G20 chancellors: bankers’ tax and looming food crisis must be resolved on your watch

PARIS – The world’s leading economies must act now to stop the price of basic foods from surging further out of the reach of poor people. They must also commit to a Financial Transaction Tax (FTT) to help millions of people hit by the economic crisis and climate change.

International agency Oxfam, a leading voice on global poverty, hunger and aid, has welcomed the promise of action on these issues from France, the current G20 chair. Oxfam says that this week’s Finance Ministers’ meeting in Paris, on Feb 18-19, is an early acid test as to whether the G20 can turn words into action.

“Finance ministers will define the G20’s development credentials this week. They could make or break Sarkozy’s pledges to tackle the food price crisis and push through an FTT,” said Oxfam spokesperson Luc Lampriere. “The G20’s money ministers must now plan how exactly they will deliver on these promises – or otherwise G20 leaders will be left looking like emperors with no clothes.”

Oxfam is seeing mounting impacts on poor people as a result of the economic crisis and food price hikes. Countries are being affected differently, but in general poor people are having to spend more of their limited income on food, and are therefore eating less, less often, and in some case less nutritious food.

“We see anecdotal evidence of people slipping into food insecurity and malnourishment,” Lampriere said.”We hear about affected rural communities cutting back on health spending and having to sell productive animals earlier than they normally would in order to buy food.”

On a Financial Transaction Tax, Oxfam says:   

“This is the zeitgeist tax,” Lampriere said, “a popular and progressive policy worth as much as $400 billion a year. It would be small change from those who can most afford it but make a big difference to those who most need it.”

“A financial transaction tax would be like a breath of fresh air clearing away the stench of bankers’ bonuses and offering hope to those trapped by the economic crisis,” he said.

Oxfam is calling for an average tax of 0.05% on share, currency, bond and derivative deals. An FTT is one of the most promising ways for rich donors to make good on their promises to pay for climate change adaption and help poor countries that are being forced cut to health, education and farming budgets because of the economic crisis.

Recent research for Oxfam shows that 56 of the poorest countries in the world face a combined $65 billion hole in their budgets as a result of the economic crisis. Oxfam also wants the G20 to endorse a recent finding by the UN High Level Advisory Group on Climate Finance (AGF), that at least $12 billion a year can be raised from levies on international transport, particularly on shipping.

This G20 meeting could be the place where the political weight tips in favor of an FTT. “We urge the French and German governments, in particular, to offer clear plans and challenge their G20 counterparts to support it. If the UK and other governments are serious about getting a fairer deal from banks, they need to get behind this proposal,” Lampriere said. 

On Thursday, February 17, Oxfam will help coordinate a Global Day of Action in support of an FTT. Supporters, staff and allies from all over the world will send letters, hold demonstrations and lobby decision-makers.

On global food price increases, Oxfam says:

“Bad policies have broken the world’s food system. Good policies can fix it,” said Lampriere. “G20 Finance Ministers must lead the way and do so now. We have already seen high food prices help to trigger social unrest and Oxfam’s experience from our programs is that poor people are suffering renewed hardship.”

The damaging volatility in global food prices has been caused by many well-known issues – including weather-related crop damage and the continuing rush on biofuels and land – but also market speculation, something that Sarkozy has pledged to tackle.

“The recent price surge seems disconnected from the market fundamentals of supply and demand. Globally grain reserves are still relatively healthy. So circumstantial evidence, at least, points toward speculation as contributing to the food price crisis. Since deregulation in 2002, more than $200 billion in new investment funds have flooded into commodity markets,” Lampriere said.

Oxfam says that the G20 Finance Ministers is the right group to tackle the issue. “The food commodity market has plainly overheated. If that has been causing wild price surges, as it appears, then there is a direct link to poor people going hungry,” he said.

“If you’re earning $20 an hour, this rise in global food prices will eventually hit your pocket. But if you’re earning $20 a month, it can be the difference between eating or not,” Lampriere said.

“Food commodity derivatives should be much more transparent and better controlled to stop any chance of them creating havoc,” Lampriere said. “We’re looking for immediate policy changes from the G20 to calm food markets and help to avert a looming crisis."

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