Commodity tax proposed to fund 'Bank of the South'

Ivory Coast's president has proposed introducing a special tax on developing countries' exports of raw materials like oil and cocoa to finance a "Bank of the South" to fight world poverty.

Hosting a meeting of "G77" developing nations and China in the Ivorian capital, President Laurent Gbagbo said his plan would fund the worldwide expansion of a bank of the same name set up last year by Venezuelan President Hugo Chavez.

"We must tax raw materials ... per barrel of crude oil or tonne of cocoa for example, and create a Bank of the South," Gbagbo said in comments broadcast on Wednesday by Radio France International.

"This is the idea Chavez has already had, but he has done this for Latin America. We need to extend this across the whole South, with one in Latin America, one in Africa and one in Southeast Asia. This is the idea," Gbagbo said.

He said the African bank's headquarters should be in Ivory Coast's purpose-built capital Yamoussoukro, a city of broad avenues and immense buildings, where this week's G77 meetings are being held.

Seven Latin American nations created a "Bank of the South" in December after Chavez campaigned for years for an alternative to U.S.-dominated multilateral institutions like the World Bank.

The Latin American bank is set for launch this year, with $7 billion in capital underwritten mostly by Brazil and Argentina to fund economic and social development projects.

But contrary to Chavez's wishes, it will not be a lender of last resort to replace the International Monetary Fund, the sister institution of the World Bank.



FOOD STABILISATION FUND

Africa already has a continental development bank, based in Ivory Coast's main city Abidjan. But Gbagbo's relations with it have been tense since it evacuated its headquarters because of a brief civil war in 2002/2003. The bank has not yet returned.

Ivory Coast also owed the African Development Bank more than $500 million in loan arrears at the end of 2007, more than any other country, the bank's annual report said.

Gbagbo did not detail how the proposed new taxes would work.

Ivory Coast is the world's top cocoa grower and already levies a range of charges on beans exported.

The levies are mostly a government tax but include fees for industry bodies and cocoa development. They amount to more than 20 percent of current international futures prices LCCU8.

However, addressing the G77 meeting on Tuesday, Gbagbo said farmers' priority should be growing food, not cash crops.

He blamed the global food crisis on a "19th century" economic model in which "non-industrialised countries are meant to meet the needs of industrialised countries" and suggested a global mechanism to avoid wild fluctuations in food prices.

"We could ask the United Nations to set up a stabilisation fund for food products," Gbagbo said.