Climate change: ITUC statement for Copenhagen

With governments downplaying prospects for December’s UN climate summit and the chances of a binding agreement receding fast, the international trade union movement has called on governments to go to Copenhagen ready to make decisions that will put the world on an unequivocal path to a low-carbon future. “The science shows clearly that the longer we wait, the higher the human, environmental and economic costs will be. We need governments to make ambitious commitments which will set in stone the core elements of a treaty that must be completed as a matter of urgency. This means legally-binding targets on emissions and longer-term financing to assist developing countries to adapt, as well as “just transition” strategies to deal with the social and employment dimensions,” said ITUC General Secretary Guy Ryder.

The ITUC statement to the Summit sets out the international trade union movement’s position in detail, emphasising the need for creation of green and decent jobs, through investment in new low-carbon production and services and measures to reduce the carbon footprints of existing industries. The ITUC platform was developed through an exhaustive 18-month process of negotiation involving trade unions from every part of the world, and reflects the concerns and proposals of working people from developing and industrialised countries.

The ITUC Statement to the Copenhagen COP15 Summit and other information about trade unions and climate change can be found at http://climate.ituc-csi.org.

World Food Summit must tackle hunger with just and sustainable solutions

CIDSE and Caritas Internationalis, together the world’s largest development alliance, working with communities impacted by the food crisis across Asia, Africa and Latin America, travel to Rome for next week’s World Food Summit to call on world leaders to harness the potential of small-scale farmers. The catholic alliances believe urgent action is needed now; every day over a billion people go to bed hungry and currently over 23 million people across East Africa are in need of emergency food aid due to drought and a food price crisis made worse by the global economic recession. Since the global food crisis hit in 2007 there is increasing recognition by governments of the need to invest in small-scale agriculture in developing countries to ensure that small producers earn a decent income and enjoy the universal right to food.

“This is a very positive development, but recognition needs to be translated into national country policies and donor support strategies that promote small producer organisations and strengthen their ability to improve production, processing, and marketing - including their capacity to negotiate with buyers and other market actors. The Summit leaders should particularly prioritise farmer’s engagement in policy development, their access to land and water, inputs, credit, insurance, markets, training and extension services,” said Bob van Dillen, from the CIDSE and Caritas networks. However, there is a significant threat that the international community will promote the use of high-tech agricultural techniques, many of which are socially or environmentally unsustainable and create dependence on external inputs, rather than investing in what these farmers really need. The World Food Summit is also expected to reiterate support for further opening of markets and completion of the Doha Round of trade negotiations, which CIDSE and Caritas believe would hurt small-scale farmers rather than help them unless significant changes are made to current proposals.

CIDSE and Caritas believe that if the international community is serious about harnessing the potential of small-scale farmers, policies should particularly target women producers, who are the backbone of the rural economy and crucial actors in ensuring household food security. Both networks call on developing country governments to allocate, within 5 years, a minimum of 10% of their annual budgets to implement these urgent policies. The international donor community should make at least an equivalent commitment to agriculture and rural development in their Official Development Assistance (ODA), whose share within overall ODA spending has fallen from 17% in 1980 to around 5% today.

Parallel to the Summit a Civil Society Forum is taking place in Rome from 14-17 November. An APRODEV and CIDSE Briefing Paper and recommendations to the EU for the World Food Summit is available: >>> here

Oxam reacts to G20 finance ministers

According to Max Lawson, Oxfam senior policy adviser, a tax on banks would be a major step towards clearing up the mess caused by their greed. “The G20 has a responsibility to act. Every minute around the world 100 people are forced into extreme poverty as a result of the economic crisis. Money raised by a financial transaction tax on banks could make a massive difference to the lives of ordinary people.” A global financial transaction tax could raise $1.15 trillion annually to help those affected by the economic crisis in both poor and G20 countries.

On tax havens Lawson said: “It is not sustainable for the G20 to protect themselves from tax havens while allowing them to continue to deprive poor countries of hundreds of billions of dollars every year. A multilateral deal to ensure all countries are protected from tax havens must be a key priority for the G20 in 2010.”

G20 meeting in Scotland: Action for employment, but questions remain

The world’s trade union movement has welcomed the decision by G20 Finance Ministers meeting in St Andrews, Scotland, to keep jobs high on the agenda for economic recovery and reform, and to “maintain government support for the recovery until it is assured”. The meeting also decided that the ILO will have a role in assessing the effectiveness of G20 policies for “strong, sustainable and balanced growth”, although the major players in this process will still be the IMF and the World Bank. Nevertheless, several serious questions remain unanswered by the St Andrews meeting. While the Finance Ministers committed the G20 to responsiveness and legitimacy, especially concerning reform of the international financial institutions, trade unions are extremely concerned that the Financial Stability Board (FSB), which has a primary role in designing new architecture for financial regulation, still effectively operates in secret.

“The FSB has made no effort to discuss and consult outside a very narrow circle of people, many of whom bear heavy responsibility for the current crisis. The G20’s stated commitment to transparency won’t have much meaning at all unless governments make the FSB come out from behind closed doors and open up to discussion and consultation,” said ITUC General Secretary Guy Ryder. The unions have also expressed dismay at the lack of progress on a global transactions tax, championed by UK Prime Minister Gordon Brown who hosted the meeting. “The IMF, which has been asked to make recommendations on this, has traditionally opposed such a tax and now seems to be steering the G20 towards a weak option which would not generate many funds nor make banks help to pay for the crisis they caused. This would only add to the enormous burden working people are already bearing, and would do little if anything to restrain destructive speculation,” said John Evans, General Secretary of the OECD Trade Union Advisory Committee.

The communiqué issued by the St Andrews meeting does include references to the need for financing to tackle climate change; however, no concrete commitments are given either in terms of actual funds to be made available or on the emissions reductions that need to be agreed at the UN Conference in Copenhagen next month. “Finance will be critical to success or failure at December’s Copenhagen Climate Summit, and the absence of clear commitments from this weekend’s G20 meeting on financing within the industrialised economies, or to help developing economies find a low-carbon development path, does not bode well for success in Copenhagen,” said Ryder.

AOSIS States: No Backsliding in climate deal

The world’s threatened island states last week expressed alarm at suggestions that the Copenhagen Climate Summit will not produce legally binding outcomes to build on the current international climate regime. Speaking at the conclusion of climate talks in Bangkok, Ambassador Dessima Williams, Permanent Representative of Grenada to the United Nations in New York and current Chair of the 43-member Alliance of Small Island States, said her group was deeply concerned with the "divisive rhetoric" that had characterised some of the discussions in Bangkok.

Williams addressed the growing divide by proposing two separate and legally binding outcomes in December. Island states joined with other developing nations in calling for deeper emission reduction commitments by industrialised countries under the Kyoto Protocol for the period after 2012. She also called for a second, multilateral and legally binding agreement to define action for all countries, including the United States, sufficient to limit global warming to less than 1.5°C above pre-industrial levels.

Responding to a push by some industrialised countries to move forward without the Kyoto Protocol, Williams said: "It is essential that we build upon, and do not weaken, the existing legally binding framework". She added that "now is not the time for backsliding. The failure to deliver ambitious legally binding outcomes in Copenhagen will threaten the survival small island states." – Williams also noted that Bangkok had seen Costa Rica, Guatemala, Panama and Sri Lanka join AOSIS and the Group of Least Developed Countries (LDCs) in calling for global warming to be limited to below 1.5°C above pre-industrial temperatures. The AOSIS targets are now supported by close to 100 countries, more than half the UN membership.

Statement of the UNFCCC Women’s Caucus at the Bangkok Climate Change Talks

Bits of "women" for a chunk of the earth's population? We, women representing women`s organisations from around the world, appreciate UN Secretary General Ban Ki Moon's recognition of women as stakeholders in this process. We are grateful for the United Nations Framework Convention on Climate Change (UNFCCC) Secretariat led by Yvo de Boer in recognizing us as a possible constituency. However women's leadership and participation in the discussions and ultimately, in the implementation of climate change solutions have yet to be clearly articulated.

While the documents mention "women" at least 20 times, "women" mostly appear in the lists of vulnerable groups. Yet women have made significant contribution in solving the climate crisis through their leadership, experience, perspectives and ideas. We deserve to be included as stakeholders with interests that outstrip individual governments and corporate entities particularly those that refuse to consider the gendered impacts of climate change.

The strong integration of gender dimensions in the discussions would have enabled a more comprehensive analysis of the causes of climate change. Until today, patriarchal politics and corporate greed are the helm of the UNFCCC process as it is held hostage by most developed countries that have been unconscientiously messing up the planet and are not showing any signs of restraint.

Women represent half of the world's population. Often through our unpaid labour, we provide up to 90% of the household's food and other needs. Many of us walk a long distance just to fetch water. Sometimes some of us are raped as we set out to gather firewood.

Yet we continue to venture outside, if only to feed and shelter our families and communities. We significantly make up small-scale fisheries which is far less intrusive to the marine ecosystem. Despite the deep relationship we have established with nature as resource managers, especially in ancestral domains, a majority have yet to be accorded land rights, credit, information and a string of even the most basic human rights.

This situation even worsens as access to natural resources becomes scarcer
due to climate change.

In times of displacement because of extractive industries such as oil exploration, mining, rising sea levels, droughts, floods, tsunamis, earthquakes and others, women and girls constitute more than half of the death toll because of cultural restrictions, lack the necessary know-how and resources to protect themselves While tired and lost, we continue to perform our reproductive roles as providers and nurturers wherever and however we settle.

As women's empowerment primarily comes from women themselves, we need the opportunities to meaningfully engage the process, whose framework so leaves much to be desired especially in terms of transparency, accountability and equity. Women's participation will be fundamental for realization of a gender integrated approach to climate change. It is for this reason that we urge governments to include the following paragraph in the Shared Vision, which serves as the outcome document's preamble:

"The full integration of gender perspectives is essential to effective action on all aspects of climate change, adaptation, mitigation, technology sharing, financing, and capacity building. UNFCCC processes must ensure compliance with existing women's rights standards and best practice as enshrined in the Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW), Millennium Development Goals (MDGs) and UN Security Council Resolution 1325 [Women and Peace-Building]. The advancement of women, their leadership and meaningful participation and engagement as stakeholders in all climate related processes and implementation must be guaranteed."

Bangkok, 8 October 2009

Climate negotiations stuck: US becoming key obstacle

The rift between rich and poor countries has intensified because rich countries have not put serious money on the table to help poor countries adapt to the escalating impacts of climate change and develop on a low carbon pathway, international aid agency Oxfam said on the last day of UN climate negotiations in Bangkok. Oxfam senior climate adviser Antonio Hill said a continued lack of political will from rich country leaders also meant there was no movement on the emissions reduction targets that would help safeguard billions of the world’s poorest from death and suffering.

“The millions of people facing greater floods, droughts and failed harvest after failed harvest will be the real losers if the US, Canada, EU, Japan and Australia continue as blockers to the UN negotiations,” Hill said. The US in particular was becoming the biggest obstacle to a fair and safe global climate deal in Copenhagen. “The US has been silent on the scale of finance it will commit to, and has yet to adopt an ambitious emissions reduction target by 2020, giving negotiators none of the political clout necessary to unblock negotiations in make-or-break areas.” He said the desire of the EU, Japan, Canada and Australia to accommodate the US and abandon the Kyoto Protocol was an example of the poor leadership on show by all these countries these past two weeks.

According to Oxfam, Bangkok has been a warm-up session for negotiators who have shown their skill in trimming text, but in political terms, when the starting gun fired it became a race to the bottom, with rich countries weakening existing commitments under the international framework. The poorest, most vulnerable countries looking ahead to Copenhagen now face an impossible choice - to accept an agreement that fails to reduce the life-or-death risks they face, or to hold out for a safe and fair deal but risk walking away from Copenhagen empty-handed. “It is useful that the US is prompting a debate on who does what under a global agreement, but if it really hopes to have a constructive dialogue with developing countries it has to up the ante first by tabling an offer of finance and emissions cuts commensurate with its historic emissions and economic weight,” Hill said.

“The US’ endorsement of a new fund for developing countries is an encouraging step forward, although big questions remain on how it will operate.” Hill pointed to other areas of useful progress in the areas of agriculture, mitigation action from developing countries, and aviation and shipping emissions over the past two weeks. “But what we have seen in Bangkok was a cosmetic procedure, when what was required was major surgery,” he said.

Developing countries came to Bangkok willing to negotiate. China is a world leader in renewable energy investment, has committed to reduce emissions in line with its economic growth path, and has offered support to help developing countries, including small island states and African nations, adapt to the impacts of climate change. Last week Indonesia committed to deep cuts below business as usual.

For developing countries, another disturbing development in Bangkok has been a hardening of rich country positions on the issue of finance: they are now openly insisting climate finance should come from existing aid budgets. But aid must be increased, not diverted, say NGOs. If promised aid increases are plundered for climate purposes, it could mean that 8.6 million fewer people have access to HIV and AIDS treatment, 75 million fewer children will be in school, and 4.5 million more children die than would otherwise be the case.

Financial Transaction Tax de facto in Pittsburgh Leaders’ Statement

France and Germany managed to get the financial transaction tax (FTT) proposal de facto into the Pittsburgh Declaration of the G20. The IMF is tasked to prepare for the next summit a report on instruments to make the financial industry "a fair and substantial contribution toward paying for any burdens associated with government interventions to repair the banking system" (point 16 of the Leaders’ Declaration).

“This is a positive step”, says WEED’s Peter Wahl. “As the head of the IMF, the French socialist Dominique Strauss Kahn, can be considered to be open to a Transaction Tax, we can expect that the proposal will be carried on. Not only Sarkozy but already Mitterand and Chirac were supporters of a similar tax, the Tobin Tax. The Tobin Tax, however, had only currency transactions as tax basis, whereas the Financial Transaction Tax (FTT) encompasses also bonds, equities, derivatives etc.

There is an extraordinary opportunity for civil society to make the FTT one of her prominent points to organize pressure from below in the time to come and to make the FTT not the solution for everything but a spearhead of campaigning.

The tax offers a lot of economic and politic leverage:
1. It has a regulatory potential. It contributes to curb speculation, will shrink the financial sector and thus contribute to breaking the dominance of finance over the whole economy and society.
2. It has a strong distributional or social equity dimension by making pay those, who were benefitting from the system and are responsible for the crash.
3. As the issue of public debt and who will pay for the bill off the crisis will be on top of the agenda in the coming years, with pressure to cut public expenditure and in particular social budgets, we have with the FTT a powerful tool to say "Let them pay for the crisis". The FTT is a powerful alternative in that respect.
4. There is a strong political momentum with Sarkozy, Merkel, Austria supporting the idea. Also the president of the EU Commission, Barroso, and commissioner Almunia are in favor, as well as the British foreign minister Miliband.
5. There are already a lot of allies in trade unions, churches and NGOs for a currency transaction tax and the media are acquainted with it.
6. There is already a lot of expertise, studies etc. on the issue on which we can build. So, we have not to start from scratch.

At the moment I see three main challenges:
a. All the new supporters of the FTT have an inbuilt self-destroying mechanism in the proposal: they all say that the proposal is only feasible on global level. This is wrong. Of course, it wold be nice to have the FTT globally, but it would already have a strong impact if it is implemented in one major currency zone, for instance the Euro zone. It is the same as with the Kyoto protocol, you can do something without the US having on board. We have to make this argument strong.
b. Civil society has to be flexible and to adjust its strategy to the new situation. This does not mean, that people give up their own agenda, but that we find ways to combine in an intelligent way with our usual work. We should not just do business as usual and try to reshuffle our agenda and resources.
c. Nobody of us loves the Merkels, Sarkozys e tutti quanti, and I know how difficult it is to admit that they could do something which is not per se an evil. But if there is such a clear split inside the elites we have to make those positions strong which have been ours since ten years, even if we Merkel and Sarkozy support it.”

Oxfam: G20 should protect poor countries from economic crisis

Developing countries across the globe are struggling to respond to the global recession that continues to slash incomes, destroy jobs and has helped push the total number of hungry people in the world above 1 billion. The economic crisis arrived as poor countries were already struggling to cope high food prices and floods, droughts and food shortages linked to climate change. Oxfam analysis of economic data has discovered that governments in Sub-Saharan Africa will be $70bn worse off this year as a result of the global slump and unlike rich countries they cannot borrow their way out of trouble. Without outside help governments will find it increasingly difficult to respond to the climate, food and economic crises and to avoid cutting spending on schools, clinics and other anti-poverty programs.

But despite feeding their own economies a much needed stimulus, the G20 has not yet provided even half the $50bn bailout it promised poor countries in April. Oxfam is calling for a $290bn package of measures to ease the burden on developing countries without hitting ordinary taxpayers. The package includes a Tobin tax on currency transactions, a debt moratorium and a crackdown on tax havens. Oxfam says: “Existing aid levels are not enough to protect the status quo let never mind reduce poverty in the face of the economic crisis, climate change and rising food prices. The G20 has the chance to change the bad habits of the past and come up with new solutions to the problems facing poor people. A currency transaction levy on the banks that helped cause the global slump could bring in $50bn to help those suffering in a crisis they did nothing to cause. It is time bankers paid a bonus to the world’s poor.”

Oxfam is also calling on G20 leaders to fulfil a promise made by President Obama in July to deliver new funds to help poor countries cope with climate change. This funding is vital to break the deadlock in climate change negotiations leading up to the make-or-break UN Summit in Copenhagen in December. Oxfam calculates that $50bn-a-year is needed to help poor countries cope with climate change and another $100bn is needed to help them control their emissions.

Trade Unions: Pittsburgh must be a jobs summit

The G20 meeting in Pittsburgh this week must tackle the growing global jobs crisis if real economic recovery is to take place, according to the world’s trade unions. With the global crisis set to cost 59 million jobs by the end of this year, and predictions that unemployment across the OECD countries could reach 10% in 2010 and increase into 2011, the ITUC, TUAC and the Global Union Federations are warning in their Pittsburgh Declaration that the chances of real economic recovery are under severe threat. A 50-strong delegation of top union leaders from every continent will hold a series of meetings with heads of government and global institutions at the Pittsburgh Summit to press the case for stronger and more coordinated action.

Last week’s gloomy predictions in the OECD’s annual Employment Outlook reinforce the union concerns. On top of an estimated 15 million jobs already lost in the richer countries, the OECD has warned that the worst is yet to come for labour markets in several countries. The OECD also confirms that young people, those with fewer skills, immigrants, ethnic minorities and those in temporary or untypical jobs are being worst hit. “The G20 must move on several fronts, quickly and with determination,” said John Evans, general secretary of the TUAC. “Jobs must be the first priority, but action on jobs will be undermined without reforms of the financial system, action for development in particular in the poorest countries, and concrete steps to create green jobs and ensure a just transition to a low-carbon future,” he added.

The unions’ Pittsburgh Declaration sets out detailed and workable plans to tackle bank insolvency, deal with excessive corporate pay and bonuses, reform taxation and ensure effective financial market regulation. A global tax on financial transactions is put forward as means both of reducing unproductive speculation and generating funds for development. Trade unions demand changes to the programmes of the International Financial Institutions, which are imposing job-destroying conditions on developing and transition countries with devastating consequences for health, education and social protection in the future, and insist that the G20 move forward on creating green jobs and ensuring proper protection for workers affected by urgently needed action on climate change.

Sign-on letter to G20 on an international capital transaction tax

Dozens of civil society organisations from across the world are urging the Heads of State and Government of the G20 meeting this week in Pittsburgh to take steps towards the implementation of an International Financial Transaction Tax. In an open letter the NGOs say:

“Such a tax would be levied on all cross border financial transactions including currencies, equities and all kinds of derivatives. Even with a low rate of 0.05% such a tax could generate an annual income of tens of billions dollars.
This revenue could be used to pay for the cost of the crisis in the North, in particular the heavy burden of public debt, which has been accumulated to rescue the financial system. As well, to assist countries in the South to meet their development objectives, which have been thrown off track by the crisis. We are sure you agree that it is unacceptable for citizens in both the North and South to pay for the damage caused by the finance industry. Those who have benefited so much from the way in which the system has worked ought to be obliged to take responsibility for their actions. This tax is a measure of political fairness and social justice.
Furthermore, such a tax would contribute to a reduction in speculation, which was at the heart of the collapse of the financial system. The tax would thus enhance financial stability and prevent the finance industry from continuing with a ‘business as usual’ approach.
Around the world national financial transaction taxes (FTTS) are commonplace on shares and bonds. Since these transactions are electronic, they are simple and inexpensive to implement. Payment of an International Financial Transaction Tax would thus be automatic with no scope for avoidance, even in off-shore centres. It could, in fact, be introduced unilaterally by those countries wishing to see it implemented; although it would be preferable that all major economies participate.”

A measure of this type has recently gained considerable support from the German finance Minister, Mr Steinbrück and his colleague in the Foreign Office, Mr Steinmeier. Two weeks ago the head of the British Financial Services Authority proposed a tax on financial transactions to prevent excessive profiteering by banks. Governments in Europe and South America already have experience of specific FTTs, and parliaments in France, Belgium, Canada and Finland have considered implementing a tax on foreign exchange transactions. In 2005, at the United Nations 115 countries voted to explore the potential of taxing cross-border currency transactions.

For further information on the initiative go to >>> http://www.stampoutpoverty.org/

Europe’s climate offer would rob tomorrow's hospitals and schools in poor countries

This week the European Commission published its paper on climate financing ahead of the Copenhagen summit in December. Even if Europe’s climate offer could divert money already promised for education and health in poor countries, Oxfam International welcomed the European Commission’s intentions to break the deadlock in global climate talks by moving first. Putting climate financing figures on the table was a necessary first step to open up meaningful negotiations.

"However, the European Commission proposes that rich countries should take money from existing promises to increase overseas aid spending to 0.7% of national incomes. This would rob tomorrow's hospitals and schools in developing countries to pay for them to tackle climate change today. This will undermine progress towards meeting the Millennium Development Goals”, Elise Ford, head of Oxfam International’s EU office, said. “This is scandalous, especially given Europe's responsibility as one of the world's biggest polluters who has caused the problem, and the onus on them to clean up.”

It’s now up to EU Member States to come up with a stronger proposal at the European Summit on 17 September, to get a good climate deal that does not come at the price of the future development of poorer countries, who are already being hurt by global warming. Funds to help developing countries to tackle climate change must be additional to aid – not instead of it. William Chadza, Executive Director for the Malawian Center for Environmental Policy and Advocacy (CEPA), said: “We must consider Europe's top-end offer of €50 billion to be an opening negotiation tactic, which might be a good start to kick-off the talks. However, the real need of developing countries to cope with the impacts of global warming and develop their own low carbon futures will go far higher than this. The rich world will need to do much more to make a real difference to poor people suffering climate change.”

* Read the media briefing >>> Paying the Climate Bill.

The Steinbrück tax proposal: No reason for too much optimism

Peer Steinbrück (see photo), Germany’s minister for finance, and Frank Steinmeier, his colleague in the foreign ministry, are in favour of a global financial transaction tax. They announced their proposal in a conversation with the national newspaper Süddeutsche Zeitung. "The costs for the crisis must not stay with the small and medium taxpayers", they said. "There must be a fair burden sharing." They suggest an international financial transaction tax, which is levied not only on currency transactions, like the Tobin Tax, but on all kinds of financial transactions, including equity, certificates and derivatives.

The idea had been initially suggested last year by the Vienna Institute for Economic Research WIFO (>>> Stephan Schulmeister, Margit Schratzenstaller, Oliver Picek, General Financial Transaction Tax Motives, Revenues, Feasibility and Effects). They propose a tax rate of 0.05%. Steinbrück also said, he would bring the issue on the agenda of the Pittsburgh G20 summit. The initiative comes two weeks after the head of the British supervisory authority, Lord Turner, had proposed to introduce a currency transaction tax.

Although the initiative gives a strong boost to civil society advocating the Tobin Tax or variants of it such as the Spahn Tax for decades “we should not be overoptimistic”, says Attac Germany’s Peter Wahl. According to him, the proposal has very much to be seen in the light of the German election campaign in the run-up to 27 September. “The Social Democratic Party (SPD) is, like all parties of New Labour, in a desperate situation. In recent regional and European elections the SPD was suffering the deepest decline in its 100 years of existence. At the same time the new left party DIE LINKE is getting stronger with the crisis and the issue of social justice becoming more and more to the forefront.”

Furthermore, Wahl explains, the Steinbrück proposal has not been agreed with the chancellor. Merkel has not yet reacted. But given her ideological and political dependence on the finance industry, it would be a miracle if she would accept to present the proposal in Pittsburgh. Last but not least, Steinbrück says that such a tax would have to be implemented at global level. This is a preventive explanation of failure, because he knows very well that Wall Street and the London City will not allow their governments to accept such a proposal. Nevertheless, civil society should use the opportunity and intervene strongly into the debate.

Doing Business 2010: World Bank discourages social protection

Even though the World Bank has endorsed improved social safety nets to protect the millions of workers who have lost their jobs due to the global economic crisis, the latest edition of the Bank’s highest circulation publication discourages countries from adopting social protection schemes by designating governments that do so as anti-business. Doing Business 2010 also recommends that countries should reduce severance pay for dismissed workers and reduce or eliminate requirements for prior notice about job cuts.

In April 2009, the Bank announced that the Doing Business labour market flexibility indicator, which encourages the reduction of workers’ protection, “does not constitute World Bank policy and should not be used as a basis for policy advice or in any country program documents”, and that the indicator would be removed from the Bank’s conditionality framework (known as CPIA: Country Policy and Institutional Assessment). The Bank also stated, “Doing Business 2010 will include a commentary explaining these steps”, but the new edition of the publication issued today ignores this commitment posted on the Bank’s web site in April.

“If the president of the World Bank truly believes that countries should improve social protection in order to mitigate the impact of the global recession, as he has said on numerous occasions, then it is high time for the Bank’s highest circulation publication to stop promoting the elimination of social and workers’ protection,” said Guy Ryder, general secretary of the International Trade Union Confederation. The ITUC called attention to the fact that Doing Business 2010 puts Cambodia in the category of countries that are “making it more difficult to do business” because it introduced a social security contribution. Conversely, Georgia is praised and given a better ranking by Doing Business because it abolished its social tax. Doing Business 2010 criticizes the democratic government of Honduras, whose president was expelled after a coup d’état in June, because it increased severance pay and advance notice requirements in response to the economic crisis (Honduras has no unemployment insurance). Similarly, Doing Business downgrades Portugal for increasing the dismissal notice period by two weeks.

On the other hand, the authoritarian regime of Belarus, which lost its preferential trade status with the European Union for violating fundamental conventions of the International Labour Organization (ILO), obtains high marks from Doing Business 2010 for making it easier to eliminate jobs. Rwanda wins this year’s Doing Business “top reformer” prize because “employers are no longer required to consult beforehand [about job cuts] with the employees’ representatives or notify the labor inspector”. The Bank’s publication also praises Macedonia for getting rid of measures to retrain redundant workers, and Mauritius for eliminating mandatory severance pay.

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.

Oxfam reacts to WTO judgement on US cotton subsidies

The United States this week has lost a battle in its dispute over cotton subsidies with Brazil at the World Trade Organization (WTO), said international organization Oxfam. The WTO confirmed the injury caused by these subsidies and authorized Brazil to retaliate against the US. “American farm policy is broken and bloated, and now other sectors of the US economy may suffer as Brazil retaliates,” said Gawain Kripke, policy director for Oxfam America. Total direct support to cotton production hovered over $3bn in the 2008-2009 growing season, or an equivalent of 50 cents per pound of actual production, according to the International Cotton Advisory Committee.

“The global trading system depends on countries obeying rules and submitting to orderly dispute resolution,” said Kripke. “Thus far, the US has ignored the ruling of the WTO adjudication and continues large subsidies for cotton production. If the US continues this way, the integrity of the multilateral trade system is at stake.” An Oxfam study found that with a complete removal of US cotton subsidies, the world price of cotton would increase by 6-14%, resulting in additional income that could feed an additional million children for a year or pay school fees for at least two million children living in extremely poor West African cotton growing households.

The longstanding dispute started in 2002. In 2005, the WTO ruled that US cotton subsidies harmed Brazilian cotton farmers and violated WTO rules, but the US did little to abide by the ruling and reduce its trade distorting subsidies. In September 2006, Brazil asked for a WTO “compliance panel” to determine whether the US has done enough to comply with the ruling and the WTO confirmed that the US has failed to reform its agricultural subsidies enough to comply. The recent ruling confirms that Brazil is entitled to start retaliation procedures, and possibly cross-retaliate by lifting intellectual property protections.

G8 in Italy must prove its relevance

Caritas Internationalis and CIDSE say G8 countries meeting in Italy need to roll back years of broken promises if they’re to regain authority on their flagship issue of tackling poverty. Leaders of France, the United States, Britain, Germany, Italy, Canada, Japan, and Russia hold a make-or-break meeting 8-10 July in the Italian town of L’Aquila to prove the annual jamboree is not past its sell-by-date.

The summit comes in a critical year for international development. The global economic crisis threatens gains made in reducing poverty over the last ten years. As many as 100 million more people will remain poor or become poor as a result of the crisis. Negotiations on climate change are not making the progress needed to achieve an adequate deal to be signed in Copenhagen in December. Hopes are not high. G8 countries have backtracked on their aid pledges, particularly Italy and France, citing the crisis as an excuse. However, world military spending surged to a new high of $1.4 trillion in 2008 while $8.7 trillion of state financing was found to shore up banks

Caritas Internationalis Secretary-General Lesley Anne Knight said, “If the G8 is to have any credibility left after this summit, it must make up for the broken promises of the past. This means committing to a firm timetable for achieving its previously agreed aid targets. To be cutting aid budgets whilst pouring billions into a bankrupt banking system is like robbing the poor to feed the rich. The G8 has an opportunity this month to show real leadership in the fight against global poverty. If it fails, it will show itself to be irrelevant.”

CIDSE Secretary-General Bernd Nilles said, "G8 countries have so far failed to commit to the necessary cuts in greenhouse gasses to avoid dangerous climate change. They have also failed to commit to providing developing countries with the support they need to enable them to adapt to the impacts of climate change and to pursue sustainable development paths. They’re fiddling while Rome burns.”

The G8 is one of the few moments where leaders of the richest countries will meet in the run up to Copenhagen and should play a crucial role in unlocking stalled talks and securing a deal. The G8 must commit to a minimum of 40% cuts in greenhouse gas emissions by 2020, based on 1990 levels. They must provide their fair share of financing for adaptation and mitigation in developing countries. Conservative estimates indicate $153bn of additional finance will be needed for mitigation and adaptation in developing countries by 2020.

Read CIDSE - Caritas Internationalis G8 recommendations >>> here.

Civil Society Background Document on the UN Conference on the World Financial and Economic Crisis and its Impact on Development

We are facing a global systemic financial and economic crisis, which originated in the increasing financialization of the global economy, coupled with deregulation, over-reliance on trade liberalization and the use of financial instruments that created systemic risks and asymmetries. These factors have resulted in a financial industry disconnected from the real productive economy and in a severe slow-down in the real economy, with tremendous human and social costs. Before the financial crisis, the world was already suffering from a food crisis, and facing environmental challenges of historic dimensions. With this Conference, the UN as the most comprehensive intergovernmental forum, has a historic opportunity to start a longer-term inclusive process for a fundamental transformation of the economic and financial system and to make social and gender justice and the fulfillment of human and environmental rights the key objectives of all crisis-related measures. As a first step, global fiscal stimulus measures are crucial, both for industrialized countries, economies in transition, and developing countries, to stimulate their economies in a sustainable manner, and implement counter-cyclical policies, without, however, reverting to the same export-led growth model based on unsustainable over-production and over-consumption patterns. However, equally important are concrete commitments for an intergovernmental time-bound process towards long-term structural reforms to prevent future financial bubbles and economic busts. This UN Conference must be the beginning of a process for systemic change, crisis resolution and economic justice between developed and developing countries and economies in transition.

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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.
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* 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.
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* 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.
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