MONTERREY: WHAT HAS BEEN ACHIEVED? BY DOMINIC
The overall mood is that Monterrey put development
on the agenda, and embarrassed America into making an increase
in aid (forging a new "unity of purpose"? See section
four). However, there are too many issues it didn't fully engage
with (debt, access to developed countries' markets, substantial
reform of international financial architecture, and a timetable
For a more detailed look at the Monterrey Consensus
document, which has not been changed during the course of the
conference, see "Events and debates up to 18/3/02",
on the ODI intranet.
After this summary of overall attitudes, responses
are broken down into the six areas: domestic and international
resource mobilisation, trade, ODA, debt, and systemic issues.
I. Monterrey is not enough
A. The process excluded NGOs:
1. NGO Caucus: the Caucus did not
consider the Consensus to be a basis for combating poverty or
advancing economic, social and cultural rights. While appreciating
the inclusion of civil society in the round tables, the Caucus
considered it an attempt to legitimise the Consensus.
More: http:// www.un.org /ffd/pressconf/22c.htm
http:// www.ffdforoglobal.org /es/foroglobalresolucion.html
2. Paul Horsman, Greenpeace: "It
cannot be described as a consensus when the voices of millions
of people have not been heard."
3. Laura Frade, Mexico Women's Eyes
on the Multilaterals: "You have refused to listen
to our view of how to build a human rights framework."
B. There is not enough commitment from developed
1. President Vicente Fox (Mexico):
the world's efforts have been "poor, late and disheartening".
2. Steve Tibbett, War on Want: the
conference is "a huge letdown" because of the lack of
detail or financial commitment. "There is new money, but
it is nowhere near enough. . . The long drawn-out negotiations
underline that many countries do not have the stomach for making
the sacrifices necessary for beginning to end poverty."
3. Greenpeace: the Consensus is
a sinister bid to pressure governments in the developing world
to open their markets to big business. "The only crumbs that
have been offered for aid to the poor have been conditional on
countries opening their markets to industry."
C. There is too much emphasis on trade:
1. John Foster, North/South Institute:
"The agreement reached here is just the Washington consensus
in a sombrero."
2. Africa Action: Monterrey misplaced
its priorities, focusing on trade to the exclusion of debt relief.
"The principal obstacles to reducing poverty in Africa remain
the haemorrhaging of some $14 billion in annual debt repayments
to rich foreign creditors and the AIDS pandemic."
D. It is gender blind:
1. Noeleen Heyzer, UNIFEM Executive
Director: "You cannot talk about halving poverty without
looking at the feminisation of poverty". The Monterrey conference
has not honed in closely enough on the gender dimension of under-development.
2. June Zeitlin, Women's Environment
and Development Organization: Monterrey has no recognition
of the specific experiences, needs, challenges, or even successes
of women and children.
Bangkok Post: "This week's talkfest
just gave a platform for Bush and others to proclaim their countries'
generosity. It is a shame. The considerable money spent last week
could have been saved and donated as well, by faxing the Monterrey
Consensus around the world for the participants to sign."
Fidel Castro: "The world economy
today is a huge casino," run by the self-appointed "masters
of the world," whose "traditional offers of assistance,
always scant and often ridiculous, are either inadequate or unfulfilled."
The European NGO caucus provided a list of seven
"minimum demands" that Monterrey should have contained,
including increased aid and reform of IFIs.
II. But Monterrey did move the debate forward
James D Wolfensohn: The Consensus is
"a taste of what is possible". "There is now a
unity of purpose between the leaders of the developed countries
and the developing countries".
Kofi Anan: "The `Monterrey Consensus'
is not a weak document, as some have claimed. It will be weak
if we fail to implement it. But if we live up to the promises
it contains, and continue working on it together, it can mark
a real turning point in the lives of poor people all over the
Horst Köhler: "This Conference
is a further milestone to understand official development aid
as an investment." The fact that the UN, IMF, World Bank
and WTO worked together in preparation was unprecedented and shows
the significance of the conference.
"There has been an extraordinary turnaround,
not just financially, but politically."
Jose Maria Aznar, Prime Minister of Spain:
"Only a few weeks ago this summit was heading for failure
. . . We therefore have reasons to be satisfied."
Economist editorial: "America is
now committed to supporting more foreign aid for poor countries
with good policies. That alone made the UN gabfest worthwhile."
WHAT HAS BEEN ACHIEVED: BY SUBJECT
1. DOMESTIC AND
There was a lot of emphasis on the importance
of FDI, but very few concrete proposals or detailed discussions,
either for international or domestic resource mobilisation.
Maria Floro, UNIFEM:
1. Domestic resources: The Monterrey meeting
should have considered institutional and legal barriers to women's
advancement like, banking systems that did not lend to women and
customary laws, which prevented female ownership of land.
2. International Resources: Monterrey failed
to consider the structural or systemic foundations of poverty,
like the impact of the opening of national borders to free trade,
debt and the often-detrimental economic changes made to attract
foreign direct investment. An example of such a change are the
export processing zones set up as tax-free havens in developing
countries, where labour is cheap, trade unions often banned and
labour standards very low.
A. Subsidies, especially agricultural, came
1. Woflensohn: "[Agricultural]
subsidies rob poor countries of markets for their products,"
he said. "Spending on subsidies is six times what the rich
countries provide in foreign aid to the developing world."
2. Kofi Anan: Different actors must
work "together not against each other. . . It does no good
helping dairy farmers in a country if, at the same time, you are
exporting subsidised milk powder to it."
3. Germany: Wieczorek-Zeul, Minister
of Economic Development and Cooperation called for a rapid reduction
of agricultural subsidies. Germany is in favour for realising
the aims set up in the free trade agenda (Schleswig-Holsteinischer
4. Canada said that "major
concessions" on trade barriers for the poorest countries
would be announced in time for the G8 summit in June, with an
end to "tariffs and quotas on some agricultural products"
at the centre of the package. (Globe and Mail)
B. Meanwhile, Bush is having problems selling
free trade in South America.
Brink Lindsey, Director of the Cato Institute's
Center for Trade Policy Studies: Bush's advocacy of free trade
is seen as hypocritical. The current tour of Mexico, Peru and
El Salvador to sing the praises of the Free Trade of the Americas
process, "is likely to fall flat on its face", because:
1. Tariffs and quotas on steel will hurt
2. The US anti-dumping law has hit exports
of many products from South America.
3. Massive subsidies to US farmers further
distort markets to the detriment of Latin American producers.
4. "Subservience to the textile lobby
rounds out the picture of US trade hypocrisy".
Many governments in the region would be all
too happy to see FTAA talks drag on forever; that way they can
maintain existing trade barriers as "bargaining chips"
in negotiations that never end.
(Wall Street Journal, p A15)
Sophia Murphy, Trade Program Director, Institute
for Agriculture and Trade Policy: "There is nothing consensual
about the statement on trade in the document before this conference.
Whatever the politics that led us to the few confused paragraphs
that treat trade in the document, they do not represent either
the breadth of our knowledge of trade and its role in development,
or the range of innovative proposals that were made in the preparations
for the conference. In its narrow focus and incoherent collection
of thoughts, the document does a disservice to a fundamentally
important role that trade, whether local, national or international,
plays in development."
I. Aid levels
A. A new consensus?
1. Wolfensohn: the consensus that
aid programs must be increased is so strong, the issue is no longer
one of vision but of implementation. "Two weeks ago no one
was even thinking about an increase". Today, the United States
and Europe are "prepared to write checks. . . That's not
a Hollywood step, that's a real step." (Los Angeles Times/New
2. Annan: competition between the
United States and the European Union over their respective levels
of aid to poor nations is a sign of growing global agreement that
more aid is needed, as he has long argued. "I think we're
winning the argument that we do need additional development assistance".
3. Eveline Herfkens, Dutch Minister
for Development Cooperation: The week has seen the emergence
of a "coalition of the willing". Never before has the
plight of the poor been so high on the international political
4. But in fact an earlier version of the
document did include a call for rich countries to commit an extra
$50 billion in FDA a year, double the present level, but it failed
to win the backing of the US and was dropped. The absence of an
overall funding figure in the Consensus reflects the Bush administration's
conviction that private enterprise, private foreign investment
and free trade are more effective than foreign aid. (AFP)
B. American aid increase
1. Timing: O'Neill confirmed "it
is quite reasonable to think we may be able to begin floating
some money under these new ideas in fiscal year 2003", rather
than 2004 as first announced. Fiscal 2003 begins October 1 this
2. Bush's speech to Conference,
meanwhile, re-emphasised that "we must tie greater aid to
political, legal and economic reforms".
3. US officials confirmed that the US list
of deserving nations will be much shorter than the list of needy
4. Clare Short: "It is a pity
that the US has not noticed that poverty reduction strategy papers
are already driving forward good governance."
5. Mark Malloch Brown: "There
is still a strong preference for bilateral action and a concern
about the absence of a US brand on World Bank assistance."
6. Jeffrey Sachs: "The US is
waking up from a 20-year sleep in the development field. We can
forgive them not immediately knowing everything that has been
happening during their slumbers."
7. Globalization Challenge Initiative:
The plan "having been clearly designed to boost private foreign
investment", there is concern that the money will go back
to US corporations.
C. Other countries' aid increases
1. Canada: Mr. Chrétien promised
a yearly increase of at least 8 per cent to Canada's official
development assistance budget, which was $2.4 billion this year.
(Globe and Mail, p A8)
2. Norway: Prime Minister Kjell
Magne launched an action plan to:
(i) Increase ODA from 0.92 per cent to 1
per cent of GDP by 2005.
(ii) Advance policy coherence in all relevant
(iii) Forgive all debts to countries under
the HIPC Initiative.
3. France reconfirmed commitment
(i) Northern countries must all increase
their aid levels to 0.7 per cent of GNP, starting with those whose
effort is the weakest.
(ii) The Conference was only the first realisation
of the scale of the problem.
(iii) France proposed working together over
the coming decade to conclude five projects, including the creation
of an economic and social security council. (Libération,
4. EU: The Global NGO Forum denounced
the increase of aid to 0.39 per cent of GNP as a "face-saving
reaction" and last-minute recognition that "the lack
of concrete commitments for achieving global poverty eradication
and development goals undermines the relevance of the so-called
II. Aid effectiveness
At the start of the conference, US Treasury
Secretary was dismissing ODA as "welfare". This position
has softened to one of "selectivity". The basic idea
that aid can work seems to have been accepted.
III. Aid and terrorism
A. Many people appealed to the "war
against terror" to justify more aid:
1. President Alejandro Toledo (Peru):
"To speak of development is to speak also of a strong and
determined fight against terrorism", "Global security
is closely tied to the health of the world economy".
2. Mike Moore, WTO Director-General:
Poverty is a "time bomb lodged against the heart of liberty".
3. Hang Seung Soo, president of the
UN General Assembly: The poorest nations are "the breeding
ground for violence and despair. . . In the wake of September
11, we will forcefully demand that development, peace and security
are inseparable" (Speech to Conference).
B. But there are dangers to doing this:
1. Wolfensohn: "There is always
a risk that terrorism could end up politicizing aid."
2. O'Neill acknowledged that strategic
interests will continue to dictate how a great deal of aid is
doled out. (New York Times, 24/3/02 sec 4, p 5)
4. SYSTEMIC ISSUES:
There were a lot of calls to make IFIs more
representative of developing countries.
Horst Köhler, Managing Director of the
The IMF itself is in the process of reform,
learning from experience and driven by its desire to make globalization
work for the benefit of all.
It is aiming to:
1. Make the IMF more transparent, and advocate
transparency for our member countries.
2. Concentrate more on crisis prevention.
3. Try to define more clearly the roles
of the IMF and private creditors in financial crises. It is essential
to be able to resolve unsustainable debt situations in a more
orderly, faster, and less costly manner.
4. Help our members to strengthen their
domestic financial sectors, and to combat money laundering and
the financing of terrorism.
5. Become more focused on the IMF's core
responsibility for macroeconomic stabilitynot as an end
in itself, but as a precondition for sustained growth, and because
the poor suffer most from high inflation, unsound public finance,
6. Take steps to focus IMF conditionality
and make room for true national ownership of reform programs.
7. Poverty Reduction Strategy Papers are
the right approach, but need to be tailored to individual countries.
(Köhler's speech to Conference)
Hugo Chàvez Frías, President
of Venezuela and Chairman of the "Group of 77"
The United Nations Development Programme (UNDP)
had defined the areas of development as life expectancy and health,
quality of education, and the real income level of the family.
The IMF is not the necessary tool for that struggle; it was not
created for that. The creation of new tools must be discussed
on an urgent basis, such as the creation of an international humanitarian
fund (Speech to Conference).
NGO Caucus: Governments talked about
reforming the World Bank and IMF and WTO but this was not reflected
in the Consensus.
Grants or loans debate continues
French Minister for Cooperation Charles Josselin
said that grants look attractive at first, but raise some concerns.
1. Putting an end to the loan policy would,
in a ten-year term, dry up the World Bank's resources.
2. Everyone must do their own job. The UN
agencies give money, the Bretton Woods institutions lend it, on
conditions that can be concessional.
3. A loan holds a pedagogical value: it
obliges the recipient state to care about its reimbursement. Thus,
maybe to engage structural reforms.
4. The US proposal would mean that some
countries have no chance to make it and to get into an "economic
5. France believes a fraction of the aid
should be given as grants, in specific sectors where there is
no return on investment, such as the social area. But the proportion
of the grant part should not exceed 5 per cent to 10 per cent
of the loan's one. (Les Echos, p 7)
O'Neill: "No compromise"
US Treasury Secretary Paul O'Neill scoffed at
a Clare Short's idea for a compromise on the issue.
1. O'Neill believes that up to 50 per cent
of aid should be in the form of grants.
2. He ridiculed the thought that any country
would prefer a loan. "I think it's a terrific idea,"
he joked. "I frankly don't think that any country's going
to take a loan when they could have a grant". (Reuters)
The arguments in favour and against the grant
proposals are reviewed in more detail by the Bretton Woods Project:
5. OTHER SYSTEMIC
A. Global Council for Economic Matters
1. Germany: German Development Minister
Heidemarie Wieczorek-Zeul actively called for a "global council"
in a speech to the conference. She gave support to the early claim
of the developing countries to become better represented in the
global financial institutions, such as the World Bank and the
IMF. (Frankfurter Allgemeine Zeitung, p.5)
2. France: The creation of an economic
and social security council should be pondered more deeply, as
should an international tax (Chirac's speech to Conference).
B. Global public goods
Jeffrey Sachs: "Fifty countries
submitted proposals and there was some beautiful work in there.
People were motivated because the money was finally out there.
But the needs in the proposals were five to 10 times more than
the money in the bank. I also heard that countries were arm-twisted
to cut down the size of their proposals. That's not the world
we want to create".
D. Environment fund
1. France: Chirac supported coordinated
environmental protection. He says it is only by coordinated efforts
that natural resources such as the forests, the air and water,
"humanity's common heritage", can be safeguarded (Libération,
2. Germany: Negotiations were held
on a new financial support for the environmental fund, said State
Secretary of the Federal Ministry of Finance, Koch-Weser. An additional
$2.7 billion have been discussed, but this idea is met by the
opposition of the USA. (Frankfurter Allgemeine Zeitung, p 5)
New US Deal?
O'Neill said a deal to provide crisis-torn countries
with a new bankruptcy-style protection from creditors may be struck.
1. He was expecting that "some time
in the last half of this year we could see a growing agreement,
maybe even a full agreement on how to actually do this."
2. He was encouraged by discussions held
the previous evening among a group of about 100 finance ministers
and other policymakers in Monterrey.
3. IMF first deputy managing director Ann
Krueger proposed last December setting up a new structure, similar
to the bankruptcy process now available to people and firms, to
protect troubled countries from creditors while they restructure.
Chirac: more cancellation
Debt cancellation should be considered with
more generosity, and there could be more ambitious treatment for
the severely indebted middle-income countries (Speech to Conference).
Overseas Development Institute