DEVELOPMENT: ‘Summit Will Look For the Money’

By Julio Godoy Reprint | | Print |

Julio Godoy

HELSINKI, Sep 13 2005 (IPS) - Several NGOs believe that the need to find alternative financial sources to pay for development will finally be on the agenda at the United Nations summit this week.

“The United Nations General Assembly will discuss new methods of mobilising resources to finance development policies,” Oscar de Rojas, director of the UN Department for Economic and Social Affairs said at the Helsinki conference here last week.

The conference attracted more than 700 participants from 79 countries. The three-day conference brought together members from civil society, 13 governments, and several businesses. The conference was called within what has been named the Helsinki Process of bringing in different stakeholders to promote development.

The Helsinki Process in this phase was launched by Finland and Tanzania in 2002. Finland was at the forefront of the earlier Helsinki Process that worked for rights within the Soviet Union during the Cold War.

The Helsinki conference took up the idea of finding innovative means for development finance. It considered particularly proposals to raise global taxes on speculative financial transactions, environmentally hazardous economic activities and corporate profits.

The very fact that the UN General Assembly is discussing the issue of global taxation is already an achievement “because the subject has been controversial for a long time,” de Rojas said. “This would have been unthinkable five years ago.”

Development experts at Helsinki agreed that new sources of money are needed if the Millennium Development Goals (MDGs) are to be met within the timetable set by the United Nations. In September 2000, 189 nations agreed on several steps, including halving the number of people who live on less than a dollar a day by 2015. Other goals were set to improve health and education and to fight disease.

Official development assistance is not enough to meet those goals, U.S. political scientist Susan George said. New methods are needed, and “global taxation on specific economic international transactions is one such method.” One model for global taxation is what has come to be known as the Tobin tax, proposed by the late James Tobin in 1972. Tobin, who received the Nobel Prize for economics in 1981 for his analysis of financial markets, proposed a small tax on all currency speculation.

Tobin’s original purpose was to discourage volatile short-term, speculative currency trading and its destabilising effect on currencies. But several NGOs, and of late many European, Latin American and North African governments have supported such a tax for its potential for generating funds to finance development.

According to estimations presented at the 2002 conference in Monterrey in Mexico on financing for development, development aid would have to be doubled to more than 100 billion dollars a year if the MDGs are to be met by 2015.

NGOs say much of the additional money needed could come from bold new taxes.

“Our proposal is not only about financing development, but also as an instrument to pay for essential global public goods such as international stability and security, environmental protection, and spreading knowledge,” Jacques Cossart, an economist at the Paris-based Association for the Taxation of Financial Transactions to Aid Citizens (Attac, after its French name) said.

Cossart also proposed tough regulation of tax havens that drain taxation income for governments and are centres for money laundering.

The World Institute for Development Economics Research (WIDER), a sort of United Nations university based on an island near Helsinki in Finland has proposed the creation of a global lottery. Other participants said more financial resources for financing development can be generated by improving efficiency in the use of present aid, by substantial debt relief, and by urging developed countries to fulfil their commitments.