The United Arab Emirates foreign minister, Abdullah bin Zayed Al Nahyan, shakes hands with his opposite number in Cuba, Bruno Rodríguez, after raising the UAE flag at the opening of the Emirati embassy in Havana on Oct. 5, 2015. Credit: Jorge Luis Baños/IPS

By Patricia Grogg
HAVANA, Oct 6 2015 (IPS)

Cuba and the United Arab Emirates agreed to strengthen diplomatic ties and bilateral cooperation during an official visit to this Caribbean island nation by the UAE minister of foreign affairs, Sheikh Abdullah bin Zayed Al Nahyan.

During his 24-hour stay, Al Nahyan met on Monday Oct. 5 with Cuban authorities, signed two agreements, and inaugurated his country’s embassy in Havana, which he said was a clear sign of the consolidation of the ties established by the two countries in March 2002.

“I am sure that the next few years will witness the prosperity of our ties,” he added during his official meeting with his Cuban counterpart, Bruno Rodríguez, with whom he signed an agreement on air services “between and beyond our territories” which will facilitate the expansion of opportunities for international air transport.

In the meeting, Rodríguez reaffirmed his government’s support for Arab peoples in their struggle to maintain their independence and territorial integrity.

According to official sources, the two foreign ministers concurred that the opening of the UAE embassy is an important step forward in bilateral ties and will permit closer follow-up of questions of mutual interest.

Al Nahyan also met with the first vice president of the councils of state and ministers, Miguel Díaz Canel. The two officials confirmed the good state of bilateral ties and the possibilities for cooperation on the economic, trade and financial fronts, Cuba’s prime-time TV newscast reported.

The foreign ministers of Cuba and the United Arab Emirates, Bruno Rodríguez (left) and Abdullah bin Zayed Al Nahyan, during the Oct. 5, 2015 agreement-signing ceremony in Cuba’s ministry of foreign affairs in Havana. Credit: Jorge Luis Baños/IPS

Cuba’s minister of foreign trade and investment, Rodrigo Malmierca, signed a credit agreement with the Abu Dhabi Fund for Development, to finance a solar energy farm that will generate 10 MW of electricity.

Al Nahyan first visited Havana on Oct. 1-2, 2009 in response to an official invitation from minister Rodríguez. On that occasion they signed two agreements, one on economic, trade and technical cooperation, and another between the two foreign ministries.

“We have great confidence in Cuba’s leaders and in our capacity to carry out these kinds of projects,” Al Nahyan told the local media on that occasion.

United Arab Emirates, a federation made up of seven emirates – Abu Dhabi, Ajman, Dubai, Fujairah, Ras al-Khaimah, Sharjah and Umm al-Quwain – established diplomatic relations with Cuba in March 2002, in an accord signed in Cairo.

The decision to open an embassy in the Cuban capital was reached in a June 2014 cabinet meeting presided over by Sheikh Mohammed bin Rashid Al Maktoum, the UAE vice president and prime minister, and the ruler of Dubai.

In late February 2015, Al Maktoum received the letters of credentials for the new ambassador of Cuba in the UAE, Enrique Enríquez, during a ceremony in the Al Mushrif Palace in the Emirati capital.

The United Arab Emirates foreign minister, Abdullah bin Zayed al Nayhan, unveils a plaque commemorating the official opening in Havana of the new UAE embassy, together with his opposite number in Cuba, Bruno Rodríguez. Credit: Jorge Luis Baños/IPS

Later, UAE Assistant Foreign Minister for Political Affairs Ahmed al Jarman and Enríquez discussed the state of bilateral relations and agreed to take immediate concrete steps to expand and strengthen ties in different areas.

Enríquez also met with Cubans living in Abu Dhabi with a view to bolstering relations between them and their home country. They agreed on periodic future gatherings.

In May 2014, the UAE and Cuba signed an open skies agreement to allow the airlines of both countries to operate in each other’s territories, as well as opening the door to new plans for flights between the two countries, the UAE General Civil Aviation Authority (GCAA) reported.

The accord formed part of a strategy to boost trade with other countries, said Saif Mohammed al Suwaidi, director general of the GCAA, who headed a delegation of officials and representatives of national airlines during a two-day visit to Cuba.

The UAE signed similar agreements with other Latin American countries, including Argentina, Brazil, Chile, Colombia and Mexico, as part of its effort at closer relations with this region, which is of growing interest to the Gulf country.

Talks have also been announced between the UAE and Russia to build a giant airport in Cuba, which would serve as an international airport hub for Latin America, the Abu Dhabi-based National newspaper reported in February.

The proposal is being discussed by the Russian government and the Abu Dhabi state investment fund Mubadala, mandated to diversify the emirate’s economy.

In 2013 and 2014, UAE was named the world’s largest official development aid donor in a report released by the Development Assistance Committee of the Organisation for Economic Cooperation and Development (OECD). In 2013, the Gulf nation provided five billion dollars in ODA to other countries.

Last year, according to OECD data, the only Gulf country to have a Ministry of International Cooperation and Development spent 1.34 percent of their gross domestic product in development cooperation.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

In the past two decades South Korea has made such vibrant progress that it now counts itself as one of the world’s leading economies. Credit: Anton Strogonoff/CC-BY-2.0

By Thalif Deen
UNITED NATIONS, Aug 27 2015 (IPS)

Back in 1996, when South Korea voluntarily quit the 132-member Group of 77 (G77) – described as the largest single coalition of developing nations — it joined the 34-member Organisation for Economic Cooperation and Development (OECD), long known as the “rich man’s club” based in Paris.

As one of only three countries to leave the G77 for the OECD – the other two being Mexico and Chile – Korea elevated itself from the ranks of developing nations to the privileged industrial world.

Perhaps more significantly, Korea also swapped places at the negotiation table: from an aid recipient to a donor nation.

“To play a greater role in the global community and fulfill its responsibility as one of the important donors, Korea will continue to increase its ODA [official development assistance]." -- Ambassador Choong-Hee Hahn, South Korea’s deputy Permanent Representative to the United Nations
Since then, the Korean government has made a significant contribution to development aid, providing assistance to some 26 developing nations.

Ambassador Choong-Hee Hahn, South Korea’s deputy Permanent Representative to the United Nations, told IPS Korea has selected 26 priority partner countries – out of 130 partner countries – for development assistance.

The countries have been singled out based on their income level, political situation, diplomatic relations with Korea, and economic cooperation potential.

To enhance aid effectiveness, he pointed out, the Korean government provides 70 percent of its Official Development Assistance (ODA) to 26 countries, namely, Ghana, Nigeria, Nepal, East Timor, Laos, Rwanda, Mozambique, Mongolia, Bangladesh, Viet Nam, Bolivia, Solomon Islands, Sri Lanka, Azerbaijan, Ethiopia, Uganda, Uzbekistan, Indonesia, Cameroon, Cambodia, Colombia, DRC, Paraguay, Pakistan, Peru, and the Philippines.

In 2014, Korea’s net ODA amounted to 1.85 billion dollars, ranking 16th in volume among OECD’s Development Assistance Committee (DAC) members.

Korea’s ODA-Gross National Income (GNI) ratio reached 0.13 percent, ranking 23rd among the OECD DAC members.

“To play a greater role in the global community and fulfill its responsibility as one of the important donors, Korea will continue to increase its ODA,” the Korean envoy said.

U.N. Secretary-General Ban Ki-moon, a former foreign minister of South Korea, points out that the international community must make progress on the three pillars of United Nations engagement.

First:  sustainable development. Second: conflict prevention and resolution. And third:  advancing human rights and democracy.

“Korea has unique lessons to share on all three pillars and can be an active catalyst in bringing the world together on these issues,” the U.N. chief said.

He said Korea evolved from a developing to a developed country within the span of a single generation, and successfully hosted the Group of 20 (G20) Summit in 2010.

“The international community is looking to Korea with high expectations,” said Ban praising his home country “for rising from a beneficiary to a donor.”

As it continues to enhance its international profile, Korea is now home to the Global Green Growth Institute and also host to the new secretariat of the Green Climate Fund.

Over the last 20 to 30 years, Korea has made such vibrant economic progress that it is now one of the world’s, if not Asia’s, leading economies, with global brand names such as Samsung, Hyundai, Kia, LG and Daewoo.

Asked about the secret of his country’s economic success, Ambassador Hahn told IPS Korea went through an unprecedented transformation from one of the least developed countries to a member of the OECD within a generation. Such economic success can be explained by several key factors.

First, Korea set ambitious yet realistic goals based on sustainable economic development plans.

He said this was achieved through the implementation of five-year economic development plans in the initial stage, even as Korea has made steady progress from the light industry to heavy industry, then to the service industry.

Second, human capital secured through quality education has been another major factor.

In sync with economic development, he pointed out, mandatory primary and secondary education was phased in.

“The strong will of the Korean people to educate also led to the establishment of high quality higher education infrastructure.”

Third, traits such as diligence, self-help, and cooperation contributed to the improvement in the ownership of the country’s development.

Especially, the concept of ‘Saemaul Undong’, which decisively contributed to poverty eradication and development of rural areas in the 1970s, created systematic cooperation between the central and local governments and motivated local governments and communities to foster leadership and ownership of poverty eradication.

These elements, he said, can be seen as the key characteristics of the Korean rural development model, which continues to be a good role model for developing countries today.

Lastly, securing efficiency and accountability through the establishment of democratic and efficient governance led to successful poverty eradication and democratization.

“I believe inclusive institutions, rule of law, and a healthy civil society played a significant role in progressing towards a democratic and open society that is respectful of justice and human rights, considerate of the vulnerable, and that emphasizes human dignity.”

Asked if North and South Korea will one day join into a single union – as East and West Germany did decades ago – Ambassador Hahn said this year marks the 70th anniversary of the division of Korea.

Just as South Korean President Park Geun-hye repeatedly called for bringing down the barriers dividing the Korean peninsula, “it is our sincere hope that conditions for a peaceful unification of the Korean peninsula are created in the near future, and that the Korean peninsula becomes a foothold to realize a ‘world free from nuclear weapons’,” he stated.

“Based on the Trust-building Process on the Korean Peninsula, we currently make efforts to lay the ground for unification by further developing inter-Korea relations, building confidence and easing tensions in the Korean peninsula,” he declared.

Edited by Kanya D’Almeida

The ICT sector employed more than 14 million people in OECD countries in 2013, almost 3 percent of jobs in the 34-country bloc. Credit: Kristin Palitza/IPS

By Jaya Ramachandran
PARIS, Jul 30 2015 (IPS)

The digital economy permeates countless aspects of the world economy, impacting sectors as varied as banking, retail, energy, transportation, education, publishing, media or health. But the full potential of the digital economy has yet to be realised even in the world’s most advanced and emerging countries, says a new report.

On the one hand, Information and Communication Technologies (ICT) are transforming the ways social interactions and personal relationships are conducted, with fixed, mobile and broadcast networks converging, and devices and objects increasingly connected to form the Internet of things.

On the other hand, none of the 34 countries of the Organisation for Economic Co-operation and Development (OECD) has a national strategy on protecting online privacy or funding research in this area, which tends to be viewed as a matter for law enforcement authorities to handle, says the report.

The OECD Digital Economy Outlook 2015, which covers areas from broadband penetration and industry consolidation to network neutrality and cloud computing in the OECD and its partner countries like Brazil, Colombia and Egypt, also stresses the need to do more to offer information and communication technology (ICT) skills training to help people transition to new types of digital jobs.

In a 2014 OECD survey, 26 out of 29 countries considered building broadband infrastructure as their top priority and 19 of 28 countries put digital privacy and security second and third, observes the report.

Asked about the future, countries placed skills development as their top objective, followed by public service improvements and digital content creation.

Other surveys cited in the report suggest that two-thirds of people are more concerned about their online privacy than a year ago and only a third believe private information on the Internet is secure. More than half fear monitoring by government agencies, adds the report.

Other important findings in the Digital Economy Outlook are:

Of 34 countries surveyed, 27 have a national digital strategy. Many were established or updated in 2013 or 2014. Most focus on telecoms infrastructure, broadband capacity and speed. Few cover international issues such as internet governance.

Seven of the OECD’s 34 member countries count more than one mobile broadband subscription per person. Around three-quarters of smartphone use in OECD countries occurs on private Wi-Fi access via fixed networks.

All OECD countries have at least three mobile operators and most have four. Prices for mobile services fell markedly between 2012 and 2014 with the biggest declines in Italy, New Zealand and Turkey. Prices rose in Austria and Greece, however.

The ICT sector employed more than 14 million people in OECD countries in 2013, almost 3 percent of jobs in the 34-country bloc. ICT employment ranges from above 4 percent of total employment in Ireland and Korea to below 2 percent in Greece, Portugal and Mexico.

ICT venture capital is on the rise again and is now back at its highest level in the U.S. since the dot-com bubble.

China is the leading gross exporter of ICT goods and services, but the U.S. is the top exporter when trade is calculated in value-added terms, due in part to the high presence of U.S. ICT services embodied in final products. Embodied ICT services also contributed to higher shares for India and the UK in value-added terms.

Korea is the most specialised of OECD and partner countries in computer, electronic and optical products; Luxembourg is strongest in telecoms; while Ireland, Sweden and the UK are most specialised in IT and other information services.

Edited by Kitty Stapp

By Soren Ambrose
NEW YORK, Jul 27 2015 (IPS)

The final round of negotiations on the Sustainable Development Goals – the successor to the Millennium Development Goals, due to be inaugurated in September at the U.N. General Assembly – is now underway in New York.

Courtesy of Soren Ambrose/ActionAid

The United Nations and many member governments want to conclude the debates by the end of July, so that there will not be open debate during the SDG Summit. But reports indicate that the atmosphere in the room is one of seething distrust.

That’s because of what happened during the Financing for Development (FfD) conference in Addis Ababa, Ethiopia last month.

The developing countries – those grouped together in the “G77,” which 50 years after its founding actually has 134 members – were pushing a proposal for a universal intergovernmental organisation, within the U.N., which would have as its mandate reform and maintenance of the international tax system.

While this proposal would not have immediately remedied any of the myriad ways that corporations dodge taxes in developing countries, it would be a decisive change to the system that has allowed such activities to flourish.

To the extent that there are international rules, or standards and guidelines, on taxation now, they are proposed and elaborated by the Organization for Economic Cooperation & Development (OECD), a club of 34 of the world’s richest countries. Every once in a while they make a show of consulting those other 134 countries, but those others never actually get a vote.Ultimately it’s the pressure of the people which will force their governments to be responsible. The movement to stand up to those who have hijacked our power is building.

In the new proposed way of making decisions on international tax rules, every country would have an equal voice and equal vote. This fight matters is because developing countries are confronting the need to change how the rules are made, and who makes the rules.

Until they manage that, they will always, at best, be running to stay in place. Changing who makes the rules is a necessary, although not sufficient condition, for creating permanent change.

Taxation is vital because wealthy companies and individuals get and stay rich by using a portion of their considerable resources to hire lawyers and accountants to guide them in dodging the taxes they should be paying in the countries where they excavate, grow, or purchase their raw materials, assemble their products, and make an increasing proportion of their sales.

If they don’t have such staff in-house, they can hire the services of big accounting firms for whom this is the most lucrative activity.

Most big companies manipulate “tax treaties” between countries and tax havens like Switzerland, Mauritius, and the Cayman Islands to create legal fictions that exempt them from paying most of the taxes they owe.

What they do is usually not technically illegal, because of the impossibility of keeping up with the tactics of the armies of experts dedicated to avoiding taxes. But neither is it quite ethical.

This deprives countries of the revenue – to the tune of at least 100 billion dollars every year – that they need to fund development, and ensures the perpetuation of the concentration of wealth in the hands of a very few. That wealth translates to power – a veritable global plutocracy.

The OECD, to be fair, has made some moves to clamp down on the most egregious forms of tax avoidance, including their “base erosion and profit shifting” (BEPS) process begun in 2013.

The corporate lawyers and accountants were a little nervous about BEPS, but with the process winding up, it appears that any reforms it demands will not be manageable. The promises at the outset of the process to include developing countries never amounted to much.

The FfD process in the U.N. was, of course, universal. The U.N. and national governments usually like to have the “outcome document” finalised before a summit meeting. The prospect of a messy negotiation with thousands of advocates just outside the door makes them nervous.

But after months of negotiations in New York and a series of missed deadlines, the big debate over the tax body was not resolved. The ministers would go to Addis facing open negotiations.

Bolstered by the support of hundreds of civil society groups, the G77 governments – a group that has to accommodate the interests of very disparate countries – held together. Three BRICS countries – South Africa as the chair of the G77, along with India and Brazil – were vocal actors on the side of the developing countries, something they can’t always be relied on to do as they ascend the global power ladder.

With negotiators starting to meet before the formal start of the meetings on July 13, there were several days filled with ever-shifting rumours. But on the evening of July 15, the eve of the scheduled end of the conference, the announcement came: there would be an outcome document little changed from the unsatisfactory draft they brought from New York.

Promises were made to expand the resources and prestige of the existing U.N. Committee of Tax Experts, but nothing more. No universal membership, and no mandate for reform.

The G77 held out to the end. But the rich countries, led by the United States with the steady support of the European Union, Canada, Japan, and Australia, refused to give up the regime of loopholes and havens and double-dealing that adds up to billions in lost revenue every year.

Make no mistake, ordinary people in rich countries also lose out as corporations dodge taxes. But with their territories serving as the leading facilitators of tax avoidance in the world, their governments showed they want the present system to endure.

The current global hyper-capitalism now puts no constraints on capital. Unlimited profits, unlimited wealth, and unlimited power have been accruing to the finance industry and the wealthy corporations and individuals it serves for over 40 years.

The rich countries’ politicians not only put up with it, they tout the “private sector” as the panacea for development in poor countries, with nearly no evidence to support them.

And at home, they cut public services and impose austerity, explaining that government just can’t afford to serve the people. Their priority has been corporations’ and investors’ bottomless appetite for profit and power.

As my colleague Ben Phillips has written about the FfD, it’s actually good news that the rich countries had to put an ugly stop to the negotiations, with barely a face-saving compromise to point to. Usually they manage to find a way to assign the blame to someone else.

Forcing them to show their hand is valuable; it’s clear that those making the rules are far more identified with a powerful few than with the public they claim to serve.

The next step is at the SDG Summit at the end of September, at the time of the annual U.N. General Assembly meetings. There we will learn whether and to what extent the developing countries will stand up to those who have monopolised power for so long. If they do, we may be on the road to reversing parts of the system that perpetuates the status quo.

Whatever happens, we aren’t going anywhere. Civil Society won’t change this global dynamic by attending these conferences, or through polite lobbying. We will have to endure many more meetings, and more setbacks.

But ultimately it’s the pressure of the people which will force their governments to be responsible. The movement to stand up to those who have hijacked our power is building.

Edited by Kitty Stapp

Excerpt:

While a major global campaign to cut down on tax evasion is picking up momentum, anti-poverty advocates say the initiative overlooks the world’s poorest countries.

Last week, 51 countries from four continents agreed to systematically exchange tax information by 2017, with the aim of allowing authorities to quickly register any disparities. Several dozen additional countries – 89 in total – said they would follow suit by the following year, according to the Organisation for Economic Cooperation and Development (OECD), a grouping of wealthy countries that is spearheading the project."Do we really think that there are many Brits or Americans with money in, say, Nigeria? Probably not. But is there likely a lot of Nigerians with money in the U.S. or U.K.? Yes.” -- Heather Lowe, senior counsel with Global Financial Integrity

Global tax evasion has risen to the top of the global agenda in the aftermath of the 2007-08 financial crisis and the resulting financial constrictions felt by governments around the world. Though last week’s pledges will still need to be underpinned by separate bilateral agreements, the new accord is being lauded as a major step forward on the issue.

“This great success in the fight against international tax evasion would have been unthinkable only a few years ago,” Wolfgang Schauble, Germany’s finance minister, wrote Monday for a newspaper here. “We need to make sure that creative tax planning in the form of profit-shifting and artificial profit reduction is no longer a lucrative business model.”

The new pledges were made at the annual meeting of an OECD-organised grouping known as the Global Forum on Transparency and Exchange of Information for Tax Purposes. At the meeting, in Berlin, the forum’s 123 members also formally endorsed a new OECD blueprint, known as the Common Reporting Standard, detailing what information will be collected, by whom, and how it will be exchanged.

Yet the list of those asked to participate in the new pledging includes almost solely developed countries or known tax havens, which rich governments have been particularly keen to address. This is cause for concern for some, given that the impact of illegal financial dealings is felt particularly by weaker economies.

“The new OECD standard on automatic information exchange is a big first step towards tackling illicit financial flows,” Andres Knobel, an analyst with the Tax Justice Network, a British advocacy group, said in a statement.

“However, serious obstacles to the inclusion of developing countries and a number of unresolved loopholes will prevent its effectiveness, allowing rich individuals with plenty of options to avoid reporting.”

Select invitations

While the Global Forum on Transparency includes 123 members, just 95 of these were asked to take part in the new automatic exchanges. And just one of those, the Pacific island nation of Vanuatu – widely known as a tax haven – is considered by the United Nations to be a least developed country.

OECD officials say that many developing countries weren’t invited to take part in this initial round of pledging due to concerns over institutional capacity.

“The developing countries which do not have financial centres have indicated their difficulties on account of low capacity to implement [the automatic exchange of tax information] on such an ambitious timeline,” Monica Bhatia, the head of the Global Forum secretariat, told IPS.

“These countries were nevertheless encouraged to participate with a more flexible timeline and support was offered to facilitate their participation … by way of pilot projects. Already six developing countries have requested pilot projects and the Global Forum is committed to helping other developing countries who come forward as well.”

Yet others suggest that, capacity notwithstanding, all countries should be able to receive tax information about whether their own citizens have undeclared overseas bank accounts.

“Under the current agreement, tax-haven countries that don’t have an income tax for their own people don’t have to reciprocate this information,” Heather Lowe, senior counsel with Global Financial Integrity (GFI), a Washington-based watchdog group, told IPS.

“That makes some logical sense, but the organisers won’t even consider a similar phase-in period for the least developed countries. Do we really think that there are many Brits or Americans with money in, say, Nigeria? Probably not. But is there likely a lot of Nigerians with money in the U.S. or U.K.? Yes.”

GFI has published pioneering data estimating that developing countries could be losing a trillion dollars a year from a variety of shady financial dealings. While all such activities contribute to crippling public-sector coffers, the new plan covers only tax evasion.

“While a portion of illicit financial flows is driven by tax evasion, much of it is also propelled by other crimes such as drug trafficking, sex slavery, corruption and fraud,” Lowe says. “The current framework risks either missing these other major forms of crime, or keeping that information locked up by tax authorities and away from government investigators and prosecutors.”

Starting with Africa

The Global Forum says it wants to bring as many developing countries as possible into the new exchange system, and maintains that multiple initiatives are currently underway to do so. Last week, the grouping announced the most significant of these, a project aimed at strengthening outreach and capacity on the issue in Africa.

The African Initiative, overseen by the Global Forum, the World Bank Group and others, will initially focus on 17 countries, around a third of the continent. Yet an OECD factsheet says this number could be “significantly increased” through the three-year programme.

As yet, there is no parallel initiative in Asia or Latin America, though the Global Forum says such projects could still be created.

“The impetus for the Africa Initiative came from our African member countries … in the wake of increased focus on the problem of illicit financial flows from African countries of which tax evasion forms a significant component,” Kathryn Dovey, a tax policy analyst with the Global Forum, told IPS in an e-mail.

“The Global Forum is committed to working with all developing countries and would be happy to seed and support similar initiatives in other regions. If countries and organisations from the region and relevant international organisations come forward to collaborate, the Africa Initiative could be replicated in other key geographies over time.”

Still, GFI’s Lowe says that capacity-building could be a secondary goal after bringing in poorer countries on a non-reciprocal basis.

“Africa is a strong place to start, because investment in Africa has been growing significantly over the past few years and there are many governments in the continent that are really starting to engage on this issue,” she says.

“But I don’t see why we can’t start with non-reciprocal information for least-developed countries and then work on these capacity-building programmes to allow for reciprocation to happen later. Let’s start with the practical.”

Edited by Kitty Stapp

The writer can be reached at cbiron@ips.org

Estefanía reads in the top bunk while Encarni does homework on a table in her small room. This 12-year-old girl from Málaga is one of the faces of child poverty, which according to a new UNICEF report affects 36.3 percent of children in Spain. Credit: Inés Benítez/IPS

By Inés Benítez
MÁLAGA, Spain, Nov 1 2014 (IPS)

“I would like to have a big house, and I wish my family didn’t have to go out and ask for food or clothes,” Encarni, who just turned 12, tells IPS in the small apartment she shares with five other family members in a poor neighbourhood in the southern Spanish city of Málaga.

This girl with shoulder-length straight brown hair, brown eyes and broad forehead is one of the faces of child poverty in Spain, which has grown 28.5 percent since 2008, according to a report released Tuesday Oct. 28 by the United Nations children’s fund, UNICEF.

The report, “Children of the Recession”, which studied 41 industrialised nations, says child poverty in Spain climbed from 28.2 percent in 2008 to 36.3 percent in 2013. It includes Spain on the list of countries hardest hit by the economic crisis, along with Croatia, Cyprus, Greece, Ireland, Italy and Portugal.

Almost every day in the middle of the afternoon Encarni goes with her mother and her aunt to get food at the Er Banco Güeno, a soup kitchen run by the community in the Palma-Palmilla neighbourhood.

The soup kitchen has been operating for the last two years in what used to be a bank, which the local residents occupied for this purpose. They serve three meals a day to the needy.

“I worked in construction until the start of the 2008 crisis, when I was laid off,” Encarní’s stepfather, Antonio Delgado, tells IPS. Since then he has not found work, and has done a little of everything, ”from picking up junk to selling things in street markets.”

Antonio, with a lean face and teeth that have seen better days, brings in a few euros a day fixing things using a soldering machine and a tire pump, which he keeps in a corridor off the street, where several bird cages hang at the entrance.

Encarni explains that her mother, Inmaculada Rodríguez, found work for a couple of months taking care of an elderly person, but was fired.

The unemployment rate in this country of 47 million people currently stands at 23.6 percent. But in the autonomous community or region of Andalusia, where Málaga is found, it is 35.2 percent, according to the national statistics institute, INE.

“I really like to go to school. I especially love gymnastics,” Encarni says, with her sweet voice, although she adds that she gets sad when she feels they leave her out sometimes, “because they saw me go into the soup kitchen for food. But I just ignore them,” she adds, with a wan smile.

One of the apartment blocks in Palma-Palmilla, the poor neighbourhood in the southern Spanish city of Málaga where Encarni and her family live. Credit: Inés Benítez/IPS

A few days ago her aunt and three cousins moved to another house nearby. But until then there were 11 people living in Encarni´s house, the family said when they described their day-to-day life to IPS.

She slept in the top bunk with her cousin Estefanía, who is a year older than her. In the bottom bunk slept her aunt Ana María and her nine-year-old cousin Juan José. Encarni’s two-and-a-half-year-old cousin Ismael slept next to them in a crib.

Encarni’s mother, her stepfather, and four other members of her family slept in the rest of the rooms of the house, which only has one small bathroom which you reach by ducking under a clothesline, where the recently washed clothes are being dried by a fan, near the kitchen.

Estefanía and Ismael suffer from epilepsy, says their mother Ana María, who is unemployed and shows IPS the box where she keeps the medications that they have to take every day.

“Is your house big?” Encarni asks IPS while petting her dog, a friendly black pup named Gordo.

She goes on to ask: “Where do rich people get their money?”

According to the report “Even it Up: Time to End Extreme Inequality” by the international relief and development organisation Oxfam, the richest one percent of Spaniards have as much wealth as 70 percent of the entire population.

The report also says the number of billionaires around the world doubled to 1,645 as of March 2014, from 793 in March 2009, demonstrating that the rich actually benefited from the economic crisis.

Spain, in particular, is one of the 34 countries of the Organisation for Economic Cooperation and Development (OECD) where inequality between rich and poor grew the most during the crisis, according to its Society at a Glance 2014 report.

Between 2007 and 2010, the income of the poorest 10 percent of the population of Spain fell 14 percent, while of the other OECD countries it only dropped more than five percent in Mexico, Greece, Ireland, Estonia and Italy, and did not drop more than 10 percent in any other country.

Encarni wants to be a judge when she grows up. But she says that for now she would be happy just to be able to “dress well” and be able to buy more things in the supermarket.

“Everything we have was given to us because my parents don’t have enough money,” she explains, pointing to the clothes folded on the shelves, the packages of rice and lentils on a high shelf, and even the backpack that a neighbour gave her for school, where she eats lunch every day free of charge because she comes from a low-income family.

Encarni has fun skipping rope, playing Chinese jump rope and goofing off on the swings near her house. She also likes it when her stepfather gives her a ride on his bike.

She likes candy too, and enhoys singing and dancing with her cousin Estefanía, who swam in the sea this summer for the first time in her life, even though she lives only a few kilometres from the beach. “The water tasted salty,” Estefanía tells IPS.

Of every 100 children at risk of poverty in Spain, 25 are in the region of Andalusía, 15 are in Cataluña in the northeast, 10 are in Valencia in the east and 10 are in Madrid and the rest of the autonomous communities, according to INE figures cited by the report “Boys and girls, the most vulnerable in all of the autonomous communities”, by the organisation Educo.

The new UNICEF study warns that 2.6 million children have fallen into poverty as a result of the economic crisis in the most affluent countries, bringing the total number of poor children in the industrialised North to 76.5 million.

With her hair loose and recently combed, sitting on a bed near a window while the TV spits out news on the latest corruption scandals in the country, Encarni hugs her little cousin Ismael, who clasps a piece of bread in his hand while they wait for night to fall.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

Ruth Osman, a 35-year-old Guyanese migrant living in Trinidad and Tobago, is one of thousands of women to have taken advantage of CARICOM’s migration scheme for skilled workers. Courtesy of Ruth Osman

By Jewel Fraser
PORT OF SPAIN, Sep 25 2014 (IPS)

Ruth Osman is attractive and well-groomed in tailored slacks and a patterned blouse, topped by a soft jacket worn open. Her demeanour and polished accent belie the stereotypical view that most Caribbean nationals have of Guyanese migrants.

As a Guyanese migrant living in Trinidad, the 35-year-old is one of thousands of Guyanese to have taken the plunge over the past decade, since the free movement clause of the CARICOM Single Market and Economy (CSME) regime granted skilled persons the right to move and work freely throughout the region.

According to a recent report, Trinidad and Tobago hosts 35.4 percent of migrants in the region. The United Nations’ ‘Trends in International Migrant Stock: The 2013 Revision’ states that Latin America and the Caribbean host a total migrant stock of 8.5 million people.

“Although, historically it is persons at the lower end of the socioeconomic scale in Caribbean society that have been the main movers, the CSME has to date facilitated the movement of those at the upper end, the educated elite in the region.” -- CARICOM Secretariat Report, 2010
Women make up 51.6 percent of migrants in the Caribbean, according to the Organisation for Economic Cooperation and Development (OECD)’s 2013 figures.

For many Guyanese, the decision to move on the strength of promises made by Caribbean Community (CARICOM) governments to facilitate free movement of skilled labour within the region has met with mixed degrees of success and, in some cases, outright harassment and even threats of deportation from the Caribbean countries to which they have migrated.

A 2013 report by the ACP Observatory on Migration states, “Guyanese migrants in Trinidad and Tobago faced unfavourable opinions in the social psyche and this could translate into tacit and other forms of discrimination.”

The report, prepared by the regional consulting firm Kairi Consultants, goes on to state that migrants from Guyana were “assumed to be menial labourers or undocumented workers.”

Guyana is one of the poorest countries in the CARICOM region, with a gross domestic product (GDP) per capita of 6,053 dollars in 2011. This stands in contrast to Trinidad and Tobago’s per-capita GDP of 29,000 dollars, according to the 2010-2011 U.N. Human Development Report (HDR).

But Osman’s background is not one of destitution. She applied for a CARICOM skills certificate in 2005, having completed a postgraduate diploma in Arts and Cultural Enterprise Management (ACEM) at the St. Augustine campus of the University of the West Indies (UWI) in Trinidad.

“I considered myself an artist, which is why I came to study here [for the ACEM] and I thought it a great stepping stone in my realising that dream of being a singer, songwriter, performer […]. Trinidad seems to be, in relation to where I came from, a more fertile ground for [what] I wanted to do,” she said.

Osman has her own band and performs as a jazz singer at nightspots in Trinidad and Tobago. During the day, she works as a speechwriter for Trinidad and Tobago’s Minister of Public Utilities.

Still, she misses the support network that her parents’ substantial contacts would have provided her in Guyana, and she acknowledges that her standard of living is also probably lower than it would have been if she were back home. But, she said, the move was necessary.

Osman’s story is in line with the findings of a 2010 CARICOM Secretariat report to “assess the impact of free movement of persons and other forms of migration on member states”, which found: “Although, historically it is persons at the lower end of the socioeconomic scale in Caribbean society that have been the main movers, the CSME has to date facilitated the movement of those at the upper end, the educated elite in the region.”

Limited educational opportunities also explain the wave of migration out of Guyana, a finding borne out by the experience of Miranda La Rose, a senior reporter with one of Trinidad and Tobago’s leading newspapers, ‘Newsday’, who holds a Bachelor’s degree in political science.

“I came here with the intention of working to help fund [my daughter’s] studies,” La Rose told IPS. “I was working for a fairly good salary in Guyana. My objective [in moving to Trinidad] was to improve my children’s education.”

She said the move to Trinidad was painless, since she was granted her CARICOM skills certificate within three weeks of applying, and she has amassed a circle of friends in Trinidad that compensates for the family she left behind in Guyana.

But not all stories of migration are happy ones. Some, like Alisa Collymore, represent the pains experienced by those with limited skills and qualifications.

Collymore, who now works as a nursing assistant with a family in Trinidad, applied for a CARICOM skills certificate under the entertainer category, because she had experience in songwriting and performing in Guyana.

However, she holds no tertiary qualifications in the field and only completed her secondary school education after she became an adult.

The Trinidadian authorities declined to grant her the CARICOM skills certificate and she has to apply for a renewal of her work permit every six months.

She said, “The treatment you get [is not what you] expected […] and the hand of brotherhood is not really extended. You feel like you are an outsider.”

Nevertheless, she said, the move has brought economic benefits. As a single, divorced, mother of three, she had struggled financially in Guyana. Since moving to Trinidad, her financial situation has improved, she said.

Though some studies have found negative impacts of the free skills movement on source countries, many are finding in the CARICOM scheme a chance to start a new – and often better – life.

Edited by Kanya D’Almeida

This story originally appeared in a special edition TerraViva, ‘ICPD@20: Tracking Progress, Exploring Potential for Post-2015’, published with the support of UNFPA, the United Nations Population Fund. The contents are the independent work of reporters and authors.

Communities in the southern Mexico state of Oaxaca complain that the wind parks being built in their territory violate their human rights. Credit: Courtesy of the Assembly of Indigenous Peoples of the Isthmus in Defence of Land and Territory

By Emilio Godoy
MEXICO CITY, Aug 28 2014 (IPS)

Four wind farm projects in the southern Mexican state of Oaxaca, operated or financed by European investors, could violate Organisation for Economic Cooperation and Development (OECD) rules, say activists.

Three of the parks are being developed by Electricité de France (EDF) and the fourth is financed by public funds from Denmark and the Netherlands.

Benjamin Cokelet, founder and executive director of the Project on Organizing, Development, Education, and Research (PODER), said the wind farms have committed several violations of human rights, which should be examined by the OECD – made up of the nations of the industrialised North and two Latin American countries, Chile and Mexico.

“EDF’s three wind farm projects claim that the community consultations took place, but we have not seen any evidence that these permits were obtained,” the head of PODER, which is based in New York and Mexico City, told IPS.

The OECD Guidelines for Multinational Enterprises contain recommendations for responsible business conduct in areas such as human rights, employment and industrial relations, environment, combating bribery and extortion, consumer interests, and taxation.

With respect to the environment, it says businesses should “provide the public and workers with adequate, measurable and verifiable…and timely information on the potential environment, health and safety impacts of the activities of the enterprise”.

It also says companies should “engage in adequate and timely communication and consultation with the communities directly affected by the environmental, health and safety policies of the enterprise and by their implementation.”

EDF, through its subsidiary EDF Energies Nouvelles (EDF EN), owns the Mata-La Ventosa wind farms. Another subsidiary is co-owner of the Bii Stinu park, while a third operates the Santo Domingo wind farm.

The three projects are in the Isthmus of Tehuantepec in the southern state of Oaxaca, which is the shortest distance between the Gulf of Mexico and the Pacific Ocean.

The Mata-La Ventosa farm generates 67.5 MW, Bii Stinu 164 and Santo Domingo 160.

The other project that has been questioned is Mareña Renovables, with a generating capacity of 396 MW, in the Oaxaca coastal community of San Dionisio del Mar, on the Pacific Ocean.

This project is currently at a standstill because of legal action brought by members of the community whose land it is being built on.

According to PODER statistics, in the Isthmus of Tehuantepec, which is 200 km wide and has a surface area of 30,000 square kilometers, there are at least 20 wind park projects, controlled by 16 different companies.

The isthmus is also home to 1,230 agrarian communities, mainly indigenous “ejidos” or communal lands. Of the five indigenous people on the isthmus, the largest groups are the Zapotecs and Ikoots.

Reports from PODER indicate that conditions are favourable to business and negative for the local communities.

“The irregularities show collusion between public and private actors,” the organisation says.

The result is asymmetrical relationships and abusive leasing arrangements, characterised by the concealment of the permanent damage that the wind parks cause to farmland, the lack of fair compensation for damage, and extremely low rental payments for the land.

One problem was the lack of translators and interpreters for the local indigenous languages in the negotiations between the companies and the communities.

The right of local and indigenous communities to free, prior and informed consent is enshrined in the International Labour Organisation Convention 169 concerning Indigenous and Tribal Peoples and the United Nations Declaration on the Rights of Indigenous Peoples.

But this right has not been respected by the companies building the wind farms in the isthmus, PODER says.

Cokelet said the companies have thus failed to comply with international social and environmental standards.

In December 2013 the EDF EN joined the United Nations Global Compact, a set of 10 voluntary, non-binding principles in the areas of human rights, labour, the environment and anti-corruption for public or private signatories. In December this year, the EDF EN must present its report on compliance with these principles.

Construction of the Mareña Renovables wind farm complex was brought to a halt in 2013 by court rulings favourable to the affected communities.

The project consists of two wind parks that would produce a total of 396 MW, with an investment of 1.2 billion dollars. The project is partly owned by PGGM, the Netherlands’ largest pension management company.

The project also has nearly 75 million dollars in financing from the Inter-American Development Bank (IDB), and a 20 million dollar loan for the electricity purchaser from Denmark’s official Export Credit Agency (EKF).

In December 2012 the international Indian Law Resource Center filed a complaint on behalf of 225 inhabitants of seven indigenous communities with the IDB’s Independent Consultation and Investigation Mechanism (ICIM).

The complaint seeks damages given the absence of adequate consultation with the communities at the start of the project and the lack of measures in its design and execution aimed at avoiding negative impacts.

In September 2013, the IBD’s Panel of the Compliance Review Phase admitted the complaint. The panel is now preparing the investigation of the case, in order to draw up a report and proceed to oversee compliance with its provisions.

EDF’s Mata-La Ventosa also received a 189 million dollar loan from the International Finance Corporation (IFC), a member of the World Bank Group. In addition, the IFC channeled another 15 million dollars from the Clean Technology Fund (CTF).

Roberto Albisetti, IFC manager for Mexico and Central America, acknowledged to IPS the risk of complaints against the wind farms in Oaxaca, although he said the IFC’s independent grievance mechanism, the Compliance Advisor Ombudsman (CAO), had not received any up to now.

“The handling of the communities has been very serious,” he said. “We invested a lot of money in the consultation processes, because it is better to prevent than to face complaints later.”

In 2010, the IFC disbursed 375 million dollars for the construction of Eurus, another wind park in Oaxaca, which generates 250 MW.

Mareña Renovables, PGGM’s project, is also exposed to international legal action, on another flank.

Fomento Económico Mexicano (Femsa), Coca Cola’s bottler in Mexico, would be the biggest consumer of the electricity generated by the wind park. Femsa is the second-largest shareholder in the Dutch brewing company Heineken International.

Femsa also signed the U.N. Global Compact, in May 2005, and is to present its compliance report in March 2015. Heineken, meanwhile, joined in January 2006 and handed in its report in July.

Cokelet said Denmark’s EKF export credit agency, which also signed the Global Compact, could face legal action before the OECD for violating its principles to promote sustainable lending in the provision of official export credits to low-income countries.

Heineken and PGGM, which could also face complaints of violating OECD guidelines and principles, are in the same position, he added.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

Even though the U.S. economy is now expected to grow – albeit sluggishly – over the coming two years, inequality will not improve without policy reforms, a major grouping of rich countries is warning.

President Barack Obama has named income inequality the “defining challenge of our time”, and has tried to make the issue a central focus for the remainder of his time in office. That concern is now being backed up by two new reports from the Organisation for Economic Cooperation and Development (OECD), an international body of 34 developed countries.“It’s no longer just about inequality but about inequalities – inequality leads to greater polarisation in education and health outcomes.” -- OECD Secretary-General Angel Gurria

“Americans have increased working hours by 20 percent but incomes have still fallen. It’s no longer just about inequality but about inequalities – inequality leads to greater polarisation in education and health outcomes,” OECD Secretary-General Angel Gurria said at a Washington panel discussion on Jun. 12.

“Inequality was a direct cause of the [2007-08] financial crisis … but contrary to popular thought, there doesn’t need to be a trade-off between growth and inclusivity.”

Gurria in recent months has become a powerful voice on the issue of inequality. During his time in Washington, he also affirmed the gravity of income inequality for the U.S. compared to other developed countries.

The OECD has now released two new reports, Tackling High Inequalities in the U.S. and the OECD’s Economic Survey of the United States. The reports warn that, while there doesn’t necessarily need to be a trade-off between growth an inclusivity, the latter also does not inevitably follow the former.

“Real [gross domestic product] is about six percent above its pre-crisis level, the housing sector is beginning to recover, banks have returned to health,” the reports note, “corporate profitability is high and equity prices have reached new peaks.”

Yet despite these strengthening indicators, income inequality in the U.S. has continued to worsen, with wages for most workers having been slow to bounce back following the economic crisis.

Out of the 34 OECD countries, the U.S. has the fourth-highest inequality, behind Chile, Mexico and Turkey. It is also in third place in terms of the gap between the society’s richest and poorest 10 percent.

While the recession hurt all OECD countries, equality in the U.S has suffered more than in the others.

Between 2000 and 2012, the average disposable income of the bottom 10 percent in the U.S. dropped by some 14 percent. Yet in Canada, the United Kingdom and Switzerland this figure dropped by only half that figure, and by even less in New Zealand and France.

Some observers say the technology and the housing crisis could be two possible reasons that share of income is today more among the rich in the U.S.

“Innovation and the returns to those innovations are concentrated in the U.S. and among people at the top,” Aparna Mathur, a resident scholar at the American Enterprise Institute, a conservative think tank here, told IPS. “Also, the recent recession may have made the situation much worse at the bottom in the U.S., where the housing crisis affected many more low-income people who were highly indebted.”

Global models

During his talk in Washington, the OECD’s Gurria offered four recommendations for bolstering inclusive growth in the United States: investing more in human capital, promoting inclusive employment, improving the tax and benefits system, and providing more efficient public services.

Improving education and health services is certainly widely recognised as one way to improve inclusion, but the U.S. experience with related reforms has seen mixed results, particularly given the highly polarised politics that continue to stymie legislative progress in Washington. Obama focused much of his first administration with improving human capital through education legislation, attempts to increase the minimum wage and the highly controversial Affordable Care Act.

Meanwhile, the U.S. spends 25 percent less than OECD countries on policies to connect unemployed citizens to jobs, Gurria noted. Many other rich countries have invested significantly in “activating” their unemployed, or helping match them with jobs that match their skills.

Indeed, certain models do exist across the globe that appear to be able to garner bipartisan support here.

“There are some lessons that we can learn from other countries, such as the use of work-sharing arrangements in Germany that allowed workers to keep their jobs while reducing their hours,” AEI’s Mathur says. “Germany and many other European countries have also done a better job of matching youths to apprenticeship programmes and training programmes.”

In addition to job matching, the U.S. needs more job creation. While the U.S. Senate proudly reports that 9.4 million private sector jobs have been created in the country over the past four-plus years, the OECD and other critics say these include too many low-wage positions.

Of course, not even full employment would fully solve inequality. The OECD credits globalisation, technological change and policy reforms such as lower wage ratios (between the median and minimum) for driving up the wages of the most skilled, especially in information technology or financial sector. Yet these have also left behind low- and middle-skilled workers.

Other countries have offset this difference through redistribution measures like social transfers and lower, progressive tax burdens. In the United States, redistribution measures have reportedly offset two-thirds of the fall in household income brought on by the financial crisis, but this still lags far behind other OECD countries.

“Taxes and transfers readjust inequality by one third in France, but only one fifth in the U.S.,” said Gurria. Yet he also cautions against putting too much faith in tax reforms, warning that “Taxing the rich is an easy way out, but there’s no quick fix.”

AEI’s Mathur agrees that policies must be holistic, targeting not just income inequality but also economic mobility.

“At AEI, we have been doing work looking at consumption inequality, and we find that consumption inequality is much narrower than income inequality,” she says. “This suggests that transfer programmes have to some extent been successful in improving material standards-of-living at the bottom of the income distribution.”

Mathur recently co-authored a study on economic mobility that suggests policies such as expanding school choice to help low-income students graduate high school and helping single mothers by expanding child-care subsidies, among other recommendations.

A major grouping of rich countries has unveiled a new model for the automatic exchange of certain individual financial information between countries, aimed at significantly cutting down on offshore tax evasion.

Advocates of stronger financial transparency measures are lauding the move, announced Thursday by the Organisation for Economic Cooperation and Development (OECD). But anti-poverty campaigners are warning that developing economies were not included in discussions around the new common reporting standard.“Just five years ago you couldn’t get anyone to talk about this issue – most people called it a pipedream.” -- Heather Lowe

Indeed, the new standard has yet to offer clarity on how it would include poor countries, despite the fact that developing economies are among the hardest-hit by global tax evasion.

“This is a real game changer. Globalisation of the world’s financial system has made it increasingly simple for people to make, hold and manage investments outside their country of residence,” OECD Secretary-General Angel Gurria said Thursday.

“This new standard on automatic exchange of information will ramp up international tax cooperation, putting governments back on a more even footing as they seek to protect the integrity of their tax systems and fight tax evasion.”

The new proposal comes in the context of rising public frustration around the world, particularly in the aftermath of the global financial crisis, with reports of rich companies and individuals stashing as much as 20 trillion dollars overseas in order to escape national taxation. That public sentiment coincides with increasingly strapped government coffers, new enforcement of painful austerity measures, and officials looking for ways to strengthen national revenue streams.

The OECD developed the new standard after being requested to do so last fall by the Group of 20 (G20) of developed and emerging economies. It will now be formally presented to a G20 ministerial meeting in Australia later this month, and potentially adopted at a G20 summit in September.

If adopted, the changes would mark a sea change in global financial transparency, and one that advocates say came about with astounding speed.

“Just five years ago you couldn’t get anyone to talk about this issue – most people called it a pipedream,” Heather Lowe, director of government affairs for Global Financial Integrity (GFI), a Washington watchdog group, told IPS.

“So it’s fantastic and amazing that we’ve gotten to the point where everybody recognises that the automatic exchange of tax information is necessary in order to fill those holes in the international financial system that allow illicit money to hide out.”

Truly global

The OECD common reporting standard would see participating countries automatically share information on foreign bank accounts, capital gains and other interest earned. Previously, such information would have needed to be formally requested by governments, an often cumbersome process that could be easily stonewalled.

Significant parts of the new standard reflect landmark U.S. legislation, known as the Foreign Account Tax Compliance Act (FATCA), which the OECD says played a “catalytic role” in the creation of the new model. Since its enactment in 2010, FATCA has been roiling international discussions by requiring overseas financial institutions to turn over information about U.S. customers.

“Today’s announcement underscores that promoting tax transparency is a global priority and we are proud to lead the charge on this pressing issue by implementing FATCA and collaborating closely with our G20 partners,” the U.S. Treasury told IPS in a statement.

“We expect the G20’s endorsement of the common reporting standard to add further momentum to our network of intergovernmental agreements, as countries see the extent to which our model agreements reflect this new international standard.”

Already, the OECD says more than 40 countries have agreed to adopt the new standard. Yet poor countries have thus far been largely left outside of the process, despite a high-level summit last year declaring that a prime motivation for any strengthened exchange of tax information would be to assist developing countries collect the taxes due to them.

“This model is being billed as a global standard, but it won’t be global unless all countries can sign up to it, and that includes developing countries,” GFI’s Lowe says. “Otherwise, we could easily create a system in which rich countries get richer and poor countries get poorer, because their wealthy officials and businesspeople continue putting money abroad where tax authorities can’t reach it.”

Other groups are decrying the fact that developing countries were excluded from the negotiating process surrounding the new OECD model.

“Up to nine trillion dollars is thought to be hidden offshore from the tax authorities in developing countries. Those governments need information just as much as [developed countries], but they are being told they will have to wait,” Joseph Stead, a senior economic justice adviser for Christian Aid, a British charity, said Thursday.

“We want to see the U.K., OECD and G20 commit to a process which enables developing countries to be part of the new system and to start benefiting from it before they are burdened with costs.”

Reciprocity and reluctance

The OECD plan outlines two G20-directed processes mandated to figure out how to bring developing countries in under the tax information-sharing umbrella. The first of these blueprints are to be released in September, and will show “how developing countries can overcome obstacles to participation in the automatic exchange standard and to assist them in meeting the standard”.

While necessary, there will likely be at least two obstacles in the attempt to begin regular exchange of tax information with developing countries.

First and foremost, while the OECD model calls for information-sharing “reciprocity”, many developing countries currently lack the basic technical capacity to make such information available. While programmes to offer both financial and training assistance are already going forward, GFI and other groups are calling on multilateral institutions and G20 donors to prioritise such work as the model goes forward.

A second obstacle could be reluctance on the part of certain governments or individual officials in developing countries to open their systems up to greater scrutiny, over concerns of past or future corruption.

“This is clearly a very tricky issue, but in certain cases it won’t be a question of what a government wants but, rather, what’s right for the people in developing countries,” GFI’s Lowe says.

“Fortunately, I think there’s a growing movement among populations around the world about illicit money and tracing it and returning it to developing countries. So as that continues to grow, the pressure will be on developing country governments to take part, and it will be up to others to support those grassroots movements.”

Finance ministers from the Group of 20 (G20) countries on Friday received a previously requested strategy under which the world’s largest economies could crack down on international tax avoidance, particularly on the part of multinational corporations.

The 15-point action plan was created by the Organisation for Economic Cooperation and Development (OECD), a Paris-based think tank funded by the world’s richest countries. The G20 requested the study in February, as tax avoidance has moved to the top of the global agenda, particularly in the context of governments struggling to fill state coffers in the aftermath of the global economic downturn."When multinational corporations game the system – and the evidence shows that they are – everyone else loses." -- Nicole Tichon of the Tax Justice Network USA

Yet some analysts have also suggested that, against the backdrop of countries such as Brazil, China, India and Russia quickly becoming some of the world’s most powerful economies, the current exercise could be developed countries’ last attempt to steer the conversation on international tax policy.

“The joint challenges of tax evasion and tax base erosion lie at the heart of the social contract,” Angel Gurria, secretary-general of the OECD, said Friday in Moscow, where he handed over the new blueprint to government officials gathered ahead of the G20 summit in September, which Russia is hosting.

“Our citizens are demanding that we tackle offshore tax evasion by wealthy individuals and re-vamp the international tax system to prevent multinational enterprises from artificially shifting profits, resulting in very low taxes or even double non-taxation and thereby eroding our tax base.”

The OECD strategy would now seek to strengthen coherence among its members’ tax systems, aimed at filling the gaps between those systems – through which multinational corporations, in particular, have become adept at slipping.

A major thrust of the new strategy deals with ways to corral the new powerhouses of the digital economy, which in recent years have become adept at extremely complex – some say only marginally legal – tax strategies. Such companies, making use of extensive offshore subsidiaries, have recently been the focus of a strengthened tax-avoidance discussion here in the United States and in Europe.

The action plan, which the OECD says it will roll out over a two-year rulemaking process, also tries to increase transparency. It would require companies to engage in country-by-country reporting of profits, for instance, in order to make it more difficult for phony “shell” offices to quietly shift profits made in one country to another that offers lower or nonexistent tax rates.

On Friday, Gurria noted that these 15 actions would “result in the most fundamental change to the international tax rules since the 1920s!”

Built on an earlier general report, the plan received widespread initial plaudits from government officials. Russian Finance Minister Anton Siluanov “commended” the report for hewing to “the basic tenets of fairness – that it allows multinational corporations to prosper without loading a higher tax burden on domestic companies and individual taxpayers.”

U.S. Treasury Secretary Jacob J. Lew also “welcomed” the action plan, which he said was created in part with U.S. participation.

“This is a major step toward addressing tax avoidance by multinational firms in the global economy and represents a concerted effort to raise standards around the world,” Lew noted in a statement sent to IPS. “We must address the persistent issue of ‘stateless income’, which undermines confidence in our tax system at all levels.”

Entrenching global inequality?

Yet the plan received a more cautious appraisal from certain civil society organisations, with some warning that the OECD’s membership has led it to overlook the importance of developing countries in combating tax avoidance in today’s context. Indeed, it is in these countries where illicit outflows of capital are having major, damaging impacts on already strapped governments’ abilities to fund their public sectors.

“We are encouraged to see this unequivocal acknowledgement that when multinational corporations game the system – and the evidence shows that they are – everyone else loses: governments, citizens and other businesses,” Nicole Tichon, executive director of the Tax Justice Network USA, an advocacy group here, told IPS.

“We agree that this is a global problem and will require a global solution, but this plan needs to more carefully consider the additional plight of developing countries.”

One of Tichon’s colleagues in Africa expanded on this point.

“In poor nations we are largely failing to capture tax revenue from major international corporations which should be harnessed to ensure better social and economic opportunities for citizens,” Alvin Mosioma, the director of Tax Justice Network Africa, says.

“This is why the current OECD reform process needs to include at its heart serious representation from developing nations rather than keeping them to the margins. That developing countries are kept out of this key process runs the real risk of further entrenching global inequality.”

Others are taking issue with the new plan’s failure to recommend that country-by-country reporting of corporate profits – seen as a critical tool in halting the currently rampant shifting of earnings among multinational companies – be made public.

According to the OECD’s top tax official, the action plan does recommend such reporting, but he admits that those reports would not be publicised.

“This country-by-country reporting will be for tax administrations and not [the] public,” Pascal Saint-Amans, director of the OECD’s Centre for Tax Policy and Administration, told IPS.

“What matters is that tax inspectors have the information. Confidentiality issues [could stop] countries from agreeing to public country-by-country reporting.”

Indeed, a similar fight is currently taking place here in the United States, which last year instituted a landmark regulation requiring multinational companies to publicly report all payments made to foreign governments. Yet earlier this month a court overturned that rule in part because of the requirement that these reports be made public.

Some anti-poverty groups are going so far as to suggest that the OECD’s tax fixes are already obsolete, having been far outstripped by the decentralised model that the most aggressive modern corporations have been able to follow.

“This plan is papering over the cracks in a broken system, rooted in an outdated and irrelevant model of corporate taxation,” Murray Worthy, a tax campaigner at War on Want, an advocacy group, said in a statement. “It might be able to tackle the worst of corporate tax dodging, but it won’t fix the system.”

Japan’s crucial official development assistance (ODA) is declining steadily, even while poverty in Asia continues to rise. Credit: Naimul Haq/IPS

By Suvendrini Kakuchi
TOKYO, May 1 2013 (IPS)

As Japan slips from its former top spot as the world’s biggest donor, experts here are worried about long-term changes in the country’s development assistance programme, which has played a crucial role in global poverty reduction efforts.

Japan’s spending on official aid fell 3.1 percent from the previous year to 10.49 billion dollars in 2012, revealed the latest data published last month by the Organisation for Economic Cooperation and Development (OECD), which placed the country in fifth place on its list of major donors, behind the United States, UK, Germany and France.

The same survey, testing the United Nations recommendation that donors allocate 0.7 percent of their gross national income (GNI) for international assistance, indicated Japan is at 18^th place in the GNI scale, with an allocation of just 0.25 percent on official development assistance (ODA).

Overall, Japanese ODA has dropped 47 percent compared to its peak in 1997, according to the government. The OECD attributes the decline to a “fall in bilateral grants and reduced contributions to international organisations”.

Analysts predict the gloomy trend is here to stay, leading to a strategic shift in how aid is allocated.

“Domestic economic constraints and security threats in East Asia have made national goals the priority in Japan’s ODA budget,” Professor Massaki Ohashi, a veteran ODA analyst, explained to IPS. “This change, from the traditional focus on poverty reduction in recipient countries, is a serious concern for us.”

Head of the Japan NGO Centre for International Cooperation (JANIC), an umbrella civil society organisation, Ohashi says ODA spending will now be directed at shoring up struggling Japanese companies facing competition from cheaper goods manufactured in rising Asian economies.

For instance, signature Japanese telecommunication brands such as Sony and Matsushita (also known as Panasonic) are no longer the household names they once were in Asia or Africa, given the encroachment of cheaper Chinese or South Korean products that are popular with the expanding middle classes on the continent.

In an interview with IPS, Hirokazu Hiratsuka, an economist at the Mizuho Research Institute explained that Japan’s inward-looking ODA policy will be strengthened under the conservative administration of Japanese Prime Minister Shinzo Abe who has made economic revival — under the term “Abenomics” — the leading national goal to counter the rising economic clout of China and South Korea.

Yen loans that support major infrastructure projects comprise more than 50 percent of ODA, but have been decreasing by an average of 16 percent annually. Grants for poverty reduction efforts, which formerly made up 40 percent of Japan’s official assistance budget, are also declining.

The focus now will be on securing Japan’s domestic economic interests. Hiratsuka stressed that Japanese aid will also be directed at developing legal frameworks for free trade agreements (FTAs) in Asia and global business regulations that will allow Japanese companies to exercise greater influence in the region.

A case in point is the Japan-led special economic zone (SEZ) adjacent to the Thilawa port in Myanmar (Burma), scheduled to start this year, which will open the doors for Japanese companies to launch businesses in the resource-rich country. With 70 percent of the zone reserved for manufacturing plants, Japanese conglomerates like Mitsubishi, Sumitomo Corp and Marubeni will be the main participants in the project.

Japanese ODA will be used to boost Yangon’s electricity generation capacity that will supply the SEZ, located 23 kilometers south of the capital.

Currently, Japanese businesses occupy just 0.64 percent of total foreign investment in Myanmar, lagging behind China’s 34 percent and South Korea’s seven percent, according to the Myanmar Federation of Chambers of Commerce and Industry.

Japan has also promised to increase economic assistance to Sri Lanka, in an effort to boost bilateral trade and investment.

A recent government statement highlighted the importance of maritime cooperation between the two countries to protect “stability” in the Indian Ocean, a jab at China’s support for infrastructure development on the island of Sri Lanka, including the construction of a new port in the southern coastal city of Hambantota.

Fighting back the changes in ODA policy, JANIC is lobbying hard for the protection of the Millennium Development Goals (MDGs) in Japanese aid policy, against pending cuts slated for the next fiscal year that started in April.

With poverty in Asia increasing along with economic growth, JANIC is struggling to keep poverty-reduction targets on a list of priorities for ODA, but these pleas may be falling on deaf ears.

The steady decline in development assistance has turned the spotlight on the future of Japan’s most important foreign policy, formulated back in 1945. Compensation payments to former colonies after its defeat in World War II and generous technical assistance to developing countries earned Japan, the richest country in Asia, respect and admiration in recipient nations, helping to bolster its image as a crucial pillar in the post-war global economy.

Now, “the country needs to figure out ways to make contributions that no other country can offer”, according to an editorial in the Nikkei, Japan’s leading economic daily.

Many experts favour the idea of leveraging Japan’s leading edge in science and technology — such as stem cell research, transport and environmental protection – to combat lower aid disbursements.

Professor Takeshi Inogchi, an international relations specialist, told IPS the dip in ODA poses a serious challenge to Japanese influence in developing countries and particularly in Asia where new aid powerhouses like China and South Korea are gaining steam.

“Japan, a resource-poor country, must react quickly to these new challenges. Not being a military player, we need to ensure friends in Asia that can defuse the territorial tensions with China in particular,” he told IPS, referring to clashes between the Japanese and Chinese navies over the Senkaku Islands (known as Diayou in China), an uninhabited archipelago claimed by both sides.

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