Preparatory Committee for the DEV/2303

International Conference 8 May 2001

on Financing for Development

3^rd and 4^th Meetings (AM and PM)*

PREPARATORY COMMITTEE FOR CONFERENCE ON FINANCING FOR DEVELOPMENT SUSPENDS

SESSION, ENCOURAGES CONCRETE INITIATIVES TO SUPPORT EVENT

The Preparatory Committee for the International Conference on Financing for Development concluded the first part of its third session this evening by approving a draft resolution that reaffirmed the importance of deepening the efforts of all relevant stakeholders in support of the financing for development process and shaped the format for the 2002 Event.

It was announced at the opening of the current session on 2 May that the Conference would be held in Monterrey, Mexico, from 18 to 22 March 2002. By further terms of the text, recommended for adoption by the General Assembly, the Event should include a high-level official meeting on 18 March, a ministerial level segment on 19 and 20 March, and a segment at the Summit level with the participation of heads of State or government on 21 and 22 March.

Also by the text, the Assembly would encourage governments and all relevant stakeholders -- the World Bank, the International Monetary Fund, the World Trade Organization and the United Nations Conference on Trade and Development, regional development banks and all other relevant regional bodies –- to continue considering concrete initiatives in support of the process and Event.

By further terms, entities of the business sector would be invited to participate in the series of preparatory meetings, as well as in the Conference, itself. It was also agreed that the Preparatory Committee would decide on the nature of the outcome of the international Conference no later than the resumed third session, to be held from 15 to 19 October.

The Committee, which is laying the groundwork for the Event, held its first session in New York on 31 May and 2 June 2000, and a resumed first session on

30 October and 16, 20 and 27 November 2000. The second session took place from

12 to 23 February 2001. A fourth session was scheduled for January 2002.

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· The header for Press Releases DEV/2300 and 2301 of 2 May should read:

Preparatory Committee for the International Conference on Financing for Development.

Preparatory Committee for Conference - 1a - Press Release DEV/2303

on Financing for Development 8 May 2001

3^rd and 4^th Meetings (AM and PM)

With special emphasis on the critical importance of development financing in a global and interdependent world, delegations sought to further focus their substantive preparatory work. Among the issues considered were: mobilizing

domestic and international financial resources for development; trade; increasing international financial cooperation through official development assistance (ODA); debt; and systemic issues, specifically enhancing the coherence and consistency of the international monetary, financial and trading systems in support of development.

Overall, the Committee seeks to address the broad development concerns expressed by world leaders at the Millennium Summit, particularly the obstacles faced by developing countries in mobilizing the resources needed to finance their sustained development. The world conference is aimed at meeting the long-term imperatives of eradicating poverty and fulfilling the social and humanitarian goals set by global conferences of the past decade.

Addressing the Committee during its morning meeting, Nitin Desai, Under- Secretary-General for Economic and Social Affairs, said that following the session’s useful exchange of views on substantive issues, the question now focused on the possible outcome of the process, specifically on what people were expecting from the Conference and ways of working towards that goal. A certain gap had existed between the consensus on development that had emerged in the 1990s, which dealt with restructuring of development effort at every level, and the lack of any equivalent consensus on the means of its implementation, a crucial part of the development financing issue. The world was looking to bridge that gap through a consensus that was defined, not by experts, but by governments.

In other business, the Committee elected Ruth Jacoby (Sweden) as Co-Chairman to replace Jorgen Bojer (Denmark) whose tour of duty is ending. The following Vice-Chairmen were also elected: Ivan Simonovic (Croatia) to replace Ivan Nimac (Croatia), and Yoshiyuki Motomura (Japan) to replace Hideaki Kobayashi (Japan). Ellen M. Loj (Denmark) would fill the vacancy created by the departure of

Mr. Bojer.

In a concluding statement, Committee Co-Chairman Jorgen Bojer (Denmark) said the success of the Monterrey Conference should be measured by the impact that the financing for development process would have on the political environment in which policies related to trade, ODA and capital flows were decided. The Conference was emerging as a confidence-building measure between North and South, and would help guide and harness globalization. The Conference should inspire all stakeholders to contribute effectively. If it succeeded, it would be a United Nations success.

Co-Chairman Asda Jayanama of Thailand thanked the outgoing Co-Chairman for his hard work and wished him luck in his future endeavours.

Statements were made by the representatives of Iran, on behalf of the "Group of 77" developing countries and China, Sweden, on behalf of the European Union, United States, Pakistan, Belarus and Israel.

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Preparatory Committee for Conference - 1b - Press Release DEV/2303

on Financing for Development 8 May 2301

3^rd and 4^th Meetings (AM and PM)

Highlights

The Committee held its formal discussion in the wake of the fourth high-level meeting at Headquarters between the Economic and Social Council (ECOSOC) and the Bretton Woods institutions. Committee members hailed the interactive meeting as evidence of the importance the world attached to the financing for development process. Economic and Social Council President, Martin Belinga-Eboutou (Cameroon), reported that one key point had been that sustainable economic growth was an essential prerequisite for attaining the objectives of the Millennium Declaration, particularly in reducing poverty.

During the discussion, intergovernmental organizations reaffirmed

commitments to the development financing process as follows:

-- The International Monetary Fund (IMF) reconfirmed the Fund's commitment to the process, adding that the degree of consensus and convergence on goals and priorities at the joint dialogue with ECOSOC on 1 May had been remarkable;

-- The World Bank said its mission was to reduce poverty and promote development; it was therefore committed to contributing to the financing for development process, which had picked up momentum in the past few weeks;

-- The Organization for Economic Cooperation and Development (OECD) stressed the need for cooperation in both the preparatory process and the actual event and highlighted five areas in which the work of the OECD could matter.

Several regional groups presented their views, with many stressing the need to secure lasting growth through strengthened partnerships:

-- The European Union said the continued active involvement of all stakeholders, including civil society, was key to the work ahead;

-- The "Group of 77" developing countries and China said the current session should encourage deepening participation by all relevant stakeholders in the preparations and the event; the Conference would give high visibility to development financing issues;

-- The Association of South-East Asian Nations (ASEAN) linked financing for development with a stable international security regime;

-- The Rio Group called for negotiations in the context of a renewed North-South partnership that included the active involvement of the Bretton Woods institutions, the World Trade Organization (WTO), regional development banks, and others;

-- The small island developing States said inadequate domestic capital markets forced them to depend on international financial flows. Pivotal initiatives by the Bretton Woods institutions and the WTO, such as the Heavily Indebted Poor Countries (HIPC) initiative to alleviate the debt burden, were welcome;

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Preparatory Committee for Conference - 1c - Press Release DEV/2303

on Financing for Development 8 May 2001

3^rd and 4^th Meetings (AM and PM)

-- The Caribbean Community (CARICOM) called for greater attention to the special needs of micro-States with small export bases, high production costs and diseconomies of scale; and

-- The landlocked developing countries also hoped for special consideration; reversing their suffering lay in improving the transit transport system.

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Summary of Morning Meeting

NITIN DESAI, Under-Secretary-General for Economic and Social Affairs, said there had been a useful exchange of views on substantive issues. The question now focused on the possible outcome of the process, specifically on what people were expecting from the Conference and ways of working towards that goal. Available space for negotiating the outcome was limited to one week in October, two in January, and perhaps some time in Monterrey. A process should be designed, therefore, which was capable of producing a result. A certain gap had existed between the consensus on development that had emerged in the 1990s, which dealt with restructuring development effort at every level, and the lack of any equivalent consensus on the means of its implementation, a crucial part of the development financing issue.

He said that the world was looking to bridge that gap through a consensus that was defined not by experts, but by governments. Clearly, a political statement of principles reflecting such a consensus, by itself, would not meet expectations. Some commitments were also sought. Those were still under discussion, but one example on which there seemed to be general agreement had been the need for a substantially strengthened programme to build the capacity of governments. The world expected an outcome that reflected that new consensus, along with some specific commitments for cooperative action.

In terms of the limited negotiating “space”, he said it was very important when defining the structure of the outcome document to include a clear understanding of what went where. The outcome should be approached in a unified way. In terms of the negotiating process, when the outcome was negotiated separately by different parts, valuable time was lost. The basic elements should be discussed together. The time had come to cease informal discussions, including on the potential contents of the outcome document, and start thinking in terms of the elements of the document, without actually reaching agreement. He hoped there would be a useful exchange of views on the shape and pattern of the outcome document, in order to pave the way for future preparatory discussions next fall.

MOHAMMAD ALI ZARIE-ZARE (Iran), speaking on behalf of the "Group of 77" developing countries and China, said that preparation process for convening the Conference had been extensive thus far. The substantive agenda was comprehensive and was providing a broad platform for the future of financing for development. The Group believed that the outcome of the Conference should build upon the rich preparatory process. The Monterrey Conference should not be seen as the end of that process, but the beginning.

The political declaration, he said, should contain a specific timetable for achieving the Conference goals. The follow-up mechanism should ensure an efficient and integrated approach, with coordination at the national and international levels, and include a high-level dialogue with all relevant stakeholders. The United Nations, as the most representative and global body, enjoyed a unique position to coordinate follow-up activities.

RUTH JACOBY (Sweden), speaking on behalf of the European Union, said the outcome of the Conference should reflect the innovative nature of the process and confirm its holistic approach to the needs of countries at different stages of their development. The Conference should adopt a concise and forward-looking political declaration that sets out strategic goals of policy and takes into account the key role of the private sector.

The Union, she said, was prepared to develop, together with other interested stakeholders, innovative approaches that would replace a conventional plan of action. Instead, the Conference should identify and agree on steps that would contribute to the realization of its goals. Each Member State and each institutional actor could outline the way in which it would contribute to the implementation of those goals. For the coordinated follow-up, the Union believed that existing bodies should be used, such as the Economic and Social Council, the General Assembly, and meetings of the Bretton Woods institutions and the World Trade Organiization (WTO). It would not be useful to plan an automatic follow-up in five or 10 years.

JOHN DAVISON (United States) praised the Under-Secretary-General’s call for a consensus and working towards an action-oriented outcome. He was pleased that his Government’s thinking “tracked” with that of the Group of 77 and the European Union. The Committee should be working towards adopting some type of political declaration of shared goals and values, and should continue with its holistic approach. A successful outcome should include the broadest possible participation by all actors and stakeholders. The role of the United Nations in the process was critical. If the Mexico Conference succeeded, it would be a United Nations success and it would have succeeded because of the kind of consensus outlined by Mr. Desai -– one that was realistic, pragmatic, and more narrowly focused.

In terms of actual outcomes, he said that the shared view was that an innovative process deserved innovative outcomes. The traditional programme of action was not the correct approach. Rather, the process should bring together different initiatives from different stakeholders. If regional groups were working on trade initiatives, for example, they should be encouraged to bring those to Monterrey. Similarly, if nations were working on individual initiatives, they should bring those to Monterrey, as should the private sector and civil society. Some type of compilation of those actions and outcomes would be the best possible outcome of Monterrey, thereby meeting the type of expectations referred to by Mr. Desai. Early agreement on such an approach would generate enormous enthusiasm during the lead-up to Monterrey. A follow-up should move away from the traditional pattern of a five-year review. Dialogue among all of the major stakeholders should be strengthened.

SHAMSHAD AHMAD (Pakistan) said that the Conference in Mexico would be an important event and an exercise aimed at achieving innovative ways of financing development. There had to be political will to sustain those innovations. Pakistan was pleased that the Preparatory Committee had initiated debate on the outcome. The discussions today would facilitate the preparation of the first draft of an outcome document that would be discussed at the next meeting of the Committee in October. Pakistan supported the facilitator in his work on the outcome document.

He added that since the inception of the financing for development process, Pakistan had maintained that the discussion on a possible outcome should take into consideration that the Conference was not a culmination point, but a beginning. The pace and complex nature of globalization required sustained efforts to ensure that development remained the central objective of the world economic system. All actors had to coordinate their activities towards the promotion of development. The United Nations must play a catalytic role in unleashing the potential of globalization. All of those factors would contribute to making the Conference a turning point in financing development.

The Conference, he said, should lead to a political declaration and a collective resolve to addressing financing for development. There should be a concise and focused action-oriented plan of action that calls for an enabling global environment. A time-bound follow-up mechanism should be established to review implementation and address emerging challenges.

ALYAKSEI MAZHOUKHOU (Belarus) praised Mr. Desai’s statement as very timely. He said that the time left to prepare for such a significant event was very limited. Thus, it was time to build upon discussions in order to “concretize” the work for the future. There should be more than one outcome document. A political declaration, in keeping with the Millennium Declaration, was also needed. The preparatory sessions should aim to develop the political principles adopted by consensus in the Millennium Declaration. Consensus should refer to all statements and deeds by heads of State and government in all international forums prior to the Monterrey Conference. That would accelerate the process of finding acceptance for principles that had already been formulated, thereby ensuring good use of the short time remaining.

He said that an international financial monitoring system should take into account the political vision of where things stood generally in that area, which would be in line with the principles of democratization. The process under way was evolutionary; recent political discussions had indicated that revolutionary changes would not be made. Not all Member States were ready and revolution might not be required. Also, there should be some kind of follow-up to the Conference. Any approach should be pragmatic and take into account the diversity of today’s world. The pursuit must be towards agreed goals.

RON ADAM (Israel) said that the Committee could not focus on revolution at this point. That would have to wait until March 2002. His delegation thought that one result of the Conference could be the initiation of a financing for development forum, which would meet periodically, with equal participation from all relevant actors. There was still time to establish such a forum.

Afternoon Meeting

Introducing the Facilitator's draft proposal on preparations for the Conference, MAURICIO ESCANERO (Mexico) said the text had been negotiated over the week and it was a text that had achieved consensus. It included decisions that, in his view, had allowed for a real breakthrough during the course of the third session.

The Secretary from the Director of the Programme Planning and Budget Division then read out a statement regarding the budget implications of the draft proposal.

The Committee then approved the draft resolution contained in the Facilitator's proposal.

The Committee's Rapporteur, HAZEM FAHMY, introduced the draft report of the Preparatory Committee on its third session, contained in document A/AC.257/L.6, which the Committee then adopted.

Before the Committee turned to electing new members of its Bureau,

Co-Chairman JORGEN BOJER (Denmark) said that he had hoped to be able to see the process through to the end, but the Conference was taking place at a later point than expected. He regretted leaving the financing for development process but found great consolation in the fact that the event would be a high-profile Conference. The process was incremental and a considerable part of its impact had already been achieved.

The success of the Monterrey Conference, he said, should be measured by the impact that the financing for development process would have on the environment in which policies related to trade, ODA and capital flows were decided. That environment was political. The discussions that had taken place with all of the stakeholders had already identified common concerns and win-win scenarios.

The Conference was emerging as a confidence-building measure between North and South, he said. It would be a contribution to guiding and harnessing globalization. The outcome document would be one instrument for shaping the future of financing development but there would be many other factors. The challenge was to ensure that the Conference was relevant enough to inspire all of stakeholders to contribute in an effective way. If the Conference succeeded it would be a United Nations success.

The Committee then elected new members for its Bureau.

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