Global Policy Forum

The first draft of the Doha Outcome Document on Reviewing the Implementation of the Monterrey Consensus which will be negotiated during September and October and, hopefully, approved at the Doha Conference at the end of November in Qatar, has been published this week. This first draft is the result of intergovernmental discussions – review sessions and informal consultations held during the first half of this year – as well as hearings with civil society and the business sector.

Eurodad welcomes the fact that negotiations are swiftly moving forward. We are also pleased that the document addresses a number of new challenges and emerging issues which are crucial in the current context of global financial crisis and the abrupt rise of food and energy prices. However, we are deeply concerned that this first draft fails to set out an ambitious and concrete agenda to push forward a number of key areas in financing development. Issues omitted include capital flight and taxation, official development aid and external debt. By contrast in 2002, governments gathered in Monterrey succeeded in agreeing an outcome document with several passages which represented progress in international discussions on financing for development.

Civil society groups in the North and the South – as well as Southern governments – have since been strongly disappointed on the failure of Northern governments to live up to the commitments made in Monterrey. In 2007, aid levels went down threatening the volumes of ODA available for achieving the Millennium Development Goals set for 2010 and 2015. Although progress has been made on providing debt relief, this is still insufficient and burdens the fiscal space available for developing country governments to foster economic growth and the fight against poverty. Northern governments and multilateral bodies have also not taken the necessary steps to enhance coherence of the global financial and economic system, so that higher aid levels and debt relief are matched with increased policy space for developing governments to design the most suitable policy options for development and retain national resources which keep on flowing outside these countries.

Unless a much more ambitious stance is taken, in terms of making progress on areas such as external debt, volumes and effectiveness of official development aid, capital flight and coherence of the global economic and financial system, the Doha Conference this November risks missing a unique opportunity for world governments to agree upon concrete and resolute measures to provide the necessary finance and policy tools to achieve the Millennium Development Goals and fight for poverty eradication.

Illicit capital flows is not only about corruption

The draft FfD outcome document – prepared by the co-facilitating governments (Norway and Egypt) and published on the UN FfD website – contains some useful language on "strengthening efforts to increase tax revenues [and] strongly combating tax evasion". It is also welcome that the document considers "strengthening the United Nations Committee of Experts on International Cooperation on Tax Matters by upgrading it to an intergovernmental body".

While the draft document contains a useful summary sentence that "Capital flight is a major hindrance to the mobilization of domestic resources for development and efforts should be strengthened to address the various factors that contribute to this" it then narrows its approach. The main recommendations deal only with preventing transfer abroad of stolen assets and capital flows with criminal intent, such as terrorist financing. Recommendations include a useful exhortation to governments to ratify and implement the UN Convention Against Corruption.

But the document fails to address the biggest share of the illicit flows problem, which is driven by tax avoidance and evasion schemes by companies. The draft outcome document also fails to provide concrete policy and institutional responses to the problem of illicit financial flows, such as the adoption of a code of conduct on international tax evasion and avoidance.

The document calls for "enhanced financial information and transparency in the financial operations of public and private financial institutions, particularly banks". However, it is worryingly silent with regards to the role that the UN should play in brokering "adequate common standards, as financial resources flow increasingly across borders." We are also concerned that, while the text rightly mentions banking institutions, it does not address measures that would increase transparency on reporting the profits from transnational corporations – such as country by country reporting – aimed at curbing capital flight from developing countries.

Aid: the UN should push more ambitious agreements than the OECD/DAC

We welcome that the draft reiterates that "countries that have not already formulated timetables or reached 0.7% of GNI as ODA do so". Equally, the document says that "to reach their agreed timetables, developed countries should take urgent measures to raise the rate of increase of aid disbursements".

Unfortunately, the document is extremely weak with regards to the efforts that need to be done to make ODA more effective. The document uncritically mentions the Accra Agenda for Action (AAA) that governments are supposed to agree at the High-level Forum on Aid Effectiveness to take place in Accra at the beginning of September (but which Eurodad believes is currently far too weak, see article). It ignores the criticisms that civil society groups and Southern governments have made on the AAA. Rather than endorse the low-level consensus emerging in the AAA, the Doha Outcome Document should call for concrete monitorable targets to ensure and measure progress towards crucial issues for improving aid effectiveness – such as aid untying, streamlining conditions or making aid more predictable and transparent.

The document should also recognise the new UN Development Cooperation Forum and the potential that this forum has to play an important role in improving mutual accountability of aid at international level.

Debt: a step backwards, few specifics

Eurodad is extremely worried that the section on external debt is a major step backwards from statements and commitments agreed in the Monterrey 2002.

A clear step backwards refers to the recognition, in the Monterrey Consensus, that "creditors and debtors share responsibility for unsustainable debt burdens". There is no mention of co-responsibility for debt in the current proposed text on external debt. It is essential that this message be incorporated.

The draft acknowledges that "existing international debt resolution mechanisms, including the Paris Club, cannot guarantee … just treatment of creditors and debtors". However, it is of particular concern that the current text places an unbalanced emphasis on the need to "guarantee equivalent treatment of all creditors". The equal treatment of debtors with similar debt profiles and facing similar development challenges should be of paramount concern, not just the equal treatment of creditors. This demonstrates the need for an internationally agreed, impartial, fair and transparent debt resolution mechanism such as the fair and transparent arbitration procedure. Commitments to re-open international efforts on such a debt work-out mechanism need to be secured.

Eurodad will continue working with its members, through the Doha NGO Group, and with other allies to advocate to governments to improve the draft text. Active negotiations will take place in New York starting early September. Eurodad will produce regular update articles in the run-up to the Doha meeting. The next update will be published early next week, comprising a brief analysis of the UN Secretary General Report on the review process of the Monterrey Consensus as well as latest information from recent meetings with officials.