CIL Group Ltd

During a keynote speech at the World Economic Forum in Davos, French President Nicolas Sarkozy once again advocated the introduction of an ‘infinitesimal’ tax on financial transactions to finance development aid in order to avert a future crisis. While making clear that this tax is his preferred choice, President Sarkozy nevertheless reiterated that he remains open to other sources of innovative financing.

While acknowledging that there exists much disagreement and opposition to the tax, President Sarkozy emphasized the need to urgently find a consensus. Alluding to the decision made by the world's major countries in Copenhagen to pay to the poorest countries USD120bn a year from 2020, Sarkozy warned that there is no choice, pointing out that “all of our budgets are in deficit” and that it would be difficult to imagine that this money will come from state budgets. There is a clear need to find innovative sources of financing, he continued, insisting that this is not a choice, it is unavoidable.

Consequently, Sarkozy proposed establishing a “little group of leader countries” in order to put in place these finances and to keep the promises made. Sarkozy stated his conviction that in several years, other countries will follow suit.

Concluding his address, Sarkozy warned that doing nothing to support poor countries will feed fundamentalism, a sense of injustice and with it terrorism.

The French President now aims to defend the idea of "innovative financing" in Addis Ababa during the forthcoming summit of the African Union.