HOLDING THE G7 ACCOUNTABLE

The G7 Summit will be held this weekend - a regular meeting of the governments of the richest, industrialized countries in the world - the US, UK, Germany, France, Italy, Canada and Japan. This year’s meeting's supposed objective is “to unite leading democracies to help the world build back better from the COVID-19 pandemic and create a greener, more prosperous future.”

These governments must be held accountable for the state of the world today. As a group and as individual governments, they have used their power and influence to maintain a global order that is characterized by extreme inequality across and within nations,  unfair and unjust economic and financial relations, the domination of big multinational corporations, and the subordination of peoples’ well-being and the health of the planet to the interests of wealth extraction and profit accumulation. 

The severity of the COVID-19 health pandemic is not only due to the ferocity of the virus. Billions of people are extremely vulnerable because of widespread poverty and weak public health care systems that bear the impacts of decades of neoliberal economic policies pushed by past and present G7 governments. These policies include austerity measures and fiscal policies that prioritize debt service at the expense of essential services, and the privatization and commercialization of public service and institutions. The economic impacts of the pandemic exacerbate the hardships already being suffered by workers, farmers, fishers,  indigenous peoples and people of color, and women and children. The climate crisis, which is devastating lives and livelihoods, has been brought about by the very same global order with its excessive and continuously increasing emissions of greenhouse gases and destruction of the earth’s natural carbon sinks.

Our hope of surviving these multiple crises and forging a better future lies not in “building back better” the same social order but in a thorough going system change.  

This process includes demanding and compelling G7 governments to take immediate actions as part of holding them accountable:  

1. Cancelation of unsustainable and illegitimate debt!

Debt cancellation offers the quickest, most palpable fiscal relief for all countries in need, as it frees up public funds for public spending on responses to COVID-19 and the multiple crises.  Much of these debts claimed from the South are illegitimate, accumulated from years of colonial plunder, and through projects that destroyed our environment and the climate, displaced communities, eroded local economies, and violated many human rights.  

The G7 Finance Ministers meeting last week concluded with the same promotion of short-term, limited, and meager debt relief measures contained in the Debt Suspension Initiative (DSSI) and the Common Framework for Debt Treatments beyond DSSI. The continued peddling of these false solutions only serve the interests of the world’s richest countries through the hugely profitable business of lending. 

 Almost half of low-income countries covered by the DSSI and the Common Framework were already falling into deeper indebtedness before the pandemic. They account for 6% of the US$598 billion of external public debt service payments that fall due from 2021-2025.  The remaining 94% of payments are claimed from middle-income countries which are not eligible even for a brief fiscal respite even as many of them register sharp economic inequalities and face the greatest risk from climate change. Up to US$311 billion of the US$598 billion is claimed by private creditors which are not participating in any of the debt relief schemes and only “urged” by the G7 to do so. 

For 2021 alone, debt service payments amount to nearly US$1.1 trillion. Less than 3% of this money could vaccinate 2 billion people through the COVAX initiative for equitable access. 

For 2021 alone, debt service payments amount to nearly US$1.1 trillion. Less than 3% of this money could vaccinate 2 billion people through the COVAX initiative for equitable access. 

The G7 has been ignoring rising demand for debt cancellation, expressed by more than 550 civil society organizations worldwide in the wake of the multiple crises made worse by the pandemic. 

 We reject business-as-usual approaches that prioritize debt service more than peoples’ survival and condemn millions in the South to crushing debt burdens in the coming years. 

2. Fulfill  fair share of climate action and climate finance obligations! 

The G7 countries are  the world’s largest historical and continuing excessive emitters of greenhouse gases which are causing global warming and the climate crisis.  They owe a huge climate debt, which is a part of larger historical, social ecological debt many times bigger than the financial debt being collected from the Global South.

Recent climate pledges and Net Zero targets of G7 countries are not enough. Their fairshares of global climate action includes domestic actions to reach real zero by 2030, as well as  providing climate finance to fulfill the balance of their share in reducing global emissions and cover the costs of adaptation and loss and damage in the Global South.  

They have repeated the promise of mobilizing climate finance of a minimum of $100 billion a year over and over again in the last decade, and yet there has not been significant progress in achieving it. The $100 billion pledge is actually a random figure that is nowhere near the scale of need to begin with.  

Pledges to the Green Climate Fund - the main finance mechanism under the UN Framework Convention on Climate  Change (UNFCCC) --  remain at a very low  average of $10 billion every three years even after seven years of its full operations.  Finance for Adaptation has also been overlooked, with only $1 billion  pledges mobilized for the Adaptation Fund in its 14 years of operations. Much of Climate Finance pledges also come in the form of loans, which add to the already staggering debt burden of countries most affected by the climate crisis. Of the total climate finance mobilized from various financial mechanisms by rich, industrialized countries in 2018, 74% or $46.3 billion are in the form of loans, while only 20% are grants-based finance.  

We reiterate that the climate finance provided should be new and additional, non-debt creating, and accessible to those who need it the most. 

3. Immediate end to all public financing of all fossil fuels!  

As the world’s biggest industrialised economies, the G7 represents almost half of global GDP. They are also among the most polluting countries in the world. Collectively, they are responsible for approximately a third of global greenhouse gas emissions since 1990. 

For more than a decade, G7 governments repeatedly pledged to end most fossil fuel subsidies but failed to commit to a firm timeline and to deliver substantial reductions in fossil fuel subsidies. In 2016, they  finally committed to phase out “inefficient” fossil fuel subsidies by 2025  -- a firm deadline but too late given the imperative to reduce their domestic emissions to zero by 2030 and reach full decarbonization globally by 2050.

Last May 21, the G7 agreed to end public financing of coal-fired power plants by the end of this year. This latest commitment also does not go fast and far enough of what needs to be done. The phrase “unabated coal” pertains to coal-fired power generation without carbon capture and storage (CCS) technology. Thus this policy will still allow overseas financing of specific coal projects outfitted with CCS, a technology that is unproven and unreliable.

Between January 2020 and March 2021, G7 countries committed more than US$189 billion to support coal, oil and gas, while clean forms of energy received only $147 billion.

All these manifest the G7’s continued lack of urgency to change course and put the world on track with keeping global temperature rise to below 1.5 degrees Celsius - the goal of the Paris Agreement to which they all profess commitment.

The latest report of the International Energy Agency (IEA) affirms that if the world is to stay within safe limits of global warming, a rapid shift away from fossil fuels is needed. This means no new coal-fired power plants can be built and the exploitation and development of new oil and gas fields must stop this year. 

The latest report of the International Energy Agency (IEA) affirms that if the world is to stay within safe limits of global warming, a rapid shift away from fossil fuels is needed. This means no new coal-fired power plants can be built and the exploitation and development of new oil and gas fields must stop this year. 

G7 countries must take bold steps to halt support for the fossil fuel industry given the narrow window of time left to prevent climate catastrophe. The  G7 must  implement an immediate end to public financing of all fossil fuels and chart a concrete course of action for a swift and just transition to end fossil fuel energy. The climate crisis will continue to worsen if G7 governments keep fossil fuels alive by continuing to support fossil fuels exploration, production, and consumption. 

4. Democratic,  transparent and fair global mechanisms and rules to address tax abuse and illicit financial flows! 

The G7 Finance Ministers and Central Bank Governors meeting last week resulted in a commitment to a 15% global minimum corporate tax rate as a significant momentum towards ending the ‘race to the bottom’ in tax rates around the world. Under the veil of these triumphalist pronouncements is the grim reality that the tax deal will only perpetuate the inequalities in the global tax architecture. 

Every year a staggering $427 billion  at minimum  is lost to tax abuse committed by multinational corporations and wealthy individuals; of which $245 billion is lost to corporate tax abuse.  

Foregone revenues lost to tax havens globally is the equivalent of 33,913, 688 nurse’s salaries every year.  Every second we lose an equivalent of one (1) nurse’s salary.  

Foregone revenues lost to tax havens globally is the equivalent of 33,913, 688 nurse’s salaries every year. Every second we lose an equivalent of one (1) nurse’s salary.

 

As the world fights a raging pandemic and peoples of the Global South struggle to survive the multiple crises, the implications for public health spending is nothing short of scandalous.  Studies by civil society on the state of tax justice in 2020 further point out that 37.4% of global tax losses are enabled by the UK with its Overseas Territories and Crown Dependencies; and 44.4% of global corporate tax abuse are enabled by the “axis of tax avoidance,” i.e. the UK and its Overseas Territories and Crown Dependencies, the Netherland, Luxembourg and Switzerland.   

 Setting a global minimum corporate tax rate to a mere 15% clearly serves only the interests of multinational corporations, many of them headquartered in G7 countries,  and the global elite.  This paltry number is not enough to curb tax abuses nor plug the leaks that rob the Global South of potential fiscal resources for essential public services so urgently needed at this very hour. 

Setting new tax rules for the rest of the world must not be an initiative orchestrated by the richest 10% of the global population, whose multinational corporations have amassed billions in profit at the expense of natural resources and labor in developing countries. The G7’s tax proposals are set to disproportionately benefit their own countries in recovering offshore tax revenues and maintain their privileged position in the global tax infrastructure. 

Instead of standing in the way, we call on the G7 to cooperate in setting up democratic, transparent, and fair global mechanisms and rules for addressing tax abuse and illicit financial flows.