An estimated 50% of world trade passes through one of the world's 70 tax havens, costing developing countries an estimated US $160 billion each year, more than the total amount of global aid they received in 2008.

This tax evasion by multinational corporations could be curbed if the G20 governments agreed to put in place mandatory regulations.

Ahead of the G20 Finance Ministers' Meeting held in St Andrews in November 2009, the newly formed Tax Justice Network Australia sent the Treasurer the following letter: Read

Visit our partner Action Aid UK and download their latest report "Accounting for Poverty"
http://www.actionaid.org.uk/102073/tax_change_could_end_hunger.html

Zim warned against debt trap

By Victoria Ruzvidzo

ZIMBABWE, weighed down by a $5,7 billion debt, should not rush into adopting the Highly Indebted Countries Initiative but should instead pursue other strategies that could yield better results.

Africa Forum and Network on Debt and Development (AFRODAD) representative Ms Ingrid Naess-Holm yesterday warned that although the HIPC strategy had its merits in some instances, its side-effects could outweigh its benefits.

Presenting a paper at a media sensitisation workshop on Zimbabwe’s debt organised by the Zimbabwe Coalition on Debt and Development yesterday, Ms Naess-Holmes said experiences in other countries had shown that the HIPC route would not necessarily rid a country of its debt but could prove more damaging to the economy.

"Zimbabwe should be careful going into the HIPC path. There are problems all the way (if it adopts this strategy.)

"Zimbabwe should find other solutions before adopting HIPC. In fact this country can have a good case to prove that you should not go the HIPC case to try to get creditors to review debts," she said.

Experience had shown that under HIPC creditors did not cancel enough debt, a situation that left intended beneficiaries in worse debt positions.

"Under HIPC debt can actually increase," she said.

Although, by virtue of its high debt to exports ratio of about 150 percent, Zimbabwe could qualify as an HIPC, measures such as mandatory privatisation of state enterprises, adopting an economic adjustment programme and other such pre-requisites could be more harmful to the economy.

Zimcodd director Dakarayi Matanga also expressed this view: "We need to be careful. HIPC in its current form will give problems for Zimbabwe."

Debate has been raging over the strategies Government can employ to get the country out of debt. Finance Minister Tendai Biti has come up with an External Debt Clearance strategy which includes the HIPC as one of the possible routes to take.

Although this he argues out his case, experts say the options needed to be weighed.

In his study launched at the workshop yesterday entitled the Legal Framework of the Public Loan Contraction and Debt Management system in Zimbabwe, Lawyer Zviko Chadambuka also argues that HIPC is not the way to go.

"HIPC has in fact been viewed as having served as a weak bribe-the promise of minimal cancellation after long delay and damaging SAPs (Structural Adjustment Programmes)-so governments would remain in debt system.

"An example justifying this view is that of Tanzania where less than three months after Tanzania received its HIPC debt relief agreement, the World Bank in its CAS was of the view that as long as Tanzania stays on track with its IMF supported adjustment programme, the World Bank intended to lend the government at least US$790 million over the next three years, with a proposal to increase lending in the third year of the CAS by US$200 million . . . this would increase lending over the period to some US$990 million," read the document.

HIPC was launched in 1996 and by 1999 only five countries had made some "progress" under the initiative.

The paper said the World Bank acknowledged that the programme was failing to meet expectations and had to adopt the Enhanced HIPC strategy.

Zimcodd chairperson Rutendo Hadebe also urged caution.

"Let’s think outside HIPC. There are alternatives outside HIPC and we should look at them.

Lets check who we owe, what is legit and what is odious," she said.

Professor Lloyd Sachikonye from the University of Zimbabwe said Zimbabwe could use alternative sources such as migrant remittances to help salvage the economy.

"Zimbabwe’s burden is very heavy. There is need to explore alternative ways of financing to avoid further heavy debts and dependency on foreign aid," he said.

The workshop, which ends today, also stressed the need for a debt audit first before pursuing strategies to get over it.

Zimbabwe owes the International Monetary Fund, the World Bank and the African Development Bank among other multilateral and bi-lateral institutions.

Its present debt has constrained efforts to finance social services such as education and health, with statistics showing that debt repayments annually are 40 times more than the funds budgeted for social sectors.

By Naomi Klein - November 11th, 2009
Published in Rolling Stone

One last chance to save the world—for months, that's how the United Nations summit on climate change in Copenhagen, which starts in early December, was being hyped. Officials from 192 countries were finally going to make a deal to keep global temperatures below catastrophic levels. The summit called for "that old comic-book sensibility of uniting in the face of a common danger threatening the Earth," said Todd Stern, President Obama's chief envoy on climate issues. "It's not a meteor or a space invader, but the damage to our planet, to our community, to our children and their children will be just as great."

That was back in March. Since then, the endless battle over health care reform has robbed much of the president's momentum on climate change. With Copenhagen now likely to begin before Congress has passed even a weak-ass climate bill co-authored by the coal lobby, U.S. politicians have dropped the superhero metaphors and are scrambling to lower expectations for achieving a serious deal at the climate summit. It's just one meeting, says U.S. Energy Secretary Steven Chu, not "the be-all and end-all."

As faith in government action dwindles, however, climate activists are treating Copenhagen as an opportunity of a different kind. On track to be the largest environmental gathering in history, the summit represents a chance to seize the political terrain back from business-friendly half-measures, such as carbon offsets and emissions trading, and introduce some effective, common-sense proposals— ideas that have less to do with creating complex new markets for pollution and more to do with keeping coal and oil in the ground.

Among the smartest and most promising—not to mention controversial—proposals is "climate debt," the idea that rich countries should pay reparations to poor countries for the climate crisis. In the world of climate-change activism, this marks a dramatic shift in both tone and content. American environmentalism tends to treat global warming as a force that transcends difference: We all share this fragile blue planet, so we all need to work together to save it. But the coalition of Latin American and African governments making the case for climate debt actually stresses difference, zeroing in on the cruel contrast between those who caused the climate crisis (the developed world) and those who are suffering its worst effects (the developing world). Justin Lin, chief economist at the World Bank, puts the equation bluntly: "About 75 to 80 percent" of the damages caused by global warming "will be suffered by developing countries, although they only contribute about one-third of greenhouse gases."

Climate debt is about who will pick up the bill. The grass-roots movement behind the proposal argues that all the costs associated with adapting to a more hostile ecology—everything from building stronger sea walls to switching to cleaner, more expensive technologies—are the responsibility of the countries that created the crisis. "What we need is not something we should be begging for but something that is owed to us, because we are dealing with a crisis not of our making," says Lidy Nacpil, one of the coordinators of Jubilee South, an international organization that has staged demonstrations to promote climate reparations. "Climate debt is not a matter of charity."

Sharon Looremeta, an advocate for Maasai tribespeople in Kenya who have lost at least 5 million cattle to drought in recent years, puts it in even sharper terms. "The Maasai community does not drive 4x4s or fly off on holidays in airplanes," she says. "We have not caused climate change, yet we are the ones suffering. This is an injustice and should be stopped right now."

The case for climate debt begins like most discussions of climate change: with the science. Before the Industrial Revolution, the density of carbon dioxide in the atmosphere—the key cause of global warming—was about 280 parts per million. Today, it has reached 387 ppm—far above safe limits—and it's still rising. Developed countries, which represent less than 20 percent of the world's population, have emitted almost 75 percent of all greenhouse-gas pollution that is now destabilizing the climate. (The U.S. alone, which comprises barely five percent of the global population, contributes 25 percent of all carbon emissions.) And while developing countries like China and India have also begun to spew large amounts of carbon dioxide, the reasoning goes, they are not equally responsible for the cost of the cleanup, because they have contributed only a small fraction of the 200 years of cumulative pollution that has caused the crisis.

In Latin America, left-wing economists have long argued that Western powers owe a vaguely defined "ecological debt" to the continent for centuries of colonial land-grabs and resource extraction. But the emerging argument for climate debt is far more concrete, thanks to a relatively new body of research putting precise figures on who emitted what and when. "What is exciting," says Antonio Hill, senior climate adviser at Oxfam, "is you can really put numbers on it. We can measure it in tons of CO2 and come up with a cost."

Equally important, the idea is supported by the United Nations Framework Convention on Climate Change—ratified by 192 countries, including the United States. The framework not only asserts that "the largest share of historical and current global emissions of greenhouse gases has originated in developed countries," it clearly states that actions taken to fix the problem should be made "on the basis of equity and in accordance with their common but differentiated responsibilities."

The reparations movement has brought together a diverse coalition of big international organizations, from Friends of the Earth to the World Council of Churches, that have joined up with climate scientists and political economists, many of them linked to the influential Third World Network, which has been leading the call. Until recently, however, there was no government pushing for climate debt to be included in the Copenhagen agreement. That changed in June, when Angelica Navarro, the chief climate negotiator for Bolivia, took the podium at a U.N. climate negotiation in Bonn, Germany. Only 36 and dressed casually in a black sweater, Navarro looked more like the hippies outside than the bureaucrats and civil servants inside the session. Mixing the latest emissions science with accounts of how melting glaciers were threatening the water supply in two major Bolivian cities, Navarro made the case for why developing countries are owed massive compensation for the climate crisis.

"Millions of people—in small islands, least-developed countries, landlocked countries as well as vulnerable communities in Brazil, India and China, and all around the world—are suffering from the effects of a problem to which they did not contribute," Navarro told the packed room. In addition to facing an increasingly hostile climate, she added, countries like Bolivia cannot fuel economic growth with cheap and dirty energy, as the rich countries did, since that would only add to the climate crisis—yet they cannot afford the heavy upfront costs of switching to renewable energies like wind and solar.

The solution, Navarro argued, is three-fold. Rich countries need to pay the costs associated with adapting to a changing climate, make deep cuts to their own emission levels "to make atmospheric space available" for the developing world, and pay Third World countries to leapfrog over fossil fuels and go straight to cleaner alternatives. "We cannot and will not give up our rightful claim to a fair share of atmospheric space on the promise that, at some future stage, technology will be provided to us," she said.

The speech galvanized activists across the world. In recent months, the governments of Sri Lanka, Venezuela, Paraguay and Malaysia have endorsed the concept of climate debt. More than 240 environmental and development organizations have signed a statement calling for wealthy nations to pay their climate debt, and 49 of the world's least-developed countries will take the demand to Copenhagen as a negotiating bloc.

"If we are to curb emissions in the next decade, we need a massive mobilization larger than any in history," Navarro declared at the end of her talk. "We need a Marshall Plan for the Earth. This plan must mobilize financing and technology transfer on scales never seen before. It must get technology onto the ground in every country to ensure we reduce emissions while raising people's quality of life. We have only a decade."

A very expensive decade. The World Bank puts the cost that developing countries face from climate change—everything from crops destroyed by drought and floods to malaria spread by mosquito-infested waters—as high as $100 billion a year. And shifting to renewable energy, according to a team of United Nations researchers, will raise the cost far more: to as much as $600 billion a year over the next decade.

Unlike the recent bank bailouts, however, which simply transferred public wealth to the world's richest financial institutions, the money spent on climate debt would fuel a global environmental transformation essential to saving the entire planet. The most exciting example of what could be accomplished is the ongoing effort to protect Ecuador's Yasuní National Park. This extraordinary swath of Amazonian rainforest, which is home to several indigenous tribes and a surreal number of rare and exotic animals, contains nearly as many species of trees in 2.5 acres as exist in all of North America. The catch is that underneath that riot of life sits an estimated 850 million barrels of crude oil, worth about $7 billion. Burning that oil—and logging the rainforest to get it— would add another 547 million tons of carbon dioxide to the atmosphere.

Two years ago, Ecuador's center-left president, Rafael Correa, said something very rare for the leader of an oil-exporting nation: He wanted to leave the oil in the ground. But, he argued, wealthy countries should pay Ecuador—where half the population lives in poverty—not to release that carbon into the atmosphere, as "compensation for the damages caused by the out-of-proportion amount of historical and current emissions of greenhouse gases." He didn't ask for the entire amount; just half. And he committed to spending much of the money to move Ecuador to alternative energy sources like solar and geothermal.

Largely because of the beauty of the Yasuní, the plan has generated widespread international support. Germany has already offered $70 million a year for 13 years, and several other European governments have expressed interest in participating. If Yasuní is saved, it will demonstrate that climate debt isn't just a disguised ploy for more aid—it's a far more credible solution to the climate crisis than the ones we have now. "This initiative needs to succeed," says Atossa Soltani, executive director of Amazon Watch. "I think we can set a model for other countries."

Activists point to a huge range of other green initiatives that would become possible if wealthy countries paid their climate debts. In India, mini power plants that run on biomass and solar power could bring low-carbon electricity to many of the 400 million Indians currently living without a light bulb. In cities from Cairo to Manila, financial support could be given to the armies of impoverished "trash pickers" who save as much as 80 percent of municipal waste in some areas from winding up in garbage dumps and trash incinerators that release planet-warming pollution. And on a much larger scale, coal-fired power plants across the developing world could be converted into more efficient facilities using existing technology, cutting their emissions by more than a third.

But to ensure that climate reparations are real, advocates insist, they must be independent of the current system of international aid. Climate money cannot simply be diverted from existing aid programs, such as primary education or HIV prevention. What's more, the funds must be provided as grants, not loans, since the last thing developing countries need is more debt. Furthermore, the money should not be administered by the usual suspects like the World Bank and USAID, which too often push pet projects based on Western agendas, but must be controlled by the United Nations climate convention, where developing countries would have a direct say in how the money is spent.

Without such guarantees, reparations will be meaningless—and without reparations, the climate talks in Copenhagen will likely collapse. As it stands, the U.S. and other Western nations are engaged in a lose-lose game of chicken with developing nations like India and China: We refuse to lower our emissions unless they cut theirs and submit to international monitoring, and they refuse to budge unless wealthy nations cut first and cough up serious funding to help them adapt to climate change and switch to clean energy. "No money, no deal," is how one of South Africa's top environmental officials put it. "If need be," says Ethiopian Prime Minister Meles Zenawi, speaking on behalf of the African Union, "we are prepared to walk out."

In the past, President Obama has recognized the principle on which climate debt rests. "Yes, the developed nations that caused much of the damage to our climate over the last century still have a responsibility to lead," he acknowledged in his September speech at the United Nations. "We have a responsibility to provide the financial and technical assistance needed to help these [developing] nations adapt to the impacts of climate change and pursue low-carbon development."

Yet as Copenhagen draws near, the U.S. negotiating position appears to be to pretend that 200 years of over-emissions never happened. Todd Stern, the chief U.S. climate negotiator, has scoffed at a Chinese and African proposal that developed countries pay as much as $400 billion a year in climate financing as "wildly unrealistic" and "untethered to reality." Yet he put no alternative number on the table—unlike the European Union, which has offered to kick in up to $22 billion. U.S. negotiators have even suggested that countries could fund climate debt by holding periodic "pledge parties," making it clear that they see covering the costs of climate change as a matter of whimsy, not duty.

But shunning the high price of climate change carries a cost of its own. U.S. military and intelligence agencies now consider global warming a leading threat to national security. As sea levels rise and droughts spread, competition for food and water will only increase in many of the world's poorest nations. These regions will become "breeding grounds for instability, for insurgencies, for warlords," according to a 2007 study for the Center for Naval Analyses led by Gen. Anthony Zinni, the former Centcom commander. To keep out millions of climate refugees fleeing hunger and conflict, a report commissioned by the Pentagon in 2003 predicted that the U.S. and other rich nations would likely decide to "build defensive fortresses around their countries."

Setting aside the morality of building high-tech fortresses to protect ourselves from a crisis we inflicted on the world, those enclaves and resource wars won't come cheap. And unless we pay our climate debt, and quickly, we may well find ourselves living in a world of climate rage. "Privately, we already hear the simmering resentment of diplomats whose countries bear the costs of our emissions," Sen. John Kerry observed recently. "I can tell you from my own experience: It is real, and it is prevalent. It's not hard to see how this could crystallize into a virulent, dangerous, public anti-Americanism. That's a threat too. Remember: The very places least responsible for climate change—and least equipped to deal with its impacts—will be among the very worst affected."

That, in a nutshell, is the argument for climate debt. The developing world has always had plenty of reasons to be pissed off with their northern neighbors, with our tendency to overthrow their governments, invade their countries and pillage their natural resources. But never before has there been an issue so politically inflammatory as the refusal of people living in the rich world to make even small sacrifices to avert a potential climate catastrophe. In Bangladesh, the Maldives, Bolivia, the Arctic, our climate pollution is directly responsible for destroying entire ways of life—yet we keep doing it.

From outside our borders, the climate crisis doesn't look anything like the meteors or space invaders that Todd Stern imagined hurtling toward Earth. It looks, instead, like a long and silent war waged by the rich against the poor. And for that, regardless of what happens in Copenhagen, the poor will continue to demand their rightful reparations. "This is about the rich world taking responsibility for the damage done," says Ilana Solomon, policy analyst for ActionAid USA, one of the groups recently converted to the cause. "This money belongs to poor communities affected by climate change. It is their compensation."