Briefing: Rich countries undermined FFD3 Conference

The Third UN Financing for Development Conference (FFD3) in Addis Ababa fell short of “the fundamental changes to the international financial system that are needed” to guarantee sustainable and equitable development and poverty eradication, according to Oxfam.

The 193 countries attending the Conference reached an agreement, dubbed the Addis Ababa Action Agenda, on Wednesday. UN described the agreement as consisting of “a series of bold measures.”

However, Oxfam International’s Executive Director, Winnie Byanyima said,

“the Addis Action Agenda has allowed aid commitments to dry up, and has merely handed over development to the private sector without adequate safeguards.”

“Fair taxation is vital in the fight against poverty and inequality. Citizens must be able to depend on their own governments to deliver the services they need. But it is just not logical to ask developing countries to raise more of their own resources without also reforming the global tax system that prevents them doing this.”

Here is a briefing on the four major issues by Oxfam:

Tax: Developing country governments had held out for an intergovernmental tax body under the UN which would have representational legitimacy, real decision-making power, and the right expertise to reform the governance of global taxes. Negotiations went up to the wire with developing countries holding firm to secure an agreement. Despite this, the changes secured only tweaks to what we already have in the existing UN Tax Committee of Experts. There is no significant change in status or resourcing. What’s more it definitely does not signal a move away from dominance of the global tax agenda by the OECD. Ultimately it has been an exercise in naked power.

Overseas Development Aid: Recommitting to the 0.7% ODA/GNI target was critical to show continued solidarity and justice for the world’s poorest communities and countries. Unfortunately the Agenda, falls well short of the necessary time-bound, actionable commitments needed to deliver an ambitious and transformative development agenda.  With limited public resources like aid ensuring that each dollar is spent as effectively as possibly will be vital.

Private finance: The outcome document puts private finance front and centre of financing for development especially encouraging the use of Public-Private Partnerships and blended financing instruments.  However, there is little language in the document to ensure that private finance will deliver for sustainable development, including little language to ensure the building of a strong international framework to protect human rights, social and environmental accountability and ensure the ability of the state to regulate in the public interest.

Climate change: Though several developing countries spoke of the devastating impacts of climate change which are already affecting their populations today, the FFD has barely dealt with the huge additional burden which will be faced by countries least responsible for causing the problem. Though mainstreaming of climate change into aid is essential, it is not enough. It is unacceptable that an increasing share of aid is used as public climate finance – 17 per cent in 2013 – while overall aid budgets are barely growing. Climate finance is central to the politics of the Paris climate deal later this year, so in the next six months finance ministers have their work cut out to help seal a deal that keeps global warming below two degrees. They need to commit to put a stop to the diversion of existing aid to address climate change, and ensure real new resources are put on the table from government budgets and new and predictable sources of public finance.  The European Union should kickstart the process, by ensuring that the financial transaction tax that is being set up in 11 EU countries, as well as the European carbon market helps feed the Green Climate Fund.

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