For Immediate Release
United Nations Small Islands Conference Fails to Address Major Debt and Tax Crisis
WASHINGTON - As the Third International Conference on Small Island Developing States (SIDS) continues in Samoa, the agreed upon final outcome statement fails to address the major debt and tax crises facing many of the attending countries. According to the World Bank, 10 of the 30 most heavily indebted countries in the world are small islands.
"While the final statement talks about the urgency to raise revenue for these struggling islands, it's baffling that there is hardly a mention of their debt crises and no proposed tax plans," stated Eric LeCompte, who sits on related UN expert working groups and is the Executive Director of the religious financial reform group, Jubilee USA.
The final outcome statement is 32 pages long, with fewer than three paragraphs on debt crises and no mention of tax issues. According to the United Nations Development Programme (UNDP), 1 out of 4 people in the Pacific small islands live in poverty. In the Caribbean, some small islands have poverty rates hovering around 40 percent.
"Especially because the islands are all so vulnerable to external shocks, the islands can band together and call for a process to work out their debts," said LeCompte.
The UN SIDS Conference has looked at how external shocks impact the islands and has emphasized the need to increase revenue to deal with climate change.
"Their focus on raising revenue to battle the impacts of climate change is important, but there is too little emphasis on curbing corporate and professional tax avoidance to help raise the revenue," noted LeCompte. "It's acknowledging a problem, but not pursuing a solution."
In 2011, UNDP noted that 4 of the 10 poorest countries with the highest ratio of illicit financial flows and corporate tax avoidance to GDP were small island nations. With many small islands facing debt restructuring, curbing corporate tax avoidance is one strategy for preventing austerity programs. As a growing number of small Islands face debt restructuring, another concern is predatory hedge funds and other hold-outs who refuse to restructure their debts and demand full payment. Currently, Grenada is being sued by the Export-Import Bank of Taiwan, which refused to participate in a debt restructuring agreement.
"The conference hasn't ended yet and there is still time to build partnerships to tackle the economic crises facing the islands," said LeCompte. "I'd encourage the delegates to not head to a Fia Fia Luau tonight and instead work late until they have a plan."
Read the UN SIDS Conference outcome document here.
Read the UNDP report on illicit financial flows here.