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Doha disappointment: governments fail to deliver a good outcome on development finance
11 December 2008
The UN conference on Financing for Development finished on 2nd December at the Sheraton hotel in Doha, after four days of heated discussions and a good dose of excitement. Unfortunately, the excitement was not due to high expectations on the outcome of the conference. On the contrary the adrenaline came from a whole-hearted fight by civil society – and some progressive governments and officials – to avoid a race-to-the-bottom to strip down an outcome document which already got to Doha with very little clothing. Eurodad has analysed the document in detail and provides a look ahead to what will be the outcomes in practice.
The conference in Doha was due to review the Monterrey Consensus on Financing for Development, agreed in Mexico in March 2002. Far from being perfect, the Monterrey Consensus had been a milestone in recognising that finance for development is not only about aid funds flowing from North to South. The Consensus put down on paper that a wide range of issues – such as external debt, trade, or foreign direct investment – need to be coherent with the goal of poverty eradication. It also recognised the need to “reform the international financial architecture…to enhance financing for development and poverty eradication.”[1] A key developing country negotiator in the Monterrey process said: “the expression ‘international financial architecture’ was simply a taboo at the UN before the Consensus.”
Since then, much has happened and quite a few commitments have been made by rich country governments under strong pressure from civil society and social movements. The 2005 review of the UN Millennium Summit, where the Millennium Development Goals were agreed; the Paris Declaration on Aid Effectiveness; the G8 Gleneagles commitments; the decision of the Norwegian government in December 2006 to cancel some US $80 billion of “bad loans” on the grounds of creditor co-responsibility; or the Ecuador’s commission to audit external debts. Civil society around the globe has been instrumental in putting on the development agenda sticky issues such as illegitimacy of developing country debts; related to capital flight and evasion of taxes on multinational companies’ profits made in developing countries – often by extractive industries.
The UN Financing for Development negotiations: how they happened
Since early 2008, civil society around the world has pushed to see all these crucial issues reflected in the outcome document of the Doha conference. While the UN can be ineffective, it is a unique forum where key international agreements in the quest for human dignity have been made throughout the last half century. This is precisely what civil society was expecting from the Doha conference: in times of deep financial, food and climate crisis, governments gathered under the UN umbrella would make a bold statement to commit to deliver on their (unfulfilled) promises and go well beyond to fix a system which does not work for developing countries (and for developed countries neither, as we have recently seen). Unfortunately, the outcome of the conference proved that CSO expectations where quite removed from their governments’ – as Eurodad already warned as the conference started.
Governmental delegations got to Doha with a rather unusual situation: after weeks of cumbersome negotiations in New York, more than half of the document was still open to discussion. Negotiators were faced with the challenge to agree, in four days, what they could not agree in months of negotiations. Needless to say, any agreement would come at the expense of the quality of the outcome document. After strong US pressure to reopen the discussion on several sections of the document and their threat to withdraw from the negotiations, a compromise was reached very late at night on 1st December.
The good news was that there would finally be an outcome document, which included agreement on the sticky issue of convening a UN conference to address the impact of the financial crisis on developing countries. This was a crucial demand from developing countries, which had been repeatedly blocked by the US and other Northern governments. An agreement to have a full outcome document was finally reached – among other reasons – thanks to the pressure and diplomatic skills of some European and emerging economy ministers, and the pressure of civil society asking their governments to isolate the US. On 1st of December, European NGOs wrote a letter to EU ministers meeting in a hotel in Doha asking them to take a strong stand and not give in to US pressure to deliver just a short political statement. There was a strong pressure from some country groupings to deliver an outcome document: developing countries did not want to run the risk of further de-legitimising the FfD process, or the UN by letting the conference fail. And EU development ministers could not afford going home empty handed, which would have further weakened their pledges for development aid to finance ministers overstretched by the financial crisis. The sad reality is that in such context the US played hard to water down the document to unimaginable levels. In exchange for agreeing a full outcome document the US managed, however, to weaken key sections of the document, including those on aid, debt, tax and climate change. For a detailed assessment, see Eurodad’s analysis of the Doha UN Financing for Development Outcome Document.
How Doha failed to recreate the Monterrey momentum
Although there was a sense of relief when the outcome document was agreed – the general feeling was that “it could have been much worse” – if we take a step back and look beyond the specific dynamics of the few days and weeks of negotiations leading up to the Doha Outcome Document, the broader picture could hardly be more disappointing. The Doha summit definitely did not live up to even the standards of its predecessor in Monterrey. The new UN document is not likely to shape development debates in the next few years.
At best, the Doha Outcome Document is a mere restatement of the Monterrey Consensus. At a moment of deep crisis this is woefully insufficient. Progress has been made on just a few issues such as taxation – although steps forward are only piecemeal. The text even goes backwards on some issues, including on debt. It is striking how six years after the Monterrey FfD summit, the text is only able to - at best - restate past commitments.
The FfD process is one of the very few existing processes which could address the major flaws in the global economic and financial system to make it work for development. However, lack of political will from rich country governments has prevented the process having the necessary impetus and vision.
This conference confirms that at this moment when the world economy and financial system are in crisis and recession, a good number of rich countries are threatening to go back to regressive and very short-sighted views. Concerned about budget constraints and in trying to preserve their power in the global economy, they fail to realise that we are most likely heading to a multipolar world where "old" rich countries will no longer have hegemonic power. The US and the EU are also failing to realise that, even if it is only for narrow self interest, they may need more than ever to boost economic growth and consumption in developing countries; they may need in the near future a fair and transparent debt work-out mechanism which allows them to deal with huge debts they will be soon accumulating; they may need clear regulation on fiscal matters and tax competition when a growing number of companies using the justification of the crisis to relocate even more to other countries.
Rich countries are upsetting the rest of the world with their unwillingness to give up their power in the international economic and financial governance. Both rich and poor countries should be more willing to agree measures that will enable developing countries to retain and mobilise resources for development and to address policies which allow greater wealth redistribution within countries, and the protection of the poorest of the poor.
The UN is the right forum to agree principles and mechanisms for reforming the economic and financial system. Other institutional mechanisms at global level, regional and national levels are also needed. But regardless of the forum what is desperately needed is the political will and long-term vision of world governments. The fact that so few heads of state came to Doha for this conference sent a bad signal that is matched by the outcome text. It is hard to hold out too much hope for the next UN conference that has been agreed, but it is positive that more governments will have some say in how the world’s institutional architecture can be rebuilt for the good of the majority.
Key links:
In the press:
[1]
Monterrey Consensus, “Addressing systemic issues”, page 18.