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[ Comment ]

Overshadowed by the G20

The final document of the UN Conference on Financing for Development in Doha remains vague in many respects. It nevertheless goes some way towards extending the policy framework for development finance.


[ By Reinhard Hermle ]

The reduction of global poverty requires not only political will, capable states and active citizens. Adequate funding is also necessary. The Monterrey Consensus was the outcome of the UN Conference on Financing for Development in Mexico in March 2002. It included commitments on:
– how to raise public and private funds in developing countries and world-wide,
– how to overcome poor countries’ high levels of foreign indebtedness, and
– the relevance of trade and institutional issues.

The second UN Conference on development finance was held in Doha in early December. The goal was to review implementation of the Monterrey Consensus and rise to new challenges. At stake, in short, was how to promote development in the face of the global financial and economic crisis, climate change and volatile energy and commodity prices.

The timing of the Conference proved to be unfortunate. It was overshadowed by the G20 Leaders Summit on Financial Markets and the World Economy in Washington in November. Presidential transition in the USA, moreover, implied that the world’s remaining super power was a lame duck. Few heads of state and government from influential countries attended Doha, and even the leaders of the World Bank and International Monetary Fund were not present. The media showed little interest.

Moreover, the preliminary negotiations on the Doha declaration had come to an impasse. The USA – once again – hampered the process. The G77 seemed to be in erosion, because some emerging-market nations are about to join the rich countries’ club, and African governments seemed somewhat in disarray.

Against this background, the final document from Doha is not all that bad. It does, at least,
– affirm the Monterrey Consensus,
– accurately describe the dramatic current world situation,
– encourage efforts to increase the quality and quantity of development aid,
– stress the need for more efficient public-finance management and tax systems in developing countries,
– highlight the significance of foreign direct investment, and
– emphasise the need to conclude the trade-talks in the WTO round in a development-friendly way soon.

Other useful aspects include the document’s call for gender equality, as well as an agreement to improve institutional settings in the UN system to facilitate international cooperation on taxes. Important principles are mentioned – such as good governance, combating corruption, decent work or transparency in the use of funds.

However, many paragraphs are hardly more than politically correct rhetoric. Accurate analyses and strong declarations of intent did not translate into consistent action. Important players evidently had reservations about entering into binding obligations with long-term structural consequences.

For example, new initiatives for innovative financing instruments were discussed only on the sidelines of the conference. The final declaration only mentions some progress made since Monterrey, stating that this debate must go on.

The paragraphs on climate change were progressively weakened. However, they at least recognise that existing budgets for Official Development Assistance (ODA) must not be used to fund poor countries’ adaptation to climate change, which is a new and additional challgenge. The fact that it was necessary to reaffirm the target of rich nations spending 0.7 % of GDP on ODA, however, is depressing rather than encouraging.

Finally, after heated discussions, there was an agreement to assess the financial crisis and its impact on poor countries at a UN summit at the highest political level in 2009. Developing countries had certainly hoped for a stronger statement. Nevertheless, as the United Nations is the only legitimate forum for global-governance issues, it is most welcome that the powers that wanted to ignore the UN in handling the crisis did not get their way. The poor countries did not cause this mess – but they also will have to bear the brunt. Their governments must get a say.

D+C, 2009/01, Debate