Have we not learned anything from Panama and Paradise Papers? The government proposes to remove the economic support that gives the opportunity for NGOs to work for transparency in capital flows.
This opinion piece is written by Lisa Sivertsen, Director of Department, Policy and Society, in Norwegian Church Aid and Mona Thowsen, Secretary General in PWYP Norway. It was first published in Dagsavisen.no November 8th, 2017.
The government proposes to remove the "sustainable management of natural resources and transparency in capital flows" as one of the objectives for supporting civil society. It can put an effective stop for small organizations that follow up the authorities' work, for example, in relation to multinational companies and wealthy elites in tax havens.
The UN, on the other hand, believes that transparency in capital flows is a prerequisite for sustainable development.
Not only a prestigious office Erna, but responsibility as well
The UN's Sustainable Development Goals (SDGs) are the world's global work plan for how all countries should prioritize their efforts towards sustainable development over the next 15 years. UN appointed Erna Solberg to co-chair UN’s prestigious office of the UN Advocates to build political will and mobilize actions that can speed up the work for achieving Sustainable Development Goals.
UN’s sustainable development goals on tax and capital flight
Two of the UN's Sustainable Development Goals emphasize the importance of tax and capital flight for sustainable development, in particular for reducing inequality both between and within countries, and for building peaceful and inclusive societies.
- UN’s goal 10: “Reduce inequality within and among countries” has a target 10.5: “Improve the regulation and monitoring of global financial markets and institutions and strengthen the implementation of such regulations”.
This means that Norway must improve the legislation and monitoring of global financial markets and institutions, in addition to strengthening the implementation of such regulations. - UN’s goal 16: ”Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels” has a target 16.4: ”By 2030, significantly reduce illicit financial and arms flows, strengthen the recovery and return of stolen assets and combat all forms of organized crime”.
Norway must help significantly reduce illegal capital flight and arms flow, strengthen the recovery and return of stolen values and combat all forms of economic crime.
Development conditional on financial transparency
The UN's goals tell us that the situation in one area affects other areas as well. Development process is conditional on a number of different factors that are not primarily related to aid in the traditional form, but also includes financial transparency.
We have an internationally strong normative framework on the UN's prioritized Sustainable Developments Goals.
Norwegian politicians must go from a normative framework to an operational level. These two tracks are mutually equally important. The government seems to remain at a normative level. Why is the normative framework not turned into a political priority?
Critical voices in civil society are necessary
The UN has asked governments, private sector and civil society organizations to help ensure collaboration and take actions. However, it requires that there exists a civil society that can contribute and that there is a political will to introduce measures.
Civil society organizations play a decisive role in the work for sustainable management of natural resources and financial transparency in capital flows. This is necessary to create development effects. Most disclosures, leaks and measures for transparency will be achieved through a civil society that will hold governments and companies accountable.
Despite this, "sustainable management of natural resource and transparency in capital flows" has been removed as a prioritized objective from financial support to civil society organisations (Chapter 160, post 70 in the Budget Proposition for the Ministry of Foreign Affairs). Support for NGO’s work on financial transparency in capital flows from natural resources can neither be replaced by state-to-state cooperation nor multilateral aid.
Work for transparency in cash flows related to natural resources and capital flows is equally important to ensure innovative and equitable funding for development in poor countries in the South as it is to ensure equal conditions for competition for Norwegian companies both in the North and in the South.
It is an informed and demanding civil society that makes democracy possible. We need knowledge about financial secrecy and alternatives for actions when we face the tax avoidance of multinational companies. PWYP Norway has produced and disseminated to the general public such knowledge as of where the leakages occur, what techniques are used, which mechanisms interact, how it is made possible, who facilitates tax avoidance, how it may be possible to detect that it happens, and which transparency measures can counteract which types of leaks and issues.
Decisive efforts, dialogue and achieved results are documented in the development report for 2017, under chapter "1.5 Sustainability and Coherence". Here is an example of the dialogue with civil society that has contributed to policy changes:
"The dialogue has contributed to increased Government awareness of the development-related effects of Norwegian politics and increased mutual understanding of opportunities and dilemmas. It has also contributed to policy changes, such as the revision of the country-by-country reporting which is in progress."
What are consequences if we do not succeed?
Leaks such as Panama Papers, Lux leaks, Swiss leaks and now Paradise Papers have shown that not only commercial companies and dubious organizations, but also political leaders choose to use tax havens, layer upon layer of secrecy and financial tools to build up their power.
Personal enrichment of individuals, elites and multinational corporations is a prerequisite for building and financing authoritarian regimes in the world, and being able to conceal its traces.
Do not destroy the work for transparency
We ask the Finance and Economic Affairs Committee to ask the Government that "sustainable management of natural resources and transparency in capital flows" should continue being a goal for supporting civil society (Chapter 160.70), in addition to the objectives listed in The Proposition to the Storting.