TWN Info Service on Finance and Development (Jul15/05)
10 July 2015
Third World Network

From New York to Addis Ababa: Financing for Development on life-support

By Bhumika Muchhala, Third World Network
(New York, 8 July 2015)

Lack of ambition and consensus in the New York negotiations begs the question of whether governments in Addis Ababa will salvage or further dilute the outcome of the Third International Conference on Financing for Development. The establishment of a global tax body, a strong and independent follow-up process for FfD, the Rio principle of CBDR and the link between the post-2015 development agenda and the FFD agenda are among the central issues for the Addis Conference to resolve. 

After weeks of political impasse in the intergovernmental negotiations for the Third Conference on International Financing for Development (FfD), an open text to be negotiated in Addis Ababa next week was presented on Tuesday 7 July by the FfD Co-Facilitators to government delegates and negotiators in New York.  Titled ‘The Addis Ababa Action Agenda of the Third International Conference on Financing for Development’ the draft outcome document containing 134 paragraphs across 31 pages, the document is a result of numerous draft revisions beginning with the first ‘Elements Paper’ in January 2015. 

Negotiations in New York gathered momentum in April and in the last few months have become heated and tense affairs marked by clashing positions between developed and developing countries and deep discontentment over both content and process. The Co-Facilitators of the process, Ambassadors George Talbot of Guyana and Geir Pedersen of Norway, convened non-stop informal discussions and even smaller private meetings, all behind closed doors, in the last several weeks.  Until mid-June, negotiations in plenary format were open and transparent to all, including via webcast, and interventions by civil society organizations (CSOs) were accepted from the floor.  However, recent informal meetings were explicitly closed, with CSOs being asked to leave the room at initial sessions when some individuals made attempts to observe the proceedings in person.

At the heart of the intergovernmental wrangling is a glaring lack of consensus, which the Co-Facilitators highlighted in their introduction to the final FfD plenary in New York.  Developed countries were intent on seeking to wrap up the negotiations in what would have been a diminished outcome compared to the agreed outcomes in the Monterrey Consensus of 2002 and the Doha Declaration of 2008, and what is needed for the current and future challenges of FfD. On the other hand, developing countries continue to demand for a more ambitious outcome.

Intergovernmental discussions commenced in October 2014 and evolved into negotiations by April 2015.  However, rather than convergence on key actions and decisions, the conflicts and red lines became further entrenched for both developed and developing countries.  To some degree, this dearth of intergovernmental consensus that leaves an open document maintains the pressure for final hour compromises in Addis Ababa.

Parts of the text where tension is rife and where negotiation efforts will be targeted   include the contentious and central decision to establish an intergovernmental, or global, tax body where developing countries have a voice in agenda-setting, as many developing countries have been arguing for, most notably India.  Developed countries are firmly against such an establishment and have ensured that the relevant language was deleted from earlier versions of the text and now Paragraph 29 refers only to the UN Committee of Experts on International Cooperation in Tax Matters and to enhance its resources and increase the frequency of its meetings to two sessions per year. 

Besides international tax cooperation, the two other issues highlighted by the Co-Facilitators in the plenary were the conflict on the Rio Principle of common but differentiated responsibilities (CBDR) and the link between FfD and the post-2015 development agenda, including its core component of the Sustainable Development Goals (SDGs), and the means of implementation (MOI) that the FfD outcome is to contribute toward.  The discord on CBDR has consumed a significant amount of time and space in the FfD negotiations, with sharp arguments for it propounded by the G77 and China group of 134 developing countries and arguments against it by developed countries, in particular the European Union and the United States.  The G77 has argued that if the 2015 FfD conference is to contribute to the MOI for the SDGs, the application of CBDR is indispensable for the political legitimacy of the FfD agenda.
The G77 explained how CBDR encapsulates universality, differentiation and responsibility: differentiation as the basis of crafting commitments; responsibility as the basis of delivering actionable MoI and for upholding the global partnership for development; and universality of the implementation of goals by all States.  Developed countries argued that CBDR only applies to environment and climate change-related issues, and that the North-South dichotomy is in today’s world anachronistic, and no longer reflects a world that has changed.  In response developing countries highlighted how the North-South gap in terms of inequality of consumption and production is still sharp and visceral in its magnitudes, and that if the SDGs have effectively mainstreamed environmental action across all goals and targets, it is only natural that the principle of CBDR is equally valid for the entire agenda of not only the post-2015 development agenda but also the FfD agenda.  The current text of 7 July refers in Paragraph 6 to the reaffirmation of “all the principles of the Rio Declaration on Environment and Development.”  While this formulation does not specify CBDR, the principle as such is included on the whole and is a more favourable outcome than the danger of a redefinition or distortion of the principle.

The link between the FfD conference and the post-2015 development agenda is located in the articulation of MOI.  Developed countries have been clear that the FfD outcome is to comprise all of the MOI for the post-2015 development agenda, whereas developing countries have been resolute in the nuance that while the FfD outcome contributes significantly to the MOI for the post-2015 development agenda, it does not by any means comprise the whole of the MOI.  This argument has been central to developing countries’ call for a follow-up process for FfD that is distinct and independent from the follow-up process of the post-2015 development agenda.  The text of 7 July reflects this position of developing countries in Paragraph 19, in the formulation that reads: “The post-2015 development agenda, including the SDGs, can be met within the framework of a revitalized global partnership for sustainable development, supported by the concrete policies and actions as outlined in the present Action Agenda.”

The key priorities of the G77 remain somewhat aligned around a set of issues that have been present from the beginning of the FfD negotiations in New York. This set of issues includes a re-commitment to ODA by developed countries, including the provision that climate finance and biodiversity financing is new and additional to traditional official development assistance (ODA).  This language, regrettably, is not present in the current 7 July draft outcome document.

In the final plenary, the tone of the G77 was to remain within the main areas of debate while leaving the majority of the text, whose language has been arrived and agreed upon through arduous negotiations, closed to further negotiation in Addis Ababa.  In other words, the entire text should, preferably, not be re-opened to negotiation.  However, the US and Japan were far more aggressive, with Japan stating that it is important to emphasize that nothing is agreed until everything is agreed, and the US making note of  "a list" of problem issues, essentially warning Member States that some of the text could be at risk if consensus was not achieved. The European Union noted that they were not in agreement with the formulation of South-South cooperation and fossil fuel subsidies, in that these sections are “too weak.”  The long-standing position of the EU is that more obligations and commitments should be taken on through South-South cooperation and that fossil fuel subsidies should be rationalised with more determination. 

Across all UN discussions, the issue of South-South cooperation is a centrifugal point.  Developing countries routinely clarify that South-South cooperation is a complement, not a substitute, to North-South cooperation and that international development financing commitments are to be met by developed countries taking the lead in the framework of the global partnership for development.  Paragraph 56 in the 7 July text mentions South-South cooperation as having increased importance and different history and particularities, and stresses that “South-South cooperation should be seen as an expression of solidarity among peoples and countries of the South, based on their shared experiences and objectives. It should continue to be guided by the principles of respect for national sovereignty, national ownership and independence, equality, non-conditionality, non-interference in domestic affairs and mutual benefit.” 

Paragraph 57 welcomes the increased contributions of South-South cooperation to poverty eradication and sustainable development and encourages developing countries to voluntarily step up their efforts to strengthen South-South cooperation, and to further improve its development effectiveness in accordance with the provisions of the Nairobi Outcome document of the High Level UN Conference on South-South Cooperation.

The US referred to a "list" of issues that, in their view, have not been agreed upon, and which they did not clarify. This list is a potential source of stalemate in Addis Ababa.  It could become the foundation for contentious trade-offs and further dilution of an already extremely diluted outcome document.  The danger here is the reopening of hard-won text where there is already some degree of intergovernmental agreement.  If developed countries reserve their option to ask for further movement in their favour, across the spectrum of issues ranging from public and private finance, debt and systemic issues, the opening paragraphs and systemic issues, a united G77 defence of FfD for developing countries would be critical.

In the context of vested geo-political interests and the wide gap between North and South, a strengthened ethos of multilateralism is at its most critical imperative next week in Addis Ababa.  There is still ample space and prospect for Member States to push for the best possible compromise and outcome in Addis Ababa. A genuine global partnership for development requires efforts where negotiations are conducted in good faith, without backhanded tactics to manipulate text, and without resorting to undemocratic measures to influence the text. 

The very integrity of FfD as an international conference is that it addresses, with the most universal membership available in global governance fora to date, systemic issues in the international architecture for development finance, private finance, capital flows, debt, trade and now this year, technology as well.  The significance of FfD is that it can decide on intergovernmental commitments to deliver concrete and actionable commitments on development finance, as well as generate political momentum for much-needed reforms in the international systemic and structural architecture.  For example, it has the potential to push for reforms on financial regulation, debt sustainability, trade and the international monetary system.  The history of political and social change involves a vital role for the international norm setting that can take place through the FfD conference.

As the draft civil society declaration for Addis Ababa states, the level of ambition witnessed in this year’s FfD negotiations is hardly suited to function as the operational MOI for the post-2015 development agenda, which is one of the goals, though not the only one, of this conference.  Even more unfortunately, there is now a serious risk of retrogression from the agreements in the Monterrey Consensus of 2002 and the Doha Declaration of 2008.  The countries that historically, and with good reason, have taken on a large part of the responsibility to lead in delivering MOI, have gone to great lengths to shed this responsibility or shift them to others.  The FfD text as of the current draft of 7 July fails to ensure the space to undertake normative and systemic reforms that would enable developing countries to mobilize their own available resources. This combination makes it impossible for countries to generate the requisite resources to deliver a sustainable agenda.

Civil society has expressed its disappointment that save for an explicit decision in Paragraph 123 to establish a Technology Facilitation Mechanism at the UN post-2015 Development Summit in order to support the SDGs, the FfD draft outcome document is almost entirely devoid of actionable deliverables. While not a pledging conference it is deplorable that a conference on financing fails to scale up existing sources and commit new financial resources. This calls into question governments’ commitment to realize a development agenda as expansive and multi-dimensional as the SDGs.  In particular, civil society notes the rejection of a UN tax body which would create significant sustainable financing for development through, for example, combating corporate tax dodging in developing countries.

A very low window of opportunity was expected if the FfD outcome document was closed in New York.  On this note, it is a positive development that concrete negotiations will carry forth into Addis Ababa next week.  While inevitable friction will ensue across well-established battle-lines, the 3rd FfD conference still has a breath of hope for a better outcome. +