Are the ‘No Ones’ again being ‘Left Behind’?

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.


Universality and the SDGs- what’s good for the goose

What’s Good for the Goose: Universality and the SDGs

McLeod Group Blog, June 1, 2015:  John Sinclair

Universality – the idea that certain norms should apply to all countries alike – is a crucial feature of many aspects of international life, from the United Nations Charter to the Declarations of Human Rights. Still, the idea that wealthy nations should be submitted to the same standards as poor ones can be a surprisingly touchy political subject. The latest example is the UN’s new Sustainable Development Goals (SDGs).

The SDGs are the successors to those simple, easy-to-understand Millennium Development Goals (MDGs), which expire at the end of 2015. The MDGs centred on core social issues: poverty, basic education, maternal health and child mortality – simple, but seriously lacking in their comprehensiveness.

In September 2015 global leaders, including a hesitant Mr. Harper, will sign off on the UN’s Post-2015 Agenda. The centrepiece will be the SDGs, which apply to everybody, wherever they live. Unlike the MDGs, they are not targets designed by rich donors for poor recipients.

Universality in the SDGs has strength as a statement of solidarity, of rich with poor, of donor sharing with recipient. However, universality is not without its technical complications – for example, how can the same health target be used for Chad and Canada, yet still be a challenge for both? For some in Canada, universality has also become sensitive politically. To put it crudely: ‘How dare the UN try to judge us, a G7 country?’

In a globalized world, we need a universal agenda. The SDGs are that agenda, framed against three dimensions of sustainability – social, economic and environmental. They embrace a universe of challenges: ending extreme poverty; water for all; safe and sustainable cities; promoting peaceful and inclusive societies, with justice for all.

The new ‘universal’ targets will be voluntary. Each UN member-country will set its own targets for each SDG. This is a kind of global democracy at work. It also reflects the frustration of the less developed countries, who feel they were set up for failure by the old MDGs, which ‘imposed’ impossible targets. This humiliation was compounded by the failure of donors to deliver the financial and technical support needed by the poorest to reach those goals.

What does this all mean to Canada? As universal targets, the SDGs concern ordinary Canadians as much as Brazilians – safe births, cities without pollution and justice for everybody. Of course, solidarity involves effort, such as new funding for a neglected Statistics Canada to help collect more comprehensive data at home.

Instead, by refusing to engage actively, we have had little impact on the specifics of setting international goals, and the Harper government has had many moments of angst about the idea of universality, insisting that such rules simply cannot apply to a country like Canada. Conservative ministers say they have had enough already of busybody UN special rapporteurs coming to Canada and daring to tell us that we neglect, sometimes abuse, our indigenous people or our prison populations. In 2012, Minister Jason Kenney didn’t mince words in response to the UN’s Special Rapporteur on the Right to Food’s concern with hunger in Canada, stating: ‘Canada is one of the wealthiest and most democratic countries in the world. We believe that the UN should focus on development in that the UN should focus on development in countries where people are starving’. We see another example of this evasive attitude towards universality in the Harper government’s refusal to set meaningful Canadian climate-change targets ahead of this year’s UN environment summit.

The same government pontificates on the importance of accountability in multilateral fora, insisting upon tough reporting regimes for developing countries. However, when it comes to Canadians, the government seems to say that international goals are not applicable to us.

Universality is seen in Europe and even in the US as a positive thing, as an act of global solidarity, as well as an opportunity to promote international goals by acting first at home. Universality should also be seen by our blinkered government as a helpful mechanism to encourage emerging economies to share global roles that Western countries have assumed for decades – the provision of development assistance, for example. Solidarity with old OECD colleagues is not enough. As Canadians, we should worry that our government’s egocentric behaviour regarding the SDGs will leave it evading some of its shared responsibility for tackling global poverty, and at the same time discouraging others from doing so.

Not least, ordinary Canadians have to be puzzled as to why a wealthy society such as ours would not wish to accept bold international targets that might also do some good for our own most vulnerable citizens.

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What’s Good for the Goose: Universality and the SDGs

Financing for Development – new integrity needed

Financing for Development, the Net New challenge

– blog for  published Jun 4/2015. by John Sinclair 

 The UN Conference on Financing for Development (FfD) meets this July in Addis Ababa. It is designed to mobilize the trillions of new dollars needed to fully implement the UN’s new Post-2015 Agenda. The Agenda embodies the principle of ‘leaving nobody behind’ and has a bold core goal, the elimination of extreme poverty by 2030.

All very worthy, but will Western donors be seen as evasive in Addis and deliberately avoiding the need for ‘Net New’ resource? This is economist jargon for asking two things: that donor support is genuinely additional, the ‘new’; also that there is no false labelling, that we recognise that the new private investment will be substantially recovered as profits or declared as loans from development banks, the ‘net’.

We know private flows far exceed traditional grant aid. But worrisomely donors now talk about these trillions of investment dollars as being equivalent to ‘aid’.

It is becoming political cover for the reality of almost stagnant grant aid. Is this fantasy, window-dressing, even a practical possibility? Critically will it be ‘net new’? Practically, developed country governments cannot instruct private companies to invest in poverty reduction, rather than profit maximization.

We need to recall that most private flows are going to the richest of developing countries, to China not a Cambodia. This distribution runs counter to a goal of ‘leaving nobody behind’. The least developed countries for sure want both: more private investment and a bigger share of traditional grant aid.

So is there too much donor ‘window-dressing’?  However for those who believe in fairness (don’t we all?) it means that developed nations are expected to contribute substantially the ‘Net New’ stuff that is needed by the poorest nations.

However global equity does not seem to be in vogue. Many traditional Western donors have let their grant aid stagnate.  Canadian aid is down to 0.24% of national income (GNI)…  and still falling. We boast of our competence in handling the global financial crisis, but then say it has left us too poor to contribute.  A better model is the UK.  It chose to protect its budget allocation for meeting the UN’s 0.7% target. Western donors are not searching for ‘new net’ but rather for innovative ways of reporting and boasting about other things we can count as ‘sort of like’ aid.

Private sector activities have always been the life-blood of national economies in developed and developing countries alike. But now it is to be the big innovation in development. In practice, this means the money multinational and their shareholders in such as New York and Toronto spend clearing tropical jungle to grow oil palms in Indonesia or building jean factories in Haiti. Donors, including multilaterals such as the World Bank, note these huge gross flows in the IMF statistics, but conveniently overlook the large matching item called ‘remitted profits’.  This can leave as the only ‘Net New’ benefit for say Bangladesh low-paid jobs, sometimes even tragic death in a factory fire.

To compound the problem multinationals often find the means of not paying taxes on their profits. Sometimes this is technically legal, sometimes essentially fraud via false documentation. The net effect is the same – a loss of public funds for social investment in the developing country (and often also to the investor’s home country as profits are parked in tax havens). This massive leakage is now a major topic of discussion in the OECD and the G20, but there is all too little action on reformed global taxation systems, binding codes of good practice for multinationals, rules on fair taxation in the country where production occurs, etc. We need to make tax avoidance history.

One last example of missing ‘net new’ are the $ billions recorded as  ‘remittances’ in the IMF statistics. Key at the human level is the money saved by individuals born in the South, now working in the West as say a taxi-driver in Montreal or picking strawberries in California. The remittances are the personal savings they send home to even poorer mothers in Guatemala or Ethiopia. It is somewhat offensive that these millions of tiny personal transfers back home are now being discussed as new ‘treasure’ discovered by Canadian and other aid officials that can be boasted of as some sort of national ‘aid’ money.

We need a new integrity in the debate about financing global development, notably the Post-2015 Agenda. Its implementation will be costly.  As in the past most will be born by developing countries themselves, hopefully with more effective local tax efforts. Private and public external contributions are all needed and valid but they must be measured in ‘net new’ terms, not as repackaged old goods. Much better be honest with Canadian citizens who when polled say they want to be seen as generous donors to the most needy, surely not as tax avoiders or trying to double-count the savings of a poor Haitian taxi-driver living in Montreal.