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Briefing on Financing for Development

On the 25th of March 2010, we had the pleasure to receive a presentation by Mr Daniel Platz about Financing for Development which is one of the basic issues Member States of the United Nations have to deal with. Mr Platz is the Economic Affairs Officer and NGO Focal Point at the Financing for Development Office within the Department of Social Affairs (DESA) of the United Nations.

The Department of Economic and Social Affairs is partitioned in many divisions with a comprehensive field of duties. The main task of the Department is to help countries to cope with their economic, social and environmental challenges in particular those of the developing world. The work of the agency is highly linked to the Millennium Development Goals – therefore it is dealing with issues like poverty reduction, climate change, gender equality, development finance, forest policy to name but a few.

According to its webpage the Financing for Development Office aims at a provision of an ‘effective secretariat support for sustained follow-up within the United Nations system to the agreements and commitments reached at the International Conference on Financing for Development […].’ Short: the Office administers the achievement of the goals stated in the Monterrey Consensus on Financing for Development. Another important task is to bring financial development issues to the UN which could be a big step for the Agenda for Development because while in the International Monetary Fund (IMF) and the World Bank rich countries are dominant, in the UN the developing countries have a majority and can push solutions forward. The negotiations are usually very long and can even last for years.

Before the substantial conference of Monterrey (18–22 March 2002) there were long debates about what actually the agenda could be. Finally the Official Development Aid targets were formulated and a framework for development co-operation was achieved.

The outcome of the Monterrey Conference in 2002 was the ‘Monterrey Consensus on Financing for Development’ which was designed as a multi-stakeholder process divided up into six segments: Part (A) is about the mobilisation of domestic financial resources for development issues, Part (B) deals with the mobilisation of international resources for development – especially how to create incentives to achieve flows of Foreign Direct Investments and other private flows - known as Greenfield investments – into the developing world.

Part (C) is focusing on trade and its ability to be an ‘engine for development’ which is a tricky issue and the weaker part of the Monterrey consensus. For a better understanding, Mr Platz gave us the following example: the countries of the Organisation for Economic Co-operation and Development spend about 400 billion USD per year for their own agriculture including agricultural subsidies while only accumulated 120 billion USD is spent on Official Development Aid (ODA).

Segment (D) is called ‘Increasing international financial and technical co-operation for development’. It focuses on the importance of ODA in the developing world and correlates the Millennium Development Goals.

Part (E) is dealing with external debt relief agreements, such as the one with the Highly Indebted Poor Countries, and also with the relation between rich countries and IMF. Furthermore it is about reaching a ‘sustainable debt financing’, how to manage and to monitor external liabilities.

The aim of the last part (F) is to address systemic issues namely the enhancement of the coherence and consistency of the international monetary, financial and trading systems in support of development. Due to the complexity of that topic Mr Platz was not able to go into more details concerning also the short period of time we had.

After the introduction about Financing for Development and the Monterrey Consensus on Financing for Development the students had the chance to ask questions. One of the questions was about the view of neoliberalism in the UN and which approach and structure the Monterrey Consensus on Financing for Development rather includes.

Mr Platz said that while the Washington Consensus, which was a neoliberal approach, was no real consensus, Monterrey was one with a mix of approaches and moves away from neoliberalism. It has the character of a typical UN document and can be interpreted in many different ways.

Another question was concerning the agricultural subsidies. Mr Platz stated that the remaining problems are the halting strength of the farmer lobbies and the wish of politicians to be re-elected. Although goods from Least Developed Countries can be exported into the EU quota and duty free, the biggest issues remain.

One student also asked which enhancements could be done concerning the Monterrey Consensus on Financing for Development. The answer was short but concise: ‘It is not a question of improvement but implementation of the agreement.’ At this point, the briefing had to be interrupted since the fire alarm went on and we were asked to leave the building (luckily it was a false one and near the end of the briefing). During the evacuation process I managed to ask one more question about how aid effectiveness is being assessed and dealt with. Mr Platz advised me to read about the Paris Declaration on Aid Effectiveness and research on the work of the OECD Development Assistance Committee.

The issue of Financing for Development will remain one of the biggest ones the United Nations have to deal with. Especially in times of the current economic crisis it is much harder to assure that ODA commitments are met and therefore to make progress in achieving development in those countries that are most unlikely to achieve it by themselves.

Konstantin Volkov