G20 poised for watershed summit
“Food, funds, inequality” issues will test G20 leaders’ ability to transform the global economy
The 2011 G20 Summit could be a watershed for global stability and prosperity if leaders rise above a narrow vision of self-interest and act decisively for the world’s poorest citizens, says international agency Oxfam.
One in seven people now face hunger. The global economy is teetering, with poor people being hit the hardest. Even among the G20, a return to strong economic growth will not stop people in many countries from sliding into poverty because of massive disparities in income. The G20’s credibility is on the line at Cannes (Nov 3-4).
Oxfam sees an opportunity for G20 success in three burning questions:
- Will more G20 leaders support innovative sources of funding to fight poverty and climate change?
- Will they start to act on the causes of rising and volatile food prices?
- Will they start to tackle growing inequality in their approach to sustained and inclusive growth?
“The Eurozone crisis will hog the headlines but if the G20 genuinely wants to ‘sustainably improve global stability and prosperity’ then it needs to act on much wider concerns,” said Oxfam’s Carlos Zarco Mera. “President Sarkozy has presented a bold agenda to do this, including issues that are most affecting the poorest people. We now need a Summit of Action, not a Summit of Restating the Obvious.”
“But this G20 has a mountain of skepticism to climb. Country brinkmanship and intransigence have sunk good intentions many times before today,” said Oxfam’s Luc Lampriere. “If G20 leaders rise to the challenge, Cannes could become a watershed for the world’s poor. Millions of hungry people are counting on them.”
Oxfam has identified three issues that feature in the G20’s agenda which, if properly supported, would make a significant contribution to global stability and prosperity.
Build more support for “Robin Hood” financial transaction taxes and a fair carbon charge on international shipping.
The financial crisis has left a $65 billion hole in poor country budgets. Aid flows are down. Climate change is leaving millions of people at risk of hunger and homelessness. A small broad-based tax of 0.05 per cent on financial transactions could raise up to $400 billion a year, while a carbon price on shipping could help to cut emissions and in the process raise $25 billion a year. Each proposal has attracted heavyweight support.
“These are two genuine and innovative solutions to free up a lot of new money to help people being hit hardest by global shocks,” Zarco Mera said. “More G20 leaders should support countries like France, Germany and South Africa in helping to bring these ideas to life. This is a ‘no-brainer’, the obvious right thing to do.
“It will be difficult to forgive countries that set out to deliberately block these proposals when so much momentum and goodwill exists to make them work,” he said.
Tackle food price volatility
The G20 first looked at commodity price fluctuations in 2009 but two years later, very little has been achieved. 44 million people fell into poverty in the second half of 2010 due to rising food prices and Oxfam says prices could double again over the next 20 years.
President Sarkozy has put the food price crisis high on the G20 agenda. He has called for strong market regulation, improved transparency and more work on inventories and insurance in order to manage the effects of price instability.
However, in June, Agriculture Ministers made a feeble call for more studies on biofuels targets and food reserves and speculation but offered little real action.
“G20 leaders have been poorly served by their agriculture ministers and have been left with a huge amount of work to do if they’re going to make any significant improvements for poor producers and consumers,” said Lampriere.
Pave the way for inclusive and sustainable growth and finish the fight against tax havens
Oxfam believes that the G20 must now make good on the bold promises it made in Seoul in 2010 to promote ‘shared and green growth’.
“The G20 raised hopes that it would tilt the balance of economic policy in favour of the poor,” Zarco Mera said. “Its policies now need to concentrate equally on the quality of growth, not just the quantity, so that the benefits of growth reach people living in poverty.”
Despite previous promises to fight tax havens, G20 members have not secured any durable improvement in tax cooperation since 2009 and most countries are still left out of negotiations. The G20 must force tax havens to be fully transparent and promote more transparency from multinational companies.
“Many companies are still hiding from the tax man in dozens of unregulated tax havens around the world. No real sanctions or transparency obligations have been put in place. For ever dollar they get in aid, developing countries are still seeing around $10 leaving their borders, mainly diverted via tax havens,” Zarco Mera said.
Lampriere said: “The G20 is considering the kind of systematic reforms that we need in order to make the economy work fairly for everyone. They need to protect poor people from the worsening effects not only of failing financial and energy markets, but of climate change, inequality and food insecurity as well. This G20 Summit has the potential to be a transformative one in the fight against poverty.”