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FFD3: Last chance to avert failure for the financing of development

Failure may be imminent at the negotiations for a “Financing for Development” (FFD) accord in Addis Ababa this week, said ActionAid. According to the organization, the G77 are being aggressively pushed by the US, Canada and the EU, among others, to sign a deeply unjust version of an agreement that would reinforce rather than address inequalities between rich and poor.

Chief executive of ActionAid International, Adriano Campolina said: “The world’s richest countries are once again trying to impose rules that will keep the rich and ignore the needs and interests of developing countries and the world’s poor. We must see three important changes in the text of the outcome statement or this process, which has been ongoing for over a year, will have failed.
“Firstly, we must secure a commitment to the establishment of an intergovernmental tax body. Secondly, the statement must reverse recent changes that reduced the demand on the private sector’s accountability to government and citizens. And thirdly, women and agriculture must be recognized and actively supported as crucial motors of development.”

Global Tax Body
Central among the issues being negotiated is the global tax system. Developing countries lose an estimated US$212 billion every year to tax dodging by multinational companies. This is lost revenue that is desperately needed for the provision of public services, such as education and health care, which are essential for the eradication of poverty. Harmful tax practices like this are, in large part, due to the decision-making structure of the global tax system.

ActionAid’s Africa campaign coordinator, Luckystar Miyandazi said: “The current global tax standards have been determined almost exclusively by the OECD, a group of 34 countries which include the worlds’ most wealthy and powerful nations. Developing countries are not part of the decision-making at all. This is an incredibly unjust system and will inevitably only ever work in the interests of those who made it. Tax is simply too important to be left to the OECD’s rich members.

“Developing countries must hold firm on the creation of a UN tax body where every country is a member and has equal voice and decision-making powers. If the G77 bow to the pressures of the US, EU and others, it will not just be a missed opportunity, it will be a failure. The world will be stuck with a tax system that continues to work only in the interests of rich countries, rich individuals, and rich companies for the foreseeable future. The poorest and most marginalized people, in particular women, will continue to suffer and inequality will continue to grow.”

Private Sector
ActionAid is further concerned by the recent changes to the declaration that omitted demands for the private sector to be publicly transparent and fully accountable to governments and citizens. These were replaced with incentives and assurance of risk reduction for private investors.

Soren Ambrose, ActionAid’s head of policy, research and advocacy said: “The draft agreement puts profit before people. The transparency demands must be re-inserted and private companies must be made to report their tax affairs for each country in which they operate.”

Women and Development
The current draft of the outcome document treats women as instruments for economic growth rather than as people whose rights must be promoted through the development process. There is little attention paid to the rights of women to pursue development goals on an equal basis, and to be free of threats of violence and exclusion.

Nowhere is this more evident than in the marginalisation of agriculture. Buba Khan, Africa policy adviser said: “Small scale farming is the main source of livelihood for women in developing countries and is the cornerstone of food security, which is among the most basic rights that must be safeguarded. The Financing for Development outcome must include clear plans for increasing financial support for smallholder farmers, with a particular focus on women. Governments have been making empty commitments for too long; what we need is a clear plan of action.”

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