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15th Apr 2024

Global North-South inequality — can the EU do anything?

  • EU commissioner for international partnerships, Jutta Urpilainen, at the event. Some 3.4 billion people (nearly half of the world's population) live on less than €5.20 a day (Photo: EC - Audiovisual Service)
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Global inequality is growing, and the future of the world will depend largely on relations between North and South, said MEP Udo Bullmann (S&D) at a high-level panel in the European Parliament on Tuesday (10 October).

"Half of the global wealth is concentrated in the hands of a small coup of the richest, while 3.8 billion people live in absolute poverty," Bullmann stressed. "It is not defendable, because it is so deeply unjust".

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Food insecurity, climate change, the Covid-19 pandemic and most recently the war in Ukraine have only exacerbated existing inequalities — and while they affect everyone, they don't reach everyone equally.

The so-called 'polycrisis' is hitting the poorest hardest. Nearly half of the world's population live on less than $5.5 (€5.2) a day, according to Oxfam.

Women, young people and people with disabilities are also disproportionately affected. Globally, women still earn 24 percent less than men and accumulate about 50 percent less wealth.

"We must overcome one of the major challenges our world is facing, and that is increasing inequalities," said EU commissioner for international partnerships, Jutta Urpilainen.

And because inequalities are a multi-dimensional problem, reducing them means [for the EU] investing in people and the planet, reforming the global financial architecture and promoting inclusive and participatory democracy, according to Urpilainen.

"To reduce inequalities, we need fair and just economy," the commissioner said. "When everyone pays their fair share, countries have more capital available to invest in education, public healthcare systems and strong social protection".

The reality is different. A recent study by the Greens in the European Parliament estimates that the EU's coffers lose up to €59.5bn a year due to tax avoidance by the super-rich in using jurisdictions with little or no tax scrutiny.

The world's wealth and income is also highly-concentrated. In 2022, the world's richest one percent, those with more than $1m, accumulated nearly 46-percent of total wealth.

Oxfam estimates that an annual wealth tax of up to five percent on Europe's billionaires could raise nearly €250bn a year, lifting two billion people out of poverty.

But for now, the commissioner said the EU is helping continents such as Africa to improve their fiscal policies (as some of these countries spend large amounts of their GDP on borrowing costs) and promote domestic resource mobilisation.

Urpilainen also stressed the need to reform the global financial architecture, including the multilateral development banks. "More concessional financing [generally including below-market interest rates] should be made to the most vulnerable partners," she said.

Within the EU's room for manoeuvre, civil society organisations have stressed the need for specific policies (e.g. on wealth distribution) and binding targets or specific inequality lines to set levels of ambition that can be visualised and achieved through their programmes.

"Reducing inequalities goes much further than poverty reduction," director of CONCORD, the European Confederation of NGOs working on sustainable development and international cooperation, Tanya Cox highlighted.

In addition, Cox noted that the funding landscape is changing, and not in their favour, with fewer and much larger calls for proposals in the EU.

As a result, even networks have to join forces with other networks to win these proposals, and resources are not always available at ground level, leading to the outsourcing of programme management and creating something of a "black hole" in terms of the transparency of these EU funds.

"We can't do our job of supporting you in reducing inequalities as the space to do this is shrinking very fast," Cox warned.

The task is also complicated by demographic changes in countries such as those in Africa, where, unlike Europe's ageing population, a large proportion of the population is under the age of 35.

"The best ways to tackle inequalities in the long-term is investing in education," Urpilainen said. "If they don't have access to [quality] education, it is difficult to have access to jobs".

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