One step forward

The Paris Ministerial Meeting of the Leading Group on Innovative Finances for Development, has recently mandated a study group to determine the feasibility of creating a currency transaction levy. This is a step forward but much remains to be done: for this idea to become a reality, it is necessary that Finance ministers find the way to implement what the Foreign ministers agree upon. As presidents and Prime Ministers must intervene when cabinet officials cannot find agreement, it is crucial that all countries are represented at the highest level in the UN Conference on the crisis later this June.

The idea of creating a currency transaction levy to generate additional funding for development was given a major push last friday, May 29 in Paris, when the ministerial meeting of the Lleading Group on Innovative Finances for Development decided to mandate a study group to determine its feasibility. The idea was also mentioned for the first time as worth while studying by the high level task force on innovative financing of health systems, co-chaired by British prime minister Gordon Brown and World Bank president Robert Zoellick. The composition of the study group was left open and many countries will confirm their joining in the coming days, but it is certain that Belgium, Brazil, Chile, Finland, France and Norway will be part of it.

The Leading Group on Innovative Finances was created by Brazil and France and its main achievement so far is the creation of a tax on air tickets currently being implemented by 13 countries that funds medicines for children living in poverty with HIV-AIDS. Some sixty countries participated in the Paris ministerial, together with international organizations and NGOs. Social Watch has been an active member since its creation in 2006 and actively advocates for innovative financing in other fora, such as the UN Conference on the World Economic and Financial Crisis that will meet next June 24 to 26 in New York.

French Foreign minister Bernard Kouchner, himself an NGO person, as former director of Doctors Without Borders, strongly advocated in favour of the currency transactions levy and a financial transactions tax, not only as ways to raise money for health systems in developing countries, but also as much needed mechanisms to stop tax evasion everywhere. “I have made this proposal several times”, said Koucher, “and finance ministers always say it is not possible. 'Nothing is impossible', I tell them (…) and in this moment of difficulties we have to show imagination”.
French finance minister Christine Lagarde immediately reacted by saying that “nobody knows what will come out, when foreign ministers open the financial ideas box” and that her colleague Kouchner is “very generous” but “lacks expertise”. The local press mocked this “French-French discrepancy” in the middle of an international meeting, but the episode served as a warning. Unless finance ministers are brought on board, the idea might never jump from the drawing board to the toolbox of central bankers.
Presidents and prime ministers have to intervene when their cabinet officials cannot find agreement and this is why we need to insist on the need for our countries to be represented at the highest level in the UN Conference on the crisis later this month.
The Paris ministerial was a step forward. But much remains to be done.