Is France the real Financial Transaction Tax villain?

Cannes

The standard narrative regarding a Financial Transaction Tax is well-rehearsed: France and Germany would dearly like to introduce such a levy, but they are being frustrated by the British government, which cares more about protecting rich bankers than helping the world’s poor.

But I’ve picked up here in Cannes that some in the charity world do not see it quite like that. Yes, they blame the British (backed up by the US, Canada and Australia) for their obstruction, but they’ve long known that the UK would not change its position on the FTT.  The real object of frustration among some campaigners is now France. They think President Nicolas Sarkozy isn’t pushing the FTT hard enough behind the scenes, despite his commissioning of Bill Gates to conduct a heavyweight report on the subject for this G20 meeting.

“They’re just going with the flow. They’re using the Anglo-Saxon objections as an excuse not to push it forward,” a source in the charity sector, who is close to Gates, told me.

The same source told me that if Sarkozy truly believes that a FTT is “morally essential”, as he described it yesterday, he would move ahead with such a levy with like-minded countries, despite the refusal of the Brits and others to join in:

“We always knew that the UK and others would object. But there’s no reason why France and Germany could not take it forward without them. There is a coalition of the willing there.”

The concern is that Sarkozy will simply use the FTT for political posturing and point scoring. And the charity world, supportive as it is of the levy, recognise that Britain is doing a much more impressive job in meeting its international aid commitments than France and many other countries that back the FTT.

So why would Sarkozy be soft pedalling the FTT? One cynical explanation here is that when the former IMF chief, Dominique Strauss-Kahn, was gearing up to run for the Elysee, Sarkozy needed some way of demonstrating his heavyweight financial credentials. But now that DSK has fallen away, according to this view, Sarkozy is much less bothered by the whole FTT idea.

The commitments in today’s G20 communique on the FTT, particularly regarding next steps, should give us an indication of precisely how much Sarokzy really cares about the levy.

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