Embassy Newspaper Oped: published Aug 26th 2015
Financing for Development: Are the ’No Ones’ again being ‘Left Behind’?
Just a few weeks ago, 7000 ministers and senior officials, plus CSOs and private sector representatives met in Addis Ababa at the UN Conference on Financing for Development (FfD). Participants came from the richest to the poorest of nations. Their core goal was to ensure resources would be available to effectively implement the UN Post-2015 Agenda, the international community’s core vehicle for ‘Eliminating Extreme Poverty by 2030’, poverty that weighs upon over a billion global citizens. Post-2015 itself is due to be endorsed, after several years of dialogue and negotiations, at a UN Summit in New York this September. Canada will be one of the many which sign on to an agenda framed by the moral, as well as the practical, objective of ‘No One Left Behind’.
Against that objective, FfD has already failed. Its main goal was to ensure that Post-2015 would have a smooth beginning to its 15 years ‘transformational’ journey. Often tense negotiations instead produced a rambling 134 paragraph Addis Ababa Action Agenda (AAAA). Despite the fancy acronym the document is full of critical holes and papered-over cracks following discussions between rich nations and the developing countries (the G77 as they code themselves). Over four months of intermittent negotiations had their formal climax in just four days of tense exchanges in Addis. Even before they arrived everybody knew there would be no bold resolution to tackle the financing needs of the poorest. Traditional donors, struggling still with their own shaky economies, were in no mood for generosity, instead they were looking for alibis. The final Addis agreement has both North and South endorsing a minimalist, lowest common denominator model, with little for the poorest.
This means that the Post-2015 Agenda Summit, planned as a showcase of bold commitments to defeat poverty, will be more a gathering of embarrassed world leaders committing themselves to an unfunded agenda, maybe wisely renamed ‘Agenda 2030’. The harsh truth is that there is no plan for effective implementation.
Addis certainly had many big ideas on the table, but the problem was that there was little consensus on their content and many of the solutions have no proven viability. One of the most disturbing outcomes is that the poor living in the least developed countries (LDCs) or fragile states (g7+), had no champion amongst the power-brokers of the international community. Many one-time liberal voices amongst Western donors were almost as defensive on increasing aid volume as traditional misers such as the USA. Canada sadly (and Australia) has joined the USA and Japan in a cabal of development policy hard-liners in the eyes of the G77, drawing ‘red lines’ indicating forbidden ideas that were once norms of good policy. Progress was instead represented by gimmicky ideas with no money or concrete action plan. Canada boasted about Convergence, a ‘blended finance platform’, which sounded more like the name for a new perfume brand. We breathed a sigh of relief that nobody pressed for dates for the 0.7% aid target. [Canadian aid under Mr. Harper has sunk to 0.24%, close to an all-time low.]
Maybe worse, the powerful G77 countries, the BRICS and other leading voices seemed equally unsupportive of their weaker brethren. Instead they were preoccupied in Addis drawing their own ‘red lines’ as they sought to advance their own agendas. Key was international tax reform on which they fought a long battle with OECD countries. The case for more grant aid for the LDCs was not pressed by G77 leaders and unsurprisingly no enhanced LDC-specific target was set.
One of the new realities in the international dialogue of recent years is that the development agenda is being debated in much more than aid terms. This would be fine if the other new possible instruments being discussed were incremental (and proven viable) … and not being used to justify stagnant traditional grant aid, even for the poorest. The problem is that the latter is closer to the truth. Look at where Canada is placing its emphasis. We have steadily cut our ODA effort in the recent years. Instead we joined forces with such as the World Economic Forum, the club for multinational CEOs, in designing approaches to enhanced financing for the private sector, often the equivalent of investment subsidies. Roughly 5/30 pages of AAAA are on possible enhanced private sector activities and it took just two paras to reject more demanding aid volume targets.
The ‘proven viable’ is a key proviso. Most private investment in developing countries goes to a few strong middle-income economies such as Brazil, India and, of course, China. Virtually none goes to the LDCs where most ‘no one left behind’ poor are presently living, unskilled and under-educated. The only exception is profit-driven investors seeking privileged access to their raw materials. This does not seem like a ‘transformational‘ reality.
Significantly in Addis there were reportedly 500 or so activist CSOs, but private sector CEOs were essentially ‘no show’ actors, implicitly signaling their tenuous interest in being the West’s frontline warriors in eliminating extreme poverty.
The hottest topic in Addis was international tax reform: new rules that seek to end a situation where many private companies, those multinationals, evade fair tax obligations. This costs tax revenue in both those developing countries where multinationals have factories and in developed countries, their corporate homes. Instead these corporations hide their profits in tax havens or by phony transfer pricing. The battle in Addis was about who should lead the search for answers. At present this is done using tax reform ideas from the OECD Secretariat. The G77 argued that this work on what is a global problem must be centered in a strengthened UN framework, its Tax Committee. They saw OECD technical advice as seriously tainted; the OECD is home to most tax-evading multinationals. Both sides drew ‘red lines’ and in the end Addis saw a stand-off that leaves tax-evaders off the hook. No prize for guessing Canada’s side.
Canada was a blocking voice in Addis. We were leaders in the search for instruments that eased political pressures for more aid. We joined opposition to enhanced aid for LDCs. All this only reinforced our ever-diminished credibility with the developing world and even with once like-minded Western nations, (most Nordics, the UK), who still recognise their global responsibilities.. and longer-term interests in ending global poverty.
John Sinclair, a Cambridge-educated economist, worked as a development practitioner at CIDA and the World Bank. He is a member of the advocacy McLeod Group. He is a Distinguished Associate of the former North-South Institute.