After Addis: four steps to turn a 'failure' into success

current affairs, environment, ethics, finance, foreign affairs, integral ecology, international development, international politics, multilateralism, pope francis, spirituality

It has been a historic, ground breaking week in Addis Ababa. That is for sure. For those who believe in a debt-driven world where global private finance transfers risk to the public purse, and calls it development, it has been a huge success. The launch of the Redesigning Development Finance Initiative by Canada this morning is testament to this. The international community has finally thrown off the shackles of the messy, awkward business of substantive, detailed multilateral negotiations and cut to the chase. A new world order governed largely by public private blended finance, where issues of human rights and environmental sustainability are tangential (despite the rhetoric) is now here. As Helen Clarke, UNDP Administrator said at an OECD event on Tuesday, people are ‘voting with their feet’. Even the modalities of FFD negotiations testify to this shift. As veteran Chilean Negotiator Torres said at a CIDSE side event yesterday: ‘this was the strangest negotiation in my life’. The evangelism of this new approach is intoxicating, as the Canadian launch this morning, attended by five ministers, heads of state, heads of agencies, CEOs of multinationals demonstrated. The holy grail of development finance has been found. 
There should be a lot of head scratching and soul searching going on within the global CSO movement. What has been achieved by the 1000 strong CSO presence here? Did CSOs influence anything of substance in the process? Or has the horse bolted and left us all standing at the stable door? I am certainly asking myself these searching questions, having come to Addis hopeful that it would live up to the ambition of this momentous year. Maybe the fact you are reading this blog is my main contribution.  Thank you. How could so much effort result in so much disappointment? There is a very strange, confusing paradox playing out. CSO issues, such as tax cooperation certainly were centre stage in all the official discussions and negotiations, and the logic was compelling, as I wrote here. But ultimately, the forces at work simply circumvented and subverted the official processes. The real action happened behind closed doors and in the surrounding hotels. The rest was ultimately form, not substance. Sure, there are some good things in the outcome document which issue based NGOs will be delighted with – some small wins, but very little of substance in relation to systemic drivers of poverty.
The big issue now for CSOs who believe in global justice is one of political strategy. Given that we can pretty much accept that the brave new world of an international finance dominated development cooperation future has arrived, we need to regroup. This future is one which we in Trócaire predicted back in our Leading Edge futures project back in 2010, as have others in their own power analyses.
Here are my thoughts on what needs to happen now.
First, we need to accept we have lost this battle, if not the war. Accepting defeat is hard, but ‘the truth will set you free’ – let’s not try and claim success in changing this or that comma, sentence, word in the text to justify our existence. CSO presence here has been critical in terms of accountability, but we need to accept the scale of the challenge is perhaps even bigger than we thought. The tax debate is testament to this. 
Second, we need to step back and take stock of our influencing strategies and where we draw our power from. At our recent climate justice conference in June, Bill McKibben, in his speech, made a very good point that those in control today wield massive monopolistic economic power. This isn’t about the market really, but monopoly. We don’t have that and we can never match it. What we have is another currency – that of people, movement building. We need to understand deeply where we draw our power from, and what the blockages are in terms of harnessing it. We need to shift from “networking” to “movement building”.
Third, we need to join the dots. This is where I think Pope Francis in Laudato Sí, is so helpful. He helps us to look outside our silos and urgently get back to basics – to a different perspective founded on the idea of ‘integral ecology’. The crisis we are facing now is a ‘socio-environmental’ one which requires dialogue and collaboration. We need a common analysis which actively joins the dots in the many struggles faced by those who believe in a future based on shared humanity and environmental justice, and are resisting a shift to the kind of future we have seen in Addis this week. This is where I think the work of the likes of Naomi Klein, as someone who has done the thinking on the dots, needs to come in. Tax justice and climate justice are inextricably linked – we need to make those linkages explicit.
Fourth, we need to grow the alternatives and make them visible and viable. Just imagine if the FFD summit side events this week had been flooded with the hundreds, thousands of truly participatory, co-operative based, agro-ecological, social solidarity based initiatives that exist?  We need to build engagement strategies with the many enlightened business leaders out there too, such as the ones I met recently in Nairobi, so as to engage a broad coalition.
Doing all this requires a new clarity of vision and purpose, especially within the INGO sector. As Ben Phillips wrote after his trip to the Vatican, we need to take courage from what Pope Francis has said. We need to get our courage back – recognising that this will make us unpopular, sometimes with those who bankroll our organisations. In the face of Addis, we need to once again, go back to our roots in speaking truth to power.

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TAX: A dirty three letter word?

current affairs, ethics, finance, foreign policy, international politics

For many ‘tax’ is a dirty three letter word. It is something to be endured under duress. We all know what it means to get that crested letter from the revenue. The Financing for Development Conference in Addis this week has revolved around tax. The loud call by the G77 for the establishment of a global tax body where all can have an equal say in global tax rules has been the pivotal issue in the negotiations, which are coming to a head as I write. Despite the many new initiatives launched during the FFD summit, this single issue has become critical – and emblematic of the deeper struggle going on within global politics, as I wrote here. Don’t be fooled by the gloss and spin!
The reason for this is quite straight forward. It comes down to a growing realisation that there are only a limited number of available sources to finance development in poor countries – and not all of them are equal.
Let’s take the main financial flows very briefly in turn. First there is overseas aid. Whilst aid remains an important source of finance, especially for the poorest countries, it has some serious down sides. The biggest weakness of aid is that it leaves countries vulnerable to the whim of international actors, who themselves are responding to their own political constituencies. This constituency, in recent years, by and large, in the OECD, has tended to question the value of aid as a legitimate public expenditure. Aid also comes with many strings, not all of which match the desires of national governments around their peoples’ futures. Irish Aid, thankfully, bucks the trend in being untied, grant-based and poverty focused. It sets a ‘gold standard’ I personally am proud of, but still, it is vulnerable to the same downsides.
The second major private flow is foreign direct investment. For sure, this is an important source of finance and it has been the focus of many discussions this week, but again it comes at a cost as a main source of finance. Large external investors are prepared to exert significant on national governments to restructure their economies in their favour as a condition of investment. Importantly, one such condition is pressure to reduce taxes.
The third flow is international trade. Again, it is an important source of foreign currency but history has shown that countries which are heavily dependent on this for development are vulnerable to currency fluctuations, making it a very risky source of core budget finance. A similar argument could be made for remittances from overseas. Again, nice to have – but hardly a sustainable way to finance a country!
Other flows such as raising public debt are becoming increasingly important. The structural adjustment programmes from the 80s onwards, and the recent Greek crisis, however, are testament to how unsustainable debt – whether public or private/public blends– can result in the most serious crises, including state collapse and conflict. That is why the proposals at the FFD conference around ‘blended finance’ and PPPs, which effectively increase public debt levels are so disturbing. In the absence of sovereign debt work out mechanisms or adequate safeguards, there could be many more Greece crises in the future. Bankrupt countries which are bailed out and then run by private finance institutions and technicians, who then literally ‘buy up’ countries are a very possible future.
The overwhelming impact of all of these external sources is to narrow the space that national governments have to implement policies on behalf of their people. With each of the above, countries are beholden to masters beyond their control. Inevitably, the pressure this brings to bear corrupts. It results in a crisis of accountability.
So the attention of many northern governments has turned to forms of domestic resource mobilisation, i.e. resources countries can raise ‘in house’. Unable to provide adequate ODA, they point to Southern government to raise their own resources. Tax is the essential, sine non qua – the unavoidable missing element in the discussion which is now taking centre stage.
Tax has a number of qualities other sources don’t have. It is an obligation, backed by law; it is predictable and long-term; by definition, it is a contribution to the financing of the public good which goes beyond the benefit received in return. As a source of revenue it is raised locally and largely spent locally, it is not bound by the same external conditionalities. Progressive tax has the added benefit of increasing social cohesion through institutionalised solidarity.
What the wealthy countries didn’t foresee on this week was the powerful counter argument to their call for greater domestic resource mobilisation. This was epitomised in a report by former South African PM Thabo Mbeki: African countries have lost the same about in illicit flows as they have received in aid in the last 50 years. Multinationals based in rich countries, who set the tax rules, are by and large responsible for this through tax avoidance schemes such as transfer mis-pricing. Annually, Africa looses $50 billion dollars to illicit flows. In an era of globalisation, if you want to raise domestic resources, you need to stop the bleeding from illicit flows. To do that, all countries need an equal say in setting the rules of global taxation.
Who, how and what is taxed says something deep about the communal values in a given society and how those are aligned to political power. Unfortunately in our world today, there is a profound mis-alignment between our societal values and the forces which determine taxation globally. The large corporations, and their powerful leaders who set the rules, are largely unaccountable. They are able to make the rules to their own advantage in the cracks between inadequate national and international laws. Reversing this through a global tax body which reflects better the shared values of justice and human rights is the key message from Addis, and now a top priority. Tax for me is no longer a dirty word – but a symbol of commitment to a just world.

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FFD: Outsourcing multilateralism?

business, climate change, finance, foreign affairs, multilateralism, sustainable development goals

At the start of this 2015 blog, I highlighted three major global events happening in 2015 which offer an exceptional opportunity to change course. The first of these, the Financing for Development Summit in Addis Ababa has finally arrived.
As I sit here in my comfortable hotel bedroom in Addis Ababa, listening to the police sirens outside as dignitaries from 193 countries arrive, I wonder about the week ahead – and what difference, if any, my being here makes. These big global summits are a circus. In fact, as I write, the negotiations may be over already. The EU unilaterally agreed to the final draft text overnight. They have given the other major block of countries, the G77, until 3pm today to accept this agreement. The G77 will have to decide whether this is a battle worth fighting.
The point is that delegates coming to Addis would prefer not to have to do any serious, messy negotiating – this would take away from the media razzmatazz of the non-negotiated announcements. The last thing they want is for the media to get distracted by any disagreements. Patch it up, cover up the cracks – agree something, anything. Let us all get on with the real business of interesting side events, state dinners, receptions, and the all-important branded global initiatives! Let the people back home know we are making a difference.
The fact is that the official outcome document is excruciatingly weak, despite Ban Ki Moon’s valiant attempt to talk it up to 1000 NGOs yesterday. The “Addis Action Agenda” is very short on concrete action, especially on the part of states. There is no new aid money, for example, on the table. The FfD summit is meant to come up with the additional finance – both the actual money and the structural changes required to generate future resources – to deliver on the ambitious Sustainable Development Goals (SDGs) by 2030. Finance for global goals can come from a range of sources but not all finance is equal. All of us know the difference between a grant and a high interest loan. To achieve the SDGs, especially for the poorest people on the planet, public finance is essential. Only public finance can provide the level of stability and the social contract needed to deliver essential services to the poorest. Without adequate public finance the whole enterprise of human development based on the idea of human rights – where duty bearers can be held to account – is put at serious risk.
What the run up to the negotiations in Addis confirms, yet again, is that a profound shift in global politics taking place right under the noses of our elected governments. This shift is really about a transferal of accountability in global politics away from democratic governance into the hands of powerful financiers and corporations. The only game in town this week is the unrelenting rise of private capital in the provision of the new development agenda, as I recently wrote about here. Public Private Partnerships and blended finance are the only show in town. Such PPPs come at a cost – a cost of democratic accountability, through transferring the responsibility for public services provision away from the state into large, international, unelected profit making entities. The risk burden, moreover, is transferred to the public purse creating the potential for new unsustainable debt crises. The decision on when the cost of an investment in essential, life saving services becomes too high essentially becomes a matter for the board room in New York rather than the cabinet table in Addis Ababa. Who, then, is accountable for ensuring the human rights of those at the receiving end of such essential services? 
Whilst the negotiations on agreeing the new goals (the what) have been relatively straight forward so far, the negotiations on the means to get there (the how) have been dogged with bad feeling from the start. It feels like the world was happy to come up with an ambitious wish list, but is hoping Santa Claus will come to deliver it. The atmosphere here could not be more different to the optimistic spirit experienced in the Vatican last week. That spirit, grounded in a realisation of the existential crisis facing humanity, unfortunately does not seem to have made it to Addis yet. The words of the Encyclical are still ringing in my ears “everything is connected”. The fight against climate change, in fact, is profoundly linked to the capacity for state action, which in turn relies on an ability to generate resources through taxation and limit illicit flows – which in turn, requires democratic governance and upholding of basic human rights of communities over corporations. In other words, people and planet before profits.  
At present, it would appear that the dominance of the private corporate sphere, with its unrelenting logic of profit seeking has the upper hand. That logic has come to set the rules of the game, even within the UN. The UN, as I wrote here, is not coca cola! Santa Claus, in his red Coca cola truck will not deliver the SDGs. Multilateralism itself it seems is now beholden to the markets. Such a form of multilateralism knows no forgiveness, as the unfolding Greek tragedy demonstrates.
The question is how can such influence be curtailed? How can we reclaim the democratic space, especially in a world where 90 states have introduced draconian measures to limit democratic freedoms? In many countries, including the one I am sitting in right now, public protest will now land you in prison or worse. Everything is connected.
As I said following the Vatican conference, and after the Trócaire conference, we need a new global movement – which is able to see the profound interconnections between the different struggles we are facing. At the heart of this, there is a profound need to reclaim the Greek philosophical basis of a good society – and adapt it to the world we live in today, constrained by climate change and other massive challenges. It seems to me that four burgeoning global movements need get out of their silos and come together: the movement for climate justice, the movement for tax justice, the global treaty alliance on business and human rights and the movement for transparency. Together, these peoples’ movements, grounded in a global “culture of care” based on the Encyclical, could make the difference. Without this kind of united struggle, the spectre of global plutocracy looms large.

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