A berry bad summer

Click on the photo to see why they like berries

Vietnamese farm-workers recently locked up their bosses to protest against low pay and hard working conditions. Their action might well have gone unnoticed except for one thing: It happened in Lapland.

What were Vietnamese workers doing in northern Sweden? Picking berries, or trying to. Every summer, the Nordic forests fill up with delicious fruit – blueberries, lingonberries and the amber-coloured cloudberry. Collecting them is a favourite summer pastime, and, thanks to the “right to roam” allemansrätten law, people in Sweden are more or less free to pick berries wherever they find them.  

 

But in recent years, this tradition has become commercialised, with thousands of foreign workers flying in to reap the wild harvest. In the past, many were rice farmers from Thailand. They planted their rice in June, travelled to Sweden for the summer berry season, and then returned home to harvest their own rice crop in the autumn. As Bertil Lintner writes, the work was hard but lucrative, with workers bringing home between $2,850 and $5,700 – “much more than a doctor or other well-paid professional back in Thailand”.

Lately, however, the annual trek has become less rewarding. Travelling to Sweden has become more expensive and the berries are harder to find. One picker told the Bangkok Post that he used to be able to find wild berries within 20 kilometres of a town centre. But these days he has to drive 100 to 400 kilometres. In part that’s just because some years are good for berries and some are not. But it also reflects growing competition.    

Problems came to a head this summer with the arrival of workers from China and Vietnam. Not only did they hit a bad summer for berries but, according to locals, many were spooked by the mosquito-ridden northern forests and had little farming experience.

 The workers also complained of impossible targets. One of them, Le Thi Hong, said the recruiting agency had promised workers they would be able to pick between 60 and 120 kilograms of berries a day, Västerbottens Folkblad reported. In reality, he said, they were lucky if they could manage 10 to 30 kg. Workers had mortgaged their homes to travel to Sweden, he added, and risked losing them if they didn’t meet their targets. Discontent led the Chinese and Vietnamese pickers to stage a series of protests over the summer, including locking up their bosses and going on a 15-kilometre night march.

The story is unusual but, unfortunately, not all that rare. Fruit-picking can provide useful, short-term labour, but it’s also often rife with scams. Many pickers are hired by contractors and may have to pay relatively high up-front fees, which they can only earn back by meeting quotas. Many also are seasonal workers, and so may have limited protection under labour laws. (And, while there’s no suggestion of forced labour in Sweden, in the worst cases farm-workers – both locals and migrants – may effectively be slave labour, as this ILO report discusses.)

Sweden has tried to protect the pickers by issuing warnings about scams through its embassies and imposing a minimum wage. Local unions, however, say more needs to be done. But in reality there’s probably only so much the government can do: So long as hiring agencies in the pickers’ home countries create unrealistic expectations, would-be fruit pickers are going to be open to exploitation. Back in Sweden, there have been calls for a boycott of commercially picked berries to show support for pickers who have been unfairly treated. But, as Isabel Conway comments, the idea of giving up their beloved berries “may be a sacrifice too hard for many Swedes to swallow”.

 Useful links

OECD Insights: International Migration

 OECD work on international migration

Social issues (including migration) at the OECD iLibrary

The International Labour Organisation

Migration and asylum policy in Sweden (government website)

Helping Haiti: Colombia says ownership is the origin of aid effectiveness

 
 

Click on the image to go to the Acción Social site (in Spanish)

This contribution to the debate on aid ownership comes from Sandra Alzate, Director of International Cooperation, Presidential Agency for Social Action and International Cooperation – Acción Social, Colombia. You can see French and Spanish translations by clicking on the “more” tag.

I would like to express our rejection of the conclusion of Joel Brinkley in his article: “Don’t let Haitians help themselves“, according to which “if the World wants to help Haiti, aid officials should put aside the Paris Agreement on Aid Effectiveness. The donors should decide what to do with their money. The Haitian “government” can have no more than an advisory role, or nothing will ever change”.

There are several points to mention.

As expressed in the article, there have indeed been decades of unproductive work; unproductive work that gave rise to the reflections and actions for more effective aid strategies, both in countries dependent and not dependent on aid.

The Paris Declaration (PD) and the Accra Agenda for Action (AAA) have become a commitment of the international community with the most vulnerable populations of the world. Colombia shares the principles of the PD because it locates the responsibility for development with the so-called partner countries, and because it understands international cooperation as complementary to national efforts.

In particular, the principle of “ownership” is seen by Colombia as the origin of the aid effectiveness chain, and necessary in order to strengthen leadership, coordination, dialogue and interaction between all the development actors, thus enriching their cooperation policies and practices.

It is in this scenario that Colombia has played an active role in the international debate. This has generated new spaces of dialogue and has promoted the incorporation of the effectiveness agenda, and of subjects like broadening and the  democratization of the term ownership, the promotion of using national systems and mutual evaluation mechanisms, the recognition of the role of NGOs, the reference to south-south and triangular cooperation policies, and aid information transparency.

As anticipated in the PD and AAA, donors have the responsibility to develop capacities and leadership in Southern countries so as to support the sustainable construction of their own development. Nevertheless, traditional cooperation models in Haiti have reflected a lack of work from donors related to this responsibility (lack of capacity-building, creation of dependence, fragmentation of initiatives, high transaction costs, weakness of accountability, and lack of transparency).

Considering these factors, ownership becomes the common denominator that must govern in a vulnerable and, for decades, criticized context like the one in which Haiti has been living. This principle allows the exercise of an effective authority of development policies and strategies where donors respect the leadership and they contribute to local capacities development and strength.

To imagine a scenario like the one raised in the conclusion by Brinkley, where the Haitian reality reflects the presence of multiple international actors working to develop the country, without guaranteeing a firm leadership and an active participation of the Haitian government, only generates a lack of organization of the numerous cooperation actions, and a negative impact for the future generations of Haitian society.

Colombia, as a Middle Income Country, positioned as a donor of financial and technical cooperation in Haiti, has felt deep solidarity with the Haitian Government since the earthquake of January 12, 2010. As a result, Colombia participates as an observer in the Interim Recovery Haiti Commission (IHRC) and is using the Haiti Reconstruction Fund – created by the Government of Haiti and managed by the World Bank – to realize, as a request of the Government, a donation of $4 million for budget support to the agricultural and land reconstruction sectors.

Colombia has also seen in South-South Cooperation an opportunity to promote in Haiti a new philosophy that encourages an integrated and new approach to development, based on a coordination scheme between all the actors involved, connecting the emergency and recovery stage, and guaranteeing the active participation of local communities in decision-making.

What the author proposes in his article is not new, but is a scenario that has caused a continued chaotic situation in Haiti. It is for that reason that we would like to invite the author to reframe his ideas and to better ask donors what they have done, or what they are doing, to develop Haiti’s capacity for leadership. (more…)

Hey you, stop wurfing and read about the 26 billion buck haircut!

Haircuts can be dangerous

OK, wurfing (surfing the web at work) didn’t make it into the new edition of the Oxford Dictionary of English published today, but toxic debt and quantitative easing did.

Speaking of which, haircut was already there. Eh? Haircut, you know: “US informal: a reduction in the stated value of an asset”.

That’s one of the terms you need to understand to follow the argument in a new OECD Working Paper on the stress tests 84 European banks passed so brilliantly in July.

Adrian Blundell-Wignall, Special Adviser to the OECD Secretary-General on financial markets, and his colleague Patrick Slovik point out that the tests only considered “trading book” exposures to sovereign debt, while over 80% of exposure is on the “banking book”.

The trading book consists of the securities a bank buys and sells regularly, even daily, while the banking book contains the products the bank would normally hold on to until they matured, including the bonds used to finance sovereign debt.

For the trading book, the haircut is around €26 bn in the stress tests. No haircut was applied to the banking book, on the grounds a default would be virtually impossible over the two-year period considered. The tests also assumed there would be no bank failures.

Blundell-Wignall and Slovik argue that these two assumptions help to explain why despite the encouraging test results (only 7 banks failed) equity markets are still performing poorly, bond spreads remain high, and banks are still reluctant to lend.

If a bank fails, it cannot hold on to the longer-term assets on its banking book, which would have to be sold for whatever they are worth on the day, even at a loss, and in fact there would be no difference between the trading and banking books. In other words, shifts in the market value of sovereign debt do matter, unless you assume that the stress-tested banks never fail. 

That’s a brave, or foolish, assumption in light of what we’ve seen since the crisis broke, but the assumption of no sovereign default over the next two years seems reasonable, given the €720 bn European Financial Stability Facility (EFSF) agreed earlier this year.

The EFSF could more than cover all the funding needs of the most exposed countries, even in the highly unlikely case that no securities could be sold on the open market.

So why are ratings agencies like Moody’s worried about the sovereign debt of even the US, Germany, France and the UK, countries they consider “well-positioned at AAA” in their latest figures?

They’re not worried about the next couple of years, but many analysts foresee problems in reforming labour and pension markets to ensure sustainable growth before the stimulus packages run out. In the medium-term, budget restraints will make these reforms more difficult.

In the longer term, Moody’s is afraid of a situation where states delay pension reform for political reasons, leading to a downward spiral as they try to borrow more to finance deficits, while at the same time, conflict between younger and older generations destroys the social cohesion needed to stabilise debt.

Countries in this situation would lose their triple-A rating.  

Useful links

OECD Insights: From Crisis to Recovery

OECD work on financial markets

This OECD paper warns that retirement income may become a “lottery” unless default strategies are carefully designed

Helping Haiti: Moving beyond the blame game

 

Click on the image for links to government and state institutions

Following the previous post on aid to Haiti, Jerzy POMIANOWSKI, Director of the OECD’s Partnership for Democratic Governance Advisory Unit and Bathylle MISSIKA, Technical Advisor for the OECD-PDG sent us this contribution to the debate. You can find information on PDG work on Haiti’s reconstruction and development here.

Brinkley is absolutely right when he underlines some of the shortcomings of donor involvement in Haiti. The “by the book” application of some of the pivotal Paris Declaration principles  of ownership or use of country systems (“alignment”) has not delivered according to plan. But should we expect the same pace of improvement from “good performers” like Tanzania or Ghana in countries like Haiti, which are emerging from decades of political and social instability and rampant poverty?

As outlined in the DAC Principles for Good International Engagement in Fragile States, donors need to adapt their strategies to fragile contexts. In other words, discarding the ownership principle altogether is not the answer and certainly sounds schizophrenic after the political and financial commitments made by aid donors in March at the international conference in New York when more than USD 5 billion was pledged to help Haiti “build back better”.

Clearly, this money cannot be given in the form of a blank check. Brinkley is also right to warn against the misuse of funds and the risks of seeing monies disappear in the wrong pockets. This does not mean that donors should “decide what to do with their money”. A countless number of evaluations have showed that “ring fencing” funds by creating isolated projects run by donors using their own procedures and staff, and accountable only to themselves only leads to greater alienation of the government, a lack of efficiency and unsustainable results. Haitian stewardship is not incompatible with safeguarding mechanisms.

The Reconstruction Commission mentioned by Brinkley, which approves all new development and reconstruction projects, has been established with a built-in, independent “Performance and Anti-corruption Office” with a compliance unit and investigative powers so as to limit the risks of embezzlement in reconstruction projects.

Moreover, Brinkley is wrong in asserting that Haitian leadership has led nowhere in the past. It is precisely the past practice of aid donors avoiding the state that needs to be let go. Since former dictator Jean-Claude Duvalier fled the island in 1986, donors have unfortunately often bypassed the government. But Haitian ownership has manifested itself in many ways. It now needs the right stepping stone to take off.

The most recent example cited by Brinkley of displaced people on the Champ de Mars is a good example. Whatever the Government (or in this case, President Préval) puts forth as its own agenda, some international critics raise eyebrows because things should be done by the (their?) book. Should tents have been left in front of the destroyed Presidential Palace, fingers would have been pointed at the Haitian government for its inertia.

The biggest risk now is not to avoid having “Haitians help themselves” but, rather, a return to the sub-optimal pre-earthquake model, in which donors, NGOs and other non-state providers bypassed the state, with 85% of essential services such as health, education or water primarily administered and delivered through NGOs, private companies and other non-state actors such as charities, associations and faith-based groups, with little accountability to the government or the beneficiaries of these services.

As discussed during a workshop organised from 8-9 July 2010 by the Haitian government in collaboration with the OECD’s Partnership for Democratic Governance, the Govern­ment of Haiti, donors and service providers have laid the ground for a new approach to the delivery of basic social services. “We need to redefine the model that prevailed before the earthquake, in particular to allow Haitians to have access to the essential services [they] can rightfully expect from the State,” Prime Minister Bellerive said as he opened discussions at the July workshop.

This new paradigm for service delivery, in which all stakeholders accept the Haitian state’s primary stewardship role and, at a minimum, its core policy-making, standard-setting and monitoring roles, can mark a turning point in what has so far been an uncoordinated tango between donors, NGOs and the government.

This uneven relationship of mistrust and low mutual accountability probably stems from Haiti’s complicated history as the first black republic, which freed itself from slavery and declared independence in 1804, while reinstating a culture of dependency through dictatorships, the oppression of the elite and a reliance on foreign aid.

Now is actually the time to allow Haitians to help themselves. Finger-pointing has not led anywhere and it is high time for donors and the Haitians to “walk the talk”. The new rules of engagement discussed in July are premised on the Government setting its policy orientations, being informed of the activities of all donors and non-state providers, and applying its norms and regulations, while being able to decide what services should be delivered and where. This is the least that citizens can expect from their sovereign state and the first step towards greater accountability.

This approach of enhanced transparency was behind the creation of the IHRC, which is not co-chaired by President Préval as incorrectly stated by Brinkley, but by Prime Minister Bellerive. The Commission has become an easy scapegoat, while it is simply the tip of the iceberg of a bigger problem: Donors tend to supply technical responses to political problems and apply old recipes, such as hiring big management consulting firms to set up multi-donor funds and expecting donors to fall in line behind their approach.

Brinkley rightly notes that the Commission has “met only once” and implies it is far from being operational, but this situation has more to do with all the weaknesses of international recruitment systems and the superimposition of donors’ own red tape and pre-defined organigrams than anything else.

The Commission is about to meet a second time on 17 August and is certainly behind schedule. But before resuming the never-ending ‘blame game’ it should be given the space and time to operate. If donors do not support Haitians to help themselves according to a set of mutually agreed new rules of engagement and through the mechanisms that they themselves have helped to create, it would be, as a popular Creole proverb goes, like “lave men siye a tè” (washing your hands then rubbing them in the dirt). 

Useful links (the previous post on this topic also has many links)

 

Atelier sur le renforcement des capacités du Gouvernement haïtien : Provision et coordination des services sociaux de base (8-9 juillet 2010)

 

Plateforme pour la refondation d’Haïti

 

BetterAid unites over 700 development organisations from civil society working on development effectiveness and “is leading many of the civil society activities” in the lead up to the Fourth High Level Forum on Aid Effectiveness (HLF-4) in Busan, Korea in 2011

 

Inter-American Development Bank on Haiti

Helping Haiti: Should donors make the decisions?

A US Marine shows a Haitian woman how to use a radio

In a widely-circulated editorial opinion piece that the International Herald Tribune printed under the headline “Don’t let Haitians help themselves“, Pulitzer prize winning journalist Joel Brinkley argues that the Haitian government is so corrupt and ineffective that “If the world wants to help Haiti, aid officials should put aside that Paris Declaration on Aid Effectiveness. The donors should decide what to do with their money”.

In criticizing the OECD-backed Declaration that over 100 ministers, heads of agencies and other senior officials have now adhered to, Brinkley focuses on the principle of “ownership”: “Developing countries set their own strategies for poverty reduction, improve their institutions and tackle corruption.”

Brenda Killen, head of the OECD division working on aid effectiveness, replies to Brinkley.

We agree with Joel Brinkley that corruption can undo the best of efforts and intentions, and it has a strong hold in many of the neediest countries. But we strongly reject his conclusions that Haitians should not be trusted with their own rebuilding and that donors should abandon the principles of the Paris Declaration.

The Paris Declaration sets out five strong principles to make aid work for development. Brinkley zeroes in on one of them: countries must take the reins of their own development. The reasons for this seem obvious to those of us who have had the privilege of growing up and living in countries that do so – at least when we are talking about our own countries and futures.

But the principle of ownership, like the other principles that underpin the Paris Declaration, is not an expression of political correctness. It is based on objective assessments of what works – and what doesn’t – and drawn from experience in the field.

Countries like Vietnam (which has adapted the Paris Declaration to its own priorities and needs) and Ghana (which has set its own programme to achieve middle income country status by 2015) illustrate why local ownership is essential if aid is to be a catalyst for effective development.  And even where systems are weak and there is corruption and inefficiency, ownership is key to uncovering and reversing this. Post-conflict Uganda in the 1990s provides a well-known example in the form of the Public Expenditure Tracking Surveys of education grants that showed a reduction in the diversion of funds from 80 percent to 20 percent over a decade – reflecting strong ownership by the public (through broad public debate and citizen engagement) and government (through reform and strengthening of public financial management systems) of the country’s post-conflict process.

Referring to the origins of the Paris Declaration, Mr Brinkley states that it came out of “decades of unproductive work”. Certainly, if the donors and developing countries that adhered to this Declaration found it worthwhile to work on making aid more effective, it was not because aid had achieved nothing. It was, rather, that the experience gathered over time provided evidence of what could be done to make it work better. The Paris Declaration made harmonisation of donor efforts imperative long before the media reported stories of duplicated and wasted efforts due to turf battles among donors.

One of the major obstacles to aid effectiveness during the decades referred to by Brinkley as “unproductive”, was that a substantial part of aid was tied to conditions and services set by the donors. In other words, donors – not recipients – controlled it and how it was used. The Paris Declaration has helped to reverse this situation, and today almost 90%of aid is untied.

But above and beyond the specifics of aid effectiveness – which are often very complex and process- oriented – there is another, overarching lesson that today seems obvious: aid is not an end – or a solution – in itself. Nor can it take the blame, or the credit for that matter, for what has or has not worked. The problem in Haiti is about much more than aid, and here – as in so many other places – the Paris principles must be applied not in isolation, but rather in the context of much larger, more complex development issues.

Brinkley states that “Haitians were as poor and uneducated as ever” before the earthquake. It could be argued that this is simply not true. The 2009 Human Development Index report states that “Between 1980 and 2007 Haiti’s HDI rose by 0.77% annually from 0.433 to 0.532.” Not great, but still an improvement.

Yet this still leaves the fundamental question raised by Brinkley: earthquake or not, is Haiti in a position to be able to direct all international aid resources through its own government systems? Absolutely not. On this we agree. But does this mean we should not be working with the Haitians? Or does it mean we should be working to help them get to a point where aid can eventually go through Haiti’s national systems? We believe the answer is the latter. Absolutely, we should and we must.  

At the heart of the issue is the question of how to combat corruption. Punishing a crime requires legal institutions. Should foreign charities or donor governments run these too? Rather than standing on the high moral ground and telling Haitians what they must do, shouldn’t we be helping Haiti to build those institutions?

The Principles for Good International Engagement in Fragile States are about just this – how do we move from the chaos of disaster and conflict to a stable development path?  The ultimate aim is to support Haitians in building the ownership (in the form of democratically elected government, strong institutions and a voice for the poor) that will enable them to achieve – and sustain – their own development.  Fragile states realise this and the g7+ group of fragile states is calling on donors to recognise it as well. 

Just as South Korea was able to use aid as a catalyst to move from poverty and conflict to leadership of the G20 in less than two generations – building on strong national ownership and committed international support – other countries can do the same.  Liberia, Timor Leste – and Haiti.

The Paris principles are highly relevant to Haiti’s current situation.  In particular, they highlight the need to coordinate the many aid efforts more effectively so aid gets quickly to those who need it. But they can’t stand alone. Without action on many fronts – and action that takes into account the location-specific realities of each country – neither aid nor development will be effective.

Useful links

The Partnership for Democratic Governance  (PDG) is proposing Service Delivery Guidance in English, French and Creole to assist Haitian authorities and the donor community

Watch the trailer of an OECD-PDG documentary about Haiti made to accompany the forthcoming OECD-PDG Handbook on Contracting Out Government Functions and Services in Post-Conflict and Fragile Situations.

Catalyzing development: A new vision for aid,  a workshop organised by Brookings in July 2010, concluded that: “Donors remain far too eager to lead, despite empirical evidence that aid programs that are truly owned by recipients have the biggest impact.”

The DAC Network on Development Evaluation  works to increase the effectiveness of programmes through evaluation. In Haiti, the Network is supporting a collaborative approach to assessing the international aid response.

The Development Co-operation Report is the key annual reference document for statistics and analysis on trends in international aid.

The Dili International Dialogue sets out a new vision for peacebuilding and statebuilding

Enriching our poverty measures

Click on the image to read what people affected by poverty say about it

This post was contributed by Kate Scrivens of the OECD’s Statistics Directorate. Kate is working on a project researching indicators of household vulnerability and resilience in OECD countries.

One of the most widely recognised  Millennium Development Goals (MDG) is halving the proportion of people living on less than $1 per day. And yet, how many of us have actually taken time to think about what that could mean, to live on less than $1 a day? Indeed, for most people in the developed world, this represents such a miniscule sum as to be almost meaningless. How can we better understand what life is actually like for the world’s poor?

A new international poverty measure – the Multidimensional Poverty Index (MPI) – devised by the Oxford Poverty and Human Development Initiative (OPHI) and the UNDP Human Development Report, goes some way to addressing this problem. A person may not be considered poor according to the traditional monetary threshold and yet still have woefully inadequate access to schooling, food, healthcare, electricity, water or decent housing.

The MPI takes these different dimensions into account, and finds significant differences between the income-poor population and the population facing wider deprivations. For example, in Ethiopia, only 39% of the population is counted as being income-poor using the $1.25-a-day measure (the $1 figure was revised to account for inflation), yet 90% of the population are “multi-dimensionally” deprived according to the MPI.

As the MPI directly measures the hardships experienced by individual households, it can give a much more nuanced picture of patterns within countries.  In Kenya, the overall poverty rates for the Kikuyu and Embu ethnic groups are similar; however the experience of poverty for the two groups is quite different. The Kikuyu suffer from higher rates of child mortality and malnutrition, whereas the Embu are more likely to face insufficient access to electricity, cooking fuel and adequate sanitation.

From a policy perspective, this kind of detail is crucial to be able to identify the challenges faced by different groups and to design effective solutions accordingly.

There are obvious links between lacking income and being deprived in a wider sense, and monetary measures of poverty remain very useful. However, poverty is a complex and multifaceted phenomenon – a reality that is sometimes obscured by income statistics. The availability of international comparable data of the breadth and depth of detail provided by the MPI can hopefully result in more informed policy and tangible change in the lives of poor people.

Of course, poverty is not just a problem for the developing world and the need for more comprehensive measures of household living conditions is increasingly being recognised in OECD countries too. The Stiglitz-Sen-Fitoussi Commission made recommendations in this vein last year, and surveys such as the EU Survey on Income and Living Conditions are starting to give a richer picture of poverty and social exclusion. The OECD publication Growing Unequal provides an analysis of non-income poverty indicators in OECD countries.

These developments are important because how we define and measure a problem dictates how we respond to it. By using a narrow definition of poverty, we risk ignoring large groups of disadvantaged people and implementing ineffective policy. Better data can provide a powerful (and much-needed) advantage in the fight against poverty.

Useful links

OECD Statistics Directorate

The OECD Progblog discusses progress.

Wikigender is a project initiated by the OECD Development Centre to facilitate the exchange and improve the knowledge on gender equality-related issues around the world.

OECD Insights on Sustainable Development

If I were a rich man

Help the gentleman pay for his iPad, sweetie

When asked what he’d done with all the money he’d earned, former Manchester United star George Best replied that he’d spent a fortune on women, booze and fast cars. “The rest,” he said, “I just wasted.”

No such prodigality from the three dozen billionaires who’ve agreed with Bill Gates and Warren Buffet to give away at least half of their fortunes and get by on what’s left. The initiative is expected to bring in $600 billion eventually, about twice what Americans gave to charity last year.

Some of it would have been given anyway according to an interview with Buffet in the New York Times. He says the real value of the pledge is in the example it sets and the sentiments expressed in the letters posted on the Giving Pledge web site.

If you think that charity is a good thing but would like a more convincing example than somebody who explains in his letter to the Pledge that he only has three luxury homes, try imitating the poor. According to the OECD study Growing Unequal? Income Distribution and Poverty in OECD Countriesthe economic expansion that allowed the billionaires to make so much money hasn’t benefitted everybody. In fact, “the change has been equivalent to taking $880 from each of the poorest half of the population, and giving it to the richest half”.

What are they going to do with their philanthropy money? Education and health care top the list of intended beneficiaries. You might object that such basics should be a right, and not have to depend on charity and the whims of the rich.

Various sets of data suggest where other sources of funding could be found, even in poor countries. OECD Secretary-General Angel Gurría has pointed out that developing countries lose to tax havens almost three times what they get from developed countries in aid. 

Christian Aid estimates that the sums being lost to tax evasion could save the lives of 350,000 children each year if made available to programmes fighting poverty and disease.

OECD countries suffer from tax dodgers too. According to a 2009 report from the US Internal Revenue Service, the tax gap – the difference between tax owed and tax paid – was  around $345 billion in 2005, the most recent estimate. After subtracting revenue obtained through enforcement actions and other late payments, the IRS estimated the net tax gap at approximately $290 billion. The OECD says that tax evasion deprives other member governments of billions of euros a year too.

Charities do vital work that wouldn’t be done otherwise. But in a stronger, cleaner, fairer economy, they wouldn’t have to do it   

Useful links

OECD work on harmful tax practices

OECD work on fighting tax evasion

Outcomes of the first meeting of the Informal Task Force on Tax and Development

OECD report on Abuse of Charities for Money-Laundering and Tax Evasion