Transparency

When I took on this job, I didn’t expect to be writing about G8* summits.

But I was asked to speak to an audience by the Institute of Certified Financial Managers, and I was wondering what to say. Like many of my fellow bloggers, I turned to the G8 Summit which we were about to host. The headlines were trade, tax, transparency. These turned out to be very relevant for my prospective audience.

When I had first read our collective instructions to support the event, I didn’t think they applied to Belarus. (And in Russian or Belarusian the alliteration is lost in translation: so торговля, налог и прозрачность, or гандаль, падаткі і празрыстасць.)

Belarus is in a different set of international organisations from the United Kingdom. The outlook and priorities of our respective governments can be very different.

We’ve used the G8 (and other international organisations) to nudge along the development of what we call the “rules-based international system”. This means agreeing a common system of organisations, treaties, conventions and other international agreements to limit the possibilities of disputes and conflicts between nations.

So what of the themes of this year’s G8 Summit?

Trade has always been important to Britain. The depression of the 1930s was made worse by countries raising tariffs individually, instead of collectively working to reduce trade barriers for the collective good. So to help economies recover from the recent economic difficulties, we want to cut trade barriers and stimulate growth for all countries.

Trade is currently important to Belarus too. It has joined a Customs Union with Russia – another G8 member – and Kazakhstan.

However, Russia has also just joined the World Trade Organisation whose primary purpose is to “open trade for the benefit of all” as its mission statement proclaims. Its predecessor (the GATT) was set up immediately after the Second World War precisely to avoid the same mistake of countries raising tariffs competitively during economic crisis.

Russia wants its Customs Union partners to apply WTO rules. So Belarus is now keen to join the WTO too.

Tax is important for all governments.  It is the major source of its income – its wage or salary, if you like. In today’s global economy, companies and individuals can transfer vast sums rapidly and evade paying tax where they earned their income. So we want better international co-operation to stop tax evaders moving profits around the world. This should benefit all countries in time.

Transparency is the important link. Without transparency on who owns what company or land, and about where money flows from and to, governments cannot fairly tax their people. And to sustain long term, productive partnerships especially across borders, businesses need to know and trust who they are dealing with.

Organisations like the ICFM work to apply International Financial Reporting Standards for their businesses and their customers’ businesses. So what a balance sheet says about a company based in Minsk, Manchester or Manila should be understood by anyone – or anyone who understands balance sheets.

I said all this in a slightly different way to the audience. They seemed to like the message. But I was only telling them what they already knew – that they play an important role for the well-being of their employers, their businesses and their country.

* For Belarusian readers who may not be aware of it, the G8 was established as the G7 in the 1970s by a group of the largest industrial nations, in response to the economic crises of that decade.  Russian joined in the 1990s as it developed a more market oriented economy.