Spanish EU presidency 2010: Intermón Oxfam calls for tax justice

Intermón Oxfam has published a policy paper which outlines specific policy benchmarks for the Spanish government to push at the EU level during its presidency, starting on January 2010. These include the following:

* To support and defend within the G20 and prior to the IMF/World Bank Spring Meetings, the setting up of a multilateral and automatic information exchange models;
* To support the inclusion of a Finantial Transaction Tax at the International level and to include during 2010, at least in the Euro-zone, a Currency Transaction Tax of 0,005% to finance ODA;
* To promote a reform in the International Accounting Standard Board (IASB) governance in order to increase its accountability and the political control from the EU and from the National Authorities;
* To ensure that the coming IFRS 8 review (in 2010) becomes the opportunity to bind Multinational Corporations (MNCs) to submit, in the annual report, their accounting information on country by country (C-B-C) basis and to ensure that the already engaged procedure for a new IASB norm for the Extractive Industries (replacing the current IFRS 6) will include a compulsory C-B-C reporting requirement for MNCs;
* To support the introduction of C-B-C reporting as a compulsory requirement for MNCs of all sectors through the Directive 2004/109/EC (TOD Directive) review, that will probably take place during the first half of 2010.

The full report (in Spanish only) is available >>> here.

http://www.intermonoxfam.org/cms/HTML/espanol/3693/091123_Posicion_IO_sobre_fiscalidad_para_el_desarrollo.pdf

Three innovative proposals for G20 to help the poor

G20 finance ministers meeting in London this weekend should provide a $280 billion bailout for millions of poor people struggling to survive the economic crisis, Oxfam is proposing. A currency transaction tax is one of three measures that could raise much needed funds for developing countries without putting any extra burden on ordinary taxpayers. The proposals are set out in a new Oxfam briefing paper, Money for Nothing: Three ways the G20 could deliver up to $280 billion for poor countries. Reforming tax havens alone could release $160bn, reallocating an already agreed IMF bailout could free up another $89bn, and introducing a currency transaction tax could raise at least a further $30bn – each a significant sum to help poor people suffering in the crisis.

The money is desperately needed to prevent the crisis derailing efforts to reduce poverty as developing countries suffer job losses because of falling trade and capital flows. According World Bank and UN estimates, between 50-100 million more people will be trapped in poverty this year, forced to survive on less than $1.25 per day. Max Lawson, Oxfam senior policy adviser, said: “The beauty of these proposals is that they allow the G20 to bailout poor people without asking ordinary taxpayers at home to put their hands in their pockets. Rich countries that spent $18 trillion bailing out banks should not be allowed to plead tight budgets as an excuse for failing to help poor people – especially when there are alternative sources of funding available that would cost them little or nothing.”

The G20 in April promised to provide $240bn to help developing countries deal with the financial crisis – including $50bn for the poorest. But the World Bank estimates that developing countries will need up to $635bn in 2009 just to stand still. Much more is needed to reduce poverty, increase the number of children who attend school and tackle health problems such as HIV/AIDS and malaria.

How the three proposals would work:

* Implement a Currency Transaction Tax (CTT) of at least 0.005% on international currency transactions. It is estimated that such a tax could generate a minimum of $30bn per year if applied to the four major international reserve currencies (US Dollar, Yen, Euro and British Pound). If more currencies were included, this figure could increase as high as $50bn. A slightly higher rate could also provide more resources for government spending in rich countries facing cuts in services.

* Transfer half of rich countries’ new Special Drawing Rights allocations. Agree that at a minimum all the G8 and other major donor countries will transfer half of their allotted new allocations of IMF Special Drawing Rights (SDRs) to Low Income Countries. SDRs are a form of IMF quasi currency distributed to member countries. The April G20 agreed to create $285 billion worth of SDRs, and rich nations will receive $177 billion of this amount. Oxfam is calling for half of this, $89 billion, to be transferred to the poorest countries.

* Deal with tax havens. Put in place a multilateral agreement for the automatic exchange of full tax information and require country-by-country reporting of subsidiaries, sales and profits by multinational corporations, to help developing countries recoup lost tax revenue. This could result in a further US$160bn for poor countries, and at the same time would enable rich countries to recover their lost tax revenues. The current OECD initiative on tax havens, supported by the G20, relies on bilateral agreements between countries. To date no developing country has signed a bilateral agreement with a tax haven.

UN takes the ball on global economic policy

The UN agreement on the financial crisis takes important steps toward a global consensus on response to the crisis, according to CIDSE, an international alliance of 16 Catholic development agencies working together for global justice. Member nations have already agreed the text of a final declaration of the conference, which ends today in New York. The document includes the recognition that the UN should have a role in ensuring in ensuring that the global economic and financial system should work for developing countries.

“Global economic policy should be like the World Cup, with every nation playing – not a tournament for rich countries and their invited guests. With this agreement, the UN took the ball,” said René Grotenhuis, President of CIDSE and Director of Dutch organization Cordaid. “The US ought to be particularly commended for supporting economic justice – anyone at the Bush or Bill Clinton State Department would have been fired for approving this. Agreement for countries to impose capital controls is a total reversal of Clinton and Bush-era policies. And US support for World Bank and IMF hiring according to geographic and gender diversity moves them part of the way from G8-dominated clubs towards accountability to the world,” said Aldo Caliari, Director of the Rethinking Bretton Woods project at Center of Concern, the US member of CIDSE.

Progress includes:
* Trade: Developing countries earn half their GDP from exports, and trade is the main way the financial crisis is hitting them. The document recognizes many countries will need to change trade and investment rules or impose capital account restrictions, to implement crisis recovery measures.
* Debt: Developing countries face more than $3 trillion in debt maturing this year. The agreement includes temporary standstills on debt payments for countries in crisis, and agreement to go beyond existing ad hoc responses to a structured mechanism for sovereign debt settlements.
* Stimulus: The agreement calls on countries with stimulus spending not to impose rules that hurt third countries.
* Continuing mandate: While some countries opposed follow-up to the conference, the UN will have a continuing working group to implement these measures and an expert group to provide “independent technical expertise and analysis” on the subject of the conference.

“This is slow progress for more than 50 million people are expected to lose their jobs, and 100 million newly hungry in the world. But the UN is asserting influence on the global economy, and that’s good news for the majority of people who aren’t represented at the G8 or the World Bank and IMF they control,” said René Grotenhuis.

Voices on the UN financial summit in New York

* Head of South Centre: Most collateral damage in developing world
The United Nations should be the place that “educates the innocent and the victims” on how to deal with the world economic and financial crisis, Martin Khor, Executive Director of South Centre, said at a press conference in the run-up to the UN conference on the impact of the global crisis on developing countries in New York. He said that, having played no role in causing the crisis, the developing countries had suffered the most “collateral damage”, with losses averaging 6% of gross national income as their economic growth was expected to fall from 8.3% in 2007 to 1.6% in 2009.
>>> Full text

* ITUC: Global crisis needs global coordination
As the United Nations kicks off a major three-day Conference in New York, the International Trade Union Confederation (ITUC) is drawing the attention of world leaders to the severe human costs of the deepening slowdown in the global economy. This is most evident in the jobs crisis, with increasing income inequality, rapid increases in unemployment, and growing hunger and poverty in developing countries. Women are bearing a disproportionate share of the hardships brought on by the global crisis.
>>> Full text

* CIDSE: Global crisis requires global reform
According to CIDSE, an international alliance of Catholic development agencies working together for global justice, the worlds’ poor risk being let down once more as no leaders from developed countries are expected to attend. Their constructive engagement in inclusive fora like the UN is needed for structural changes like a Global Economic Council, to address economic issues the way the Security Council addresses security-related ones, and in keeping promises like the development finance agreements made in Doha.
>>> Full text

Rich countries still need to prove that poor countries are not being left out in the cold

The international community’s decision to convene a UN Conference to discuss the financial crisis and its impacts on development is important. However, it will only prove its value if it receives the support of all eco-political power blocks, especially the G20. The convening of a UN Conference on the financial crisis and its impact on development in 2009 was a key decision made at the three-day International Conference to Review the Monterrey Consensus which concluded in Doha today.

According to the Catholic network IDSE, the UN Conference on the Financial Crisis to be convened in 2009 will be the first test of political commitment to the outcomes of the Doha Financing for Development Conference. Industrialised countries and particularly the new US Obama administration will be under close scrutiny. Serious and high level participation in the Conference will be fundamental to achieve an outcome that reinforces the Monterrey Consensus’ commitment to ‘promote sustainable development as we advance to a fully inclusive and equitable global economic system.’

The political will to see this Conference succeed is all the more significant in the face of the general weakness of the Doha Conference’s outcome. "Poor deals on trade, debt, to concretely reach ODA targets, and to follow-up on the Monterrey Consensus have been the casualties of the long and discordant negotiations during the Doha Conference. It is at least fortunate that tax evasion, a curse for poor countries’ revenues, has been recognised for what it is," observed Jean Saldanha, Policy Officer in CIDSE. The Conference’s failure to strengthen efforts to gear political support for innovative resources for development, and especially the glaring absence of a mention of a Currency Transaction Tax sets back the progress in demonstrating its feasibility and value since the Monterrey Conference in 2002. The Conference’s feeble outcomes fly in the face of the plea for urgent action made by many countries in Doha who have been hard hit by the financial crisis. For CIDSE the big question now is whether the UN Conference on the Financial Crisis will be able to succeed to turn around the fundamental problems of global architecture that is perpetuating today’s financial crisis.

Trade unions demand new effort to successfully conclude Doha conference

As negotiations reach an impasse at the International Conference on Financing for Development in Doha, Qatar, the ITUC has expressed its concern that crucial commitments to mobilise financial resources for development could be compromised. “At the current stage, the trade union delegation is working hard to convince official delegations at all levels not to back down on core issues pertaining to Decent Work and to ensure that there is a strong follow-up mechanism under the auspices of the United Nations,” said ITUC General Secretary Guy Ryder.

Key questions, including, the impact of international trade on development, the future of the international financial system and the urgency of confronting climate change are provoking major debate between the G77 group, the US, the EU and Australia, Canada, New Zealand and Japan. There are three major issues on which disagreement persists: First, opposition was voiced by the US and to a certain extent by the EU to strong draft language on the way trade policies affect development. Second, there is no consensus among governments on the way forward to review the international financial and monetary architecture and global economic structures. Third, a number of countries, such as the US and Russia, contend that the issue of financing climate change belongs to the UN’s climate change (UNFCCC) process and should be excluded from the discussions.

“It is of the utmost importance that the world listens to the aspirations of the developing world, because they suffer the worst impact of the current crises: job losses, downward pressure on working conditions and deterioration of living standards,” Ryder added. Apart from actively lobbying government officials at this critical point, the ITUC delegation together with the other members of the Decent Work, Decent Life Campaign hosted a parallel side-event “Financing Decent Work – An Imperative for Sustainable Development” at the Conference.

Bretton Woods II? We Need a Second UN Finance and Monetary Conference

Closing Remarks by Jens Martens to the Civil Society Forum Doha

1. Let me start with a quote from the Draft Outcome Document:
“The environment for Financing for Development has improved over the past 6 years, primarily due to a significant improvement in domestic savings of developing countries but also because of a sustained expansion in world trade, record private capital flows, higher remittances, a reduction in debt burdens especially in heavily-indebted poor countries and a reversal in ODA from earlier declines. The development impact of these flows is enhanced by a commitment to free market principles, including the rule of law, respect for private property, open trade and investment, competitive markets and efficient, effectively regulated financial systems. These principles are essential to economic growth and prosperity and have lifted millions out of poverty and have significantly raised the global standard of living.” (para 2bis)

This paragraph is not agreed and hopefully will never be agreed, but I am wondering: Do the delegates who drafted these sentences live in a parallel universe, when they praise the “efficient and effectively regulated financial systems” that have lifted millions out of poverty? At least additional 75 million people are forced to live in hunger and poverty this year due to the global food crisis. What would they think when they had to read these sentences?

2. The world faces an unprecedented crisis of the current financial and economic system. But the negotiations on the Doha outcome document seem to continue as if nothing has happened. We miss any sense of urgency in the negotiations. What we need now is creative thinking and collective multilateral action instead of following the business as usual and muddling through approaches of the past.

3. Two weeks ago, the leaders of the 20 most powerful countries of the world met in Washington as the G-20. After three and a half hours they adopted a declaration on “Financial Markets and the World Economy” – a preliminary “to-do-list” to solve the current financial crisis. Without doubt, some of the 47 announced measures might be useful and necessary. But the G-20 failed to really address the root causes of the crisis. Instead, they primarily intend to stabilize the current financial system – a system that has been characterized for the last 20 years as “casino capitalism”. But we don’t need better rules for the casino. The casino has to be closed down!

4. That the Washington summit took place at the level of the G-20 and not the G-7 or 8 reflects the changing realities of the world and is a step in the right direction. But it would be a grave mistake to stop there and to exclude 172 governments and the global civil society from the decision making process about the future financial and economic system.

5. About 20 years ago the G-7 took the lead in promoting the Washington Consensus and its neo-liberal ideology of deregulation and privatization – the same ideology that caused the current crisis. We don’t need a new Washington Consensus of the new G-20, which primary goal is to stabilize the present system, without taking into account the needs and demands of the people who are most affected by the crisis and the structural causes of this crisis.
(The G-20 leaders made “a commitment to free market principles, including the rule of law, respect for private property, open trade and investment, competitive markets, and efficient, effectively regulated financial systems.”)

6. What we need instead is a new global consensus, name it New York, Geneva or Nairobi Consensus, of the G-192 – the members of the United Nations. This is the reason, why we are here in Doha at a conference of the United Nations.

7. We are not naïve. We are aware of the weaknesses and limitations of the UN. Its decision making process is painfully slow and its results are based on the lowest common denominator. This was the reason, why many Civil Society Organisations declared in Monterrey 6 years ago that they are not part of the Monterrey Consensus. The Monterrey Conference was important, but its outcome didn’t respond adequately to the urgency of the economic and social situation in the world. Since then, the situation has become even worse.

8. However, the UN is the only universal forum that is inclusive, the forum where nearly all governments of the world have voice and vote, and where civil society organizations have participatory rights. Therefore it’s worth to fight for the strengthening of the UN.

9. This brings me back to the draft outcome document of the Doha conference. The existing draft is weak and the negotiations proceed again painfully slow. But the text contains at least a few elements – although not agreed yet - which could bring incremental progress, for instance
* the upgrading of the United Nations Committee of Experts on International Cooperation in Tax Matters to an intergovernmental body of the UN (para 8)
* the proposal for new ad hoc forums to explore sovereign debt work-out mechanisms and the possibility of crafting permanent debt mediation or arbitration procedures (para 46), and particularly
* the proposal to convene a major international conference, under the UN auspices, to review the international financial and monetary architecture and global economic governance structures ( one of 4 and my favourite versions of para. 58).

The adoption of this paragraph would in fact mean to bring not only the global discourse but also the decision making process on the reform of the economic and financial system back to the United Nations.

10. You may ask, why back to the UN? Was it ever there? Yes, 64 years ago, when the first United Nations Monetary and Financial Conference took place – better known as Bretton Woods Conference. The preparation of this conference took nearly 3 years and the conference was attended by delegates from 44 countries – by the way more than twice the membership of the G-20.

What we need now is a second United Nations Monetary and Financial Conference. Doha could mark the first step towards it.

Civil Society supports UN-led Summit on finances

As one of the lead elements proposed for recommendation to the Financing for Development Review Conference, the Civil Society Forum supports an international summit on financial and economic architecture and global economic governance structures, in 2009. The Forum position challenges the proposal of some governments that the Bretton Woods Institutions organize an event, as well as moves to concentrate decision-making in the G-20 group of governments. Speaking to the plenary, Rana Al Sairafi, a civil society delegate from Bahrain, said “instead of focusing on ad hoc mechanisms like the G20, such a conference should be under the umbrella of the United Nations with the inclusive principles that govern the Financing for Development process, including the active participation of civil society organizations.” In preparation for the event, the UN should be asked to prepare a comprehensive review of the existing global financial architecture.

There are currently four alternate proposals (para.58) regarding the conference in negotiations for the Review Conference. The Forum recommendation supports the UN-led option. Addressing the Forum regarding the locus and purpose of economic governance, Jens Martens, Global Policy Forum (Germany) noted “The G20 failed to really address the root causes of the crisis. Instead, they primarily intend to stabilize the current financial system - a system that has been characterized for the last 20 years as “casino capitalism”. “We don’t need better rules for the casino,” Martens concludes. “The casino has to be closed down!”

Forum delegates spent Wednesday in sessions focusing on the six agenda items of the Review Conference, followed by intense workshops and caucuses on specific issues, including: women setting the agenda, addressing climate change, achieving the health MDGs, the Currency Transaction Tax, among others. Women, trade unions, and other sector-specific caucuses have met as well. Further recommendations on finance reform include support for the upgrading of the UN Committee of Experts on tax to become an inter-governmental body, moves to make international financial flows fully transparent, ending illicit transfers of resources, and ensuring rapid fulfillment of aid commitments and enhancement of quality and accountability of aid.

Civil Society Forum at Doha: The US a failed state?

“Is the United States a ‘failed state’? Its financial mismanagement has triggered a worldwide crisis.” Thus, Social Watch coordinator Roberto Bissio challenged some 300 civil society delegates, who are meeting since yesterday at the Ramada Plaza Hotel. The Civil Society Forum leading to the Financing for Development Review Conference is addressing the international crises that threaten our climate, development and social justice, developing recommendations for change to carry into the official Conference. The Draft Declaration to be considered by the Forum states:

“The world is consumed by an urgent triple crisis of energy, food and finance that not only threatens the realization of the MDGs, but also the stability of the world’s economies. The Northern governments and financial system are responsible for the current financial crisis, but the costs and the impacts are paid for by the entire world and by the poorest countries in particular. Moreover, climate change is threatening the lives and livelihoods of hundreds of millions of people, in the North and the South.”

Barbara Adams, a former UN official and Senior Fellow with the Global Policy Forum introduced delegates to the state of the negotiations, which continue in New York and will be finalized in Doha before 2 December. The final agreement must address decent work, growing inequality and continuing imbalances in the global economy and polity, she noted. Perhaps the most significant major issue remaining is the nature and organizing body for a “Bretton Woods II” international conference for a new global economic architecture, she pointed out. Many civil society delegates stress that such a follow-up event should be organized by the universally-based United Nations and not by the existing Bretton Woods Institutions.

The Forum is the penultimate step leading to the UN Financing for Development follow-up Conference convening at the Sheraton Hotel November 29. The Forum was opened by H. E Mohammed Abdullah Mutib Al Rumaihi, Deputy Minister of Foreign Affairs for Qatar and Dr. Ali Ben Samiekh El Marri, General Secretary of the National Human Rights Committee of Qatar. The Civil Society Forum continues through Thursday, November 27, when a final declaration for delivery to the official Conference will be agreed.