Development finance talks in Ethiopia close to collapse: charities

By Katy Migiro

By Katy Migiro

ADDIS ABABA (Thomson Reuters Foundation) - Talks between rich and poor countries in the Ethiopian capital, aimed at agreeing on the financing of the United Nations' bold new global development agenda, are on the brink of collapse, advocacy groups said on Wednesday.

The G77 developing countries want the final document, due to be signed when the Financing For Development (FfD) conference closes on Thursday, to include the creation of a new U.N. tax body which they hope would set new global rules to stop tax dodging.

The proposal is fiercely opposed by the rich members of the Organisation for Economic Cooperation and Development (OECD), which drew up the current tax rules.

"Negotiations are on the brink of collapse," the European Network on Debt and Development said in a statement.

"Rich country governments led by the U.S., the U.K. and Japan are jeopardizing the entire FfD agreement as they refuse to consider an inter-governmental tax body."

Nearly $1 trillion in illicit finance - the fruits of tax evasion, crime and corruption - is estimated to leave poor countries each year, according to Global Financial Integrity, a policy research group.

The G77 wants the current U.N. tax committee to be upgraded to a political body with more power and money and universal membership.

A compromise proposal put forward by South Africa and the host nation, Ethiopia, was rejected on Wednesday morning, charities said.

A draft of the proposal, seen by the Thomson Reuters Foundation, said the two nations invited the U.N. Economic and Social Council, to which the current U.N. tax committee reports, to finales proposals for upgrading it to "a universal body with equitable participation of developing countries" by 2016.

The OECD said in a statement that it had supported inclusive processes. Its "Base Erosion and Profit Shifting" reform initiative, due to be finalised in November, includes 60 countries - the 34 OECD members plus G20 nations and 20 developing countries representing geographical regions, it said.

"The discussion should not be about one body or another body‎, but rather making sure that it works for everybody," OECD Secretary-General Angel Gurría said.

"Any progress we make on this work will accrue to the benefit of developing and developed countries alike."

A successful outcome in Ethiopia is seen as crucial for building momentum towards signing the Sustainable Development Goals in New York in September, and for reaching a climate change agreement in Paris in December.

"Failure to agree is not an option,” Save the Children's policy, advocacy and campaigns director Brendan Cox said in a statement. "Too much is at stake."

(The story is refiled with ADDIS ABABA dateline)

(Reporting by Katy Migiro, editing by Tim Pearce; Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers humanitarian news, women’s rights, corruption and climate change. Visit www.trust.org)