Fit for whose purpose?

Secretary-General Ban Ki-moon. (Photo: UN,  Rick Bajornas).

The UN Secretary-General’s (SG) report “A life in dignity for all” (A/68/202) calls for a “new post-2015 era […] a new vision and a responsive framework […] a universal agenda that requires profound economic transformations and a new global partnership.” Unfortunately that new vision and the new partnerships proposed by the SG derails our ability to meet the challenges we meet today.

Statement by the Civil Society Reflection Group on Global Development Perspectives
New York, 22 Sep. 2013

Misdirecting finance – who benefits?

The SG’s report fails to address the core structural and macro-economic issues that shape the means of implementation. Six multilateral banks and the International Monetary fund have offered to fill that gap. In a letter to the UN Secretary General sent last July the heads of these institutions volunteer to work on “the definition of goals and targets on poverty and equity, gender, governance, job creation, trade, and financing for development”.

However, this cannot be left in the hands of these institutions, which actively recommended the financial deregulation policies that led to the crisis or made its social and economic impact worse. They have also frequently prescribed, as condition to their lending, inappropriate policies that undermine agreed UN development objectives, commitments and programmes.  And they have also come up in the past with the wrong targets and indicators for ambitious UN resolutions that require more transformative action. Thus, the goal unanimously formulated in 1995 by the heads of State and government during the UN Summit on Social Development “of eradicating poverty in the world, through decisive national actions and international cooperation, as an ethical, social, political and economic imperative of humankind” was understood by the World Bank to mean “halving between 1990 and 2015 the proportion of people living under one dollar a day.”

The SG completely disregards the global economic and financial crisis in his report in spite of its enormous economic and social costs except as a cause of diminishing ODA.

The financial institutions support “the development of a thriving private sector, which in turn provide the growth and jobs that help to end poverty”. They have been doing precisely this through liberalization, deregulation and an enabling environment for corporations have resulted in the volume of trade multiplying fivefold. However, although the average per capita GDP of the world has more than doubled that wealth has not trickled down to the poor and the progress of social indicators has not accelerated. At the same time, much of the liberalization has reduced national policy space and deregulation has been and continues to weaken social and environmental standards and safeguards.

The report of the SG does not mention the need to reform and regulate global financial markets, including through mechanisms like the proposed Financial Transaction Tax, that could both tame financial volatility and generate resources for sustainable development.

A key strategy proposed by the financial institutions is that of “maximizing the impact of ODA” supporting “new development partnerships” to “leverage the private sector”.  This formulation echoed in the SG report when it states that “official development assistance will remain crucial, including for leveraging other finance” (para. 99).

Contrary to the perception that leveraging actually draws in private resources to available public funds, increasingly it is about using public money  (ODA) to cover the risks of private investment. Losses will be socialized while profits continue to be private. Recent experience in many countries shows that these ‘innovative’ mechanisms are often ineffective, poorly regulated and can lead to corruption in borrowing and lending countries.

Independent assessments show that the leveraged investments do not support small and medium enterprises that create jobs, but rather subsidize investments by big corporations from the donor country, many of them of doubtful development interest. For example, only 25% of all companies supported by the European Investment Bank (EIB) and the International Finance Corporation (IFC) of the World Bank, between 2006 and 2010, were domiciled in developing countries.

The following questions were raised:

1. As private finance follows market trends leading to a concentration of resources, what regulatory framework or policy could ensure that it delivers development objectives?
2. Analysis by the British Overseas Development Institute (ODI) has shown that “leverage ratios do not have a one-to-one relationship with additionality” how can we be sure then that these mechanisms really leverage additional resources?
3. With scarce public money being dedicated to this kind of mechanism, how can we ensure the continuity of the basic services that would “leave no one behind”?.
4. With private investment increasingly taking the decisions that determine development funding, how can the UN ensure transparency and accountability and regular reporting?
5. These mechanisms do not avoid debt risks. Experience has shown that with or without a government guarantee, public finances might have to ultimately cover potential losses of investors that are too big to fail. Should these mechanisms be promoted when they may increase developing countries’ debt burdens to unsustainable levels?

Misleading partnerships euphoria weakens democratic governance and global commitments

The report of the Secretary-General as well as the reports of the HLP, the SDSN and the Global Compact all feature proposals for building partnerships beyond the cooperation between governments and the commitments of States under United Nations treaties and programs. The SG’s report lists some of these partnerships (paras. 63-68) and calls for anew United Nations Partnership Facility in para. 69.

Usually termed “multi-stakeholder partnerships”, these proposals build on the notion that governments will not be able to solve global problems by themselves. Seeing business as the main driver of development, the Global Compact report goes so far as to recommend the creation of “business led” global issue platforms aligned to specific sustainability challenges. It urges Governments that the Post-2015 Agenda be designed with business engagement in mind – “allowing for maximum alignment with corporate strategies and multi-stakeholder partnerships.”

As the reports put partnerships among various actors in the center of development strategies, the relationship between public institutions and the corporate sector becomes embedded in the logic of the proposed agenda. Taking into account the current patterns of economic and political power, adopting these recommendations would lead to the further weakening or by-passing of public institutions and further strengthening corporate actors.

Following the line of argument from the report of the SG (paras. 53, 83 and 98) and the reports of the SG, the HLP, the SDSN and the Global Compact, one would assume that there is no alternative to the partnership approach. Collaborative projects including corporate actors, philanthropic foundations and some NGOs and civil society organizations are seen as pragmatic, solution-oriented, flexible, efficient and unbureaucratic.

However, the assessments of the advantages of global partnerships are for the most part not based on thorough empirical research and lack power and interest analyses of the actors involved.

Multi-stakeholder partnerships can bring a number of risks and side effects with them that must be considered carefully in the further discussions on the Post-2015 Agenda. The following questions should be addressed:

1. Growing influence of the corporate sector in political discourse and agenda-setting: Do partnership initiatives allow corporations and their interest groups undue and unsupervised influence over agenda setting and political decision-making by governments?
2. Undermining accountable and transparent multilateralism: Will the proliferation of partnerships contribute to the continued institutional weakening of the UN system and hinder comprehensive development strategies?
3. Weakening democratic public institutions: If partnerships create the equivalence of equal rights among stakeholders, do they undermine the political and legal position occupied legitimately by accountable public bodies (governments and parliaments)? Given the inequality amongst participating actors, how can conflicts of interest be avoided and checks and balances amongst the participating actors be ensured?
4. Unstable financing – a threat to the sufficient provision of public goods: Will the funding of the Post-2015 Agenda become increasingly privatized, dependent on voluntary and unpredictable channels of financing through benevolent individuals or private philanthropic foundations? Are the financial resources committed in the existing partnership initiatives effectively increasing available resources (cf. para. 69)? Do the financial commitments of governments constitute new and additional funding.
5. Lack of monitoring and accountability mechanisms: What instruments are in place to guarantee that partnerships as well as the proposed United Nations Partnership Facility will be open, transparent, and accountable?

This statement has been prepared for the Civil Society Reflection Group on Global Development Perspectives.

The Civil Society Reflection Group on Global Development Perspectives was established in November 2010 by Social Watch, Third World Network, Development Alternatives with Women for a New Era (DAWN), the Friedrich-Ebert-Stiftung, Global Policy Forum, terre des hommes and the Dag Hammarskjöld Foundation. It provides an informal space for in-depth discussions for civil society activists and scholars from all parts of the world to explore conventional and alternative models of development and well-being.

The following members of the Reflection Group contributed to this draft statement: Barbara Adams (Global Policy Forum), Chee Yoke Ling (Third World Network), Gita Sen (DAWN), Hubert Schillinger (Friedrich-Ebert-Stiftung), Ziad Abdel Samad (Arab NGO Network for Development, ANND), Roberto Bissio (Social Watch), Jens Martens (Global Policy Forum), Wolfgang Obenland (Global Policy Forum).