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News: Globalisation & social justice

Modestly hopeful Monterrey

26 March 2002

John Langmore reports on the International Conference on Finance for Development.

John Langmore

John Langmore reports from New York

For the last week I've been attending the International Conference on Finance for Development (FfD) in Monterrey, Mexico. Despite the weakness of the outcome document, called the Monterrey Consensus, a sense of modest hopefulness grew during the conference.

About 55 heads of state and government attended - including presidents Bush, Chirac, Fox (Mexico), Mbeki (South Africa), Obasanjo (Nigeria) and Castro, and prime ministers Aznar (Spain), Chretien (Canada) and many others. At least 200 finance, foreign, development co-operation or other ministers also attended, including, not least, Powell and O'Neill from the US.

The principal significance of this conference is that it was the first time for two decades - since Reagan's condemnation of the Brandt Report at Cancun in 1980 - that the US and other powerful developed countries have allowed substantive discussion of economic and financial policy issues outside of the IMF and World Bank (which they control) into the more representative and transparent UN. Another benefit is that it furthered the growing co-operation between countries, business and civil society organisations, and the strengthened coherence within the UN system - between the UN Secretariat, the funds and agencies and the IMF and the World Bank - around the commitment to the Millennium Development Goals for poverty reduction.

The Monterrey Consensus is certainly a disappointing document. It is general and imprecise, and fails to address systemic issues. This was noted in speeches by delegates from a considerable number of countries, not all of them developing. It includes few concrete initiatives. Many systemic issues are, however, still mentioned, suggesting a willingness to keep talking about them, and many delegations explicitly said this. Subjects mentioned, but not discussed, include not only many aspects of domestic resource mobilization, foreign direct investment, trade, aid and debt reduction, but also international financial stability, improving the representation of developing countries in the governance of international financial institutions, co-operation about domestic tax matters between countries, and new and innovative sources of financing.

Speaking on behalf of the EU, the Spanish Prime Minister, for instance, said that the Union will explore innovative sources of financing and will "strengthen the voice of developing countries in international economic decision-making". So foundations were laid for future discourse.

The conference also provoked many donor countries to announce increases in Overseas Development Aid. The EU has decided to increase average ODA to 0.39 per cent of GNI by 2006, with all Member Countries aiming for a minimum of 0.33 per cent by the same year. This will increase the Union's annual aid by $7 billion by 2006, in addition to the current $25 billion. Ireland announced that it would reach 0.7 per cent by 2007, Belgium by 2010. France has undertaken to keep ODA above the EU average.

The US plans to increase its current ODA of $10 billion by $1.6 billion in fiscal 2004, by $3.2 billion in 2005 and by $5 billion in 2006, and to maintain that level. (This will still leave the US as the lowest per capita donor, however.) The Canadian PM said that his country would increase aid by 8 per cent a year in the coming years. Australia is one of the very few donor countries, currently way below the aid target, which failed to announce any increase in ODA.

One of the most significant benefits of the conference was that it provided a forum for the presentation and discussion of new ideas. There was much interesting advocacy of innovative proposals in speeches at the plenary sessions, at the Ministerial Roundtables and at side events. Governments made some proposals, and civil society, business and scholars made others. Some examples follow.

There was widespread support for a new issue of special drawing rights, to be allocated to developing countries. George Soros has been actively and effectively campaigning for this for the last few months - after years of advocacy by many others. Countries with about 70 per cent of the votes at the IMF support such an issue, and an attempt was made by European allies on Thursday to persuade the US to withdraw its opposition, since it has 18 per cent of votes, this would have taken the support over the 85 per cent required to authorise an issue. The US has not yet agreed.
There was general interest in more discussion about strengthening and extending global public goods. Despite earlier American opposition, the European Union "will promote setting up of an international task force on global public goods". This is certainly going to happen.
President Chirac, the German Development Minister (Wieczorek-Zeul) and others supported the establishment of an economic and social security council.
Quite a number of countries expressed support for a currency transaction tax. Germany organised the presentation of a supportive report commissioned by its Development Co-operation Ministry.
Many countries supported improved co-operation between national taxation authorities to facilitate reduction of tax avoidance and evasion; and China, Algeria and others supported establishing an international tax co-operation forum.
Fifteen detailed proposals for innovative ways of mobilising private finance were presented at the Business Forum, many involving partnerships between the public and private sectors.

Implementation, monitoring outcomes and further consideration of the undecided issues are now up to donor and developing countries, to international organisations, to business, to civil society, and to all of us who are concerned with the great immediate global moral challenge, which is to halve the number of people living in poverty by 2015.

A great deal of advocacy is clearly required.

John Langmore is the Director of the ILO Liason Office to the United Nations, a former member of the House of Representatives in the Parliament of Australia, and a former member of the Evatt Foundation's Executive Committee.

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