Financing for Development forges ‘New Financial Alliance’

Date published on source: 
17 July 2015
Source organisation: 
UN News Centre

Addis Ababa: World leaders agreed that strengthening cooperation in technology, infrastructure and social protections to drive prosperity was key to realizing inclusive, sustainable development, as the Third International Conference on Financing for Development concluded this evening in Addis Ababa with the adoption of an outcome text — described by some as a “new financial alliance”.

Called a “a critical step forward” by United Nations Secretary-General Ban Ki-moon, the Addis Ababa Action Agenda provides a foundation for implementing the global sustainable development agenda that leaders are expected to adopt this September, speakers affirmed. Financing, many agreed, was the “linchpin” of the new agenda, which will be driven by the implementation of 17 sustainable development goals.

Under-Secretary-General for Economic Affairs Wu Hongbo said “this has been a historic conference”, delivering an outcome that met the high expectations of people around the world. To succeed, “we need all stakeholders on board” working together towards common goals: Governments, financial and trade institutions, civil society, the business sector, philanthropy and academia.

Most importantly, he said, the outcome was one of collective efforts by Member States. The new framework would help align finance flows — domestic and international, public and private — with economic, social and environmental priorities. Its policy actions drew upon all sources of finance, technology, innovation, trade and data, mobilizing the means for a global transformation towards sustainable development.

Through the text, countries agreed that domestic resource mobilization was central to the agenda, notably through measures that widened the revenue base, improved tax collection and combatted both tax evasion and illicit financial flows. At the same time, they reaffirmed their commitment to official development assistance (ODA), particularly for least developed countries, pledging to increase South-South cooperation.

Other commitments were made in matters crucial for sustainable development. In the area of technology, for example, countries agreed to establish a Technology Facilitation Mechanism to enhance collaboration among Governments, civil society, the private sector and others. A new Global Infrastructure Forum would identify and address infrastructure gaps and highlight opportunities for investment. Through a new “social compact”, Governments agreed to provide social protection systems for all, including social protection floors.

In the area of assistance, developed countries, through the text, committed to reversing declines in aid to the poorest countries, with the European Union committing to increase aid to least developed countries to 0.2 per cent of gross national income (GNI) by 2030. In the widely debated area of taxation, the agenda called for strengthening support to the United Nations Committee of Experts on International Cooperation in Tax Matters to improve its effectiveness.

Countries also stressed the importance of nationally owned sustainable development strategies, supported by integrated national financing frameworks. “We reiterate that each country has primary responsibility for its own economic and social development and that the role of national policies and development strategies cannot be overemphasized,” ministers stated in the agreement.

After the adoption, several delegations took the floor to express appreciation for the hard-won accord, while some explained their reservations to parts of the text, especially regarding the principle of common but differentiated responsibilities, which they said deserved explicit emphasis. Some speakers made the point that references to the United Nations Convention on the Law of the Sea should not be construed as a change in their established positions on that instrument, while others said the non-binding nature of the action agenda did not create rights or obligations under international law.

Giving voice to many of those concerns, South Africa’s representative, on behalf of the “Group of 77” developing countries and China, regretted certain omissions, such as the need to fully upgrade the Tax Committee into an intergovernmental body, to make an explicit reference to countries and people living under foreign occupation, to explicitly address the lifting of coercive measures and to clarify that climate financing did not count as ODA, nor could it be mixed with traditional development finance.

In his closing remarks, Sam Kahamba Kutesa, President of the General Assembly, expressing pride in the accomplishments of the Conference and thanking all those involved, said: “The Addis Ababa Agenda demonstrates our collective resolve to build a better future for all in a more equal and sustainable world.”

In other matters, delegates adopted a draft resolution approving the report of the Credentials Committee, introduced by its Chair, Abulkalam Abdul Momen (Bangladesh). They also adopted the draft report of the Conference, introduced by Rapporteur-General Andreas Mavroyiannis (Cyprus), with a view to submitting it to the General Assembly’s sixty-ninth session. The report of the Main Committee was introduced by its Chair, Tedros Adhanom Ghebreyesus.

Finally, it adopted a draft resolution titled “Expression of thanks to the people and Government of Ethiopia”, introduced by the representative of South Africa, on behalf of the “Group of 77” developing countries and China.

Speaking in the general debate earlier today were ministers and other senior officials from Guinea, Democratic Republic of the Congo, Guinea-Bissau, Tonga, Maldives (on behalf of the Alliance of Small Island States (AOSIS)), Pakistan, Uruguay, Argentina, Australia, New Zealand, Cyprus, Sri Lanka, Singapore, Peru, Syria, Solomon Islands, Monaco, Romania, Lebanon, Slovenia, Suriname, Portugal, Indonesia, Honduras, Palau, Brazil and Vanuatu.

Representatives of the following organizations also participated: Caribbean Community, International Anti-Corruption Academy, International Organization of La Francophonie, International Union for Conservation of Nature and Natural Resources (IUCN), OPEC Fund for International Development, Commonwealth Secretariat, South Centre, League of Arab States, International Labour Organization (ILO), Economic Commission for Asia and the Pacific (ESCAP), World Food Programme (WFP), and the United Nations Educational, Scientific and Cultural Organization (UNESCO).

Also, the Joint United Nations Programme on HIV/AIDS (UNAIDS), United Nations Entity for Gender Equality and the Empowerment of Women (UN-Women), United Nations Children’s Fund (UNICEF), Office of the United Nations High Commissioner for Human Rights (OHCHR), Organisation for Economic Cooperation and Development (OECD), United Nations Industrial Development Organization (UNIDO), International Telecommunication Union (ITU) and United Nations High Commissioner for Refugees.

Additional speakers in explanation of position were the representatives of Benin (on behalf of the least developed countries), Maldives (on behalf of AOSIS), United States, Turkey, Venezuela, Bolivia, Japan, Nigeria, Malawi, Nicaragua, Switzerland, Ecuador and Canada, as well as the representative of the European Union.

Explanations of Vote on Draft Outcome

KINGSLEY MAMABOLO (South Africa), speaking on behalf of the Group of 77 and China, recognized that progress had been achieved, with compromise outcomes in key areas such as the call for a global infrastructure forum, a more comprehensive treatment of the issue of debt sustainability in the context of the United Nations, provisions for capacity-building and a technology transfer mechanism and dedicated mechanisms for follow-up and review with intergovernmentally agreed conclusions and recommendations.

He regretted, however, certain omissions, such as the need to fully upgrade the Tax Committee into an intergovernmental body, to make an explicit reference to countries and people living under foreign occupation, to explicitly address the issue of lifting coercive measures and to clarify that climate financing did not count as ODA, nor could it be mixed with traditional development finance. On the other hand, references to fossil fuel subsidies and to carbon fuel subsidies that could prejudge the outcome of climate change talks were premature.  Those principles were fundamental to the livelihood of people in developing countries, but many more issues remained unresolved for individual members of the Group, he said. Its member States were firmly resolved to engage in a constructive manner on all such issues in other relevant forums and to not abandon its principled conditions, and to ensure that the global partnership for development was genuine and adequately resourced for future generations.

The representative of the European Union said the landmark action agenda provided the means to deliver on the upcoming sustainable development goals. It addressed the full spectrum of means of implementation and agreed that everyone would need to take action to achieve the post-2015 agenda. It brought together domestic resources, investments, international public finance, including ODA, showing that all actions would be needed to combat poverty and exclusion. Balancing the three dimensions of sustainable development, it paved the way towards a universal set of goals. He welcomed its strong language on peace and security, gender equality and democratic governance.

The European Union, said the speaker, was the most open market in the world for developing countries and the world’s largest donor. The Conference’s successful outcome symbolized Africa’s commitment to multilateralism. By mainstreaming sustainable development into the common agenda, it provided the momentum needed to achieve success in September and to conclude an ambitious climate agreement. The Union would continue to engage in preparations for the September summit. While there was still a way to go, “this agreement brings us a lot closer”, he said.

The representative of Benin, speaking on behalf of the least developed countries, said that, throughout the process, the group had requested States to consider their issues so they could free themselves from poverty. They had explained their problems and the harsh reality of their situation. He was pleased that the outcome had considerably captured several of their concerns. The Addis agenda was a “new financial alliance” for sustainable development which, if applied in good faith, would bring about inclusive economic growth and structural transformation. For that to happen, the entire international community must be involved. There was a need for sustainable industrialization in least developed countries, and it was important to invest in infrastructure and energy, improve manufacturing and participate in international trade, and adapt to climate change. He called for the consistent implementation of the Addis action plan.

The representative of Maldives, speaking on behalf of the AOSIS and aligning with the statement made on behalf of the Group of 77 and China, welcomed the adoption of the Action Agenda and said that the framework represented progress and, in particular, addressed the needs of small island States. “Let us now look to the remaining processes this year so that no country is left behind and our successes are fructified on the tree of our endeavours.”

The representative of the United States, thanking all delegations for their hard work on the Conference outcome, said that her country was pleased to join consensus on the Action Agenda, which forged a new global partnership. She made clear, however, that the non-binding document did not create rights or obligations under international law.  Regarding debt restructuring, she said the negotiations must take place within a framework where creditors and debtors could seek recourse to the courts to enforce contractual terms. Finally, all references to technology transfer were understood to be on mutually agreed terms and conditions, recognizing the importance of intellectual property rights.

The representative of Turkey said the Addis action plan set an important precedent for the United Nations summit in September and the twenty-first Conference of Parties meeting in December. She welcomed that the Addis Agenda captured different dimensions of the global development agenda. Its reference to the United Nations Convention on the Law of the Sea, to which Turkey was not a party, could not be construed as a change in her country’s established legal and political position with regard to that instrument.

Venezuela’s representative, associating with the Group of 77 and China, said his Government’s acceptance of the document was in no way an endorsement of its unbalanced content. He acknowledged the strategic importance of financing for development, on the understanding that it was an open process that did not conclude today. Developed countries were shirking their historic responsibility to nations of the global South.

The principle of common but differentiated responsibilities acknowledged various development models, he said, and the dominant model of a “predatory minority” had caused environmental damage and bent the will of the vulnerable through the exploitation of natural resources, with little added value, and the unbalanced norms of colonialism that continued today.

In paragraph 31, he expressed his reservation to the reference to the phasing out of fossil fuel subsidies, which was an intrusion in Venezuela’s public policies. He would not accept any reporting or review of his country’s energy policies, nor measures that carried an effect on its national sovereignty. It amended what had been agreed in 2002 in the Johannesburg Plan of Action. He did not accept the list of new innovative mechanisms, especially for carbon pricing.

In paragraph 49, he expressed a reservation on the concept of “modern energy for all”, as modern energy implied the use of new technologies without an evaluation of their implementation or effectiveness. He regretted that in paragraph 14, wording by the Group of 77 and China had been deleted, which related to the expansion of financing through multilateral development banks, such as the Alba Fund, to supplement existing institutions.

He also regretted that another topic by the Group of 77 and China was not included, related to concern about trade barriers, such as unilateral sanctions, which threatened productive investments. Venezuela was not a party to the Convention on the Law of the Sea. Its joining consensus on the action agenda could not be interpreted as a change in its position vis-à-vis that instrument.

The representative of Bolivia, associating with the statement made by the Group of 77 and China, supported the general consensus through solidarity, but had reservations on several issues regarding energy. He also had hoped for more explicit emphasis on the principle of common but differentiated responsibilities in the outcome document.

The representative of Japan said it was with great pleasure and a sense of relief that his delegation joined the consensus on what he called a good, balanced text that incorporated most of the relevant principles, good policies and measures that had been proposed by countries, as well as diverse groups of countries, in an inclusive manner. He hoped that the same sense diversity and universality would prevail in negotiations on the post-2015 development agenda.

The representative of Nigeria, associating with the Group of 77 and China, said that the Conference had given a “new lease on life to multilateralism” and refocused attention on key issues. With the agenda’s adoption, there was now an opportunity to go forward and at last overcome the challenges that overwhelmed humanity, including those of poverty and climate change; the most vulnerable countries could have a new lease on life. A message was also being sent to countries emerging from conflict that they would have partners in their recovery. Finally, the indispensability of the United Nations was reaffirmed.

The representative of Malawi, while welcoming the Addis Action Agenda, registered a strong reservation on paragraph 32, which did not consider the consequences on tobacco-producing countries like his, whose economies substantially depended on tobacco production. He would have liked it to read: “In order not to leave anyone behind, countries whose economies substantially depended on tobacco production, in parallel with consuming countries, must be supported and compensated for the loss of revenue within the framework of the United Nations and other international aid agencies as they diversify out of tobacco.”

Nicaragua’s representative, supporting the Group of 77 and China, welcomed the plan and progress towards realizing the global sustainable development agenda. Its adoption was “good news” for multilateralism. The principle of common but differentiated responsibilities, included in paragraph 5, meant that that principle was an integral part of the new consensus. Financing for development must be a separate process from the post-2015 agenda.

He said many delegations had sought an increase in ODA to reach the sustainable development goals, and the solution to their requests had been approved. If developed countries had agreed to articles 33 and 34 of resolution 2626 XXV (1970) and the implementation deadline in 1975, ODA would have more than doubled. He praised Norway, Sweden, Luxembourg, Denmark, United Kingdom and the Netherlands for living up to their ODA commitments, especially as underpayment had accounted for $6 trillion, representing a loss of income in eradicating poverty.

Noting that climate finance should not be considered ODA, he said there was no one-size-fits-all financing for development model. Countries should keep their political space to establish standards which they viewed as feasible in their circumstances. He advocated the lifting of coercive measures that violated international law, such as the embargo against Cuba, and expressed solidarity with the Palestinians.

The representative of Switzerland expressed hope that the spirit of the Addis process continued into negotiations on the post-2015 agenda and on climate change. Welcoming the outcome, he recognized however that it was just a step in the process and that the most important work lay ahead, in acting to implement the framework and the new development agenda. “The cost of not acting will be much higher than if we act,” he said.

The representative of Ecuador, associating with the statement made on behalf of the Group of 77 and China, welcomed the consensus, but said that any monitoring of national energy policies, as included in the document, would not be acceptable as they conflicted with national sovereignty. In addition, he stressed that the United Nations should be the organization following up on reform of the international financial architecture. He enumerated many other paragraphs with which his delegation had problems; those had been communicated in detail to the Bureau.

The representative of Canada said that there was great potential in the Agenda, but there was some inaccurate wording, including in passages on ocean law and indigenous people, the rights of which his country provided for domestically. Those passages, he made clear, did not have the force of international law.

*  Extract:  the full summary can be accessed here.