Non-Aligned Nations Must Lead Financial Reform

"Tobin Tax" and increased South-South cooperation are demanded by leaders of the Non-Aligned Movement.KUALA LUMPUR, Feb 23 (IPS) - Indian Prime Minister AtalBihari Vajpayee has re-ignited the campaign for a 'Tobin Tax'on international capital flows, after he called on the Non-AlignedMovement (NAM) Sunday to lead in reforming theinternational financial architecture. ''We know that unstablecapital flows can severely disrupt developing economies. Thereis less ready acceptance of the idea that such flows should beregulated by an international levy. I believe this is a reformwhose time has come' Vajpayee told the NAM Business Forum.

He pointed out that conservative estimates by recent studieshave shown that a token tax of a quarter percent on internationalcapital flows could generate annual revenue of about 300 billionU.S. dollars. ''If this were to form the corpus of a Global PovertyAlleviation Fund, we can make dramatic progress towardstackling the poverty problem in developing countries'', he pointedout.

The Tobin Tax was first proposed in 1978 by James Tobin,a Nobel prize-winning U.S. economist. He proposed a verysmall tax on foreign exchange transactions to deter short-termcurrency speculation. Developed countries, especially the UnitedStates, call this idea unworkable, but Vajpayee points out thatit actually is easier to implement than the stringent measuresspelled out in U.N. Security Council resolutions 1373 and 1456-- passed after Sep. 11 to monitor terrorist financial channelsacross the globe. The Indian leader said that measures like this,to which all countries are committed by the U.N. charter to do,would be of far greater magnitude than those required formonitoring and taxing capital flows.

The three-day NAM BusinessForum, which opened here Sunday, is an initiative by host Malaysiato create closer links between business persons and groups indeveloping countries. It will be held parallel to all NAM leaders'summit in the future. In his opening address, Malaysian PrimeMinister Mahathir Mohamad called on NAM business leaders toforge closer links to help developing countries rid themselves of aninternational order where a select few dominates the world. Hesuggested that NAM countries learn from Malaysia's experienceand adopt the 'prosper thy neighbour' policy, under which richercountries help the poorer ones improve their living standards,which will in turn create markets in the poor countries for richer-countryproducts. Enriching poorer nations including neighboursis not charity. It is enlightened self-interest, said Mahathir. Theleaders of South Africa, Indonesia and Thailand also addressedthe NAM business forum.