The war in Gaza has further deepened the gulf between Western states and the developing world.
The thousands of civilian deaths caused by Israeli bombardment in the Palestinian enclave, exactly 20 years after the tens of thousands killed by the American invasion of Iraq, will long epitomise the hypocrisy and double standards of the West.
The wealthy Western powers, accustomed to exploiting Asia, Africa and Latin America since colonial times, are trying their best to maintain their economic advantages and keep the States of the Global South under their control.
Over the past 30 years, the wealth gap between the world’s richest and poorest people has widened to record levels. According to the international humanitarian organisation OXFAM, the world’s 26 richest people had the same wealth as the world’s 3.8 billion poorest people. In total, during this period, the incomes of the poorest 10 per cent of the population increased by $65 per person, while the incomes of the wealthy 1 per cent increased by $11,800 (that’s 182 times more).
In 2021, the world’s richest 10 per cent of the world’s people received 52 per cent of global income, while the poorest half of the population received only 8 per cent.
The EU Tax Observatory, based at the Paris School of Economics, estimates that 2,700 billionaires around the world own $13 trillion and successfully evade tax: in fact, they pay much less personal tax than other taxpayers of more modest wealth because they can keep their wealth in shell companies.
This observatory estimates that the personal tax of billionaires in the US is around 0.5 per cent, while in high-tax France it is as low as zero. President Biden promised a minimum tax of 25% for the richest 0.01%, but this proposal was never implemented.
As a result, inequality in America has deepened even further, with the most recent data showing that the richest 1% now own 31.4% of all-American wealth, more than the poorest 90% of the population. Between 1975 and 2018, the wages of middle-income American adults grew at less than 1/3 the rate of GDP growth, while the rich saw their incomes grow almost twice as fast as GDP.
In these circumstances, the Observatory proposes the introduction of a single global tax on billionaires, which would close the channels of evasion through the registration of assets offshore. The emergence of such a tax at a rate of 2 per cent would raise almost $250 billion. In early 2023, the UK charity OXFAM proposed a global 5% tax on multi-millionaires – it estimated that the world’s richest 1% earned more than all other people in 2022. Under these proposals, a 5% tax on the income of billionaires could generate $1.7 trillion for the world. This would be enough to lift 2bn people out of poverty, as well as creating a fund to help end world hunger.
According to a report by the FAO – the UN food agricultural organisation (September 2023) about 42% of the world’s population – more than 3.1 billion people could not afford a healthy diet in 2021 and the level of hungry people increased by 122 million in 2022.
Against this backdrop, the annual session of the International Monetary Fund and World Bank in Marrakech noted that many developing countries, including Egypt, Ethiopia, Ghana, Ghana, Kenya, Pakistan, Sri Lanka, Tunisia, Ukraine and Zambia are teetering on the brink of default or have already declared default. In this regard, there has been a proposal for a 3 per cent tax on the main oil-exporting states – UAE – $119 billion, Qatar – 116, Kuwait – 98, Norway – 174, Saudi Arabia – 311. this could generate $25 billion a year.
In 2009, advanced economies pledged to channel $100 billion to less developed countries by 2020, as aid to the most vulnerable and affected by the effects of climate change. However, this pledge has not been honoured.
The West’s unwillingness to honour its promises during the Covid-19 pandemic is a divisive factor in the global world, but it is not the only one.
A similar breach of trust was another reaction to the climate crisis. At the 2015 climate conference in Paris, Western powers renewed their commitment to mitigate and adapt to climate change in developing countries. In effect, low-income countries are borrowing money with interest to pay for the damage caused by wealthy Western nations.
The balance of power is now shifting: in August 2023, the BRICS, which was created in 2009, is enlarged to 11 nations.
On a purchasing power parity basis, Brazil, Russia, India, China and South Africa (joined in 2011) had a combined GDP of over €40 trillion in 2022, while the G7 countries – the US, Canada, Japan, Germany, France, the UK, Italy – had a combined GDP of €30 trillion. According to Thomas Piketty the world’s GDP totals €120 trillion – just over a thousand euros a month on average for about 8bn people. Differences in average national per capita income remain large: almost 3 thousand euros a month in the G7 countries, a thousand euros a month in the BRICS countries, and less than 200 euros a month in sub-Saharan Africa.
The BRICS countries are increasingly raising the issue of a new means of international settlements: whether it will be a single currency of the BRICS countries, a currency basket or mechanisms to synchronise national currencies in the new trade and economic space. This is currently being discussed by experts, and it is important that payment means or systems never again become a weapon in the hands of a group of “favoured” countries or players.
Countries of the Global South are now more resolutely raising the issue of reparations for years of colonial domination. Many of these States have accumulated a large pile of bills of exchange, and it is unlikely that any leniency will be forthcoming in the final reckoning.
Veniamin POPOV, Director of the Centre for Partnership of Civilisations, MGIMO (U) of the Ministry of Foreign Affairs of the Russian Federation, Ambassador Extraordinary and Plenipotentiary, Candidate of Historical Sciences, especially for online magazine “New Eastern Outlook”.