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Fiscal space is big right now. It was an important part of the OECD’s policy prescriptions in last year’s Economic Outlook and was high on the World Bank President’s agenda at this year’s Spring Meetings in Washington. It also featured in discussions at the 2017 Forum on Financing for Development in May. Yet the term has a different meaning depending on whether it is applied to a developed or a developing country, and it doesn’t appear to resonate with policy makers at a national level.


So what does fiscal space mean for developed economies? The OECD and IMF view the concept in terms of long-term debt sustainability. By this approach, fiscal space is interpreted as the distance between actual debt levels and a theoretical higher level of debt that is nonetheless safe. Fiscal space suggests how much wiggle-room national governments have to increase growth-enhancing spending, such as infrastructure investment, without raising taxes. This is important in the current context of a sluggish global economy where monetary policy has done all it can to support growth and the pressure is thus on fiscal policy and structural reform to propel the recovery.

The development of Africa has once again been subject of discussions of the G7 and G20 summits this year in Italy as well as in Germany. In their minds they are occupied with the question of how to address the “root causes of irregular migration” of tens of thousands of Africans to Europe. For both Italy and Germany, it is a question of facilitating investments by their business companies in Africa to create jobs with the illusion of being able to guarantee decent work to the 350 million young people aged 15 to 24 who populate the continent. Ironically, it was the same governments who, through the international financial institutions (IMF and World Bank) and through their Club of Creditor Countries (Club de Paris), pushed African countries to austerity programs called “adjustment” which have hitherto impeded the creation of viable jobs for African youth. It is hard to believe in the good faith of these new saviors of Africa who struggle to find a solution to the unemployment of theirs in Europe.

 

This Monday, the committee on economic and monetary affairs (ECON) as
well as the legal affairs committee (JURI) of the European Parliament
voted on new tax transparency rules for transnational companies. The
Commission suggested that transnational companies are required to
publish key tax data on a country-by-country basis for the EU-28 as
well as for countries blacklisted as tax havens. Data for other third
countries should only be reported on an aggregated level. The text
adopted today significantly improves the Commission proposal and brings
more transparency (1). The Greens/EFA group would have favoured
stricter rules than adopted in committee today. Therefore, we insisted
on a plenary vote on the negotiation mandate of the European Parliament
for the upcoming trialogue. MEP Sven Giegold, financial and economic
policy spokesperson of the Greens/EFA group commented:

The number of countries experiencing physical violence and threats against workers has risen by 10 percent in just one year, according to the annual ITUC Global Rights Index. Attacks on union members have been documented in fifty-nine countries, fuelling growing anxiety about jobs and wages.
 
The report shows that corporate interests are being put ahead of the interests of working people in the global economy, with 60 per cent of countries excluding whole categories of workers from labour law.

On Monday-Tuesday next week, Berlin will host the G20 finance ministers’ negotiations with African elites led by a South African, Malusi Gigaba. Is this the next neo-colonial defeat for the continent, harking back to another process 132 years ago?
From November 1884 to March 1885, fourteen European powers met in Berlin to discuss the division of European imperial interests on the African continent. The outcome of this negotiation process by the European powers was the General Act of the Berlin Conference. This provided an international legal framework for the formal annexation of African territories in furtherance of European capitalist interest.


Through European imperial control, the ruling oligarchs and elites were able, as Walter Rodney observed, “to underdevelop Africa.” Their work led to extreme fragmentation that makes it difficult to solve durable problems including climate change, acute poverty, economic dependency, violent conflict, chronic hunger and general lack of basic social services such as education, health and social infrastructure.


Now, 132 years after Berlin, the leaders of the Group of Twenty (G20), 19 leading economic countries plus the European Union, meet at another German City, Hamburg on 7-8 July 2017, following next week’s Berlin meeting of financial officials. Key on the agenda of the G20 leaders is its partnership with Africa as contained in a blueprint titled, Compact with Africa (CWA).

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