Global Policy Forum

By Gideon Burrows*

At the recent G8 summit in Evian, Brazilian president 'Lula' da Silva proposed a tax on the arms trade. Why did no one listen to him?

It was exactly one month ago today that, buried among the empty speeches and photo opportunities of the G8 world leaders, the Brazilian president 'Lula' da Silva made a concrete proposal to tackle two of the worst problems facing the world today - extreme hunger and the trade in weapons. There is a need for a global hunger fund, Lula told the G8, "that would not only give food to those in need but would also create the conditions necessary to strike at the structural roots of hunger. There are many ways of gaining financial resources for such a fund. Taxes could be levied on the international arms trade: this would prove advantageous from both an economic and an ethical standpoint."

Blink and you could have missed it. Only a handful of the thousands of journalists packed into the Evian press centre bothered to cover Lula's speech, let alone his proposal. Over the past month, in the UK at least, not one broadcaster or newspaper has examined the idea, nor asked the government for a response. The G8's silence on the proposal, apart from a few platitudes from Chirac, betrays the fact that leaders from the developing world were invited to Evian as window dressing rather than to be listened to.

The Brazilian president's proposal, one of most concrete and progressive thing to emerge from the Evian G8 meeting, deserves proper consideration - by both governments and campaigners on poverty and arms issues. The figures speak for themselves. In 2000, the world wide value of weapons deliveries was US$32.6 billion, according to the Stockholm International Peace Research Institute (Sipri). In 2001, it was less at $21.3 billion, but for 2002 was expected to rise again thanks to rearmament after the Afghan military campaign. Just a one percent tax on these sales - £1 for every £100 of arms traded - would have raised hundreds of millions to finance food aid and agriculture programmes for the world's poorest countries.

For 2000, an arms trade tax would have raised $326 million, around $100 million more than the total cost of food aid delivered to Afghanistan during and after the coalition military campaign there. Certainly a one percent tax would not raise even close to enough to eradicate world poverty, but it would contribute millions to the fight. It would also have a number of added benefits, not least of reducing arms transfers between western nations, and expensive arms sales from rich countries to poor ones.

It is perhaps no surprise that the G8 leaders, from France, Italy, Russia, Spain, Japan, Canada, the UK and the United States gave short shrift to Lula's proposal. Between them, the group of eight account for more than 85 percent of world arms sales. They would have to contribute most in taxes, because the majority of arms transfers are between Western nations. They too would suffer most when poorer countries cut back their arms spending to reduce their tax liability.

Most would argue countries have a right to defend themselves, to buy arms for that purpose and should not be unduly punished for doing so. The tax could feature a threshold, lets call it the Peter Hain clause. Those countries spending below a certain level per capita on arms purchases, compared with health and education spending, would face a lower tax rate when they buy arms. But those spending excessively on arms face the full rate. If the UK government believes tax breaks for working parents encourage poor families into work and out of poverty, then it should support a tax break for poor countries which concentrate their spending on poverty rather than weapons.

Unlike the trade in many other goods, which are monitored by rules at the World Trade Organization, the global arms trade is subject to no international monitoring or regulation. Another benefit of the arms trade tax would be to tackle this unaccountability. It would impose a structure on the trade that could make it easier to monitor. The UN, or even the WTO, could take up this function, taking into account company's claims to commercial confidentiality. Or monitoring could be applied on a national basis. In the UK, for example, there is currently no method of monitoring arms sales accountably. The government decides, in secret, which arms export licenses to grant, and tells Parliament and the British public about the decision at least six months after licenses have been signed. An arms trade tax could require a committee of elected MPs to scrutinize sales before they take place and to tot up the tax and charge recipient countries accordingly. That would introduce an extra check that might prevent British arms sales being sold to repressive countries, where they are used against innocent civilians. Labour's scandalous arms exports to Indonesia, Turkey and Zimbabwe might have been prevented by such a committee.

Of course, the tax would not be without its moral implications. Not least those leveled by campaigners that it would legitimize the arms trade and mean blood money was being used to feed the poor. However, few would argue that a tax on tobacco or gambling legitimizes them. Instead, tax is a profitable way for the government to control and curb them. The government even intends to ring-fence money raised by tax on cigarettes for health spending. Ultimately I'd like to see a complete end to the arms trade, but in the mean time a tax, as a means towards reducing it, could strike a balance between legitimacy and arms sales reduction. Like the introduction of the EU Code of Conduct on arms sales in 1998, which was supposed to prevent arms sales to human rights abusers and poor countries, it would confer a certain amount of legitimacy on the arms trade in order to control it.

The important question is how effective the measure is in practice. So far, the Code has been next to useless. A tax might be more successful. I freely admit this is back-of-the-envelope politics. But it is at least an attempt to respond to charge often leveled against campaigners that we always complain, but never promote alternatives. If a journalist with a decent working knowledge of the arms trade can bash out some ideas on the proposal, how much more could be done by a professional economist from one of the eight governments responsible for the majority of the world's arms sales? At a cost of $800,000 for every cruise missile rained down over Iraq, you would think at least one of them could afford to commission the work.

Lula is the elected president of a country with more than 176 million people. In a very real way, he was speaking on behalf of the majority world when he gave his speech at the Evian summit. His ideas should not have been dismissed out of hand by the G8 leaders - even if they were later to discard the proposal. Western campaigners have started taking seriously voices from the South. It is time our governments did the same.

About the Author: Gideon Burrows is the author of the No-Nonsense Guide to the Arms Trade, published by Verso. He is founder of the Foundations Press Agency.

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