Leaders of the seven biggest industrialised countries (G7) have discussed illicit financial flows in developing countries and extractive industries. Important progress was made according to ONE. EURACTIV France reports.
Putin’s absence did not stop the other seven leaders from meeting in Brussels and making significant progress in the areas of international development and the fight against extreme poverty.
Leaders from Canada, France, Germany, Italy, Japan, the UK and the US discussed the need to develop “an ambitious and universal post 2015 agenda.” The eight Millennium Development Goals (MDGs) come to an end in 2015, and steps to determine post 2015 targets are well under way.
“Despite a hectic agenda and important current events on the international scene, the G7 leaders proved that they acknowledge global stakes and can bring concrete solutions,” said Friederike Röder, director of ONE France.
The difference between the Millennium Development Goals and the post-2015 framework is its scope. The post-2015 framework plans to affect all countries, not just developing countries. “The programme should sort out some of the issues associated with the MDGs,” claimed the G7 leaders.
Other advances include moves to establish an ‘extraction payment’ rule, an international rule requiring companies to report payments made to governments for extraction rights. This is an important step towards ensuring that the benefits of the extractive industry trickle down to ordinary people in developing countries.
“We remain committed to work towards common global standards that raise extractives transparency, which ensure disclosure of companies’ payments to all governments,” the leaders stated. “We reaffirm our commitment to fully establish this partnership.”
The Extractive Industries Transparency Initiative (EITI) demands that all payments for natural resources, such as oil, gas, metals and minerals, between companies and governments are made public to people in developing countries.
Currently, Canada and the US are the only countries to have accepted the EITI’s norms, but both fail to meet all transparency criteria. No EU member state has accepted the norms.
The G7 leaders also announced the launch of a new initiative to reinforce Assistance for Complex Contract Negotiations (CONNEX).
It aims to provide developing countries with “extended and concrete expertise for negotiating complex commercial contracts.” The extractive industry will benefit from this assistance.
Tackling illicit flows of finance was also on the agenda. “For the first time, the G7 accepted that transparency of intermediary companies and trusts can help developing countries,” stated ONE France.
According to the G7 press release, the leaders “will continue to work to tackle tax evasion and illicit flows of finance, including by supporting developing countries to strengthen their tax base and help create stable and sustainable states.”
The G7 leaders are also committed in the “national action plans in line with the principles we agreed at Lough Erne.”
In June 2013, the then G8 met in the Northern-Irish town of Lough Erne. They made progress in promoting fiscal transparency through an automatic banking information system.
This will have an important effect in developing countries, where illicit flows of finances are high and detrimental to society.
In 2011, $950 billion (€693 billion) of illicit flows exited developing countries. This is equivalent to 13.7% more than in 2010, according to a report by Global Finance Integrity. Sub-Saharan Africa is the number one region in the world to be affected by this, with an annual loss of 5.7% of GDP.