Global campaign for the CTT

Heikki Patomaki (ATTAC Finland, NIGD)

Workshop 582, European Social Forum, London, 16 October 2004
Organisers:
ATTAC Finland & NIGD - Heikki Patomäki (convenor, rapporteur)
ATTAC Ireland - Donnacha O’Brian
ATTAC Denmark - Ole Klammer

Other speakers:
Sony Kapoor, Tobin Tax Network, UK
Lieven Denys, Free University of Brussels
Bruno Jetin, Attac France

The main point of the World Social Forum process with its various regional and thematic events, such as the European Social Forum, has been to create a political space for transnational encounters and dialogues. Many encounters may, and at least some of them should, lead to the development and cultivation of campaigns for key global reforms. One of the few examples of this actually happening in any sustained way is the global campaign for the currency transaction tax, CTT. Although the CTT campaign predates the WSF process, and although it was also one of the original drives behind the setting up of the WSF, the discussions in London in a series of CTT-related events proved highly successful, demonstrating that social forums can be more than mere “travelling anti-globalisation circuses” (as a not-so-friendly British critic once called the various counter-summits).

The War on Want has nicely summarized the flow of CTT-events in London: “The 2004 European Social Forum (ESF) commenced in London on Friday 15 October. On the evening of the first day there was a successful plenary session, which prominently placed the Currency Transaction Tax (CTT) in a wider context with other regulation such as control of Tax Havens. On Saturday morning there was an excellent CTT action-oriented seminar that heard reports of progress from many countries across Europe, including the possibility of dramatic progress towards CTT legislation in Spain. On Saturday afternoon a very useful workshop was held where differing ideas about the CTT proposition were discussed. The final workshop, on Sunday morning, followed last year’s very successful strategy and planning session at the ESF in Paris, where a statement was agreed by many European ‘Tobin’ groups for coordinated activity to achieve a CTT on the Euro and other European currencies. This led to the initiation of the Tobin-Europe email list and monthly telephone conferences.”

The Saturday afternoon workshop 582, “Global campaign for the CTT”, discussed “differing ideas about the CTT proposition”. It also clarified many of the differences and led to a deeper understanding of the constraints and possibilities of both the European and the global campaign. Apart from the successful Belgian legislation, the CTT campaigns have gained new momentum from the so-called Lula-Chirac Initiative (joined by the Presidents of Chile and Spain as well). The Report of the Technical Group on Innovative Financing Mechanisms “Action against Hunger and Poverty”, and the related summit in New York at the end of September 2004, at the time of the General Assembly meeting, appear to be the biggest step thus far towards the adoption of the CTT. However, as Bruno Jetin expressed it, the Report is a “mixed blessing”.

In my opening talk, I argued that the report “Action against Hunger and Poverty” not only focuses exclusively on the need to generate global funds but seems to assume, by and large, the validity of orthodox economic theories and policies. It tries to avoid “distorting” free markets and would like to exempt a large part of all currency transactions from the tax (the so-called “market making transactions”).What is equally problematical is that the Report assumes that the CTT can only be implemented if all the major financial centres are within the system from the outset. In other words, the US or any other major financial centre would have a veto-power over establishing the tax.

For many years campaigners have been trying to demonstrate the possibility of starting with a grouping of likeminded countries, seemingly to no avail. In the Lula-Chirac report, there are some counterarguments against the Rodney Schmidt resolution of collecting the tax in the absence of some of the major financial centres. Although I have never thought that the tax collecting system should rely exclusively on any specific technical mechanism such as using the Continuous Link Settlement Bank, or other net settlement systems, to collect the tax, this is nonetheless a point that we should re-examine carefully.

Last but not least, the Report also argues against setting up new institutions (or “bureaucracies”, as they call them). However, the problem with using existing multilateral arrangements is that they are not at all democratic and tend to impose orthodox policies where-ever they operate. Would we really like the IMF, for instance, to set the conditions for loans and grants made possible by the revenues of the CTT? There seemed to be a strong consensus that this would not be a particularly good idea. Opinions were more divergent on the EU-institutions – should the Europeans need to set up a tax regime unilaterally – but I think it is fair to say that for virtually all the scholars and campaigners present in London, the best option is to create a new democratic institution.

Also the discussion on the EU mechanisms and European power relations brought some new light on the conditions of making the CTT real. It was stressed by many speakers and participants that focussing our activities on achieving CTT progress in Europe did not undermine the vision of a global CTT, nor detract from the importance of holding an international CTT conference as soon as practicably possible. This was articulated even more explicitly the following morning in the strategy workshop. On the other hand, it is rather difficult to get the 20% of the currency markets inside the CTT zone without the euro-countries, as required by the Draft Treaty (see nigd/ctt). The EMU-countries are thus really important for the CTT.

Donnacha O’Brian emphasized the need to analyze in detail the decision-making procedures inside the European Union, in order to focus on the right actors and processes. Lieven Denys argued that it is possible establish the basic Tobin tax through the national parliaments of the EU member-states. However, in the two-tier system of the Spahn variation of the CTT, supported unanimously by all campaigners, the so-called surcharge would in fact require a European agreement. This European agreement would involve not only the Commission (that continues to have monopoly over regulative initiatives) and the Council of Ministers (that makes the main decisions) but also the European Central Bank (ECB). This is because the surcharge concerns monetary policy, and thus it falls also within the terrain of the ECB. Given the neoliberal orientation of the Commission and the monetarist economic theory of the ECB, this may become a major obstacle.

There was also a lot of discussion about what is realistic and what is not. Sony Kapoor maintained that in order to make the tax acceptable also to the business community and the New Labour government, the tax rate should be very low indeed and the CTT should be seen as strictly complementary to the existing development aid, which is controlled by the OECD governments and North-controlled multilateral organizations, including the EU. This sparked a lively debate on economic theory and the philosophical underpinnings of the CTT campaign. Jetin emphasized that the point of the CTT is precisely to make the markets “less liquid”. Moreover, even if the burden of tax were transferred to the “customers” of the banks, there is no problem since these customers are pension funds, hedge funds, multinational corporations and the like. They should be taxed. Likewise, I have been arguing for years against compromising the CTT already before the real negotiations have started. In particular, many recent proposals to establish a stand alone CTT by the European Union would not achieve the three basic goals. There would be no curbing of the power of financial flows, global fund or global democratic control of financial markets. If developing countries were invited to join the regime subject to acceptance of the control of the Commission or the European Central Bank, the CTT regime would come close to reproducing (neo)colonial structures of finance.

At the end of the workshop, Rudy De Meyer from 11.11.11. in Belgium joined the discussion and vividly supported the idea of making civil society proposals as ambitious as possible. “We know what has happened to many proposals in the past, such as when the Jubilee campaign proposals were transformed into the HIPC-initiatives by the G7. We should watch out.” Giving up already at this stage would be self-defeating. Indeed, the Draft Treaty conception is based on the adoption of the CTT in an international conference of the willing countries, with the strong presence of the civil society organizations ensuring that the outcome will meet the expectations put on the CTT. Arguably, a unilateral European tax would be less realistic because it would require the simultaneous consensus of all member-states.

Strikingly, however, this workshop came also to the conclusion that for the surcharge part, the approval of the Commission, Council and the ECB would be indispensable. It should be noted, though, that Denys mentioned that the new procedures of “enhanced European cooperation” might be of help here, providing a way to overcome the unanimity requirement of the European Council. At any rate, the Draft Treaty would not necessarily be sufficient to overcome the obstacles of the EU-institutions, unless the idea of the two-tier tax was replaced with the more simple original idea of James Tobin. Should we go back to the original Tobin-model of the CTT? I think this is now the key problem of the global campaign. A decision should be made, based on a systematic analysis of political possibilities and economic viability, in the context of a wider strategy for global economic and democratic reforms.