|G20 Summit: Reactions and Reflections|
Last week’s G20 summit in Cannes elicited mixed reactions from the development community. Praise flowed for world leaders who promoted a financial transactions tax, but a weak outcome and inaction on debt and tax havens left many disappointed.
9th November 2011
7th November 2011 - Mark Tran, The Guardian
The eurozone crisis dominated the G20 summit in Cannes, but the world's leaders did manage to find some time to discuss development issues such as global food security and transparency. Here is a roundup of reaction from some NGOs and international organisations to what transpired.
ONE, the advocacy group, said the 75 minutes spent on talks about innovative finance for development (the financial transactions or Tobin tax) may have saved the summit.
"The good news from Cannes is that development is now firmly embedded in the G20's agenda – largely thanks to the report on financing 21st century development which President Sarkozy commissioned from Bill Gates, and the welcome that report received," said Michael Elliott, ONE's president and chief executive.
"Bill Gates demonstrated to the G20 that the fight against poverty is a fight we can win. When so much progress has been made in saving and improving lives, now would be the worst possible time to retreat," he said. "The report's recommendations represent a bold challenge to world leaders and a shot in the arm for campaigners worldwide. We look forward to the G20 carrying forward its work on development in 2012 under the leadership of President Calderón of Mexico."
Adrian Lovett, Europe director of ONE, criticised the G20 for failing to recognise that investing in Africa is a big part of the solution to the global economic crisis, but acknowledged this was the first G20 summit where leaders did at least recognise their promises to deliver aid.
"Progress was also made on agriculture, with commitments to limit harmful speculation and investing more in agricultural productivity," he said.
The UN's World Food Programme was pleased by the G20's decision to exempt food aid from export restrictions and extra taxation, saying the move would ensure food assistance continues to reach people affected by hunger as a result of high prices and humanitarian crises. The WFP said during the 2008 food price crisis, export restrictions had threatened its ability to provide a lifeline of support to hundreds of thousands of people.
"High and volatile food prices and financial crises compound the impact of disasters on hungry populations, in the Horn of Africa and elsewhere, and we commend G20 leaders for taking crucial decisions to support humanitarian food supply systems and food security for the most vulnerable people," said WFP executive director Josette Sheeran. "WFP moves the vast majority of multilateral food assistance and now we will have secure access to food from G20 nations that provide the biggest share of global food exports, enabling us to reach the needy rapidly and efficiently."
The Africa Progress Panel, chaired by Kofi Annan, the former UN secretary-general, welcomed Nicolas Sarkozy's effort to keep Africa on the agenda but stressed the importance of traditional aid amid talk of innovative financing.
"Regardless of how many new financing mechanisms emerge, ODA is still essential in establishing the basic elements that will support Africa's economic growth," it said. "The Africa Progress Panel therefore welcomes the efforts of the G20 to stress the role of ODA as one of the necessary drivers for sustained growth in Africa and MDG achievement."
The panel – like many NGOs – liked the proposals in the Gates report for a financial and maritime tax with the caveat that mechanisms be put in place to ensure that some revenues are allocated towards development in Africa.
Max Lawson, Oxfam GB's head of Policy and Advocacy, focused on the prospects for a Tobin tax on his blog. Interestingly, he notes that the UK, which is very cool to the tax, thinks it will happen.
"I had a long debate with one of [UK finance minister] George Osborne's advisers yesterday about all this, and he conceded that he felt the eurozone FTT was almost certain to go ahead now, and that they are scenario-planning to see whether the UK will benefit from it or not," Green wrote. "Germany are really serious about doing this, as are France, and at the moment what [Angela] Merkel and Sarkozy want to do in the eurozone is very likely to happen. In fact, there are no major opponents of the tax in the eurozone, with the Dutch having changed their position recently. All that would have been completely unthinkable two years ago."
Some of the most negative reaction came from the Jubilee Debt Campaign, which called for debt cancellation rather than loans to bail out private creditors as a way to deal with the debt of Greece, Italy and Portugal.
"It is incredible that the in the midst of another global debt crisis, the most powerful countries are still failing to regulate irresponsible lenders," said Tim Jones, policy officer at Jubilee. "An orderly system is needed to cancel unjust debts, neutral of both creditors and debtors. Yet the G20 seem happy to continue with the debt debacle currently being played out in Europe, as has been seen across the world for the last 30 years.
"The continuing history of debt crises – from Africa, Latin America, East Asia and now Europe – is that loans to bail out private creditors and enforced austerity do not work. Instead, reckless lenders need to be made responsible for their actions and debts cancelled. Global rules are needed to enable this to happen."
VSO, the volunteer group, was equally critical of the G20, accusing it of ignoring the urgent need for jobs in the world's poorest countries.
"The G20 has acknowledged that developing countries can actively contribute to growth. But when it comes to combating unemployment, action from the G20 is 'only in our backyard' – focused on getting their own populations back to work. There's talk of investment in developing countries but only a fleeting reference to jobs," said VSO UK director Brian Rockliffe"
Meanwhile, Martin Hearson, ActionAid's tax policy adviser, said the G20 had missed a chance to commit to greater transparency for multinational companies.
"Having commissioned three expert reports on tax and development, it's sad that the G20 has ignored so many of the key recommendations. In particular, the OECD, IMF and Bill Gates all called on the G20 to commit to greater transparency for multinational companies, but they failed to do so."
He added that the G20 had been "quietly chipping away at the protective shell of financial secrecy, which hurts the economies of developing and developed countries alike". While the era of banking secrecy was still far from over, he said, the movement towards that end is "unmistakable".
He said: "The question now is whether this progress will continue next year, when Mexico is the G20 chair. The G20 must demonstrate it will use its political power to exert sustained pressure on tax havens in the future as well as throw its weight behind efforts to help developing countries crack down on the tax dodging that undermines development."
4th November 2011 - Sarah Anderson, Institute for Policy Studies
Talk about piling on. Bill Gates, the Pope, Michael Moore, the Archbishop of Canterbury, 1,000 parliamentarians, 1,000 economists, the world's major labor leaders, Occupy Wall Street protesters, Oxfam and other major development groups, thousands of nurses, the World Wildlife Fund and other major enviros…It might be easier to list who didn't come out didn't come out in support of a Wall Street tax in the lead-up to this week's G20 summit in Cannes.
The outcome? No home run, but some measurable steps forward.
No one expected a G20-wide agreement on taxing financial transactions at this summit. Despite rising support, opposition from the United Kingdom, Canada, and the United States, among others, is still just too strong. But there were high hopes that a subset of European and non-European G20 countries would launch a "coalition of the willing" in support of the tax.
This goal was achieved. In his concluding press conference, summit host French President Nicolas Sarkozy announced that South Africa, Brazil, and Argentina were joining the list of current supporters, including France, Germany, Spain, the European Commission, and several other European governments. Sarkozy said he hopes to move towards implementation in early 2012.
Sarkozy and German Chancellor Angela Merkel have been the strongest supporters of taxing financial transactions for nearly two years. A few months ago, the European Commission also reversed its earlier opposition and released proposed legislation for such a tax in the European Union. But while Europe appears likely to move forward, the addition of several emerging market countries to the supporter list is significant for several reasons:
For U.S. advocates, there was another modest victory. Over the past two years, Treasury Secretary Timothy Geithner has made no secret of his aversion to the tax. In September, Geithner angered some of his European counterparts by objecting to proposals to raise funds to address their deficit problems through an EU-wide tax on financial transactions.
In Cannes, the Obama position shifted from active blocking to friendly neutrality.
"The president made clear that he shares the objectives that Chancellor Merkel and President Sarkozy have in ensuring that the financial sector contributes an appropriate share to the resolution of crises," said Michael Froman, the White House's G20 point person. "I think there is broad consensus between the Europeans that the president met with this morning and ourselves about the ability of each to pursue this in their own way, whatever way they see to be most effective."
The final communiqué of the G20 leaders was a disappointment, however.
The only relevant line in it is a typical diplomatic non-statement: "We acknowledge the initiatives in some of our countries to tax the financial sector for various purposes including a financial transaction tax inter alia to support development."
But with the likelihood of a critical mass of countries coordinating taxes on financial speculation, this kind of mumbo jumbo may disappear in the coming years. Once other governments start generating massive revenues by taxing speculation, even the most closed-minded economic advisers in this country may see the issue anew.
Sarah Anderson directs the Global Economy Project at the Institute for Policy Studies.
7th November 2011 - Mark Lawson, From Poverty to Power
It is all over. The diminutive Frenchman has spoken (at length). So what happened?
We heard in the morning from South Africa that the French attempt to have a separate communique on the Financial Transaction Tax (FTT) had run out of time. Which basically confirmed what has been the theme of the last few days – the ingredients for further movement on the FTT have been there all along but there was simply not enough time or diplomatic head space. Frustrating, but not surprising. We also heard that the Brazilians had won support from France on a global minimum for social protection in return for their backing on the FTT, which was interesting and impressive diplomacy by Dilma.
All morning rumours circulated about possible agreements on various things that never came to fruition, mostly about boosting the resources of the IMF. The emerging powers don’t want to fund the European bailout directly as it is too politically contentious, but they are interested in channelling money through the IMF, in return for a bigger share in the governance of the institution. For nerds like me this remains fascinating, as the financial crisis continues to accelerate the shift of global power to the major emerging markets. This is a febrile moment in history, and whilst shrouded in deadly dull financial speak, we are witnessing some major shifts that will shape the next century.
Mid-morning and NGOs had a briefing from the Gates Foundation staff on the G20 discussion yesterday of development, which took up about 45 minutes. It seems there was some pretty good discussion and definitely having Bill and his report there meant the FTT got a lot more profile than it would have otherwise. They confirmed that Germany was saying that they are open to potentially using some of the revenues from an FTT to finance climate change and development, which was good to hear.
The press conference finally started around 2pm. Just when I thought sitting in this lurid bunker of a press centre could not get any more surreal, it emerged that all of the many men’s toilets you go to in this huge complex have the Star Wars music on a permanent loop.
Sarkozy spoke first about the euro of course and the commitments of the G20 to boost growth, but announced nothing new. He spoke at length about the action they have taken in naming 11 tax havens, which is of course good but not nearly enough, as it is only beating up on some small island states and ignoring the major companies creaming off profits through these havens and the fact that the biggest tax havens are in the G8, in London especially. Still, it’s good that this crucial issue is getting profile and some progress. It is similar to the FTT in many ways – a popular cause that taps into anger in rich and poor countries alike that companies and the richest individuals are avoiding their responsibilities and failing to contribute, meaning that ordinary people are faced with cuts in services and bankrupt governments.
Anyhow, then he moved onto the FTT. He underlined that the FTT was now a mainstream issue, and had made it into the communique. That there were big fights on this issue in the G20 with many against, but that plucky little France continues to push for it. That in addition to France, Germany, Spain, Brazil and Argentina, they now had support from South Africa, the African Union, Ethiopia (Meles, the Ethiopian president attends the G20 representing NEPAD) and Ban Ki Moon.
He underlined that the process at the EU is the main one, and that this will be on the agenda at the EU heads of state meeting in January. He said that whilst not in favour of the FTT, President Obama agreed that the financial sector should contribute more to the cost of the crisis. He confirmed that he believes that the majority of the revenue should be spent on development. Later, in questions, he name-checked the Robin Hood Tax campaign, and reiterated that the banks must be made to pay back for the impact of the financial crisis they have caused.
What does this mean? Well it is definitely progress. During his brief flirtation with the FTT before he lost the election, Gordon Brown compared taxing transactions to debt cancellation for poor countries. Debt cancellation was initially the preserve of the radicals, ridiculed and dismissed by economists, but which then over a period of ten years and with a fantastic global campaign made the journey into the mainstream and into actual policy. Sarkozy made a similar case for the FTT, and I think he is right in many ways, although the time-frame is a lot quicker.
I had a long debate with one of [UK finance minister] George Osborne’s advisers yesterday about all this, and he conceded that he felt the eurozone FTT was almost certain to go ahead now, and that they are scenario-planning to see whether the UK will benefit from it or not. Germany are really serious about doing this, as are France, and at the moment what Merkel and Sarkozy want to do in the eurozone is very likely to happen. In fact there are no major opponents of the tax in the eurozone, with the Dutch having changed their position recently. All that would have been completely unthinkable two years ago.
The key question is whether all the fuss this week, and the involvement now of South Africa, Brazil and the other developing countries, is enough to ensure that not just the French, but the Germans and the rest of the eurozone countries agree to spend some of the money on fighting poverty and climate change. I hope so. Either way the FTT took a big step in that direction today. We need to keep the pressure up in the coming few months on Germany and France on the issue of how the revenues are used, and not stop campaigning until they stop talking big about this tax and actually go ahead and do it. In France especially the pressure should be on Sarkozy to implement the FTT nationally too and stop hiding behind other countries.
Lots to do, but for now I am hanging up the bow and arrow and heading off for some vin, pain and the usual Gallic shrug when I ask whether they have a vegetarian option.
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