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A Currency Transaction Tax To Finance Development?

The UN is slated to review progress on the MDGs “and other international development goals” during this month’s high-level meeting in New York. UN Secretary-General Ban Ki-moon hopes the meeting “will not only result in a renewal of existing commitments but also can decisively galvanize coordinated action among all stakeholders and elicit the funding needed to ensure the achievement of the Goals by 2015.” The issue of inefficient, inadequate funding capacity is a particularly crucial one.

Funding shortfalls in development aid are common. In high-level meetings, such as at the United Nations or the G8/G20 summits, countries often commit billions of dollars to address a host of issues. From combating extreme poverty to fighting climate change or improving maternal health, leading nations regularly make public commitments to allocate funding for development. The reality of these financial commitments, however, is often very different than what the rhetoric suggests. For example, monies already budgeted can be re-allocated to meet a commitment (with no new funds being made available), funding timelines are extended over a period that suits the donor’s priorities and, sometimes, these public pronouncements never translate into real, new funding.


Innovative Financing for Development

One initiative in particular is focusing on an aspect of volatile, unpredictable levels of official development aid (ODA): the Leading Group on Financing for Development (LGFD). The LGFD, founded in 2006, is a product of the Paris Ministerial Conference on Innovative Development Financing Mechanisms. Composed of 55 member countries members, five observer countries, 15 international organisations and more than 20 NGOs, the LGFD’s mission is to promote discussions and actions about setting up innovative development financing mechanisms.

The LGFD, currently chaired by Japan, is preparing a session on the sidelines of the UN MDG review summit which will highlight “the new instruments under study” for innovative development financing. One of these instruments is the introduction of a tax on currency transactions, which the Leading Group on Financing for Development will propose to Heads of State and Governments.

The idea of a tax on currency transactions was in fact originally developed by Nobel Prize-winning economist James Tobin in the 1970s, as a way to reduce exchange rate volatility and promote international economic stability, but it never garnered the political support necessary to be implemented.

The current proposal, though, is based on the findings of a committee of experts which the the LGFD appointed to examine the viability of financial levies as alternative funding mechanims. In their report, the committee of experts supports a plan to levy a tax of 0.005% on international financial transactions in British sterling, euros, dollars, and yen, which would be funelled to a new multilateral fund, the Global Solidarity Fund. This fund would focus on two priority areas: meeting the MDGs and “mitigation funding to enable poorer countries to switch to a low-carbon development path.”

The proposal is enjoying strong support from the European Parliament, which adopted a resolution in June 2010 “[calling] on the EU unilaterally to introduce a tax on currency and derivatives transactions in order to fund global public goods, including the MDGs.” While the plan would necessitate the participation of the United States in order to generate the expected $25-35 billion, the U.S. has notoriously been opposed to such taxes. French foreign minister Bernard Kouchner, however, alluded to the possibility of the 60 countries of the LGFD implementing the tax with or without the United States.


The successful case of UNITAID

Recurrent funding shortfalls in official development aid – in particular multilateral funding – lead to inefficiencies, duplication and a poor allocation of resources. Already, some mechanims meant to stabilize and improve multilateral funding flows are proving successful; UNITAID is a good example. Launched in 2006 by Brazil, Chile, France, Norway and the United Kingdom, UNITAID is an international drug purchase facility which provides “sustained and strategic market intervention that aims both to decrease the price of medicines for priority diseases (HIV/AIDS, tuberculosis, malaria) and to increase the supply of drugs and diagnostics.” The initiative has raised over US$ 1 billion and funded treatments for more than 21 million people in 94 countries since its inception, UNITAID says.

What’s unique about UNITAID is that it is financed in part by an air ticket solidarity levy. By the end of 2008, revenues from this levy accounted for 72% of UNITAID’s financial base. Multi-year budgetary contributions from donor countries and the Gates Foundation complement this funding. France, which also happens to be one of the biggest supporters of the currency transaction tax, generated an extra €160 million in aid in 2009 through the air ticket solidarity levy.

In a global financial context deeply marked by the recent crisis, the proposed tax on currency transactions, which is seen as an effective mechanism to address the issue of volatile aid flows for priority areas (MDGs, climate change), will hopefully garner broad international support. Perhaps the current political trend toward increasing governance and tightening regulation of highly-speculatory activities – like currency trading – will boost the proposal’s appeal to UN member states.

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UN Gears up for the South Sudan Referendum Vote

MUNDRI, Sudan—Earlier this week, I flew to Mundri, in the fertile green state of Western Equatoria, to attend the United Nations Mission in Sudan’s unveiling of its first “county referendum base.” Per the request of the National Congress Party and the south’s ruling SPLM, the U.N. is upping its support and assistance to the referendum process. Part of this bigger effort is establishing a presence in each of the south’s 79 counties, a step that clearly shows the U.N. will be playing a bigger role in pulling off the southern vote—from a technical and logistical standpoint—than it did in supporting the nationwide elections in April.

The real takeaway, however, from the day trip to Mundri occurred during the speeches given by various southern government officials and by David Gressly, the top U.N. official in the south. Crammed into a sweltering hot white plastic tent, which will become one of the makeshift offices at the county base, these officials had strong messages about the referendum. The Governor of Western Equatoria State Joseph Bakosoro urged—more like ordered—the citizens of his state to “register and vote,” then emphasized that everyone must “vote wisely.” “Let us not repeat any mistakes,” the governor said. “The mistake we [could] repeat will be a final mistake that you will regret all of your life and for the life of your children,” the governor said, subtly recalling history. Meanwhile, the southern government’s minister of cabinet affairs Kosti Manibe said that if the referendum vote didn’t occur on time (on January 9 to be exact), then the south would have to opt for a “plan B.” The minister didn’t go into the details of what this plan would entail. 

Finally, as if to reassure the crowd, the U.N.’s Gressly begin his address by announcing that “the referendum is real.” In other words, the U.N. is preparing for Plan A. Later, while speaking with reporters, Gressly conceded that “there are a lot of decisions pending,” but argued that “it would be wrong to do anything but move ahead.” The U.N. plans to pitch tents, build fences, and deploy staff to hastily constructed referendum bases in 63 entirely new locations across the south in the coming months.

Stay tuned for more on the U.N.’s expanded effort to help pull off the referendum in time.

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Jordan Cracking Down On Internet Freedom

Jordan used to be one of the freest countries in the Middle East. That’s changing fast. The government is pushing to expand control over the internet, and it has begun arresting people or making defamatory remarks about the king. It looks like the government of Jordan is expanding its efforts at control in several ways. Tighter censorship over what goes into the country, more monitoring of what is posted online, and prosecuting individual cases for their activities on the internet.

Global Post highlights one recent arrest. Imad Al-Ash, a fifth year computer science student at the University of Jordan, was arrested in February.

The (police) eventually accused Al-Ash of posting critical remarks about the king’s policies on a jihadi website, something Al-Ash steadfastly denies. Defaming or slandering the royals here is a crime, but without a copy of the post in question, it was his word against a single agent…Despite having no hard evidence that Al-Ash had written the post, a military tribunal sentenced the student to two years in prison. He’s now appealing to Jordan’s Supreme Court.

As you look deeper, the case gets even more disturbing. A Jordanian blog, Black Iris, is reporting that the defamation in question actually took place in an MSN chat discussion. Al-Ash’s father says that he was tortured while in police custody.

In addition to the Al-Ash prosecution, the government of Jordan has promulgated a new cyber crime law. Internet cafes must install

“surveillance cameras in order “to prevent access to pornographic and offensive religious content.” All videos taken must then be given to the Ministry of Interior to be processed and examined. Penalties—including heavy fines and jail time—may be imposed on individuals found engaged in questionable activity online.”

Jordan already ranked 140 out of 196 in the Freedom House free press rankings; having the freest press in the Middle East is not that impressive on a global scale. But even that small distinction is rapidly eroding.

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Fear Not the Universal Periodic Review

Ever since the United States submitted its first Universal Periodic Review report to the UN Human Rights Council a meme has been percolating, mostly on the right, that the Obama administration is trying to use the UN to undermine Arizona’s controversial law that allows it to detain suspected illegal immigrants.  We can thank Arizona governor Jan Brewer for this–she sent an angry letter to Secretary Clinton, indignant that the United States would bring this up at the UN. A number of websites sites and commentators picked up on the idea that the Obama administration was looking to the UN for redress. 

The thing is, this is completely bunk. First, actual UPR does not take a position on the Arizona law. It just presents, as fact, that a controversy over it exists. Second, as Colum Lynch points out, administrations of both political stripes routinely submit their human rights record to UN bodies for review.   

Finally, amid all this fricas, it is useful to keep in mind that the Universal Periodic Review is a mechanism that can lead to tangible improvements in human rights around the world. As I wrote back in February, when Iran’s UPR was up for debate at the Council: 

The ultimate measure of the effectiveness of the Universal Periodic Review is the extent to which it can inspire a country to alter its internal human rights practices. With countries that are generally rejectionist of this sort of external interference (say, Iran and North Korea) there is an obvious limit to what the council can practically accomplish. On the other hand, countries that have troubling human rights records, but are not completely rejectionist, have been inspired to improve their human rights records based on the recommendations of the Universal Periodic Review. For example, Human Rights Watch notes that following Saudi Arabia’s first review last year, the Saudi government pledged a number of reforms on women’s rights, ending the juvenile death penalty, and expanding its labor laws to include protection for domestic workers.

For the United States to be taken credibly when it criticizes other country’s record, it has to occasionally let the spotlight shine on itself.  There is nothing wrong or out of the ordinary with that. 




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Yemen Poised to Receive Even More $$ in Miliary Assistance. Humanitarian Funding Still Short

Over at Wired, Spencer Ackerman points to a WSJ report that the Pentagon is contemplating a five year,  $1.4 billion military aid package to Yemen.  That would be on top of a $155 million military aid package Yemen received earlier in the year, which, according to Ackerman includes such goodies as:

Yemeni Special Operations Forces get $34.5 million for 50 new Humvees, personal radios, light weapons, ammo and other stuff to improve their “tactical effectiveness and operational reach,” according to Pentagon budget documents.

Yemen’s Air Force get nearly $83 million for new Huey helicopters, Russian-designed Mi-17 “Hip” copters, and spare parts and maintenance gear. “This program will allow the Yemen Air Force to transport small units to participate in day- or night-time operations at high altitude,” the department says in a funding submission to Congress.

Finally, there’s another $38 million to get the Yemenis CN-235s, a transit plane that just so happens to double as a spy plane.

Even in these times of economic hardship, there is plenty of money for this kind of military assistance.  Meanwhile, in November 2009, the UN released a $187 million Yemen Humanitarian Response Plan “to respond to a series of acute and chronic humanitarian needs which have been triggered, or in some cases exacerbated, by the armed conflict that escalated in August 2009 between the Government and Al Houthi rebels in the north of the country, and which expanded to include tribal and international actors.”  To date, international donors have given $79 million, or about 42% of what the UN says is required to keep many thousands of Yemenis fed, sheltered, and inoculated. That funding shorfall has had real consequences. In May, the World Food Program had to cut its food rations in half for 1.5 million people dependent on WFP food aid. 

To its credit, the United States is the largest funder of the Yemen humanitarian relief plan. Of the $79 million received, $30 million has come from the United States.  Still, this means that the United States’ military to humanitarian spending for Yemen is about 5 to 1.  Should that $1.5 billion aid package go through, the ratio would jump to 50 to 1. There is nothing wrong with providing bi-lateral military assistance to an ally. But, as they say, a budget is the truest reflection of a country’s priorities. What Washington is telling the Yemenis (and the world) is that it cares  exponentially more about arming Yemen’s military than helping to feed its people.

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The Top Four Innovations in Emergency Response

Innovation is the word of the year in international relief and development. Here are four recent innovations we’ve seen in disaster response–and their potential downsides. 

1.       Plumpy’nut

Plumpy’nut changed everything. It saved the lives of more starving kids than ever before, by replacing the old f-100 formula (which tasted gross) with delicious, shelf-stable peanut paste. I didn’t require clean water and kids could eat it on their own. In addition to the innovation in product, Plumpy’nut is also an innovation in organizational structure. The product is patented, and it’s manufactured by a company, Nutriset, that sells it to NGOs.

Potential Downside: switching from formula to paste turned the whole system for treating malnutrition inside out. It changed the way that humanitarian groups categorized and treated starving children.  And the incorporation of a commercial product into the treatment of starving children makes a lot of people nervous.

More about Plumpy’nut at the New York Times.

2.       Crowdsourcing

Encompassing everything from gathering eye-witness reports for better media, solving problems through community expertise, or coordinating rescues of people trapped in earthquake rubble, crowdsourcing seeks to use the knowledge of large groups to change humanitarian aid.

Potential Downside: How do we make sure crowdsourced information is accurate? Will it make humanitarian response less professional, or of lesser quality? Is it all a big waste of time and energy that won’t lead to anything useful.

More about crowdsourcing

3.       Crisis Mapping

Crisis mapping is the field of using geographical information to enhance crisis response. One example is the Ushahidi platform, which is also a crowd-sourced tool. Other forms of crisis mapping may not be crowdsourced at all. A single person or organization can use GIS coordinates to map events, locations of humanitarian response resources or other relevant factors.

Potential Downside: It’s a big new way to think about data and how we use it. Information like the precise coordinate of aid agency outposts or IDP camps can be dangerous in the wrong hands.

More on crisis mapping.

4.       Cash Transfers

When disaster strikes, people exhaust their savings and resources to survive the disaster and its aftermath. Maybe we should give them money to get them back on their feet. In many famines, there is food for sale in markets but no one can afford to buy it. Maybe we could just give people cash to buy their own food. Providing cash stimulates local economies and lets people choose the solution that is most appropriate to their situation.

Potential Downside:In my opinion, it kind of calls into question the whole idea of capitalism. It implies that any of the existing humanitarian aid systems and models are unnecessary. And if done wrong, it can severely damage local economies by triggering inflation.

More on cash transfers

UPDATE FROM MARK:  More information on new technologies in disasters is available in the United Nations Foundation & Vodafone Foundation report New Technologies in Emergencies and Conflicts, co-authored by Patrick Meier of Ushahidi. Also, see Mark’s bloggingheads interview with Patrick Meier about his research into crisis mapping and crowdsourcing. 

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