Philippe Douste-Blazy told EURACTIV France that in the current economic context, financing for foreign aid must be more innovative. This can be achieved with “painless” taxes, tapping into Africa’s oil exports and greater cooperation,he said in an interview.
There are one billion people earning less than one dollar per day, four billion earning four dollars, and one billion who are the “happy few”, says Philippe Douste-Blazy, United Nations Special Advisor on Innovative Financing for Development.
High birth rates mean the needs of people living in extreme poverty are increasing. They need more clean water, better education and efficient healthcare. This, accompanied by the West’s struggling economy and budget cuts to foreign aid, leads to what Douste-Blazy calls the “scissor effect”.
According to Douste-Blazy, the scissor effect means many of the UN’s eight Millennium Development Goals (MDGs) will not be met. The MDGs are a set of eight anti-poverty goals that range from halving extreme poverty rates to halting the spread of HIV/AIDS (see context). In 2006, Douste-Blazy was elected President of UNITAID, a global health initiative. He was given the task of promoting UNITAID and other sources of innovative financing in order to achieve the MDGs.
In 2013, many EU member states’ contributions to international development decreased. According to an OECD report, foreign aid decreased in France and many other EU member states. Douste-Blazy praises the UK, which managed to mobilise enough public resources to contribute 0.7% of its GNI to development aid.
Innovate, not cut back
He believes that instead of cutting financing to foreign aid, it should be complimented with innovative measures.
“We must preserve public development aid, but the architecture of development must progressively change and focus on two sources of financing: public aid and innovative finance,” he said.
A pioneer in the innovative financing movement, Philippe Douste-Blazy is laying the foundations for the future of foreign aid. This can be done with greater contributions from economic activity that is directly related to globalisation, what he calls “painless” taxes in areas like aviation, Internet, financial transactions and the extraction industry.
Some of these methods are already in place. For example, there is a €1 tax on all flights within the Eurozone and a $1 dollar tax on all flights within the US, which have contributed over $2bn in two years. Douste-Blazy says that the flight tax financed 355 million malaria shots and vaccinated 8.5 million people against tuberculosis.
The success means the scheme is spreading, and UNITAID is in ongoing talks with other countries: Morocco is on board, Japan is considering it and Argentina can still be convinced.
FTTs for greater global solidarity
Financial transaction taxes (FTTs) are also a tool used to innovate foreign aid. Germany and France, the main proponents of FTTs in Europe, first pushed for an EU-wide implementation starting in 2014. Faced with fierce resistance from other EU member states, especially the UK, just 11 countries are taking part.
France has promised to put 15% of their FTT income aside to invest into development aid. Douste-Blazy salutes this, but argues that 15-20% of the money collected all 11 countries should be pooled and invested into UNITAID to help improve healthcare worldwide and tackle climate change. By reinvesting global money towards greater solidarity, he hopes to forge a relationship between globalisation and solidarity.
Oil to fuel aid
A possible source of finance for foreign aid is a tax on the extractive industry. Progress is underway to make the extractive industry more transparent in developing countries. Western leaders discussed illicit financial flows in extractive industries during the G7 meeting in Brussels, 4-5 June.
They proposed putting in place 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.
Douste-Blazy solution to give some of the profits of the extractive industry back to ordinary people in developing countries is another “painless tax”. He wants a 10c tax on every barrel of oil. Indeed, only a small tax on multinational extractive companies could mean a huge hike for foreign aid financing.