FFD CONFERENCE REAFFIRMS MONTERREY CONSENSUS -

UNCLAS SECTION 01 OF 05 STATE 133691 SENSITIVE SIPDIS E.O. 12958: N/A TAGS: ECON EFIN EAID UN AORC SUBJECT: FFD CONFERENCE REAFFIRMS MONTERREY CONSENSUS - DEBATE FOCUSED ON ODA COMMITMENTS REF: A. A.STATE 122053 (NOTAL) ¶B. B. STATE 102765 ¶C. C. STATE 015117 ¶1. (SBU) Summary: The November 29 - December 2 United Nations "International Conference to review implementation of the Monterrey Consensus" adopted the "Doha Declaration on Financing for Development" (FfD) that reaffirms the path breaking 2002 Monterrey Consensus. The economic uncertainty caused by the financial market crisis and global economic downturn cast a shadow over the conference proceedings and contributed to a tilt in the outcome declaration away from private sources of financing toward ODA. Nonetheless, the U.S. delegation largely achieved our objectives of maintaining U.S. leadership in promoting the Monterrey Consensus as a framework that works, advocating the total economic engagement approach to development, highlighting the importance of country ownership and responsibility in the development process, and showcasing U.S. assistance, particularly its focus on partnership and engaging the private sector. ¶2. (SBU) The toughest issue to solve at the conference was defining the UN's role in the ongoing reforms to the global financial system. The G77 and the President of the General Assembly pressed to establish a specific and authoritative role for the General Assembly, with several ministers joining in negotiations. However, delegations agreed only that the UN would provide a forum for discussion by hosting a high-level conference "on the world financial and economic crisis and its impact on development." We will need to work to ensure that this conference remains focused on that topic and does not become a repeat of the difficulties we experienced at the Doha Conference. Director of Foreign Assistance and USAID Administrator Henrietta Fore led the U.S. delegation and hosted a well-attended side event on financing agriculture in a global financial crisis. Washington welcomes post reporting on host country views on the Conference, FfD follow-up, and the planned high-level conference. End Summary. ¶3. (U) The four-day UN International Conference to review implementation of the Monterrey Consensus on Financing for Development ended on December 2 with the consensus adoption of the "Doha Declaration." The product of intense negotiations over three months leading up to and through the last day of the conference (ref A),the outcome document captured the widely shared, if not unanimous, view that the integrated approach for marshaling development financing set out in the Monterrey Consensus remains an effective framework of action. Conference participants offered impassioned arguments that additional efforts and follow through on commitments made by both developed and developing countries are needed to realize the full promise of the Monterrey Consensus. The levels and importance of official development assistance (ODA) dominated the debate, particularly in the many presentations and discussions organized by NGOs and civil society organizations on the margins of the official proceedings. ¶4. (U) Most countries were represented at the ministerial or sub-ministerial level (appropriate for a review conference),while the heads of state or government of only a quarter of the 160 participating countries made brief appearances to deliver remarks in the plenary sessions that continued throughout the conference. French President Sarkozy, speaking on behalf of the EU, was the only head of a major donor country to attend. Unlike the U.S. multi-agency delegation (led by Director of Foreign Assistance and USAID Administrator Henrietta Fore with State, USAID, Treasury, Commerce, USTR, and MCC),most other developed country delegations, particularly from the EU, were dominated by development ministry officials. This had an impact on the focus of the discussions. ¶5. (SBU) The economic uncertainty caused by the financial crisis and global economic downturn cast a shadow over the proceedings and also contributed to the tilt towards ODA. This backdrop helped to embolden some participants, including President of the UN General Assembly (PGA) Miguel d'Escoto Brockmann, who tried to radicalize the dialogue and called for revolutionary changes to the development paradigm and international financial architecture. Several countries and accredited STATE 00133691 002 OF 005 organizations also used the conference to push pet issues not directly linked to the Financing for Development (FfD) review, diverting the discussion to questions of development spending rather than financing. Weak conference planning by the UN and a messy negotiating process for the outcome document also made it difficult to keep the dialogue focused, balanced, and constructive. The terrorist siege in Mumbai, India dominated the news during the conference and reminded participants of the national security implications of economic development policies. -------------- Key Messages from Doha -------------- ¶6. (U) The U.S. delegation largely achieved the objectives we set out at the beginning of the review process (ref C) and pursued since expert meetings began in January 2008. In our official statement delivered by Administrator Fore, which included a message from President Bush, we sought to maintain U.S. leadership in promoting the Monterrey Consensus as a framework that works and the necessity of a total economic engagement approach to development. We also highlighted the importance of countries' ownership and responsibility for their own development and showcased U.S. assistance, particularly its focus on partnership and engaging the private sector. Following are the key messages we promoted during the conference and which are reflected in the Doha Declaration: ¶7. (U) Recommitment to the Monterrey Consensus: The Doha Declaration explicitly reaffirms the Monterrey Consensus "in its entirety, in its integrity and holistic approach." Calls for a new alternative found little resonance and no practical articulation. A broad spectrum of participants acknowledged and supported clear statements in the outcome document that states must use all sources of financing in pursuing their development goals, including domestic resources, foreign investment, trade, ODA and debt. Despite the current global economic crisis, states also generally recognized the unparalleled period of global economic prosperity since they set out the Consensus at Monterrey, as well as its effectiveness as an integrated approach to development through economic growth. The conference recognized that "private international capital flows, particularly foreign direct investment (FDI),... are vital," and "international trade is an engine for development and sustained economic growth." The conference also recognized the "catalytic role" that ODA can play "as a complement to other sources of financing for development." ¶8. (U) Country ownership and responsibility, together with partnership are key: The Doha Declaration underscores that "each country has primary responsibility for its own economic and social development." At the same time participants recognized that "domestic economies are now interwoven with the global economic system," and we have a shared interest in each country's success and the need for "an enabling international economic environment." The necessity of strong public-private partnerships and the role of the state in creating an enabling environment for the private sector were also dominant themes in Doha and sprinkled throughout the outcome document. ¶9. (U) The U.S. stands by its commitments: With developing countries present in much larger numbers than donors, public remarks and media reporting during the conference overwhelmingly focused on whether developed countries were meeting and increasing their ODA commitments, especially in light of the global economic downturn and its potentially negative impact on developing countries. While the U.S. has already fulfilled and gone beyond its Monterrey commitments, we reiterated the President's pledge that "the U.S. will not abandon its commitments to people in the developing world in the midst of this financial crisis." ¶10. (U) Developing countries have important commitments too: At the same time we emphasized that developing country commitments to good governance, sound economic policies, and rule of law are even more important today and must be fully realized. In the Doha Declaration we recognized the progress made and developing countries still pledged "to build upon this progress ... by ensuring the necessary enabling environment for mobilizing public and private resources and expanding productive investments." A strong push by developing countries to STATE 00133691 003 OF 005 advance the concept of "policy space" as a donor-financed entitlement and license to escape any international commitments to accountability, transparency, or funding conditionality did not take root. The Doha Declaration simply states that, "[i]t is for each Government to evaluate the trade-off between the benefits of accepting international rules and commitments, and the constraints posed by the loss of policy space." ¶11. (U) Developing countries have a voice that must be heard: The Doha Declaration acknowledges the need to "strengthen the voice and participation of developing countries ... in international decision-making and norm-setting." However, despite a number of press statements by PGA D'Escoto, participants did not endorse the view that the purpose of the conference was to convince the "haves" to pay attention to the "have-nots," and that the UN should host a summit of the entire membership (i.e., the G-192) to review and revamp the international financial architecture. UN Secretary General Ban received greater support for his more pragmatic call for a new flexible multilateralism that can "accommodate different fora with various mixtures of participation" and balances "the legitimacy that comes from universal involvement ... with the efficiency that results when we delegate deliberations to a few key players." With several ministers joining in negotiations, delegations agreed that rather than the summit proposed by the PGA, the UN would host a high-level conference "on the world financial and economic crisis and its impact on development," with the details are supposed to be worked out in the UNGA by March 2009. -------------- -------------- Messy Negotiations and Lengthy Outcome Document -------------- -------------- ¶12. (SBU) The question of a UN summit on the international financial and monetary architecture was one of many contentious outcome document issues that remained outstanding after three months of negotiations in New York. Negotiating as country blocks, both the EU and the G-77 showed little flexibility in their positions before arriving in Doha. The Egyptian and Norwegian facilitators encouraged open debate but did little to force serious negotiation on specific issues requiring compromise or concerted efforts to find common ground. They also did not clearly define and stick to a negotiating process. The unexpected issuance of a new facilitator's text on the first day of the conference, for example, left delegations scrambling to digest changes and identify unacceptable text in the 70 paragraph document. The EU, led by France, then surprised negotiators with a proposal that the conference accept the new document "as is." This brought deliberations to a grinding halt and effectively eliminated a full day of negotiations. ¶13. (SBU) Several delegations, including Japan, Russia, and the CANZ group (Canada, Australia, and New Zealand), joined us in rejecting the text absent some essential modifications, although our list of must-have changes was the longest. EU member state delegates admitted in private they expected and in fact welcomed U.S. opposition to their take-it-or-leave-it proposal, which reflected internal EU discord more than well reasoned negotiating tactics. Although the move did provoke the beginning of serious negotiations, it also positioned the U.S. as the spoiler if a consensus agreement could not be reached. After all-night negotiations narrowed the differences significantly, EU ministers disrupted negotiations again the next afternoon by demanding a senior-level session to resolve the summit issue and then, for the second time, tried to force closure on any further debate. Although enough delegations resisted to allow negotiations to continue late into the third night of the conference, the EU negotiators refused to engage and reserved judgment on any further material changes until they could consult again with their ministers. A surprising and positive result of this tactic was a demonstration of greater flexibility by other key delegations, particularly the G-77, in finding common ground on the remaining most contentious issues. This allowed the U.S. to win agreement on removing our three remaining redlines (language on international tax cooperation, future debt initiatives, and climate change). ¶14. (SBU) The result of this erratic negotiating process was an outcome document that ballooned by 20 paragraphs from the initial draft, is longer than the original lengthy Monterrey Consensus document, and contains some unnecessary repetition, unpolished language, inaccuracies, STATE 00133691 004 OF 005 and some minor internal inconsistencies. While we were able to remove attempts to pre-judge negotiations taking place in other fora, such as on trade and climate change, with time running out the Secretariat cut off debate after our redlines were addressed and left us no opportunity to clean up the text. -------------- -------------- Side Events on a Wide Range of FfD Topics -------------- -------------- ¶15. (U) Donor countries, international financial institutions, and NGOs hosted more than 50 official side events during the conference touching on a wide range of FfD themes. These included aid for trade, inclusive financial sectors, gender, the impact of tax evasion, and the ILO's decent work agenda. Secretary-General Ban Ki-moon attended at least four side events, including a UNDP event entitled "A Time of Crisis and Opportunity: Responding with Renewed Multilateralism," a high-level event on financing education, and a luncheon on the economics of gender. ¶16. (U) USAID Administrator Fore hosted a well-attended side event on financing agriculture in a global financial crisis that brought together a panel of private sector, public sector, and civil society organizations engaged in providing credit along the agricultural value chain. The event included participants from civil society, business, donors, African governments, and the press, as well as seven development ministers, the leader of the World Bank delegation, and senior African leaders. The session established broad donor endorsement of the African Union's Comprehensive African Agricultural Development Program (CAADP). It also demonstrated broad acceptance of a "value chain" framework for the agricultural sector that embodies public and private participants within a market context that stretches from inputs and production to processing and consumption. The panelists also identified a number of opportunities for public-private cooperation to better manage risks, improve the efficiency of agricultural markets, and illustrated a diversity of institutional approaches adapted to the diverse African conditions. -------------- Public Diplomacy and Outreach -------------- ¶17. (SBU) The U.S. Delegation focused its Doha media and public outreach activities on defining core U.S. FfD messages and providing constant updates and media backgrounders to available press during and after the conference. A lackluster global media attendance (due to few heads of state attending) did not affect significantly our efforts at getting out our messages to global wire and regional broadcast audiences. Overall conference media reporting was fairly balanced in representing key U.S. views and significant post-conference media outreach helped to clarify the key role the U.S. delegation played in reaching a successful conference declaration. In addition, following similar activities at the Accra High Level Forum on Aid Effectiveness, the U.S. delegation was again confronted by hostile non-U.S. civil society organizations (CSOs) and advocacy groups who attempted to undermine U.S. positions and provided disinformation support to G-77 and West European delegations during negotiation of the outcome document. The radicalization of this community was evidenced by the refusal of the lead U.S. NGO member, Interaction (a consortium of more than 150 U.S.-based humanitarian organizations) to sign the final draft of the CSO Doha Communique. ¶18. (U) DFA and USAID Administrator Fore took the initiative to request Interaction to arrange a meeting with NGOs attending the conference. The meeting, with about fifteen U.S. and international NGOs, provided an opportunity to exchange views on issues and expectations for the Conference. This effort to engage the NGOs on their views was welcomed by the group and engendered favorable feedback, even though differences of perspective remained. -------------- -------------- Next Steps - Towards a Better FfD Review Process -------------- -------------- ¶19. (SBU) Beyond a commitment to stay fully engaged in implementing the Monterrey Consensus and the need for participation across all economic ministries and with civil society organizations and the private sector, the STATE 00133691 005 OF 005 Conference could not reach agreement on how that follow-up should be structured. We opposed the proposal that participants commit to another review conference in 2013, but accepted further consideration of the need for one. Having consistently been one of the most prepared delegations for the long series of experts meetings and outcome document negotiations, our call for a thorough re-think of the FfD follow-up process had credibility and gained traction with others. We successfully pushed back calls for creating a new mechanism, arguing instead for more effective use of existing fora and a decentralized dialogue that might bring greater focus and expertise to the different pillars of the Monterrey Consensus. The UN Economic and Social Council (ECOSOC) will take up the issue during its spring 2009 meeting with the IMF, World Bank, WTO, and UN Conference on Trade and Development, as well as its regular substantive session during the month of July. ¶20. (U) Washington welcomes reporting on host country views on the Doha Conference and preferences on FfD follow-up and the UN hosted high-level conference on the global economic situation and its impact on development. Department contacts are Katherine (Kemy) Monahan in EEB/IFD/ODF and Andrew Haviland in IO/EDA. ¶21. (U) Minimize considered. RICE