Economic priorities – the triumphs and failures of the Czech presidency

However, the concerns that Glopolis raised are not restricted exclusively to the term of the Czech presidency; part of a wider movement, they are included on the list of demands by the global civil community. These demands preceded the period in which the Czech Republic held the presidency of the EU, and their promotion remains the goal of activities by analysts at Glopolis and other, mainly European NGOs, even after the rotating leadership passed to other countries. 

The aim of the article is to offer a brief introduction to the priorities of the economic and financial department of Glopolis and to evaluate progress achieved on the international level. We will conclude with a summary of the items that remain current on the given agenda in the broader context of European civil society even following the completion of the Czech presidency. This final part will be partially based on the Eurodad Conference in Barcelona that the author attended in mid June 2009. 

The areas that Glopolis’s economic and financial department focused on during the Czech presidency are summarised in the Manifesto, a compilation of recommendations for the Czech presidency. These can essentially be divided into three points:

1. To pressure tax havens to end bank secrecy, to support the automatic exchange of information between tax authorities and to expand the force of the EU’s Savings Tax Directive to include companies and trusts. 
2. To promote the adoption of laws that would force multinational corporations to provide financial reporting according to the individual countries in which they are active so that profits, losses and taxes paid in individual countries are transparent. 
3. To encourage international financial institutions such as the International Monetary Fund, the World Bank, the International Accounting Standards Board, the Financial Stability Forum and the Bank for International Settlements to be more representative and responsible. 

Progress in the given areas plays a key role in efforts to secure development in the world’s southern countries. The first two points are important from the perspective of the illegal flow of capital from the South to the North. Oxfam International estimates that this amounts to up to 1 billion dollars annually. The greater representativeness of international financial institutions has remained an unsolved problem since the end of the Second World War. These institutions, whose activities impact virtually every country in the world, are managed almost exclusively by representatives from northern countries. At the same time, the results of their work are completely unsatisfactory with respect to complying with rules of responsibility and transparency. 

The following paragraphs are devoted to an analysis of individual steps taken on the international level. 

The greatest progress has been achieved in the fight against tax havens. The issue has been the subject of numerous international conferences, and the conclusions reached at these meetings have spoken clearly: countries have expressed a determined stance in the fight against tax havens. One key meeting – the Berlin Conference in February 2009 – called for a “decisive battle against tax havens”. In March 2009 the Council of the European Union appealed for “protection ... against off-shore financial centres” and proposed sanctions in the event that these sites do not provide an adequate level of cooperation. The April summit of G20 leaders in London produced similar conclusions.

The European Union also acknowledged that the principle of the automatic exchange of information between tax authorities and the Savings Tax Directive were of key importance in combating tax evasion. For example, conclusions by the Foreign Affairs Council from May 2009 emphasize the importance of international tax cooperation and the fight against the illegal flight of capital. Among other measures, the Council calls for support in building quality tax administration in developing countries. In June the European Council will issue authoritative conclusions on the Savings Tax Directive.

The need to create “high quality global accounting standards” was emphasized at April’s G20 summit in London. British representative Dave Hartnett’s statement at the OECD Forum on Tax Administration in June 2009 indicates that the issue will remain on the international agenda. Hartnett reported on the “growing consent that financial reporting in accordance with individual countries is essential for transparency, especially in the case of transnational corporations active in developing countries”. The most recent international meeting to address the issue of financial reporting by country in the context of the International Accounting Standards Board was the conference of G20 finance ministers in Berlin on 23 June 2009. Unfortunately, the results of this conference have not yet been made public. 

It is clear that there has been significant recent progress in the fight against tax havens and in cooperation on tax issues, and the problem has assumed an important position on the agenda of the international community. 

Reforms of international financial institutions have produced far less satisfactory results. At the Bank for International Settlements and the International Accounting Standards Board only developed countries and a few emerging markets are represented. In April 2009 the Financial Stability Forum became the Financial Stability Board with members representing eight G20 countries. While this composition undoubtedly represents an improvement over the original situation, it is still far from sufficient. After all, none of the developing countries or the least developed countries are represented at the FSB, BIS, IASB, IMF or World Bank. 

During the Czech presidency there was improvement in certain areas, especially on tax matters. On the other hand, the level of reform of international financial institutions remains disappointing. As indicated at the Eurodad Conference in Barcelona in June 2009, continued attention will be paid to this issue. Unjust debt has become another pressing concern. The reform of international financial institutions and the issue of unjust debt will be regarded as key matters for solving the problems of the developing world. The fight for justice is far from over. There will continue to be a great need for efforts by NGOs to ensure the gradual improvement of the current situation toward fulfilling the Millennium Development Goals.