TWN Info Service on Finance and Development (May11/06)
18 May 2011
Third World Network

LDC conference adopts Istanbul Declaration; no new aid pledged
Published in SUNS #7151 dated 17 May 2011

Istanbul, 16 May (Sanya Smith) -- The Fourth United Nations Conference on Least Developed Countries (LDC-IV) ended on 13 May, with the adoption of a political document, the Istanbul Declaration, as well as the Istanbul Programme of Action.

These outcomes were achieved after months of intense and often contentious negotiations that took place at the United Nations in New York and continued to the last day and hours in Istanbul.

The most disappointing aspect of the outcomes is that no additional aid was pledged for the LDCs. This fact was recognised and remarked upon by the Turkish Foreign Minister Ahmet Davutoglu, who was also the Chair of the Conference, in his concluding speech.

The outcome of the Conference was heavily criticised by civil society organisations present at LDC-IV in Istanbul for falling far short in assisting the LDCs. In its final statement, the Civil Society Forum said the conference failed to meet its expectations as well as the UN General Assembly mandate for LDC-IV.

"Civil society is frustrated that, having caused massive costs in the LDCs through financial and food speculation, unjust trade rules, illegitimate loans with onerous conditionality, and ecological damage, including climate change, the developed countries have not even committed to provide more aid to LDCs," said the statement.

"Even worse, many donors are either reducing their aid or diverting it to pay for climate change damage, despite their commitments in UNFCCC [UN Framework Convention on Climate Change] negotiations to provide new and additional funding for climate finance. Current levels of aid are dwarfed by the mounting costs of the damage done to LDC economies and their people."

In the closing plenary session after the adoption of the Istanbul Declaration and Programme of Action, Argentina, on behalf of the G77 and China, made a closing speech. It remarked that it had been a very hard process of negotiations at times and the agreement does not entirely reflect the aspirations that the G77 and China and LDCs had had when they began the negotiations.

"We are nevertheless pleased that we maintained various (parts) of the commitments that are still present in the Istanbul Programme of Action," said Argentina. It added that in implementing the Programme of Action, the role of developed countries is crucial while the UN system, including the Bretton Woods institutions, are also called upon to support the LDCs.

It stressed that at the same time, the developing countries feel proud to be able to support the LDCs through South-South cooperation, in the Programme of Action. "In this way, we maintain the specific identity of cooperation amongst developing

countries based on solidarity and respect for national development  priorities in every country. So we look forward to South-South cooperation to give added value to the Programme of Action."

In particular, said Argentina, "we would like to note that partnership for development is not a matter of charity, we are investing to improve the quality of life for human beings and future generations. We are talking about remedying the tremendous injustice that has affected the world for many centuries."

The representative from the European Union (EU) expressed their satisfaction with the proceedings of the conference and the ambitious and realistic outcome in the Istanbul Programme of Action and Declaration. The EU pointed out that it is the largest donor to LDCs and gives full market access for all products from LDCs and encourages other countries to do likewise.

In the only other speech by a delegation upon adoption of the Declaration and Programme of Action, Australia, on behalf of Canada, New Zealand and Australia, said they sought to be constructive partners and will be serious about implementing it.

Ahmet Davutoglu, the Turkish Minister of Foreign Affairs, and Chair of the Conference, remarked that "developed countries abstained from additional financial commitments in the Conference."

In his closing statement, the Minister quoted a famous hadith (commentaries based on the statements and actions of the Prophet Muhammad, considered by Muslims as essential supplements to and clarifications of the Koran): "He who sleeps on a full stomach whilst his neighbour goes hungry is not one of us."

He then announced that Turkey will make available a total of US$200 million annually to LDCs, starting in 2012 for technical cooperation projects and programs as well as scholarships.

According to the Minister, Turkey's current investments in LDCs are almost US$2 billion and it aims to increase this level of direct investment in LDCs, particularly from its private sector, to a total of US$5 billion by 2015 and US$10 billion by 2020. In addition to the "International Science, Technology and Innovation Center", Turkey is also prepared to host an "International Agriculture Center" dedicated to LDCs.

The Minister also declared that Turkey will allocate US$5 million for the monitoring of the implementation of the Istanbul Program of Action and that it was ready to host a Mid-Term Review Conference of the Istanbul Program of Action, Istanbul, in 2015.

He concluded by reminding the participants that Turkish President Abdullah Gul stated in his opening remarks that a world that tolerates extreme inequalities is not a world built upon shared values and objectives. "Thus, we need to work together to build a more dignified future for the people of the LDCs ... We believe a brighter future is possible. And Turkey will do everything in its power to make it [a] reality. Istanbul will then be remembered as the place where the misfortune of 900 million people has taken a positive turn."

The final version of the Istanbul Declaration had not been issued by the time of the final plenary, but an advance draft was available. The Declaration begins by reaffirming that solidarity and partnership with the poorest, weakest and most vulnerable countries and their people is not only a moral and ethical imperative, but also an economic and political one which corresponds to long term interests of the international community and serves the cause of peace, security and prosperity for all.

It recognises that not all the objectives and goals set out in the last (Brussels LDC Conference 10 years ago) Programme of Action have been fully achieved and commits to implementing the Istanbul Programme of Action.

The Declaration expresses deep concern that the ongoing impacts of the economic and financial crisis as well as the volatile energy and food prices, problems of food security and increasing challenges due to climate change, natural disasters and loss of biodiversity are threatening the development gains that LDCs have made so far.

The Istanbul Declaration also recognises that LDCs deserve support in line with their development strategies to address their development needs in a coherent manner in trade, investment, finance, including official development assistance (ODA) and technology. In addition, it recognises the need for enhancing the voice and participation of LDCs in relevant multilateral institutions and international fora.

The Istanbul Declaration underscores that ownership, leadership and primary responsibility for development in LDCs rests with the LDCs themselves. After recognising LDCs' development efforts thus far, the Declaration underlines the importance of gender equality and the empowerment of women to development and eradication of poverty in LDCs.

On ODA, the donor countries undertake to fulfil all the ODA commitments to LDCs and consider further enhancing the resources for LDCs in the Declaration.

Productive capacity is prioritised in the next decade in the Declaration, which in this regard: underscores the importance of reliable and affordable infrastructure services; recognises the importance of mobilisation of financial resources including ODA and foreign direct investment; underscores how essential sustainable agriculture focusing on small-scale farmers are to achieving food security; acknowledges the potential of regional economic integration and undertakes to promote access of LDCs to knowledge, information, technology and knowhow and aims to establish a Technology Bank. (The Turkish Government has also offered to host an International Science, Technology and Innovation Centre).

On trade, the Declaration commits to the timely implementation of duty-free and

quota-free market access, on a lasting basis, for all LDCs, consistent with the Hong Kong Ministerial Declaration adopted by the World Trade Organization in 2005. (The Hong Kong Ministerial Declaration agrees that developed-country Members shall, and developing country Members declaring themselves in a position to do so should provide duty-free and quota-free market access on a lasting basis, for all products originating from all LDCs by 2008 or no later than the start of the implementation period. It allows Members facing difficulties at this time to provide 100% market access to provide duty-free and quota-free market access for at least 97% of products originating from LDCs by 2008 or no later than the start of the implementation period).

The Istanbul Declaration also commits to ensuring that preferential rules of origin applied to products from LDCs are simple, transparent, predictable and contribute to facilitating market access.

New innovative financing mechanisms are voluntary and should not be a substitute for traditional sources of finance and should be disbursed in accordance with LDCs' priorities and not unduly burden them, according to the Declaration.

On climate change, the Declaration shares the aim of strengthening LDC capacity to adapt to and mitigate climate change, bearing in mind the provisions of the UNFCCC. It notes that mobilization and provision of additional, adequate and predictable financial resources are necessary to address LDCs' adaptation and mitigation needs. It welcomes the decision to establish the Green Climate Fund and underscores the need for the access of the LDCs to appropriate, affordable and clean technologies that foster their sustained economic growth and sustainable development.

The 48 LDCs have a combined population of 880 million and only three countries have graduated from being LDCs.  The Declaration commits to assisting LDCs to enable half of them to meet the criteria for graduation from LDC status. It also promises to work on developing and implementing smooth transition strategies for graduating and graduated LDCs.

The Declaration acknowledges the role of Parliaments and the private sector and calls on civil society to enhance their roles in the development efforts of LDCs and takes note of the civil society declaration of the Conference.

Civil society organisations voiced sharp criticism of the LDC-IV outcome. The LDC Civil Society Forum issued its own Istanbul Declaration on 13 May 2011, which expresses deep disappointment that civil society voices have not been heard and reflected in the conference outcomes.

It states that analysis of the Brussels Programme of Action "showed that development partners failed to deliver their commitments to provide adequate aid, reform unjust trade rules, remove the burden of debt and build the capacity of LDCs... Export-led growth has been inequitable and unsustainable, resulting in LDC commodity dependency, de-industrialization, environmental damage and socioeconomic marginalisation. These failures and the flawed paradigm have contributed to the growth in LDCs from 24 to 48, and graduation of only three LDCs over the last three decades."

According to the civil society declaration, LDCs are economically disadvantaged, exploited and marginalised. It states that, "The conference has failed to meet our expectations and the UN General Assembly mandate. The UN General Assembly Resolution A/RES/63/227 calls on governments ‘to mobilize additional international support measures and action in favour of the least developed countries, and, in this regard, to formulate and adopt a renewed partnership between the least developed countries and their development partners'."

The civil society declaration states that, "This has not happened. Civil society is frustrated that, having caused massive costs in the LDCs through financial and food speculation, unjust trade rules, illegitimate loans with onerous conditionality, and ecological damage, including climate change, the developed countries have not even committed to provide more aid to LDCs. Even worse, many donors are either reducing their aid or diverting it to pay for climate change damage, despite their commitments in UNFCCC negotiations to provide new and additional funding for climate finance. Current levels of aid are dwarfed by the mounting costs of the damage done to LDC economies and their people."

While recognising the strong efforts of the LDC and Turkish governments to ensure tangible commitments are included in the Istanbul Programme of Action, civil society pointed out that this "has been undermined by the developed countries systematically having removed any targets, timetables and delivery mechanisms that may have been used to hold them to account. They have refused to accept commitments beyond those already agreed in other forums like the Millennium Summit, WTO and climate change negotiations."

The civil society declaration notes that the Istanbul Programme of Action "calls for the removal of impediments to the private sector, without recognition that governments need to regulate to protect workers, consumers, the environment and local communities. Civil society accepts that the private sector can play a useful role, but our experience is of companies that have unsustainably exploited minerals, fish and forests; land grabs that have stolen the resources and livelihoods of local people; biofuel plantations that have destroyed forests and agricultural lands; food dumping that has destroyed farmers' livelihoods; and projects that leave local people with no water and a polluted environment. Intellectuals meeting here have reminded us that the LDCs must not remain the MECs - the most exploited countries."

Its criticism also points out that the Istanbul Programme of Action "calls for public finance to be given to the private sector in the forms of guarantees, investment promotion schemes and incentives. But these subsidies hand over public money to the private sector in the hope that the market will deliver public benefits. International experience with public private partnerships demonstrates the need to avoid the public sector paying for the costs while the companies reap the profits."

"Funds needed to overcome poverty and injustice, including education, health care, water and sanitation, gender equity, social inclusion and community development are being diverted to subsidise companies. There is grossly insufficient funding now to meet the needs of the resource poor, without more being diverted from donors and governments to companies. Expropriation of the public purse is unacceptable... Civil society rejects the privatisation of essential services under the guise of public private partnerships or otherwise."

In its declaration, civil society called for "the Istanbul consensus to constitute a clear rejection of the Washington consensus... Diversification of our economies will require government leadership to build a strong domestic economy... States need to have the political space to decide on their own development, and strategies need to be discussed democratically, approved and monitored. In that regard, the primary accountability of governments should be to their own societies and parliaments, not to donors, investors or international agencies like the World Bank, IMF or WTO."

On trade, civil society states that "A decade ago, there were expectations that trade reform would be possible as part of a Doha Development Agenda. But ‘development' has been erased from the agenda, and negotiations are stuck because of the unwillingness of developed countries to agree to reform the major trade distortions in the system, notably due to inequitable rules on agriculture. Civil society is calling for an end to unjust trade agreements and for LDCs to resist efforts by developed countries to negotiate reciprocal trade agreements. Special and Differential Treatment and policy flexibility for LDCs need to be made operational according to a given country's stage of development (rather than limiting it by time) within the WTO and regional and bilateral agreements, so that LDCs can adopt development strategies that reflect their specific needs and  opportunities."

On agriculture, the civil society declaration goes on to call "for the promotion of economically viable, socially acceptable and ecologically sustainable farming practices so that food sovereignty of LDC people is strengthened. Agricultural research that builds on seed diversity and socio-cultural farming practices needs to be supported and new and additional financial resources must be mobilised to support adaptation and strengthened resilience to climate change-related impacts. Agrarian reform policies must support the needs, strengths and rights of smallholder farmers, particularly women, and support them to organise into producer associations or cooperatives and to add value to their indigenous production systems."

On debt, civil society, in its declaration, calls "for immediate and unconditional cancellation of all debts of LDCs and a moratorium on debt payments by LDC governments pending debt cancellation. An international process with counterpart national processes should be established, aimed at a rigorous study of illegitimate debt, including case studies, in order to come up with policies that lead to full and unconditional debt cancellation and changes in lending and borrowing policies and practices. Immediate changes must be pursued in the practices of lending and borrowing to move towards sovereign, democratic and responsible financing."

On ODA, the civil society position expressed in its declaration is to "call for more and better ODA which must be directed towards development effectiveness rather than the dominant aid effectiveness approach. ODA must respect sovereignty and support people-owned policies and programmes, rather [than] being undermined by conditionality. Adequate and predictable sources of finance are needed, such as from a Financial Transactions Tax levied on the transactions of the major banks and financial institutions."

In the climate change section, the civil society declaration makes it clear that "Industrialised countries must commit to deep, drastic, unconditional cuts in carbon and GHG [greenhouse gas] emissions through domestic measures, to be expressed in international, legally binding agreements within the Climate Convention that contain targets based on science and equity."

"The pursuit of false solutions must cease. They also need to commit to obligatory, predictable, condition-free, additional, non-debt creating public finance to cover the full costs of adaptation in countries of the South, as well as the costs of shifting to sustainable systems - to be part of international legally binding agreements within the Climate Convention. Action is urgent to avoid catastrophic climate change. The Istanbul target to reduce the numbers of LDCs needs to occur because they graduate not because they burn or drown due [to] the impacts of climate change." +