Memorandum submitted by BOND
BOND is a network of over 250 development non-governmental
organisations (NGOs) in the UK. BOND's membership reflects the
huge diversity of UK civil society's response to international
poverty and injustice. This submission is a collective position
and cannot be taken to represent the views of any individual organisation.
It should be read as a complement to the submissions made by individual
BOND has been co-ordinating UK NGO work around
the Financing for Development Conference (FfD) and campaigning
on the 0.7 per cent target for overseas development assistance.
As such, BOND welcomes the Select Committee's interest in the
Financing for Development Conference and aid quantity. In this
submission BOND aims to assess the achievements of the Financing
for Development process.
The idea for a UN "Financing for Development"
conference originated in long-term G77 pressure for a UN conference
to agree on the sources and uses of the resources required to
implement the commitments entered into at the UN conferences of
the 1990s, and as a response to the Asian financial crisis. During
the process of negotiation the focus narrowed down to discussion
of the means to generate the financial resources required to achieve
the Millennium Development Goals (MDGs).
The Financing for Development (FfD) process
was supposed to reach a consensus on how all sources of financedomestic
resources, foreign direct investment, trade earnings, debt relief
and overseas development assistancecan best be mobilised
for poverty reduction and agree a document which sets out actions
to better mobilise all these financing sources and to improve
global economic governance. FfD was an important opportunity for
world leaders to agree a new partnership for development, in which
developing countries agree to put in place the appropriate policies
to achieve economic growth and poverty reduction, and developed
countries undertake to support these efforts through providing
the necessary market access, debt relief and aid.
BOND members recognized the need for the constructive
discussion on how to finance the Millennium Development Goals
and supported the Financing for Development process. But these
high hopes were disappointed, the negotiation process failed to
agree an action plan and build a strong partnership between developed
and developing countries to meet the MDGs.
Negotiations for the Financing for Development
conference were based on the Zedillo Report, prepared by a high
level panel of experts at the request of the UN Secretary General.
The report estimated that financing the Millennium
Development Goals would cost around $50 billion extra per year
until 2015 (The World Bank estimate was between $40-60 billion).
Many BOND members have challenged these figures, estimating that
the cost would be closer to an additional $100 billion per annum.
The Zedillo report made some innovative suggestions
for meeting this financing gap such as acknowledging and paying
for global public goods (including global environmental services,
the control of communicable diseases, education and others); exploring
innovative sources of international finance for development (including
a carbon and currency transaction taxes); workers rights in development
(including the extension of pensions and unemployment insurance
schemes); and reinforcing the rule of law, accountability and
transparency among governments and businesses.
Less innovative but equally important were initial
calls for commitments and time frames to deliver on the MDGs:
increasing ODA to 0.7 per cent of GNP; opening markets to developing
countries exports; expanding debt relief; and increasing developing
country leverage in international agencies.
Whilst the final text of the Monterrey declaration
reflects the existing global balance of power rather than a new
consensus, the original text in the Zedillo report will remain
as blueprint of how sufficient resources could have been raised
to meet the Millennium Development Goals. It will show how the
Financing for Development Conference was a missed opportunity.
The report itself provided a catalyst for discussions, particularly
on innovative sources of development finance and global public
Many commentators complain that the scale of
the Financing for Development agenda - in part defined by the
Zedillo reportwas too broad to lead to concrete commitments.
However any response to the challenge of financing the Millennium
Development Goals must be multi-faceted and developing countries
that are on track to meet the MDGs have had to use a combination
With sufficient political will it would have
been possible to make significant progress on the recommendations
made in the Zedillo report, but that commitment was lacking. Consensus
was achieved by both ignoring some key issues of concern to middle
income and developing countries and by reducing the outcome document
to non-committal language and content.
During the negotiation period, 11 September
and the Argentinian financial crisis focused public attention
and political rhetoric on the importance of tackling issues of
poverty and financial instability, nevertheless the Zedillo proposals
were increasingly watered down and the ambitions for the conference
were scaled back.
Some developed country governments became concerned
that FfD might become antagonistic and unsuccessful if developing
countries devoted too much energy to pressing for progress on
debt relief and reform of the international financial architecture,
which they would not be able to accept. The lack of progress on
these key areas stemmed from the prevailing opinion of some richer
countries that a United Nations Conference was not the appropriate
arena for discussions on these issues. This overlooked the fact
that for many developing and middle income countries their lack
of influence in these institutions and the impact of WTO and Bretton
Woods policies on their economies is crucial to the financing
of their development strategies. The intransigence on these issues
by developed states (particularly the US) limited the success
of the conference early on.
By the end of the third preparatory meeting
and after the first facilitators draft was rejected it became
clear that the conference was not going to agree a consensus document
capable of responding to the challenges faced by developed and
developing countries in financing development. Senior United Nations
officials began talking of Monterrey as the beginning of a dialogue
to be continued at the World Summit in Sustainable Development,
thus tacitly admitting failure. Financing for Development had
been intended as a forum to provide the necessary resourcesit
was supposed to be about delivery rather than starting a process
With Chancellor Gordon Brown advocating a doubling
of global aid and instituting a global "Marshall Plan"
the UK appeared to be one of the more progressive voices in the
Financing for Development process.
The UK was actively involved in negotiations
on the collective EU position, particularly on the importance
of an enabling environment in developing countries and improved
aid effectiveness. The UK Government aimed to steer debate away
from areas on which they felt agreement was unlikelyreform
of the international financial architecture and debt relief outside
the current HIPC framework. The UK Government position was also
conservative in relation to global public goods and innovative
sources of development finance in comparison with some of its
European counterparts. BOND members were disappointed with the
lost opportunity to address these critical issues within the Financing
for Development framework.
Despite the Chancellor's public calls for increasing
aid levels, at EU level UK Government representatives were unable
to push for more substantial increases than those proposed by
the Commission due to the constraints of the comprehensive spending
review. To match strong words with action, BOND calls on the Chancellor
to keep his promise on aid levels and set a timetable to meet
the 0.7 per cent target.
The DFID-Treasury Case for Aid paper aimed to
persuade the US administration that aid works. BOND would welcome
a broader response that concentrates not only on the importance
of recipient country policy but also the quality of donor aid
and delivery mechanisms. BOND members and their Southern partners
have considerable experience of good (and bad) donor practice
on aid on which DFID can draw.
The EU, especially the Spanish EU presidency,
have been roundly criticised for being weak as a bloc, ineffectual
in alliance-building and content to hide behind the intransigence
of the US. Keeping the USA on board was an overriding goal for
the EU, apparently worthy of even sacrificing its own positions.
The EU failed to act as an honest interest broker
between the developed and the developing states. There was also
a failure by the EU Presidency, Spain, to engage in a constructive
dialogue with civil society and so profit from the wealth of experience
that NGOs can provide.
The lack of transparency in the EU coordination,
the Council and Presidency, further impaired the ability for NGOs
to input to the EU deliberations. The EU's credibility was also
seriously damaged by the European Commission's attempts to insert
its disputed re-interpretation of the WTO Ministerial agreement
of Doha into the Monterrey text, against the wishes of the G77
On overseas development assistance, the EU Development
Council of 8 November 2001 took the unprecedented step of giving
the European Commission a mandate to "monitor the progress
of, and organise a dialogue with, EU Member States on setting
a timetable for meeting the 0.7 per cent GNP to aid target".
Member state ODA had previously never been a subject for discussion
at the European Council and Member States had previously challenged
the competence of the Community in this area.
The European Summits of Gothenburg and Laeken
reinforced the EU's commitment to meeting the 0.7 per cent target.
However, achieving a EU consensus on how and by when the target
would be reached proved to be much more arduous than anticipated.
The Director General of DG Development, Koos Richelle, visited
all Member States in order to evaluate their development aid record
and gauge their commitment to 0.7 per cent. He encountered significant
resistance from a number of countries opposed to the idea of setting
a EU-wide calendar for meeting the target. After substantial negotiations
a watered down version of Commission proposals to increase EU
average aid levels to 0.39 per cent of gross national income by
2006 were accepted. The EU package as a whole was weak, and the
UK negotiators failed to achieve consensus on further untying
at the EU level.
The negotiations at Preparatory Committee meetings
were consistently marred by the intransigence of the US negotiators,
who even opposed reference to the Millennium Development Goals
and the 0.7 per cent target for overseas development assistance.
The US delegation worked hard to dilute virtually every proposal
to no more than vague recommendations, whilst re-iterating that
if developing countries committed only to peace, freedom, the
rule of law and capitalism, then development would surely follow.
The dominance of the US in international arenas
is a matter of considerable concern. The UK Government's policy
of constructive engagement must not compromise its commitment
to poverty reduction and multilateralism.
The involvement of the World Bank, IMF and World
Trade Organisation in the Financing for Development process did
not fulfil its potential. During the negotiations attempts by
developing countries and NGOs to include language on reform of
financial institutions and the WTO were rebutted by the EU and
US. The primacy of these organisations and the weakness of the
United Nations in relation to global economic governance remained
unaltered during the negotiating process and in the Consensus
agreement. Indeed, the Monterrey Consensus fails to recognize
that the international financial institutions are ready to discuss
their policies and to correct past failures.
NGO involvement in FfD preparatory process was
modest. The broad nature of the agenda was often beyond the remit
of individual NGOs and coordination of efforts took place both
at the UK and the EU level to maximise impact. Many heavyweight
NGOs and NGO networks decided early not to invest in the FfD process
assuming their views would have little chance of influencing the
official proceedings; furthermore, the usual lack of resources
hampered southern NGOs involvement.
European NGOs across member states and accession
countries signed up to the following demands:
immediate increase in ODA and agreement
on a timeframe to reach the 0.7 per cent goal;
measuring of debt sustainability
on the financial needs of countries to achieve the Millennium
Development Goals, and widening of eligibility for debt relief;
commitment to enter into the designing
of a fair and transparent arbitration process for sovereign debtors;
mandate to the UN to explore measures
to enhance the stability of the international financial system,
explicitly referring to possibilities for implementing a global
tax on currency transactions;
evaluation of regulatory frameworks
for trade and investment against their impact on achieving the
Millennium Development Goals and environmental protection;
independent external evaluations
of the performance of the international financial institutions;
reform of the international financial
institutions, starting with a participatory review process of
the composition and procedures of the decision-making bodies.
At the UK level, BOND members were involved
in consultation with the UK Government delegation, however these
seemed to be viewed as an opportunity to exchange information
rather than influence, or input into, Government policy.
EU AND US ON
The unilateral declarations by the European
Union and the United States on increasing aid levels must be seen
in the context of lack of progress on other key areas and a lack
of consensus on the balance of power and responsibility within
the partnership between developing and developed countries in
financing development. The discussions over aid quantity and the
disagreements over whether the World Bank should provide grants
rather than loans exemplify how far the focus of the conference
became donor driven.
Whilst BOND members welcome the commitment of
any additional resources to international development, the amounts
announced remain insufficient to finance the Millennium Development
Goals and are committed over a very short timescale. Stronger
wording on aid levels within the outcome document was actually
opposed by the US and the EU. The text of the outcome document
refers only to examining "the means and timeframes"
for raising aid towards "internationally agreed targets".
In order to meet the MDGs by 2015 donor country government need
to meet the 0.7 per cent target, agreed over 30 years ago, and
make available the $50 billion, at a minimum, as outlined in the
In addition, the increases in aid must be coupled
with improvements in aid quality, and ensuring that aid targets
the poorest and avoids burdensome conditionalities. Andrew Natzios,
the USAID director, referred repeatedly to four broad conditionsgood
governance, policy reforms, investment in health, education, democracy
and the rule of law. The subjective manner in which these conditions
could be interpreted and applied leads to concern that US aid
allocation will continue to be determined by geo-political allegiances
and commercial interests.
After two years of negotiations and four preparatory
conferences ("Prepcoms") the final outcome document
"the Monterrey Consensus" contains no binding commitments
to increased financing for development, none of the creativity
and vision of the Zedillo report and no implementation timeframes.
The Conference was little more than a set piece, with no substantive
negotiations and little to capture the public imagination aside
from the unilateral declarations from the EU and US.
The text contained only eight commitments or
formulations, which can be considered committalwords such
as "affirm", "will implement", "will
ensure" and "resolve". Negotiators at FfD sought
to avoid a repeat of the Racism conference in Durban and the Hague
Conference on Climate Change where talks reached crisis point.
Thus, an outcome document was agreed one month in advance that
contained everything but committed to nothing.
As a result, the conference plenary sessions
consisted of the reading of pre-prepared statements - which seemed
to highlight outstanding disagreements and the superficial nature
of the consensus document.
The multi-stakeholder roundtables marked the
first quadripartite exchange of views between governments, civil
society, the business community, and the institutional stakeholders
on global economic issues. However, the quality of the dialogue
depended largely on the ability of the chair to promote active
discussion rather than a reading of position statements. As the
consensus document had already been finalised a month in advance
of the conference, it was unclear what impact these discussions
were expected to have.
BOND members were disappointed with both the
process and the outcome of the Financing for Development Conference.
The final consensus document represented an abdication of responsibility
by the richer countries of the world and reflected their reluctance
to discuss debt relief, market access and reform of the international
financial institutions. The unilateral declarations by the EU
and US on increasing aid cannot disguise the failure to provide
an action plan for resourcing the Millennium Development Goals
and the continued donor emphasis on burdensome conditionalities
which ignores developing countries call for mutual accountability.