South Centre side event debates developing countries’ views on the FfD process and its linkages with Agenda 2030
The UN’s Third International Conference on Financing for Development (FfD) took place on 13-16 July 2015, in Addis Ababa, Ethiopia. This conference sought to assess progress made in the implementation of commitments from the Monterrey Consensus (2002) and the second FfD conference in Doha (2008), to address new and emerging issues and to reinvigorate international development cooperation. Developing country delegates debated the achievements, challenges and failures of the FfD process at a side event organized by the South Centre. Below is a summary of the meeting by the South Centre delegation.
By Adriano José Timossi and Manuel F. Montes
On the first day of the Third UN Conference on Financing for Development (FfD), high level developing country representatives debated views on the role of the FfD process in the post-2015 development agenda implementation. The event organized by the South Centre on the theme “Developing Countries’ Perspectives on Financing for Development and the Linkages to the Post-2015 Development Agenda” took place on 13 July on the sidelines of the Third International Conference on Financing for Development in Addis Ababa, Ethiopia. The programme included key authorities on the topic, including Dr. Carlos Lopes, Executive Secretary, United Nations Economic Commission for Africa (UNECA); Dr. Manuel Montes, currently Senior Advisor on Financing for Development at the South Centre; Mr. Raymond Landveld, Permanent Mission of Suriname to the UN in New York and lead coordinator for FfD3 negotiations of the G77 and China; Mr. Puneet Agrawal, Joint Secretary (UNES), Ministry of External Affairs of the Government of India; and Ambassador Carlos Cozendey, Undersecretary-General for Economic and Financial Affairs, Ministry of Foreign Affairs of Brazil. The meeting was moderated by Ms. Bhumika Muchhala, Third World Network.
Dr. Manuel Montes, South Centre, recalled for the participants that when the FfD process began with the Monterrey Consensus in 2002, one of its key purposes was the expansion of an international cooperation that increases the flow and stability of financial resources for development. Nonetheless, it has not happened and there are still greater shortfalls in achieving ambitious goals of the “Monterrey Consensus”.
FfD’s substantive structure had been organized into six chapters of “leading actions,” which signifies the key areas where developing countries face both obstacles and opportunities in mobilizing financial resources to sustain long-term investment in new economic activities critical to promoting structural change. These six chapters deal with domestic resource mobilization, foreign direct investment and portfolio flows, international trade, official development assistance, external debt, and systemic issues.
According to Dr. Montes, the 7 July 2015 draft outcome document of the Addis conference which later became the final text could only be understood as the outcome of a failed effort to expand international cooperation, a failure that can only be seen as relocating the international community farther away from the FfD’s own objectives. Moreover, given the developed countries’ advocacy for the Addis outcome’s candidacy as the main – if not the sole – means of implementation (MOI) for the 17 sustainable development goals (goals) and 169 associated goals by 2030, the contents of the 7 July draft are almost a guarantee of failure in meeting these goals.
Dr. Montes listed outstanding issues which appear to be either unaddressed or inadequately addressed in the proposals. These are: international cooperation in tax matters; harnessing private sector risk taking and innovation to development priorities; international rules, including in trade, that enable development efforts; ensuring the external debt problems do not cause development reversals; restructuring the global system so that it works for development (systemic issues).
Dr. Carlos Lopes, Executive Director of UNECA, spoke on uniqueness of the Addis Ababa conference on FfD which would be crucial for the successive events namely the SDGs and the climate agreement taking place later in the year. He stressed the need to address fairly the universality of the Post-2015 Development Agenda with the reality of the different levels of development. Speaking on sustainable development, he highlighted that the three dimensions must be effectively integrated and not considered in different layers, speaking on the “cappuccino paradox” as an example. The Executive director of the UNECA said that in times of crises, it is evident that environmental and social dimensions are sacrificed to the benefit of the economic pillar. He said that there has been no new financial commitment in the text as a negative side of the text. It only has policy recommendations which will increase even more pressure on domestic resource mobilization in developing countries. He also alerted to the growing risk of double counting of climate finance as ODA and they should be maintained as two different tracks of funding.
Mr. Lopes however welcomed the proposal to substantially reduce illicit financial flows by 2030 with a view to eliminating them. “This is an issue very dear to us,” he said as $50-60 billion a year is taken away from the African continent. He also spoke on the need for tackling the issue of debt restructuring, absent in the text, contrary to Monterrey and Doha FfD conferences and the need and means for a strong agenda for industrialization of Africa as one of main outcomes of FfD for the African continent.
Dr. Lopes explained that for Africa the ultimate means of implementation of sustainable development itself is industrialization as expressed in the AU-ECA program Africa 2063. From the earliest days of the negotiations toward the sustainable development goals, African countries had arrived at an African Common Position, many of whose propositions are in the SDGs. He asked, is it untimely to try to industrialize when the planetary boundaries are closing because of climate change? Dr. Lopes said that on the contrary it is a fortuitous time for Africa to seek to industrialize. First of all, many of Africa’s environmental problems precisely emanate from its lack of industrialization, especially noting that extractive industries are a big economic sector in the continent. It is also the case that technology is increasingly aligned to make it more feasible for Africa to industrialize with the rapid decreases in the cost in clean energy supply. Finally, if the issue is poverty and inequality, there is no other path but industrialization for Africa.
Ambassador Cozendey of Brazil highlighted that the Addis Ababa conference was mainly focused on conceptual issues as there has been no new money on the table. He said that convergence between the FfD and the Agenda post-2015, in the format proposed by the developed countries was not adequate. The integrity of the FfD process should be retained and it must have its own follow-up mechanism. Brazil is of the view that the two agendas would be integrated in a follow-up mechanism to be announced in Addis Ababa and in New York. FfD can contribute a mechanism to see, for instance, where the SDGs are not working, where financing is insufficient. The two mechanisms would than feed into the High Level Political Forum. He said that the SDGs would indicate which goals would have its implementation threatened and the FfD follow-up could discuss and stimulate efforts on how to mobilize more resources for its financing. Brazil, one of proponents of the tax committee saw this initiative as an important element to improve international cooperation in the tax issue. This critical importance of the issue has been recognized since Monterrey, which recognized that developing countries need to have their own resources for development. As of today, we do not have such a forum where developing countries could engage discussion on this issue, he said.
Raymond Landveld, Permanent Mission of Suriname and lead coordinator for FfD3, presented an overview of the position of the G77 and China for the conference to the latest text presented by the co-facilitators. The delegate from Suriname highlighted the importance of the conference in setting a strong mechanism for international cooperation. He focused on some of the key elements under negotiation. On tax cooperation, he reaffirmed the voice of the largest negotiating group of the UN in defending the need for an intergovernmental commission of the UN and the need to create an environment in which developing countries could mobilize more domestic resources for their own development. An intergovernmental tax mechanism would give developing countries a voice in rule-setting in the global economy and on systemic global governance, a pledge made so long ago.
Landveld said that G77 and China wanted a strong commission to follow-up on the FfD process but it has not happened yet but with the new negotiating text, there is an opportunity to install a follow-up and review forum. This forum will be placed under the auspices of the ECOSOC and will articulate with other existing mechanisms such as the existing dialogue with the Bretton Woods Institutions, UNCTAD, and the WTO.
Landveld defended the call of the G77 and China for incorporating the principle of common but differentiated responsibilities (CBDR) in the final outcome of the Addis conference. He said that it was natural that it should be included in the text as it comes from the inclusion of environment across the SDGs. As the FfD process is integrated with the agenda on sustainable development, there was a clear need to incorporate the Rio+20 principles. The FfD process is the basis for the Post-2015 Development Agenda. Landveld proposed that FfD is the fridge with the food stuff in it, and the post-2015 development agenda is the menu of what needs to be created or cooked. FfD must provide the ingredients that are needed to achieve the sustainable development goals. Nevertheless, the Surinamese delegate did not agree with proposals for a full convergence of the two processes within the new agenda of the SDGs, with an end-date of 2030. The FfD, on the other hand, is a forum for debating policies and mobilization of resources required to promote development, a priority which will not end in 2030, he said.
Puneet Agrawal of India said that the Addis FfD Conference takes place a time when the international community is struggling to genuinely revive the global partnership for development. The poor performance of developed countries to step up to the plate in doing their share needs to be corrected. We are, of course, disappointed with the overall lack of ambition in North-South aid, the fact that several Northern governments have found it impossible to fulfil, let alone exceed their aid commitments. More aid is crucial if developing countries are to make headway. On the issue of taxation, the ongoing discussion indicates sadly that the notion of shared responsibility is mere rhetoric and that its proponents have no intention of making it a practice. A concrete, dedicated institutional time and space to the follow-up of FfD outcomes is of critical importance. W e hope therefore that at the stage of implementation of the outcomes of the FfD and the post-2015 development agenda there will be mechanisms created that ensure an adequate level of political accountability.
Adriano José Timossi is a Senior Programme Officer of the Global Governance for Development Programme (GGDP) of the South Centre.
Manuel F. Montes is Senior Advisor on Finance and Development of the South Centre.
