arch/ive/ief (2000 - 2005)

This article was found Jospin backs moves for cross-border capital tax
By Robert Graham in Paris
Published: August 28 2001 20:11GMT

Lionel Jospin, French prime minister, has given in to pressure from an increasingly vocal anti-globalisation movement and threw his weight behind one of its main demands - moves to impose a 1 per cent levy on cross-frontier movements of capital, known as the "Tobin tax".
The Socialist premier said in a television interview on Tuesday night that France would be making an initiative at next month's meeting of EU finance ministers (Ecofin). At the request of Belgium, a discussion of the Tobin tax - named after its originator James Tobin, the liberal US economist - is already on the Ecofin agenda.
This is the first time the leader of a big industrial nation has accepted the idea of such a tax on capital movements as part of government policy. If France does press for the tax it would be unlikely to be accepted by other European governments. Proceeds would be used to aid development of poor countries.
Mr Jospin's move goes against the advice of Laurent Fabius, finance minister. In August 2000, Mr Fabius sent a report to the French parliament rejecting the idea of the Tobin tax as impractical. He argued it would destabilise foreign exchange markets, be difficult to implement and would not hit the speculators it was designed to curb.
But on Tuesday night Mr Jospin said he was aware of the message coming from the anti-globalisation movement. He recalled he had endorsed the idea of taxing trans-frontier capital movement in his 1995 abortive campaign for the French presidential elections.
His move followed a call to state his position on the Tobin tax from Bernard Cassen, the head of Attac-France, the organisation whose principal aim is to campaign for its imposition. In a letter sent on Monday Mr Cassen also sought a meeting with the prime minister ahead of the Ecofin gathering.
Mr Jospin has shown a growing interest in the issues raised by the anti-globalisation movement, aware this sector of the electorate needs to be cultivated ahead of next year's presidential and parliamentary elections. But until last night the government had been guided by the cautious counsels of the finance ministry. This same caution was evident in July at the Group of Seven leading industrial nations' meeting of finance ministers in Rome, where the Tobin tax was discussed but not put formally on the agenda to avoid giving it heightened credibility.
The government nevertheless felt forced to reassess its position in the light of the G8 summit of industrialised nations in Genoa in July. The riots by anti-globalisation protesters and their brutal treatment by Italian security forces pushed Mr Jospin closer to their views on the growing rich-poor divide in the global economy.
The lessons from Genoa have led to the first tentative moves by France to position itself as the diplomatic spokesman for the anti-globalisation movement. They have prompted Mr Fabius to search for an alternative and more practical tax to ease pressure for action from the anti-globalisation movement, which is backed by some 170 deputies in the French parliament. Last week in a magazine interview, Mr Fabius said he was considering a tax on arms sales, whose proceeds would be distributed among poor countries.