UN chief urges flexibility, compromise at development summit

World leaders gathered in the Ethiopian capital with an ambitious target – change the future direction of world development itself – heard UN Secretary General Ban Ki-moon call for “flexibility and compromise” if the world was to find the funds necessary to meet an ambitious new set of goals for global development.

Key to this will be the outcome of the Third Conference on Finance for Development which kicked off here on Monday, which aims to find the funds necessary to, among other things, end poverty and hunger by 2030, improve gender equity, promote sustainable and inclusive development and combat climate change -- collectively dubbed as ‘Sustainable Development Goals’ or SDGs.

SDGs replace the Millennium Development Goals rolled out in 2000, which aimed to improve the lives of the world’s poorest by 2015. While success in achieving these goals has been variable, the need for a post 2015 roadmap was felt, which is how the SDGs came into being.

Unexceptionable as the goals themselves are, finding the funding necessary to meet them is proving difficult. With global growth slowing, the Eurozone in turmoil and the United States moving away from multilateral aid mechanisms to more bilateral and plurilateral engagements, negotiators have been hard put get an agreement on what the new agreement should actually commit to, prompting Moon to warn the gathering, “You have recognized that in a world in which both the global population and resource constraints are growing, development finance needs a reboot.”

Without the resource commitment, these plans will remain merely “promises on paper”, Moon went on to add.

Commitments are the key bone of contention, with a sharp divergence between what developing nations – banded together under the umbrella of the Group of 77 and China (which is actually now 134 countries) want and what developed economies, principally under the Organisation for Economic Co-operation and Development (OECD) are willing to offer.

The OECD, for instance, wants newly emerged economies like India and China to step up and fund a higher share of these global development commitments. India and China argue that South-South cooperation will be driven by bilateral relationships, and are unwilling to accept externally set targets.

Besides, they point out that the previous commitment by rich nations – of directing 0.7 per cent of their GDP to development aid – has remained on paper, with the best that was achieved being 0.3 per cent.

“Now, developed nations are unwilling to commit even to that,” a negotiator for one of the developing nations said. According to current OECD data, aid to the poorest countries, classified as Least Developed Countries (LDCs), actually declined more than 10 per cent last year.

Another key area of difference is reform of the so-called Bretton Woods institutions – the IMF, the World Bank and the Asian Development Bank – where developing countries like like India and China want a greater share of voice and power.

Another key sticking point is reform of tax regulations. Developing countries say up to 1 per cent of global GDP is lost by poor countries every year because of tax evasions. They want to fix this by developing a new global regulatory structure for tax systems, which will close tax loopholes and stem evasion, primarily by multinational corporations who do ‘treaty mining’ to avoid paying higher tax in the country where they generate the income.

While the conference will discuss how poorer countries can develop better tax collection systems and stem illegal flows, the OECD nations are fiercely opposed to let the powers of setting global tax rules – currently controlled by them – to be democratized. While the OECD is prepared to deal with the G20, it is unwilling to share power with other nations.

With hectic negotiations still underway, the outcome document is still a work in progress. Hailemariam Desalegn, Prime Minister of Ethiopia and President of the Conference, joined the chorus for compromise, saying, “This is the right agenda for a world in transition. It is the right agenda for a world with the power, for the first time in history, to wipe poverty out entirely. And the right agenda for a moment in history when our future on this planet is no longer certain unless we embark on a serious change of course.”

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