As we approach the half-way point for the achievement of many of the Millennium
Development Goals (MDGs) the spotlight is shining ever more intently on the
urgent need for new sources of revenue to pay for them. With the first international
development duty launched, in the form of the ‘pilot’ solidarity levy on air travel, the
momentum needs to continue to the implementation in quick succession of a second
such initiative to provide another long term predictable source of additional finance.
Innovation is required not just in financing but also in delivery. UNITAID’s mission is to
transform a situation of high cost drugs for the treatment of the few to low cost drugs
for the care of the many. In so doing its potential value is exponentially greater than a
simple addition of extra revenue. The choice of how and where the next new stream of
finance is spent also needs to be to be similarly strategic.
The Core Group1 Governments rightly pride themselves on an international development
policy that has, as one of its pillars, the tackling of global inequality which has risen
rapidly in the latest phase of globalisation. For example President Chirac opened the
Paris conference held in February 2006 in Paris stating that ‘despite the continuous
increase in global wealth, a third of humankind still lives on less than a euro a day’, and that ‘…globalisation, far from bridging the (poverty) gap, is widening it even further’.
In this report, we offer some suggestions for tackling global inequality through concrete
proposals for both raising substantial new revenue equitably and spending it in ways
that strategically target the ‘weak spots’ in the international development effort.
The financial services industry has been one of the biggest beneficiaries of globalisation.
Annual turnover in the global market for currencies, has, for instance, expanded from
about 4trillionin1973to40 trillion in the mid 1980s to more than 450trillionnow–amorethan100foldincrease.2Profitsatfinancialservicesfirmsarealsoatarecordhighwiththetoptwomostprofitablebanks,CitibankandHSBC,postingmorethan40 billion of profits between them in 2005 alone.
At the same time as industries such as airlines and financial services have benefited
from globalisation, populations in many of the poorest countries, especially those in sub-
Saharan Africa, have been left behind – or worse, harmed. Average life expectancy in
these countries is in fact down from 50 years in 1990 to 45 years now, just over half the
almost 80-year life expectancy in countries such as Norway. The health, education and
productivity problems caused by a lack of access to basics such as clean drinking water
and sanitation facilities, the added decimation wrought by global pandemics such as
HIV/AIDS on the ability of the populations and systems in poor countries to cope, and
the increased vulnerability linked to climate change, all threaten to undermine and, in
fact, roll back the slow progress that has been made to date towards meeting the MDGs.
In Section 2 we demonstrate in some detail how, by introducing a very small levy of
less than a hundredth of one per cent on currency transactions, many countries can
unilaterally generate substantial resources for development from those who can most
afford to pay. Such a levy is simple and inexpensive to apply in this age of electronic
transfers. Whilst this proposal is specific to the currency market, it can be generalised
to apply to other financial markets many of which already pay some form of a levy.
The possible uses for this revenue that we propose in Section 4 have been shaped
by the need to lever maximum results from the resources generated. The three
potential areas for immediate financing that we have identified would generate
positive additional outcomes towards the achievement of several seemingly unrelated
development goals.
First, provision of clean water and sanitation, as it is a
foundation stone that underlies the ability to make meaningful progress with the vast
majority of the MDGs. Second, providing human resources for health, because
without sufficient trained health workers, medicines and infrastructure are simply not
enough on their own to contain the raging pandemics of HIV/AIDS, TB and malaria.
Third, providing a long term predictable source of funds to an expanded UN
Central Emergency Response Fund, to create a more robust response to the growing
threat of natural disasters and humanitarian emergencies