Monterrey meet - “Washington Consensus in a sombrero”

How far will the outcome of the Financing for Development Conference go towards improving the lot of its intended beneficiaries, the poor peoples and nations of the world? Not very far at all, bemoan developing-country and civil-society delegates, given the watered-down provisions of the Monterrey Consensus.

by Ferial Haffajee

MONTERREY: The different UN mega-conferences on development through the past decade may take place on different continents, but the five-star convention centres that have hosted them are virtually the same whether in New York, Dakar, Copenhagen or Monterrey.

Monterrey, a city in Mexico, was the venue for the latest conference, called the UN Conference on Financing for Development, held 18-22 March.

The platitudes, as the meeting wound down, follow a similar pattern too. Civil society decries the outcome as not being enough for the world’s poor; the government says the meeting has been a huge success. And so it was at the Monterrey fiesta. The key question: how far did it go to improve the future lot of 1.2 billion poor people?

Monterrey was the “Washington Consensus in a sombrero”, said John Foster of the North-South Institute in Canada. For him, the conference could not address poverty because it did not go far enough to redress the free market, open trade system that has been a hallmark of the era of globalization of the nineties.

This Washington Consensus model has increased the global wealth gap and joblessness, according to figures from the World Bank, the International Labour Organization (ILO), as well as national statistics.

Decrying the high level of corporate participation at the conference (there was a full-time Business Forum), anti-debt campaign group Jubilee South said, “If there was any hope that the UN could provide political space for alternative development thinking, that hope is being buried in Monterrey.”

UN Secretary-General Kofi Annan differed. This conference had been different, he said, because for the first time, the World Bank, the IMF and the WTO, as well as between 80 and 200 finance ministers, had attended.

Usually, the UN conferences do not include the mandarins who control the purse strings, meaning that plans are never budgeted.

Speaking about the Monterrey Consensus agreement, the roadmap to finance development, Annan said, “It’s not a weak document, as some have claimed. It will be weak if we fail to implement it. But if we live up to the promises it contains and continue to work on it together, it can mark a real turning point in the lives of poor people all over the world.”

Pared-down outcome

The conference outcome had been weakened months before, said both government and civil-society delegates. Proposed initially by the Group of 77 (G-77) developing nations, the conference was meant to probe global economic governance and make plans to democratize decision-making at the World Bank and International Monetary Fund. This did not happen.

Among the other initiatives that failed to see the light of day include calls for a currency transaction tax to prevent short-term capital movements that have crashed developing economies and a special provision for global public goods like health and clean air.

At the preparatory meeting in October last year, the US threatened to pull out or downgrade its participation if this happened. Diplomatic sources close to the negotiations say US negotiators wanted a “commitment to capitalism” and did not want any tinkering with the Bretton Woods institutions.

Faced with a boycott, the outcome document was edited down to an anodyne set of principles contained in the Monterrey Consensus. Much of the 14-page document is weighted towards the responsibility of poor countries to create the systems that will attract foreign direct investment, even though the poorest countries like those of sub-Saharan Africa attract tiny percentages of FDI and trade flows. Only 1% of world trade happens in Africa.

G-77 countries say that the Monterrey agreement provides only a foundation on which to negotiate the institutional issues. But for some, the conference had succeeded in beginning to address the systemic failings of globalization.

“The Monterrey Consensus has overcome the old Washington Consensus, which is to let the markets rule. Now, we have a coalition for development. And it’s committed us to closing the gap between our aspirations and the realities of finance,” said Heidemarie Wieczorek-Zeul, German Minister for Economic Cooperation and Development.

Development aspirations have been pared down by the UN to a set of Millennium Development Goals, defined by Annan at a meeting in 2000 as the key goals to overcome the worst poverty. These are to halve the numbers of people who live on less than $1 a day, who go hungry and have no access to safe water. The other aims are to get all children into primary school, ensure half of all schoolgoers are female, to reduce maternal and under-five mortality, as well as find new funds to fight AIDS, TB and malaria.

Achieving these goals carries a price tag of between $50 billion, according to the World Bank, and $100 billion, according to Oxfam, a leading British charity. Aid from rich to poor countries amounts to $53 billion a year, leaving a gaping shortfall.

That gap has only been partially filled at Monterrey, by increased aid pledges from the European Union and the US. By 2006, the US will give an additional $5 billion a year, taking its aid budget up by half. But this comes off a low base of about 0.1% of gross national product (GNP), where the commitment made by industrialized countries in 1970 was to give 0.7% of GNP. The EU will give an additional $13 billion a year. Only Norway made a significant pledge at Monterrey, pledging to increase aid to 1% of GNP by 2005 - one of five countries in the world that has kept its promise.

Still, Mark Malloch-Brown, the UN Development Programme (UNDP) administrator, celebrated Monterrey as “an extraordinary  turnaround, not just financially, but  politically”. This was because the aid  decline that started with the end of the  Cold  War  in 1990 had been stemmed and turned around, he claimed. The pledges at Monterrey amounted to an increase of between 20% and 25% in official development assistance, he said.

If he was happy, others were not. The Real Aid Network, a coalition of 18 NGOs, said that research showed that only one in three aid dollars was spent in poor countries, while the debt-servicing payments of underdeveloped countries, especially those in sub-Saharan Africa, continue to be higher than aid in many cases.

The final judgement call from developing-country governments and civil society is that Monterrey went some of the way, but not nearly far enough for those it targeted - half the 826 million people who sleep hungry; half the 850 million who are illiterate; and half the one billion people who lack a clean, convenient water source.

What it did not even try to do was address a question posed by a Nepalese delegate. “What about the other half?”

If aid commitments alone are a barometer, calculations suggest that she should be asking: what about the other three-quarters? (IPS)                          

From TWE No 277 (16-31 March 2002)