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February 2, 2010

Some things governments can do to support development even without spending more money

February 2, 2010
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Before any general election, anyone involved in advocacy indulges in ‘what would my dream manifesto look like?’ fantasies. (And then usually goes off to lobby the political parties and be told why their ideas are silly). 2010 is no exception, with the impending (probably 6 May) UK general election followed by decisive moments this year on climate change (in Mexico in December), on the millennium development goals (UN summit in September) and the 2010 deadline for meeting the G8’s 2005 pledges on aid, debt and universal access to treatment for HIV/AIDs.

But these are straitened times, so in an uncharacteristic burst of fiscal prudence, I’ve confined my shopping list to things that don’t require big dollops of government cash, and may even (e.g. the financial transactions tax) help fill the fiscal abyss:
 
· Support a global commitment of US$150 billion a year in public finance for climate change adaptation and mitigation in developing countries from 2013, not paid for by raiding existing aid budgets. Some of this could come from a new financial transactions tax.

· The said FTT to apply to all transactions at the rate of 0.05% across the Eurozone. At least 50% of the revenues raised will go towards development and climate change (that’s the tricky bit – keeping the chancellor’s sticky hands from grabbing all of it to fill the UK fiscal hole).

· Reform the regulation of UK tax havens and tax avoidance by UK companies, to require information disclosure and reporting by multi-national companies on the taxes they pay in each country. This should generate extra tax revenues for the UK, as well as poor countries.

vulture funds· Outlaw the actions of ‘vulture funds’ seeking to sue developing countries.

· Improve the predictability and quality of UK aid by, among other things, increasing the percentage of aid we provide to developing countries’ own budgets, reforming harmful donor conditionality; and enabling people in developing countries to hold both the UK and their own governments to account on aid promises, backed up by a newly created aid ombudsman.

· Honour the UK’s existing promise to untie aid from the use of British goods and services.

· Be consistent in condemning war crimes, serious human rights abuses and violations of international humanitarian law, and calling for those responsible to be brought to justice. 

· Press for the successful conclusion of negotiations for an international Arms Trade Treaty (ATT) in 2012.

· Work to improve the speed and effectiveness of life-saving humanitarian aid ensuring that it is given impartially and in line with people’s real needs.

· Ensure an effective regulatory framework that encourages responsible corporate behaviour by all British companies and investors, including when they operate overseas.

· Actively promote development as a core issue for G8 and G20 cooperation and ensure that this is covered as a separate agenda item at each meeting of these groups, with at a minimum full representation for the African Union.

· Support the reform of the International Financial Institutions, including ensuring greater representation for poor countries, enhancing their accountability and transparency and ending the practice of attaching economic policy conditionality to lending.

Of course, aid remains vital and necessary, and we will be pushing for whichever party(ies) emerges triumphant to meet and exceed past promises, but isn’t it impressive what a decent government can do, even without big injections of dosh? (and don’t even get me started on migration …..)

2 comments

  1. Duncan- I want to briefly comment on one of your wish-list items: improving “predictability” and “quality” of UK aid through direct budget investment.

    While direct investment is the more streamlined approach to aid, eliminating the middle-man and providing for more local control of funds, this should not become a universally applied strategy. As can be seen in the Global Integrity Reports, which track national-level corruption trends, many developing nations lack the mechanisms, capacity and/or political drive to fully account for funding. While the absence of such mechanisms is not a corruption guarantee, it does create a greater potential for disappearing funds.

    Last year, Bill Easterly wrote a controversial post claiming that UK’s DfID has actually propped up autocratic leaders by providing direct budget investment in systems that lack essential oversight mechanisms. (For a summary, see: http://commons.globalintegrity.org/2009/03/william-easterly-is-uk-propping-up.html)

    Adding to this, in 2009, it was revealed that enormous levels of funding disappeared from a NORAD project-based aid initiative in Tanzania. US$30 million went unaccounted for over 10 years! And that was with the added layer of private auditing. (See: http://commons.globalintegrity.org/2009/04/headlines-in-tanzania-millions-go.html)

    Obviously, there are plenty of cases providing rationale for and against direct budget investment. At Global Integrity, we see the harm that can seemingly accompany poorly accounted-for aid not as a direct effect of the aid itself, but more as a result of the lack of anti-corruption mechanisms to accompany this money. Direct investment will work well in some places but should not be an aid agency’s blanket approach. Similarly, an aid ombudsman is only a piecemeal solution to the greater lack of government monitoring of budget and expenditure spending. Instead of going direct investment all-the-way, context-specific approaches should be developed depending on the existence and effectiveness of national-level safeguards and accountability frameworks for budget tracking.

    Norah Mallaney
    Global Integrity
    http://www.globalintegrity.org

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