FINANCING FOR DEVELOPMENT
REPORT ON THE FOURTH AND LAST PREP COMM IN NEW YORK
By Nika Greger, Heirnich
Boell Foundation Washington Office
At the final Prep Comm for the Financing for Development Conference
scheduled to take place from March 18-22, 2002 in Monterrey, Mexico,
government delegates agreed after long and difficult negotiations
on a common outcome document which heads of states and governments
will adopt later on in March 2002. The official negotiation process
ended long after the official end of the Prep Comm at 11 am on Sunday
as government officials were not able to find an agreement on a
common text earlier. Unfortunately, the so-called Monterrey Consensus
agreed to in New York does by no means look like an improvement
on the way to creative thinking and linking the international finance
agenda with the goal of achieving equitable and sustainable development.
Still, there might be some hope that at least some of the initial
spirit of the FfD process can be revived, if not at the official
part of the conference in Mexico then at the Global NGO Forum which
will take place in Monterrey as well from March 14-18.
The Monterrey Consensus
The FfD process started off as what seemed to be a chance to provide
new solutions for the permanent financial crisis of the countries
of the South. Topics on the agenda go from the future role of public
and private capital flows to the institutional reforms within the
world financial system. Quantity as well as quality of the development
assistance should both be addressed to promote in the end a sustainable
development in the countries of the South. Since the 1960s, if not
earlier, issues regarding financing for development are among the
most controversial within the South-North discussion. Especially
government officials from developing countries have demanded the
international conference on FfD, which should deal with the future
of development assistance mainly because of reasons such as the
ongoing decline of official development assistance (ODA), the uncontrolled
international flows of private capital or the increased need for
regulation and harmonization within the global monetary and financial
system.
At the fourth and last Prep Comm, it was very clear that not much
of the original goal was left as neither the outcome document nor
the negotiation process which took place largely without the opportunity
for NGOs to participate actively can be assessed as an improvement
on the way to build a social, just and ecological sustainable life
for everybody on this planet.
Still, there are some positive outcomes as during the negotiations
in New York, delegates quickly agreed on the central role of domestic
resources for development. Therefore, the Monterrey Consensus stresses
the importance of good governance, democracy and human rights, an
efficient tax system and a functioning domestic finance sector.
Broad account was taken of the demand of the USA for the entrenching
of its three basic principles of "peace, freedom and capitalism",
at least the latter was replaced by "market-oriented policies".
Furthermore, industrialized and developing countries agreed on
increased promotion of foreign direct investments (FDI). The text
now includes demands from industry to improve particularly the investment
climate in developing countries, so that companies can operate more
"efficiently and profitably". However, the EU failed in its efforts
to additionally include the results of the WTO ministerial conference
of Doha regarding trade and investment. The text no longer refers
to the negotiations called for by the EU in the WTO on a multilateral
framework on FDI. Under pressure of the G 77, references to the
OECD Guidelines for Multinational Companies and the Global Compact
were also deleted. The companies were merely urged "to take into
account" environmental, social, gender and developmental implications
of their undertakings.
Passages on trade were debated with unexpected passion after the
EU here too brought in positions going beyond those of Doha in the
view of the G 77. Ultimately, the text mainly encourages the WTO
members to implement the outcome of Doha.
Until the end, the decisions on Official Development Assistance
(ODA) remained controversial. Numerous proposals fell victim to
the self-imposed enforced consensus and pressure from the US. This
also affected the commitment to an immediate doubling of ODA by
50 billion US dollars, in order to achieve the Millennium Development
Goals (MDGs) as defined in the Millennium Declaration of the Heads
of State and Government in 2000. Instead of agreeing on a binding
timetable to raise ODA, the Monterrey Consensus merely advises exploring
a possible "timeframe".
All passages on financing Global Public Goods were deleted - despite
the active support for this topic by e.g. the French and Swedish
governments. In general, new financing instruments, above all the
Currency Transaction Tax (CTT), were not included in the text at
all. The agreement was only to study innovative financing instruments
commissioned by the UN Secretary General in "the appropriate fora".
In the field of external debt, there was little progress either.
The Monterrey Consensus calls for the immediate implementation of
the expanded HIPC initiative and for worsened growth prospects and
terms of trade to be considered in the assessment of debt sustainability.
Remarkable progress had been made in the FfD discussions on introducing
a fair and transparent arbitration procedure for debt relief - by
analogy with national insolvency law. Ultimately, the only thing
remaining is the recommendation to examine the possibility of an
"international debt workout mechanism".
From the beginning of the FfD process, the systemic issues were
a matter of controversy at the conference. Eventually, the US and
the EU opposed any demands for tangible institutional reforms in
the international financial architecture. What remained were appeals
to involve developing countries more in the decision making processes
of international financial institutions and to strengthen the United
Nations, in particular the General Assembly and ECOSOC. The follow-up
to Monterrey will feature the spring meeting of ECOSOC and the Bretton
Woods Institutions, and the High-level Development Dialogue of the
General Assembly which takes place every two years. The General
Assembly has been expressly given the task of concerning itself
with the development policy coherence and consistency of the international
monetary, financial and trading systems. This could at least be
interpreted as an upgrading of the United Nations over against the
IMF, World Bank and the WTO.
With the outcome document released, the main focus of the FfD process
is clearly visible. True, government officials mainly from EU countries
and members of the FfD secretariat waste no opportunity to highlight
that the FfD conference should be seen only as a starting point
on the way to a much longer and intensive process towards financing
development worldwide. They also stressed the fact that within this
process for the first time in the history of the UN, official stakeholders
such as the IMF, the World Bank and the WTO are sitting together
with governments and civil society around one table to discuss the
future of the international financial structure and the economic
globalization.
Although the FfD process is taking place at the UN, for example
the U.S. delegation left out no chance to call into question the
legitimacy of the FfD process to address the reform of the public
institutions that currently drive the international economic system,
like the World Bank, the IMF and the WTO - a fact that was highly
criticized, especially among NGO participants. While commending
the 'marvelous dialogue and cooperation' that so far has taken place
between those actors and the UN in the FfD process, the U.S. made
clear that demands that threaten those institutions' mandates or
governance structures might drive it away from the process. It seems
to be the U.S. view that the financial and trade institutions are
participating in the process only to bring their expertise, but
that no issues related to their own policies are in need of being
addressed.
During a plenary session at the first week, the US walked out of
the room after having provided a copy of all its text comments to
delegates - a 'nice' way of saying that it was not very interested
in what other delegations had to say. Clearly it would be naïve
to expect that, in a UN forum, the Washington consensus would not
prevail or that the US would reverse its policy in the basement
of the United Nations. But on the other hand it is also clear that
especially NGOs need to rethink their strategies on how to influence
the global agenda by attending those international conferences and
trying to be an equal partner.
NGO involvement
As mentioned before, NGO participation was not well received at
the final stage of the official negotiation process. Delegates met
in small room for so-called 'informal informals' the meeting rooms
sometimes being too small to allow even the participation of all
government officials. As a result, many representatives from the
civil society do not see themselves as partners with equal rights
in an open discussion and decision-making process and, even worse,
they do not see that FfD holds a chance to create a new global structure
with the goal of sustainable development.
In WIDE's, the Network Women in Development Europe's, words: "The
draft Outcome Document contains some rhetoric allusions to a more
equitable and ecologically sustainable view of development (…),
but generally speaking, it is a blueprint to facilitate progress
and profit for those who are already at the controls of economic
and political power. The concept of prevailing "development" strategies
is never really questioned, "development" is equaled with economic
growth and - as a delegate of the Group of 77 pointed out during
the October PrepCom - to an increasing degree with globalization.
With a globalization that is not gender sensitive, ecologically
sustainable and inclusive of civil society, but directed by the
economic interests of Transnational Corporations and hard-core capitalist
groups in rich countries. With a globalization which considers Foreign
Direct Investments as well as speedy commercialization and privatization
of all life on earth as the winning formula to ensure freedom from
poverty and quality of life all over the planet."
A statement from over 40 European NGOs brings the same frustration
into very concrete terms. They agreed on a number of points as a
basis for their expectations of the FfD process which include the
stabilization of international financial markets, an increase of
aid levels and a binding timetable for reaching the UN target of
0.7 percent GNP for ODA, the improvement of the quality and effectiveness
of aid for poverty reduction, a human development approach in measuring
external debt sustainability, a fair and transparent debt arbitration
procedure, an international cooperation on tax matters as well as
their participation in economic global governance and a monitoring
mechanism for the achievement of the Millennium Development Goals
But compared with the final outcome paper it is apparent that none
of the NGO demands is reflected there. Four demands are not being
addressed at all in the final outcome paper, those are the immediate
increase in ODA and agreement on a timeframe, a mandate to the UN
to explore measures to enhance the stability of the international
financial system and explicit reference to CTTs, the evaluation
of regulatory frameworks for trade and investment against their
impact on achieving the MDGs and environmental protection and independent
external evaluations of the performance of IFIs.
Three demands are addressed only in an insufficient manner. These
are the measuring of debt sustainability on the financial needs
of countries to achieve the Millennium Development Goals, and widening
of eligibility for debt relief, a commitment to enter into the designing
of a fair and transparent arbitration process for sovereign debtors
and the reform of the international financial institutions, starting
with a participatory review process of the composition and procedures
of the decision-making bodies.
A number of broader points are no longer included into the FfD
process at all. For example, FfD could have provided the opportunity
for establishing a human rights framework for development. NGOs
further criticized that the final outcome document completely lacks
references to environmental sustainability for development as discussed
in the WSSD process. Other missing points are that the outcome document
+ ignores innovative approaches such as the debate on Global
Public Goods and their financing;
+ fails to confirm a follow-up procedure or any commitment to
implementation for the study of the UN Secretary General on economic
globalization, which is to look specifically at innovative measures
of finance;
+ fails to give a clear role to the UN system in the governance
of global economic relations.
Especially NGO representatives following the FfD process since
its beginning, but also a number of representatives from academia,
think tanks and international organizations are considering the
FfD process and the Monterrey Consensus a political failure. Two
of the most pressing questions are now what can be the message not
only for the Monterrey Conference itself but also for the World
Summit on Sustainable Development in Johannesburg in August/September
2002? Many civil society representatives will see it as their duty
to inform the public as well as the participating stakeholders in
the preparation for the WSSD about the insufficient base for the
financing of sustainable development.
Should NGOs follow the invitation to sit together with governments
and other stakeholders on the so-called Round Tables to discuss
about policies that have already been decided upon without consulting
them or taking their concerns into account? Or should they declare
the whole process as a total failure and raise their voice outside
on the streets? As nothing is eaten as hot as it is cooked, NGOs,
with the end of Prep Comm about a month behind them, decided to
join the Round Tables at Monterrey (see attachment for the names
of the NGO Representatives). Even if most agree, that there is no
real outcome to be expected, NGOs couldn't seem to resist the opportunity
of sitting together with their governments and other stakeholders
around the same table to discuss the future of the world. On the
other hand, it does make a lot of sense to join in at the conference
with officials stressing the point that Monterrey has to be seen
only as a starting point for a long term process. To exclude oneself
from this process might be considered later on as a missed opportunity
to stay engaged into what might become a shift away from the Washington
Consensus to a broad social, ecological and equal development worldwide.
Still, governments shouldn't be let out of the responsibility too
easy as all in all, the Monterrey Consensus is not much more than
the lowest common denominator currently possible in global development
policy-making. The enormous pressure that was built up to complete
a consensus paper by the end of the meeting was surprising to many
present. Apparently, the underlying intention was to try to get
President Bush to participate in the conference. US delegation circles
confirmed this afterwards. It is now expected of the US and EU,
in particular, that they will go beyond the minimal consensus of
Monterrey with unilateral initiatives in order to stand out as development
policy front-runners. This may serve the cause, but such a duel
strategy will undermine multilateralism.
One story at the end: After the decision to hold meetings no longer
in the Plenary but to have informal informals without participation
of stakeholders, the delegate of Santa Lucia interrupted the session
as the representative of the World Bank wanted to take the floor.
If the Prep Comm has decided to no longer allow stakeholders the
floor that would affect the World Bank being one of the official
stakeholders as well. After some tumult, the co-chairs adjourned
the session as they had to ask the legal division of the UN for
advice. Eventually, the problem was solved by the decision that
World Bank, IMF and WTO would only be able to take the floor if
asked by a delegate for technical advice. If nothing else came out
of the Prep Comm, at least everybody learned something new about
rules and procedures for those UN meetings.
Sources
Martin Koehler: The Embarrassment of Monterrey, ACP-EU Courier
Jens Martens: The (Minimal) Consensus of Monterrey, WEED
Brita Neuhold "United Nations Conference on Financing for Development
- Observations and Demands from a gender perspective", WIDE Position
Paper
ends.
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