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.

CONCORD: EU should act against land grabbing in developing countries

EuroStep – As a reaction to the European Commission’s 2007 Communication on “Advancing African Agriculture” (AAA), the European NGO confederation for relief and development (CONCORD) submitted a monitoring report to the European Parliament’s (EP) Development Committee, addressing the impact of land grabbing. Besides analysing the implications of EU and member state policies on the issue of land grabbing, the 2009-2010 monitoring report specifically focuses on three case studies from African countries, namely Uganda, Mozambique and Ethiopia. It further assesses the role of the European private sector and its linkages with state activities and scrutinizes the impact development assistance and trade and investment policies may have on land grabbing.

In light of increasing large scale land acquisitions that threaten the subsistence of local farmers in developing countries, the report calls on the EU to “initiate as soon as possible the needed international regulation to prevent such land acquisitions, including a legally binding agreement related to the proper regulation of financial and other actors active in agricultural investment”. It moreover stresses that such measures should entail direct references to the supremacy of human rights provisions, with stipulations for punishing human rights abuses by investors and states under international law. To this end, the EU should further “strengthen the implementation of human rights based land policies in ODA, particularly when supporting the implementation of the AU Land Policy Guidelines”, the report reads.

With regards to the EU’s recently adopted renewable energy targets, CONCORD calls upon the EU to scrap these targets and to freeze all policies encouraging “the use of agrofuels for the transport sector until and unless the [aforementioned] regulations … are in place”.

European Parliament: Food security high on the agenda

EP press service – A new report on food security in developing countries by the European Parliament was presented in the development committee on 25 May. MEPs used the opportunity to highlight the importance for the EU to focus on combating hunger effectively. To this end, policies should support the development of local food production and infrastructure for distribution and formulate measures to address food speculation and land grabbing, Rapporteur Gabriele Zimmer stressed. The report, An EU policy framework to assist developing countries in addressing food security challenges, comes at a time when the subject of food security and the right to food are growing in importance, according to Rapporteur Gabriele Zimmer. In light of the upcoming G20 meeting that is expected to address the problem of price volatility in commodity markets, Zimmer called upon the world’s leading economies to tackle the widespread problem of poor nutrition in developing countries, nutrition defined as “high quality food supply”, with increasing food prices further aggravating the problem.

In the wider context of food security, it was also stressed that the ever popular Washington Consensus, where trade deregulation, liberalization and tariff cuts are the order of the day, should be rethought. To this end, Zimmer stressed the EU has an important role in this shift. The draft report also refers to the ever controversial concept of food sovereignty. It is defined in the report as “the capacity of a country or a region to democratically, implement its own agricultural and food policies, priorities and strategies”.

The report was welcomed by MEPs in the development committee as an important contribution to the current discussions on food security and sovereignty. Thijs Berman (S&D) pointed to the report’s call to tackle food speculation and land grabbing as a means to foster the right to food for everyone and stressed the necessity for the EU to fundamentally reform its Common Agricultural Policy (CAP) with the aim to abolish export subsidies, even though it was recognized subsidies have been reduced by the EU over time.

The same week, the Committee for Agriculture and Rural Development (AGRI), adopted a report, entitled “the Common Agricultural Policy by 2020”, calling for a reformed CAP policy that provides for food security and environmental protection, focuses on renewable energy and fosters the creation of new jobs. The report sets out the committee’s priorities for the current debate on the reform of the CAP, which is running in parallel with the discussions on the EU’s next Multiannual Financial Framework (MFF). As a major step forward, the report explicitly refers to the principle of Policy coherence for development and long term food security in developing countries, a clause that was welcomed by the NGO Confederation for Relief and Development (CONCORD). According to the report, “the EU [must] ensure consistency between the CAP and its development and trade policies” and urges the EU to “not jeopardize food production capacity and long term food security in [developing] countries and the ability of those populations to feed themselves, while respecting the principle of Policy Coherence for Development (PCD)”.

Greece: Financial crisis hits development organisations

SocialWatch – The Hellenic Platform for Development has lost half of the dozen non-governmental organisations that used to integrate it. Many of them had to shut down due to the lack of finance to maintain their staff and to continue their operations, warned KOPIN, the national focal point of SocialWatch in Malta, which expressed its solidarity with that network. Due to the national and global financial crisis, the Greek national development agency Hellenic Aid is not in a position to honour the financial commitments it has made over the previous years to support the organisations working in the fields of global poverty eradication, education and humanitarian relief in Greece and many countries.

One of the organisations that have been hit by the Greek crisis is KOPIN’s partner European Perspective. Both have implemented a highly successful project called Mediterranean Development Network (MEDEVNET), together with the Local Council of Valletta, the National Platform of Maltese Non-Governmental Development Organisations (SKOP), the Migrants’ Solidarity Movement, the Cypriot NGO Future Worlds Center and other partners in Greece and Cyprus. This project was the first of its kind to build the capacities of and to establish networks between civil society organisations and local authorities in the three countries, to more effectively and, equally important, to jointly contribute to the achievement of the Millennium Development Goals.

In fact, the project’s activities saw the participation of over 60 Maltese individuals representing Maltese development and migration NGOs, local councils, ministries, the Office of the United Nations High Commissioner for Refugees (UNHCR) and the Malta-EU Steering & Action Committee (MEUSAC).