favour of agricultural policies which support modes of production that develop and promote food and livelihood systems with greater environmental, economic and social resilience in face of climate change and future economic and food price crises.