Global Policy Forum

Julio Godoy

Not a bad idea when French President Jacques Chirac proposed a global tax on weapons sales and corporate profits to pay for development in Africa, Asia and Latin America. Not a new idea either. His proposal at the current UN General Assembly was along the lines of the Tobin tax on money transfers to finance development proposed by Nobel prize winner in economics James Tobin.

Chirac says the tax as proposed by him would double international development aid to about 120 billion dollars a year, what experts say is needed to meet the millennium development goals (MDGs). The governments of Brazil, Chile and Spain backed the plan. But announcements are one thing, action another.

Claims like Chirac's will be examined closely at a conference on Europe and the South in The Hague Sep. 27 and 28. The conference is being organized by the Society for International Development (SID), a Rome-based international non-governmental association of individuals and organizations with members and activities in 125 countries. The conference will bring together about 250 experts from Europe, North America, Latin America, Africa and Asia to discuss relations between foreign policy, security, trade, and development. That will mean among other things questions for Chirac to answer on his new proposal.

"This is typical of Chirac," Francois Chesnais, professor of economics at the University of Villetaneuse near Paris told IPS. "Chirac loves giving high-flying humanitarian lectures before international audiences that later lead nowhere." Chesnais, an expert on the economics of globalization and strong supporter of a Tobin tax, said Chirac has championed grand development programmes before. "Look what happened to the New Partnership for African Development (NEPAD), which Chirac so passionately supported," Chesnais said. "Nothing. The money necessary to really launch NEPAD never came in." The African countries that proposed NEPAD in 2001 expected 65 billion dollars from Europe and North America. By late last year, Canada had allocated 290 million dollars for a 'Fund for Africa'.

What could make a real difference would be removal of subsidies, and there is little movement in that direction, Chesnais said. The International Monetary Fund (IMF) estimates that abolition of subsidies for farmers in Europe and North America would increase African gross domestic product by 0.6 percent a year. But European leaders, Chirac particularly, oppose this. An agreement between France and Germany in December ensures that subsidies for European farmers will continue at the present level of about 50 billion dollars a year at least until 2013.

The Organization for Economic Cooperation and Development (OECD) representing the 30 most industrialized countries said in a report published in July that its member countries pay their farmers about 260 billion dollars a year. This represents 32 percent of farmers' annual income, up from 27 percent in 1990. European subsidies for agriculture are the most costly EU programme, taking about half its budget. Other OECD reports point out that most members fail to meet the agreed UN target of allocating 0.7 percent of their gross domestic product for overseas development assistance (ODA).

Only Denmark, Luxembourg, Sweden, Holland, and Norway have met this target set by the UN General Assembly in 1972, and reaffirmed at world summits at Rio in 1992 and in Johannesburg in 2002. The United States sets aside only 0.11 percent of its GDP for ODA, Japan 0.23 percent, and Germany 0.27 percent. The OECD describes France with 0.41 percent as the most generous G8 donor country (the G8 countries are the United States, Canada, Britain, France, Germany, Italy, China and Russia). But it says a large share of this goes into debt relief for heavily indebted poor countries (HIPC), which in 2002 accounted for almost a quarter of all French ODA. The aid includes allocations for erasing debts never likely to be recovered anyway. France therefore allocates less than 0.3 percent for development.

But not that much of this debt is being cancelled either. Barry Coates from the London-based World Development Movement points out that the 52 HIPC owe a total of 350 billion dollars. The continuous slide of international commodity prices has made the HIPC debt unpayable, he said. The G8 countries promised to reduce the debt by 110 billion dollars, Coates said. "Later, the G8 announced that only 60 billion dollars would be cut. In the end, the approved reduction amounted to 36 billion dollars, or 10 percent of what activists and poor countries were requesting."

The debt can be written off if there is a political will to do so, he said. "For example, Britain's share of canceling the debt of HIPCs would amount to half of what the British government has spent on the illegal and immoral war on Iraq." World Bank president James Wolfensohn told a conference on development in Paris earlier this year that the world was spending 900 billion dollars a year on wars, but could scarcely come up with 60 billion dollars to pay for development.