Debt, foreign direct investment, illicit flows and international taxation, among other fundamental questions in times of crisis, are being discussed in preparation of the highlevel summit of the Third UN Financing for Development Conference, which will take place from 13th to 16th July in the Ethiopian capital of Addis Ababa. A wave of privatization of financing for development is in sight, which would deepen inequalities in the distribution of wealth globally.
In the last ten years, more than a trillion dollars has come out of Latin America and the Caribbean as illicit financial flows (IFF). Contrary to what one might think, more than 80 percent of all this capital flight corresponds to commercial activities, which means that this has to do with practices such as tax avoidance, tax evasion and fraud of large corporations. The remainder relates to corruption and organized crime.
If all this bulk of money is used to finance the sustainable development of the region, it could contribute to significantly reduce its deep inequalities, without relying as much on external sources of financing. Suffice to say that this looting exceeds the sum of foreign direct investment and Official Development Assistance (ODA). That is why the summit in Addis Ababa is so important because it must reach a consistent agreement on financing for development in the South.
Unfortunately, it appears that instead of tackling this agenda decisively, many of the groups of most powerful countries in the world – which continue to be stuck in fiscal crises – see Addis Ababa as an opportunity for their large private companies to do new business. That is to say, to convert the UN Financing for Development (FfD) process into a mechanism to exit their own crisis.
This commitment to privatize development implies that ODA flows would go to the private sector, instead of going directly to development projects. Also, that Public-Private Partnerships (PPP) would be consecrated, especially in infrastructure but also in services, as the solution to the global crisis. Mobilizing public funds to leverage private investment involves transferring the risk from the private to the public sector, ie the taxpayers, and creating new risks of public debt.
It is no secret that PPPs have a focus on profit, bypassing the focus on human rights, gender equality, environmental sustainability, territoriality and inter-culturalism that must be present when implementing infrastructure projects. Development is more than cement, and most of developing countries, including members of the Community of Latin American and Caribbean States (CELAC), which are very clear about this, continue to say, week after week in the United Nations (UN), that development is above all a matter of the public sector.
The FfD is the only global process in which all countries in the world have their own voice to review international economic and financial rules with the explicit mandate to promote the development of the South. Therefore, it should also be prevented that this process ends up being assaulted by private interests, relegating to the sidelines the main issues, such as reform of the global financial architecture, the neutralization of the vulture funds, the tax on financial transactions and the end of tax havens. It’s possible that the major contribution that Addis Ababa will make is an agreement to establish a universal body for regulating international taxation, and
open up this key discussion, which is now concentrated in the hands of only 34 rich countries members of the Organization for Economic Cooperation and Development (OECD).
At this time, international civil society, which has launched a global campaign for “Make multinational pay their share” appears in line with countries of the South in the negotiations to defend the creation of such a universal body, with a broad mandate, to include tax incentives, evasion and avoidance by corporations and very rich people great wealth, and transparency and information exchange. However, until today the OECD member countries – from which the largest number of multinational corporations are – are not willing to share the space. Their opposition is so strong in negotiations that this could only be resolved at the table of ministers in Addis Ababa.
Furthermore, a central and defining challenge of the process is whether this constitutes the last summit of the FfD. It’s clear that several developed countries want to end this process, born at the beginning of 21rst century as a landmark achievement in the developing world and led by the Latin American region as a political space where rules are constantly renegotiated.
While it is clear that the FfD wants to be framed in context of implementation of the Sustainable Development Goals (SDG), continuation and expansion of the Millennium Development Goals (MDGs), in no way should it be accepted that the FfD becomes reduced to a kind of financial Think Tank of the fight against poverty, pulling down the political profile of wider economic reforms in favor of sustainable development. In that sense, Latin American representatives at the highest level must go to Addis Ababa to defend the FfD space as a political tool.
In a context of renewed bilateralisation of international relations, 2015 may remain in history as the year of multilateralism, as long as the leaders of 194 countries in the world settle on, within the UN framework, the entire agenda of the post-2015 coming decades: economic resources for development in Addis Ababa in July (FfD), the struggle for a holistic vision of development in New York in September (SDG), ending with an effective agreement to address climate change in Paris in December (COP21).
The Addis Ababa conference must set the pace for what is coming, and the countries of the region need to place the bar high for generating global changes beyond the current situation. This concerns nothing less than the future of humanity. That is what is at stake.
If Addis Ababa is limited to funding only the SDGs favoring PPPs, and overall to privatization of development, then multilateralism will disappear in favor of vulture funds, the financialization of economies and the domain of corporations. Economic issues behind the FfD require the renewal of proposals and of a solid implementation strategy beyond July, and that cannot be solely in the hands of countries of the South.
In our region, primarily it will depend on the vigilant citizenry and the mobilization of civil society and social movements against the danger of the UN and the development agenda being captured by corporate interests. Few days are left.
Ana Tallada, President of the Latin American Network on Debt, Development and Rights
Miguel Santibañez, Regional Coordinator of the Beyond 2015 campaign in Latin America
Katiuska King, Economist, former Minister of Economic Policy Coordination of Ecuador
Oscar Ugarteche, Economist, National Autonomous University of Mexico, UNAM.
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Editorial sobre FpD publicado en America Latina:
La Tribuna, Honduras aca (mainstream newspaper, web y papel) publicado 15 de junio
Diario Colativo, El Salvador aca (mainstream newspaper, web y papel) publicado 11 de junio
El Espectador, Colombia aca (mainstream newspaper, web y papel) publicado 16 de junio
Coreio Da Cidadania, Brazil (medio alternativo de gran alcanze) aca 17 de junio
Cmiguate, Guatemala, (medio alternativo de medio alcanze) aca publicado 25 de junio
Le Monde Diplomatique, Chile (medio alternativo de gran alcanze) aca (fecha de publicación inconocida)
Civil Society Financing for Development (FfD) MECHANISM 