Speaking points


Eveline Herfkens
Netherlands Minister for Development Cooperation

Additional to distributed statement

Financing for Development Conference

Monterrey, Mexico
22 March 2002

As my written statement will be distributed, I just would like to highlight a few additional points. I think this was a wonderful week! Never before in one conference have we gathered so many stakeholders. Never before did we have such a very constructive interaction between the UN, the IFIs and the WTO. Never before did we discuss poverty in such a comprehensive and  holistic way with the presence of ministers of Finance, Trade, Foreign Affairs and Development Cooperation, joined by the private sector, profit and non-profit. Never before was the plight of the poor so high on the international political agenda.

And indeed, in the spotlight of international public opinion, OECD countries made a start with living up to the commitment they made when signing the Millennium Declaration in 2000. Last weekend the EU collectively decided to increase its ODA, structurally linking it as a percentage to GNP. It will amount to some 20 billion dollars for the coming few years. This is big money, and therefore the glass is half full.

But it is small in terms of GNP percentage, and therefore the glass is also half empty.

There is a real and urgent need now for all OECD countries to commit themselves to live up to the 0.7 objective, and fast. Only then do we fulfill our side of the Monterrey Consensus to fund the achievement of the Millennium Development Goals.

I simply cannot accept that heads of State and Government would have signed up to halving the number of poor by 2015, but at the same time allow part of their check to still be in the mail at that time.

But there is good news. I see a new emerging “Coalition of the Willing.” Yesterday five European Prime Ministers declared “The rich can do better.” Yes, five! For a quarter of a century, the small exclusive club of the G 0.7 consisted only of the four usual suspects: Norway, Sweden, Denmark and the Netherlands. Today I pay tribute to Luxembourg, which has joined the G 0.7. I also pay tribute to Ireland, which will reach the 0.7 in 2007. I also pay tribute to Belgium, which will join us in 2010.
Among countries that have not yet announced a final date to reach the 0.7, there is good news too. France has announced that it will continue to stay above the ever-increasing EU average.

I pay tribute to some G-7 finance ministers, like Gordon Brown and Paul Martin, who have expressed very often their commitment  to fighting global poverty. I would not be surprised to see them pulling their checkbooks the coming months.

What we definitely did in Monterrey is finally, after decades, reverse the vicious downward spiral of ever-dwindling ODA into a virtuous upwards spiral.

Furthermore, I by now see an even wider group of donor countries signing onto the commitment not to allow that any low income country will fail to achieve the Millennium Development Goals because of lack of external funding.

What a fantastic challenge for these low income countries! I urge you all to call our bluff.  By implementing your part of the Monterrey Consensus, to develop and implement credible poverty reduction strategies, to improve your governance and to fund your part of the compact by increasing domestic savings and by making your expenditures more pro-poor.

Let me conclude. We will take our planes the coming hours. But let us keep up the Spirit of Monterrey. Let us commit ourselves, all of us, and in particular the UN system, the IFIs and civil society, to create effective mechanisms to monitor country-by-country, poor and rich, the extent to which we live up to the promises we made this week, promises we made in the absence of the most important stakeholders: the billion of poor women and men living in extreme poverty. After all, the only thing that matters, in our New Global Partnership to achieve the Millennium Development Goals, is not to let THEM down.

Statement by Eveline Herfkens

Netherlands Minister for Development Co-operation

March 22, 2002

Financing for Development Conference

Monterrey, Mexico

More than ever before there is recognition that harnessing development in poor countries is an essential condition for a peaceful and sustainable world. We need less poverty and more democracy.

In September 2000 the UN General Assembly adopted the Millennium Declaration. Through this declaration rich and poor countries have accepted a shared responsibility to realise the eight Millennium Development Goals. This is crucial in the fight against global poverty.

The joint goals and the specific targets that go along with them facilitate the monitoring of progress and obligate countries to live up to their promise to work towards these goals. The most prominent among them must be realised in 2015: the reduction by half of extreme poverty. Now is the time to make good on those fine promises.

Much hàs changed for the good in the developing world over recent decades. Some countries have managed to break free from poverty and to achieve reasonable levels of development. Life expectancy in poor countries has risen by as much as 20 years over the past four decades. Infant mortality has fallen, and more children than ever go to school. More countries have democratically elected governments. And over the last 30 years, average per capita income in developing countries has more than doubled.

The Netherlands government considers Financing for Development a unique opportunity to take another big step forward in our common fight against poverty. Unique because:

· For the first time, we are taking an integrated, holistic look at all the components going into funding the development process. Aid and domestic savings, trade and investment, the level of aid and its effectiveness.

· For the first time, all parties involved are making a contribution. UN diplomats as well as the leaders of the Bretton Woods institutions and the WTO. Governments as well as private investors and NGOs. Foreign financiers as well as domestic investors and creditors.

· Since the terrorist attacks in the US, people all over the world have become even more aware of their interdependence. We cannot isolate ourselves and safeguard peace, democracy, stability and prosperity in our own enclave. We cannot ignore whole regions. A growing number of people now understand that we have to invest more in poverty reduction.

· Clearer than ever before, developing countries acknowledge their own responsibilities, that they cannot blame all their woes on evil outsiders or a hostile international climate. Good policies and good governance, participatory and transparent decision-making and pro-poor choices – these are their responsibility. At the UN ECA Big Table meeting in Amsterdam in October 2001, the African finance ministers made this very clear. Good governance is not just our latest hobbyhorse. Africans themselves expect, yes require, it from their governments. It is one of the basic principles of African leaders’ New Partnership for Africa’s Development.

Effective poverty reduction means that we must be prepared to tackle the three main deficits in our system of global governance.

Our policies – national and global – should be coherent. We have to stop giving with one hand and taking with the other. If we underscore the importance of a sound enabling environment in developing countries, we should also enable these countries to export to our markets. The new WTO round should become a real development round contributing to the achievement of the MDGs. The Doha agenda is a positive first step but the proof of the pudding is in the eating. The wealthy nations still put roadblock after roadblock on the way to development. The clearest example is agriculture policy.

Coherent policy also means helping countries to build trade capacity as well as effectively managing and funding the remaining debt problems. Consideration at the level of the IMF Board of a bankruptcy procedure for debtor countries was a real breakthrough.

The lack of coherence between multilateral organisations is primarily due to incoherence and compartmentalisation of our own governments in the national capitals. The health ministry deals with the WHO, the central bank with the IMF, the finance ministry with the multilateral banks, the trade ministry with the WTO and the social affairs ministry with the ILO. When two or more national actors disagree they simply export their conflicting points of view to the international level; the ILO, WHO and WTO headquarters in Geneva become the battlefield. The same goes for the IFIs (finance ministries) on the one hand and the UN (foreign affairs ministries) on the other. Ensuring coherent policies is a primary task of ministers for development cooperation.

Also (although things are moving in the right direction) the international organisations themselves have not yet fully integrated their own insights regarding poverty and poverty reduction in their actions. This applies in the first instance to the World Trade Organisation (WTO). It should send a strong signal of its commitment to poverty eradication by endorsing the MDGs and acknowledging that trade is a means rather than an end in itself. The IMF has become more committed to poverty reduction in recent years.  This is reflected in its endorsement of the MDGs and its close collaboration with the World Bank on the PRSPs. Despite sometimes-excessive red tape within the UN institutions, their internecine squabbles about overlapping themes and their chronic shortage of funds, a number of them have made substantial progress with internal reform.

Attempts to pander to institutional egos undermine efficient poverty eradication. International institutions have to put an end to turf battles and mission creep in order to improve global governance.

The lack of democratic control and participation within the international financial organisations and the WTO is another major obstacle to pro-poor global governance. Parliamentarians should get engaged when governments formulate their input in international institutions including the World Bank, the IMF and the WTO. I warmly welcome recent initiatives of networks of Members of Parliament, evolving into interparliamentary assemblees dealing with IFIs and the WTO.

Where the private sector becomes more of an actor in global governance,
it should recognize its ‘democratic deficit’ as well and improve accountability. NGOs, non-profit organizations, should not just claim to represent ‘the poor’, ‘the women’ or any other ill-defined group. They should acknowledge that they have a specific constituency, and be in constant dialogue with that constituency. For the profit-making private sector, their voluntary codes of conduct - although non-enforceable - might reduce the democratic deficit by improving reporting obligations on a company’s track record. Both the OECD guidelines and the World Bank/UN initiatives on corporate governance could well serve as starting point for more elaborate and effective codes of conduct.

Many instruments can enhance the impact of development assistance and reduce its transaction cost: untied aid, policy coherence, harmonization of procedures, and a sharper focus on poor countries with sound economic and social policy and strong institutions. But donors will have to give the poor countries what they also need: cash. No low-income country with a credible poverty reduction strategy should fail because of lack of external funding.

To achieve the Millennium Development Goals development aid will at least have to increase by an estimated hundred percent. That is, by fifty billion dollars a year. To bring about this increase, the best and most logical strategy is to comply with existing agreements.

All UN members, with the exception of the US, have accepted a long-established standard volume of ODA for donor countries: 0.7 percent of GNP. In fact, the Netherlands, Sweden, Norway, Denmark and Luxembourg are the only OECD members that meet or exceed the ODA standard. Together they make up the G-0.7. This week we have seen a remarkable reverse after many years of shrinking ODA. A vicious circle down turned into a virtuous circle up. Commitments made account for one third of the additional funding required for the MDGs. There is a growing coalition of the willing among OECD countries, which have committed that no country with a credible poverty reduction strategy would fail to implement it due to lack of external funding. This is a great opportunity for low-income countries to live up to their part of the Monterrey Consensus.

Developing countries themselves are responsible for the quality of their policies and the functioning of institutions. They will have to put their house in order; no one else can do it for them. An increasing number of developing countries acknowledge this responsibility. However, when developing countries have their internal affairs in order and have come up with a good national poverty reduction strategy, then adequate, untied and timely funding must be available to fund these strategies.

Now I call on the UN system, IFIs and civil society to closely monitor, country-by-country-by-country, progress in reaching the MDGs. And to live up to the promises made this week in the absence of the most important stakeholders who were not present: the billion people living in absolute poverty. After all, the only thing that matters in our new global partnership to reach the MDGs is not (again!) letting THEM down.