Proposals for a global financial transaction tax to help the development of poor countries affected by climate change have been ignored by the world’s leading finance ministers.
The commitment of the French hosts to put this tax at the heart of the G20 agenda appears to have been lost in translation. The final communique of the meeting in Paris which concluded on Saturday was conspicuously silent on the subject.
The only consolation for the French was an expression of German support for a transaction tax together with news that the philanthropist, Bill Gates, has agreed to work with President Nicolas Sarkozy on innovative ways to raise funds for poor countries.
The idea of a tiny percentage tax on investment and currency transactions featured in the list of options for climate change financing submitted by a High-Level Advisory Group to the UN Secretary General in November 2010.
The levy is strongly supported by the international NGO movement. A global day of action across 25 countries was coordinated by Oxfam and other groups on the day before the start of the G20 meeting.
“This is the zeitgeist tax (which) would be like a breath of fresh air clearing away the stench of bankers’ bonuses,” said Luc Lempriere, executive director of Oxfam France.
European anti-poverty and climate change campaigners promote the concept as the Robin Hood tax. In the US, a national initiative has been sponsored by veteran Democrat Congressman, Pete Stark.
The introduction to Congress of his Investing in Our Future Act was timed to coincide with the global day of action.
The Act would impose a small fee on currency transactions in the United States, raising funds for a range of causes including mitigation of worldwide climate change. Over thirty US campaign groups have written to President Obama urging him to support the Act.
Global campaigners for a transaction tax have pinned great hopes on President Sarkozy as the champion of their cause. He is believed to hold the view that the financial sector benefited the most from the boom years whilst swallowing much of the resources committed to recovery when the bubble burst.
At a January press conference held at the Elysee Palace to mark the launch of the French presidency of the G20, Sarkozy said, “France considers this tax to be a moral reckoning for the financial crisis.”
Expectations of foreign aid to support adaptation to climate change have been voiced in ethical terms long before the banking crisis broke in 2008. Developing countries are aggrieved that their economic growth prospects are undermined by the impact of global warming for which they are not responsible.
Shortly after the Sarkozy speech, this moral dimension of climate change was explored in a panel discussion at UN headquarters in New York. The debate on “Climate Finance: ethical considerations of scale, sources and governance” was organized by the UN Non-Governmental Liaison Service and the New York Office of the Friedrich Ebert Foundation.
Whilst speakers were united in interpreting climate change as a “profound moral problem,” they differed in locating the heart of the dilemma.
Angela Anderson, Program Director of the US Climate Action Network, felt that the most important ethical consideration is the human suffering amongst the poor that will be the consequence of failure to stabilize the climate.
A more philosophical stance was explored by Martin Lees, former secretary of the Club of Rome. “In gambling with the future of humanity….do we have the right to gratify desires now at the expense of future generations?” he asked, drawing attention to the non-linear risk posed by climate change.
The Ugandan chair of the Least Developed Countries Expert Group, Fred Onduri, prefers to address ethical considerations by straightforward reference to dollars. Rich countries have failed to deliver funding promises which are in any event insufficient to tackle the damage caused by climate change.
Mark Fulton of Deutsche Bank, a lone representative of the banking sector, sought to explain that, in the real world, the fiduciary obligations of financial managers compel them to conduct their business by reference to regulations as much as ethics.
He stressed that governments will not tamper with regulations unless they believe that voters demand change and that powerful vested interests can be set aside.
This proved to the position taken on Saturday by the finance ministers of the world’s 20 most prosperous economies. They were disinclined to consider the ethics of global financial management.
A further moral examination is imminent. President Obama’s 2012 budget presented to Congress last Monday includes a total of $1.3 billion for climate change finance to assist developing countries.
This is the third annual instalment of the promise of “fast start finance” negotiated by Obama at the Copenhagen climate conference in 2009.
The Republicans are in no mood to approve funding for foreign aid or climate change, let alone both. Will Congress honour this international commitment?
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this article was first published in the OneWorld section of Yahoo World News