Ensure global recovery for all

The financial crisis hit those who have the least the hardest, driving nearly 50 million more people into extreme poverty and the number of people chronically hungry to over one billion for the first time in history.

The G20 came up with US$1.1 trillion to stimulate their own economies—but a mere US$50 billion to assist the world’s poorest nations. And most of this funding was loaned, not given. Now another debt crisis lurks around the corner.

In 2005, the G8 began cancelling debts the poorest countries owed to the International Monetary Fund and World Bank. Debt cancellation allowed money to be spent on real needs: it allowed Tanzania to make primary school free, and Uganda to provide free primary health care.

On the investment side, the key to global economic recovery and poverty reduction is creation of decent work opportunities. Support for the International Labour Organization’s Global Jobs Pact would stimulate economies and provide protection to working people and their families.

2010 is the time to cancel the debts of all the poorest countries, develop responsible practices to guide future lending, and ensure that public policy supports the creation of good, green jobs.

Make global rules and institutions fair

Lack of effective oversight lay behind the financial crisis. At the same time, it is critical that the development needs of poorer countries be prioritized in global trade negotiations. We need fair rules for the global economy and new regulations to keep banks, hedge funds and others accountable. There are concrete, immediate steps that could be taken to ensure the global economy works for all.

We need a G-20 type leader’s forum that is representative, inclusive, accountable and transparent to all, with avenues for hearing citizens’ voices. Such a forum should eventually be established within the framework of the United Nations. In 2010, a first step would be the formal inclusion of the Africa Union in the G20, so as to ensure that Africans have stronger representation at this table.

Leaders could follow through on G20 promises to rein in secrecy jurisdictions (also known as “tax havens”) which allow companies and individuals to hide assets from taxation. Tax evasion by transnational corporations costs developing countries an estimated US$160 billion a year in lost tax revenue—money that ought to be invested in education, health and sustainable jobs.

Banks and financial speculators could pay their fair share of the cost of recovery. The most promising proposal is a small fee on financial transactions (from 0.05 percent to 0.5 percent). If implemented, this would raise substantial revenue to be used in poverty reduction and climate change adaptation while helping to discourage speculative behaviour that undermines stability.

Now is the time for the G20 to initiate a process to ensure it is more representative, accountable and transparent to all, to finally end the secrecy in tax havens, and to adopt a Financial Transaction Tax to ensure a sustainable recovery benefits all.