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Blogs, Reform of the governance of financial regulators (national and international levels)

Post-2015, Transparency and Human Rights

The Millennium Development Goals, those ambitious anti-poverty targets in eight separate categories approved by the UN in 2000, still have two years to go before a final analysis can be made of their overall achievements.  While much progress has been made (poverty is down as a percentage of the populations in poor countries as well as in real terms) much work remains.  In the most recent analysis by the UN, many regions of the world still trail far behind intended targets. It is likely that half the goals will not likely be met by the 2015 deadline.

Nevertheless, planning for the post-2015 period has begun in earnest.  A High Level Panel has been appointed and has met twice to begin deliberations on how progress should be measured during the next 15-year assessment period.  What should be included in the new targets, which are not part of the current MDGs, are targets for financial transparency in both developed and developing countries.  Financial opacity, in budgets, government contracting and in the flow of money around the globe, hides many sins.  Recent estimates of illicit financial flows out of developing countries show they are inching towards $1 trillion per annum.  To put that number in perspective, it is about eight times the amount of ODA flowing into poor nations.

It is unrealistic to believe all of those illicit flows could be stopped or that whatever amount is stopped would all be put towards reducing poverty.  But substantially curtailing those flows with new transparency measures could greatly bolster current ODA levels and development.  Given the need for more funds, financial transparency should be seen as a development imperative.  Indeed, despite the progress toward poverty alleviation over 780 million people still lack safe drinking water and 2.5 billion people lack adequate sanitation.

Transparency targets that require the owners of companies to be known, that would end bank secrecy and that require multi-national companies to report their profits and tax paid on a country-by-country basis would be an excellent start.  Since these would be new global norms it is up to developed countries (G20 and OECD are you listening?) to muster the political will to get this done.

Such a step toward transparency is, of course, also a human rights concern.  Article 25 of the Universal Declaration of Human Rights states that “everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control” (emphasis added).  Further, Article 2 of the International Covenant on Economic, Social and Cultural Rights notes that “each State Party to the present Covenant undertakes to take steps, individually and through international assistance and co-operation, especially economic and technical, to the maximum of its available resources, with a view to achieving progressively the full realization of the rights recognized in the present Covenant by all appropriate means, including particularly the adoption of legislative measures” (emphasis added).

For people in the developing world that are poor, sick and very old much is out of their control.  They have no say in how tax evading individuals and companies move money around the globe and they certainly have no control over the impact that activity has on their well-being.  But governments do have a say.  Governments, both developed and developing, have the ability to implement economic and technical fixes that would eliminate the opacity of the financial system that allows illicit funds to be hidden, laundered and moved with impunity.   States have a responsibility to not undermine human rights.  Financial transparency can go a long way toward supporting those whose voice is rarely heard by those in power.

Tom Cardamone is the Managing Director of Global Financial Integrity, a research and advocacy program which fights the massive outflow of capital from developing economies by working to curtail international money-laundering, tax evasion and corruption.


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August 2018
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