Switzerland helps development – but not enough

Sandra Titi-Fontaine/InfoSud - On Friday, the Swiss Federal Council announced its intention to increase the contribution to development assistance. The decision falls on the eve of the UN Millennium Development Goals (MDGs) summit which opens in New York today (September 20-22). Completion of the goals by 2015 is already in doubt due to insufficient funds, according to a recent UN report. In this regard, Alliance Sud, the lobby organization for six Swiss development NGOs (Swissaid, Catholic Lenten Fund, Bread for All, Helvetas, Caritas and Eper), has long denounced the lack of political will by the Swiss government to financing MDGs.

InsoSud spoke with Peter Niggli, Director of Alliance Sud, about this.

You talk about "lost decade" by Switzerland regarding MDGs. Why?

Peter Niggli: Following the commitments made by Switzerland and other donor countries towards meeting the targets for reducing poverty by 2015, the Federal Council had planned in 2001 to increase the amount already allocated to development assistance of 0.4% of GNP to 0.7% as desired by the United Nations. But the Council backtracked the following year when the global recession hit the Confederation. The project was even abandoned following the election of two conservative parliamentarians (Christophe Blocher and Hans-Rudolf Merz), which called attention to Switzerland’s budgetary difficulties.

Nevertheless, in its interim report published this summer, the Federal Council claims to have increased development assistance.

That’s a smokescreen because expenditures for asylum seekers and debt forgiveness are also included. But in the end, only one quarter of bilateral aid goes to poorer countries. Faced with inaction by the Federal Council, we launched a campaign so that funding for development aid would truly be adjusted upward. Our petition collected over 200,000 signatures, and we sent it to Parliament in 2008, which in turn approved, in principle, the increase. Two years later, in a message dated September 18, 2010, the Federal Council finally requested that Parliament increase the federal government development allocation to 0.5% of GNP by 2015. It’s a positive development, although this figure is still below the international target of 0.7%.

So now the ball is in Parliament’s court?

Discussions won’t be easy during the winter and spring sessions. If many MPs are in favor of increasing assistance, they also have considerable fiscal policy restraint [ED: the budget should rise to 640 million francs over the next two years, but some prefer that it not exceed 515 million francs, or 0.45% of GNP]. But as economic prospects are better than expected for the Confederation, and since this aid is unlikely to bust the federal budget, these reservations are not justified.

What should Switzerland do then, to make adjustments in this final stretch of the MDGs?

Two specific points are paramount. First, the problem of patent protection, especially pharmaceuticals. Switzerland, like the United States, has adopted a hardline policy in this area, even more stringent than those of the World Trade Organization (WTO). Such a rigid attitude has a real influence on how poor countries fight HIV, malaria, etc. By a simple relaxation of this political line, Switzerland could help developing countries without any additional taxes on its citizens.

The other point concerns the protection that Switzerland offers to tax evaders. If Berne would agree to establish an effective exchange of information with poor countries, it would help curb capital flight and generate more funds for fighting poverty.

What would the savings be?

They would be two to three times the cost of development aid. We estimate that about 360 billion francs, from fortunes made in developing countries, lie sleeping in our banks, without being subject to taxation. That’s roughly 6 billion francs that do not end up in the coffers of these countries. Naturally, not all states are affected equally by this tax avoidance. Some very poor countries, mostly African, have placed fortunes in Switzerland, but they are less numerous than other developing countries from Latin America or Asia.

Will we achieve the MDGs by 2015?

Yes, there is always a chance. Over the past ten years considerable progress has been made. Many governments of developing countries have spent large amounts of their national budgets to improve health or education. In parallel, development assistance has focused more on the poorest rather than higher income countries. But these achievements are in danger today because the global economic and financial crisis will make it very difficult to maintain in five years, the kind of growth experienced by Africa over the past 10 years – or even Latin America.

Translated from French by Pamela Taylor

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