Sevilla: peace, joy, tortilla?

The FfD4 conference in early July took place in one of the most problematic phases for global development in decades. Official development finance seems set to dwindle by 17 per cent in the year 2025 alone. On top of that, the fate of USAID – once the world's biggest donor – was definitively sealed during the very conference itself. With less than five years remaining to the deadline, there is still an annual funding gap of more than 4 billion US dollars for meeting the UN Sustainable Development Goals (SDGs).

It is not as though there were a basic lack of funds – since the last FfD conference in Addis Ababa in 2015, the wealthiest one per cent of the world's population has increased its wealth by more than 33.9 trillion dollars, i.e., 22 times the amount that it would take annually to eliminate absolute poverty. According to the UN Organisation for Trade and Development (UNCTAD), Africa alone could raise almost 89 billion dollars annually if illicit financial flows were stopped. One half of that amount is down to tax avoidance by corporations, and the commodities sector is far and away the leading source of such financial flows. Switzerland ought really to be taking an interest in this. 

Notable (and less notable) absences

The conference's non-binding final document, the "Compromiso de Sevilla" had already been approved almost unanimously on 17 June in New York. Hence, no further negotiations took place in Seville. The USA had been very instrumental in watering down the text with respect to climate, for example. Yet that country withdrew from the process two weeks before the conference, becoming the only country not to support the final document. Furthermore, the USA stayed away from Seville. 

Despite this, there were more than 15,000 attendees at the conference, including 60 Heads of State and Government, 80 ministers, UN Secretary-General António Guterres, and high-level representatives from UN agencies and other international organisations. For its part, Switzerland opted not to send a high-level delegation. The lack of ministerial status meant that in the official part of the conference, Switzerland could only take the floor at the very end. And because no Federal Councillor bothered to attend, Switzerland missed out on dialogue with the 60 Heads of State and Government in attendance. The road to Seville is simply longer than to Davos, and besides, it was much too hot there.

Because the Financing-for-Development process encompasses much more than "development finance" as understood in the context of international cooperation, several Federal Councillors could well have attended. Action to combat tax avoidance and illicit financial flows was just as high on the agenda as the topics of debt and debt relief, trade and development, or systemic issues of the international financial architecture.

A programme with a bias

One topic dominated the agenda, namely, "Mobilising Private Resources", which was about the incentives that could be deployed to persuade profit-oriented companies and investors to fill the gap left by the shortfall in government funds. Empty clichés were deployed, such as "Accelerating the Shift and Private Climate Investment at Scale", "Catalytic Pathways to Scale Private Investment", "Unlocking Ecosystems for Inclusive Private Sector Growth", "Impact Investing, from Pioneering Innovations to Scalable Solutions", and so on and so forth.

One might think that this was because "business representatives" made up 40 per cent of attendees, and they were holding a "Business Forum" of their own. In the official sessions, however, the topic was just as dominant among governments (especially those from the North) and international organisations. The same was true for Switzerland. Most of the events it organised revolved around the topic (e.g., "Accelerating SDG Impact through Outcomes-based Financing").
 

Private sector strengthened, mission accomplished? Spanish Prime Minister Pedro Sánchez with UN Secretary-General António Guterres and European Commission President Ursula von der Leyen. © Bianca Otero / ZUMA Press Wire

Civil society disagrees

Fortunately, civil society too organised numerous side events, where it was also pointed out that in Seville, much old wine was being put into old wineskins. Daniela Gabor, for example, economist and member of the UN Expert Group on Financing for Development, recalled that already in 2015, the World Bank came up with its motto "from billions to trillions" in regard to funding implementation of the Addis Ababa Action Agenda (the outcome of the third financing for development conference). Public-private partnerships and de-risking were already central pillars of the Agenda at the time. The idea was (and still is) to use taxpayer funds from the international cooperation (IC) budgets of the Global North to create "investable projects" for large investors like BlackRock or pension funds. In reality, this meant assuming risk so that such investors could garner attractive "risk-adjusted returns" on their investments in water, road or energy projects.

That most certainly did not work and – according to Gabor – not for a lack of sufficient funds for de-risking from multilateral development banks, the EU or the Biden administration. It failed because even with tax monies being used to fund risk-taking, major projects were still much too costly for the countries in the Global South.

Meanwhile, the "small is beautiful" version of de-risking has emerged, whereby "impact" investments are to be promoted for implementing individual SDGs, and not just for major infrastructure projects. They are meant to reach "beneficiaries" in the Global South directly. However, beneficiaries must also pay for renewable energy, for instance, as the returns have to come from somewhere. IC terminology notwithstanding, the “beneficiaries” are in fact no more than clients and borrowers. It is this version of the de-risking agenda that Switzerland, too, is also promoting.

Objections were forthcoming not just from civil society, but also from government representatives from the Global South. South Africa's Planning Minister Maropene Ramokgopa, for example, urged realism and recalled that the private sector only plays a part where a profit can be made, and that "blending" cannot therefore replace concessional funding especially in the prevailing debt situation. In addition, an event held by Small Island Developing States highlighted entirely different risks that ought to be of pivotal importance. They were not the risks to investors, but those confronting people as a result of sea level rise. This is where "de-risking" is needed.

It's taxes, stupid!

No one disputes that the "private sector" and the super-rich possess considerable assets that could be harnessed for realising the SDGs and implementing the Compromiso. Still, there are means other than hoping to lure them with scarce IC funds or relying on their philanthropy. Luckily, that too could be heard in Seville. If one wanted to hear it. Switzerland did not.

"Domestic Resource Mobilisation" is another key plank of the "Compromiso de Sevilla". More tax revenue enables the countries of the Global South to depend less on development funding and to develop their economy and society from the inside out.

This could have been heard from Aminata Touré, former Prime Minister of Senegal: "When it comes to taxes, there is an ongoing injustice from which Africa has suffered for centuries. (…) We have debts because of tax avoidance and evasion, (…) because European multinationals exploit our commodities and pay no taxes. (…) This is why the African Union is so strongly committed to a binding UN tax convention. We want a fair distribution of the right to tax. Taxes should be paid where wealth is created. That is hard to explain because it is so simple. Every school child understands that the richer you are, the more taxes you pay.

A German Finance Ministry representative had a remarkably similar message: "Steadily diminishing development finance creates an even greater need for more decisive measures against illicit financial flows, the German government has long been committed to this. Corporations and the super-rich must make their fair contribution towards the global tax pie."

Coalitions of the willing

Nobel Prize Laureate in Economics Joseph Stiglitz underlined other key aspects of the tax agenda: “The USA is now paying part of that price [of inequality] with the capture of our government by the techno-oligarchs. That agenda of (…) letting the rich escape taxation, of cutting taxes for the oligarchs, Trump wants to make global. (…) But the world can’t be held hostage, (…) there can be coalitions of the willing. (…) There’s been a very a rich discussion here of the rationale for why we ought to be taxing the super-rich. It’s obvious you don’t need to have a Nobel Prize to figure that out. (…) We’ve created tax havens around the world. (…) We could have regulated them. (…) We allow them to exist. (…) There are some special interests who benefit from them. We need global norms, we need global rules”.

Such coalitions were already emerging in Seville. Spain and Brazil announced a joint initiative for the global taxation of the super-rich. Nine countries – Brazil, France, Kenya, Barbados, Spain, Somalia, Benin, Sierra Leone and Antigua and Barbuda – are willing to commit to introducing a "solidarity levy" on business and first-class flight tickets and on private jets.
The "Sevilla Platform for Action" through which the Seville "Commitment" is to be implemented, contains these and 130 other voluntary initiatives. There is something of a contradiction between commitment and voluntary action, but considering the state of multilateralism, even a list setting out some good suggestions represents progress.

Switzerland: from the SPA to the gym

Although the "Compromiso de Sevilla" is non-binding, the "platform" voluntary, and key topics are missing, the conference did show that there are various coalitions of European, African and Latin American countries pursuing solutions. Switzerland should draw up the following to-do list as a pragmatic minimum programme:

• Create a multi-stakeholder roundtable that involves private creditors of overindebted countries in the Global South.
• Cease hindering the negotiations on a UN tax convention and instead collaborate constructively with countries in the Global South.
• Emulate the example of Spain which, at Seville, committed to reaching the UN target of 0.7 per cent of GNI for IC by 2030.

Those who prefer less pragmatism can find comprehensive problem-solving suggestions available Alliance Sud’s latest publication “The New Deal – A New Switzerland for a Just World”.