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Financing for Development: a debrief

By Jane Fiona Cumming, Alex Hughes, and Jack Setton.

As an ambitious post-2015 development agenda comes together in the run up to the much-publicised New York UN Summit this September, several crucial questions remain to be answered. Last month, the UN’s third Financing for Development conference (FfD), held in Addis Ababa, Ethiopia, put a difficult question to world leaders, private sector representatives, civil society groups  and international organisations alike: who will foot the bill, and how?

It would be difficult to overstate the stakes of the three-day negotiations. In many ways, the Financing for Development conference has laid the foundations upon which the crucial Sustainable Development Goals and UN Climate Change Conference will have to rest, and the commitments reached in Addis Ababa will have very tangible repercussions for what can be expected from the sustainable development agenda of the next fifteen years.

It comes as good news, then, that the conference’s outcome document strongly insists on sustainability being the only credible way forward where development is concerned. Indeed, the environmental dimension of development was a marginal feature of the first Financing for Development conference, held in Monterrey, Mexico, in 2002. The 2008 follow-up conference on Financing for Development, held in Doha, in turn, was seen by many as having failed to correct the 2002 false start.

Among the other crucial messages to have come out of the third FfD last month were the commitment to a global compact for social protection (cutting across major health, education and poverty goals of the SDGs), reiteration of the target to dedicate 0.7% of gross national incomes on aid, as well as a new emphasis on the role which the private sector has to play in sustainable development. One important and contentious point of negotiation was the need for improved accountability and transparency in the private sector, notably through an overhaul of international tax institutions.

While the three-day summit produced over a hundred measures which can be read in this action agenda, as well as a wide range of reactions, consensus was not foremost among those. On the one hand, UN officials celebrated the outcome as “an agreement for our world, our dignity, our future” - a momentous step in the transition to sustainable development and an inclusive global economy where equal and fulfilled societies can develop without compromising the integrity of their environments.

On the other hand, a number of civil society organisations and newsgroups expressed frustration over what they saw as an extension of “unresolved rigged tax rules and privatised development” (Oxfam), and a failure to truly engage the “flaws in international policy that, tackled effectively, could have done much for human rights” (The Guardian). The main grievance held against the Addis Ababa conference was its alleged failure to set up an international tax body where developing nations will have a credible voice in decision-making. According to such sources, the fundamental mismatch between the objectives of the SDGs or stated resolutions of the FfD conference, and the continued marginalisation of developing countries within global institutions is a crucial shortcoming which may, from the outset, undermine international aspirations of sustainable development.

The narrative deployed in Addis Ababa was on the proverbial money, opening doors for sustainable development in global policy and drawing new actors, such as the private sector, into the conversation. However, it may have fallen short of challenging the status quo which has dominated North/South relations since the late 20th century. What the FfD has perhaps shown is that a realisation has yet to materialise among the leaders and citizens of developed countries, that they will share (albeit unequally) in the disastrous consequences of climate change, environmental degradation and social crises which the developing world may drive in coming decades. So far, a general denial of this state of affairs has eclipsed the much-needed conclusion that it would better serve wealthy nations’ long term interests to approach the puzzle of sustainable development as partners, rather than gatekeepers.

The key to unlocking this change in political will and individual behaviour may come from a clearer and louder communication of the relative costs of sustainable development, against those of reacting to climate change. Past years have given us a bleak glimpse of the latter: the 2012 ‘Climate Vulnerability Monitor’ estimated that climate change is already writing off 1.6% of global GDP annually, and projected for this figure to rise to 3.2% by 2030. The report goes on to add that the costs associated with extreme weather events such as floods, droughts, or severe storms may wipe-out an additional 2% of the USA’s GDP by 2030. This leads us to consider the FfD conference’s original puzzle under a different angle: who will foot the bill - today’s societies, or those of tomorrow?

It is unclear as of yet what fruits the FfD will bear, and we can hope that the questions which were left open in Addis Ababa will find resolutions in the upcoming COP21 and UN Post-2015 conferences in September and December.

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