Blog
Modest Hope at Monterrey

by John Langmore

Despite the weakness of the outcome document, called the Monterrey Consensus, a sense of modest hope grew during the International Conference on Finance for Development, held in Monterrey, Mexico, from 18 to 22 March.

Fifty-one heads of state and government attended, including Presidents Bush, Castro, Chirac, Fox, Halonen, Mbeki and Obasanjo and Prime Ministers Aznar and Chretien and many others and over 200 finance, foreign, development cooperation or other ministers, including not least US Secretary of State Powell and US Treasury Secretary O’Neill.

Strengthening the UN

The principal significance of this Conference is that it is the first time for two decades—since President 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 the IMF and World Bank in the more representative and transparent UN.

Another benefit is that there has been growing cooperation between countries, business and civil society organisations, and 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.

However many systemic issues are still mentioned, suggesting 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, cooperation about domestic tax matters between countries, and new and innovative sources of financing.

The Spanish Prime Minister, for instance, speaking on behalf of the EU, 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 at United Nations forums such as the Economic and Social Council.

Increased ODA

The conference provoked many donor countries to announce increases in official development assistance (ODA). 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 US$ 7 billion by 2006, in addition to the current US$ 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 United States plans to increase current ODA of US$ 10 billion by US$ 1.6 billion in fiscal 2004, US$ 3.2 billion in 2005 and US$ 5 billion in 2006 and to maintain that level. President Bush said that ways would be sought to begin this increase immediately (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.

Innovative Proposals

One of the most significant benefits of the Conference was that it provided a forum for 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. An attempt was made by European allies during the Conference to persuade the US Administration to seek Congressional support for a new issue. The US has 17 per cent of votes, which would have taken support over the 85 per cent required to authorize an issue. They have 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 WieczorekZeul and a number of other national spokespeople supported the establishment of an economic and social security council.

Quite a number of countries expressed support for a currency transaction tax (CTT) and/or a carbon tax. Germany organized a presentation of a supportive report on a CTT commissioned by their Development Cooperation Ministry.

Many countries supported improved cooperation between national taxation authorities to facilitate reduction of tax avoidance and evasion and China, Algeria and others supported establishing an international tax cooperation forum.

Fifteen detailed proposals for innovative ways of mobilizing private finance were presented at the Business Forum, many involving partnership between the public and private sectors.

Implementation, monitoring of 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, to halve the number of people living in poverty by 2015.

John Langmore is Representative of the ILO to the UN in New York. John Langmore was Director of the Division for Social Policy and Development in the Department of Economic and Social Affairs in the UN Secretariat. Previously he was a member of the Australian House of Representatives where he chaired several committees on economic policy, trade, social justice and the environment. He also worked for many years in Papua New Guinea. His books include Work For All and Wealth, Poverty and Survival. E-mail: langmore@nycilo.org.