G20 summit: Don't roll back financial and tax reforms - end focus on private financing of infrastructure

This week's G20 summit in Hamburg could symbolise the end of important financial and tax reforms, warns WEED. Last month, the US House of Representatives already voted against key financial reforms. In the EU, too, the will to reform has long since slackened; there has not even been a break-up of banking operations as in the US, and the EU has long opposed stronger US banking laws. "Given this mood, the G20 countries could soon roll back the reforms they have achieved," warns Markus Henn, financial markets officer at WEED. "But the bank bailouts in Italy this year have shown just how little has been achieved. In the end, the states and their citizens will once again pay for the failure of the private sector. The fact that the G20 states are doing nothing to stop the growth of huge private banks or shadow banks and are not promoting alternatives such as local or public banks is taking its toll."

The reforms against tax evasion have also passed their zenith. Some progress has been made in the exchange of information and with measures against corporate tax avoidance. "But the reform remains piecemeal and has been watered down in many cases," criticises Henn. "And instead of finalising the outstanding work, such as on profit sharing in the cross-border taxation of companies, and ensuring greater fairness between rich and poor countries, the G20 is now focusing on 'tax certainty'. This new agenda is welcomed by companies, which hope to be able to fend off new measures and weaken existing ones," says Henn.

The G20 has long been in favour of extensive privatisation and public-private partnerships (PPPs) to finance infrastructure and is now also doing so in the Compact with Africa. The many negative experiences with this are largely ignored. For example, new World Bank standards for PPPs, which were also developed on behalf of the G20, would severely restrict the "right to regulate" states and grant investors excessive compensation rights even in the event of strikes. "As PPPs and international investments play a major role in the 'Compact with Africa', it will primarily benefit the G20 states themselves and their companies and financial groups," says Henn. "By contrast, meaningful promotion of local economic and financial structures or necessary public investment hardly play a role."

Contact (also on site in Hamburg from 5-8 July):- Markus Henn, Advisor on Financial Markets, 0176-37630916.

Events:
- Workshop on Financial Markets with Sven Giegold (MEP, Grüne), 6.7. 15-17 Uhr, Barmbek Basch, Wohldorfer Str. 30
- Conference on debt , 7.7. ab 15 Uhr, GLS-Bank, Düsternstr. 10

Background Material:
- Markus Henn: Steuerflucht: Die internationale und europäische Dimension
- C20 Finance Working Group: Forderungen zu Finanzreformen
- C20 Finance Working Group: "The G20's Compact with Africa: Some damaging initiatives for sustainable development"