The European Council of development ministers issued on 15th October a short set of ‘conclusions’ in response to the European Commission’s July report on financing for development. The Council agreed to “develop a common position” on “development finance beyond 2015” and mandated the Commission to address these issues in its forthcoming proposal on “the post-2015 development agenda” – a process Eurodad will continue to track.
Here is Eurodad’s analysis of the main points from the Council Conclusions:
While the commitment to “support increased domestic resource mobilisation” is welcome, the Council focuses on actions by developing countries, worryingly promising to “systematically incorporate tax administration into policy dialogue” with developing countries – raising the spectre of the EU trying to influence developing country tax policy rather than sort out its own complicity in the huge flows of illicit finance that so hinder development efforts.
The Council’s high level rhetoric is welcome:“The EU will also help developing countries to combat illicit capital flows and other harmful practices, improve the transparency of international financial transactions, identify misuses of transfer pricing and strengthen the Extractive Industries Transparency Initiative.”
However, the Council misses the opportunity to signal it will support concrete action, for example through the upcoming Anti-Money-Laundering directive, or in the final stages of the Accounting Directive. Instead, “EU companies operating in developing countries will be encouraged to pay their fair share of taxes”.
The Council has little to say, and nothing to add to the Commission’s position, saying they will “promote the participation of non-Paris Club members in debt-workout-settlements”; a position that does not take any steps in the direction of a fair and lasting solution to ongoing or future debt crises.
The commitment to “take action to restrict litigation against developing countries by distressed-debt funds” will be picked up by Eurodad members and others campaigning to stop these ‘vulture funds’ from preying on developing countries.
While the Council reaffirms their commitments to meet aid targets – implicitly reaffirming the promise to allocate 0.7% of GNI by 2015 – they have nothing to say on the Commission’s dry observation that on current trends they are currently 25 years behind schedule.
Aid effectiveness commitments reached at last year’s Busan High Level Forum are reaffirmed, but little is said beyond this.
The Council’s enthusiasm for the agenda of using aid to support private sector development and ‘leverage’ private finance is evident; two sections in the three page document focus on this issue, though they contain nothing new. The EU’s blending platform is endorsed, and commitments to reduce the cost of transferring remittances are repeated.
While the Commission had discussed the proposed Financial Transactions Tax, or Robin Hood Tax, the Council pointedly ignores the issue, saying only that “the EU seriously considers proposals for innovative financing with significant revenue generation potential.”