Statement on the International Conference on Financing for Development, Monterrey, Mexico, 18-22 MARCH 2002

Meeting of the SI Committee on the Economy, Social Cohesion and the Environment, New York, United Nations, 15-16 February 2002

The Socialist International welcomes the Monterrey Conference and wants to contribute to its success. The Monterrey Conference offers the opportunity to mobilise the necessary funds for international poverty alleviation. In the Millennium Declaration of the United Nations of September 2000, heads of state and government of the member states of the United Nations confirmed their intention to cut the number of people living in severe poverty by half by the year 2015. For this purpose many governments have set in place action programmes defining their contribution to this worldwide endeavour. The Socialist International calls upon all countries to work out national 2015-action programmes of this nature.

The draft for the final document of the FfD Conference, the "Monterrey Consensus", which was agreed upon on 28 January 2002 in New York at the end of the fourth and last preparatory meeting of the member states of the United Nations, contains a comprehensive list of demands and expectations for developed countries, but also for the developing countries and countries in transformation which are to be fulfilled on the basis of a "new partnership". In this way the 21st century could be turned into a century for the "development for all". The SI advocates these justified demands.

However, the SI deeply regrets that so far no real effort has been made to include the views of parliamentarians in the Monterrey Consensus. To the extent that many of the recommendations included in this consensus had to do with improving the legal framework of the financial sector (banking, insurances, pension funds) which are the main responsibility of parliaments we believe that an extraordinary effort should be made to include their views.

In the first part, mention is made of the demand for a stronger mobilisation of national financing for development. This requires a determined fight against the waste of public funds and against corruption, the establishment of a smooth running bank system - especially for micro credits as well as for small- and medium-sized enterprises - the improvement of bank supervision. But it is equally important to reorganise and reform state-owned banks, as well as avoiding the exodus of capital and tax evasion, guaranteeing consistency of the law for business transactions, gender equality, protecting the rights of employees and the environment. In addition to that, for the developing countries and countries in transformation it will be extremely important to reduce the transaction costs for bank transfer payments of guest-workers to their countries of origin and the promotion of housing. The Socialist International supports these demands. It deplores the fact that the FfD document does not explicitly mention the core labour standards of the International Labour Organisation (ILO) due to the opposition of some developing countries and the United States.

It lacks a stronger acknowledgement that domestic policies in themselves will not achieve development unless systemic constraints in the international economic and financial system are adequately addressed.

The second part deals with the mobilisation of international resources for development. This first and foremost concerns the establishment of the appropriate framework conditions for foreign direct investment. In the developing countries a transparent, stable and predictable climate is needed that is conducive for investment based on agreements for the promotion of investment, for the protection of investment, guarantees for capital investment, conventions on double taxation, co-financing, venture capital, export credits and other forms of financing. Investors should not only consider their legitimate personal interests to generate revenues, but also respect social and environmental standards. Public-Private partnerships for improving the infrastructure, for example in the field of information and communication technologies, water and energy supply, could be one but not the only means for improving the conditions for investment.

The Socialist International is in favour of introducing effective transaction regulations (which could take the form of better institutions, international taxation etc.) for cases of an excessively volatile short-term outflow and influx of capital and it holds the view that developing countries should not be urged to liberalise the balance of capital transactions if the financial sector in their country is not yet ready for it. The example of China shows that intensified trade and high growth rates can be achieved with foreign direct investment without the complete liberalisation of the balance of capital transactions.

We would wish that the document would further support developing countries' own path of development by allowing for appropriate capital account regimes and for capital account taxes and controls. As another key issue the promotion of labour and environmental standards should be complemented in the document and become an integral part of the FDI chapter.

We would strongly recommend that enhanced efforts to control tax havens be made.

The third part considers trade as a big source and driving force of development. For the countries that have developed to a certain extent and which receive no or very little development aid, the participation in world trade constitutes the most important basis for development, because the scope and intensity of foreign direct investment is determined by their possibilities to export their products. The Socialist International supports the recommendations for stronger participation of developing countries in world trade, especially in connection with the reduction of production and export subsidies for specific agricultural products in the EU and the United States.

In addition, the Socialist International favours free access for products without tariffs and quota with the exception of exports of weapons from the least developed countries (LDCs) to the markets of industrialised states, the "Everything But Arms Initiative". The member states of the European Union have already committed themselves to this initiative and Japan has also already made a similar declaration.

The new round of world trade negotiations, which was given the green light during the Fourth ministerial conference of the WTO in Doha, has to be turned into a "development round". The integrated programme of the LDC III conference in Brussels for the promotion of exports from the least developed countries needs to be complemented by additional measures for trade-related technical assistance for all developing countries.

The Socialist International calls for an evaluation of the regulatory framework for trade, including its impact on poverty reduction, food security and the protection of workers and the environment. The instability in commodity prices and export revenues of developing countries and different risk management mechanisms to tackle these issues should be another area of concern.

Fourthly, the Socialist International supports the recommendations on a necessary increase of official development assistance (ODA) to 0.7 per cent of the gross domestic product (GDP) of the developed countries for the improved efficiency of financial and technical cooperation for development. The Socialist International advocates the goals of the Millennium Declaration of the UN General Assembly and the report of the Zedillo Commission which stipulated that the ODA should at least be doubled to 100 billion. US dollars every year in order to be able to reduce international poverty by half by the year 2015. This is still far away from the 0.7 per cent which the United Nations determined as a general objective some 30 years ago. The developing countries have not yet accepted the intermediate goal and call for compliance with the 0.7 per cent objective in the Monterrey declaration. The OECD member states have committed themselves to this goal with the exception of the United States. The heads of state and government of the EU during their meeting in Laeken (Belgium) on 15 December 2001 approved a study on the analysis of the funds and the time periods with which each member state could reach the objective set by the United Nations. Because of the fact that up until now only some of the smaller European states, namely Norway, Denmark, the Netherlands, Sweden and Luxembourg, have reached this goal. The SI now appeals to the larger EU member states run by social democratic governments, namely Germany, France and Britain, to set in place time schedules and implementation programmes to achieve the UN goals and to take precise steps leading in this direction. Without increased assistance on the part of the OECD member states it will be the poorer developing countries especially which will not be in a position to use the opportunities provided by the mobilisation of national resources, the international transfer of capital and international trade in order to fight poverty. The Socialist International urges that at least 0.2 percent of GNP goes to the least developed countries.

The SI criticises the lack of commitment in the Monterrey Consensus document to higher aid levels, which should be addressed by the socialist parties. Aid levels should be immediately increased and a timeframe for meeting the 0.7 per cent target is necessary. It should be ensured that the timeframe is consistent with the deadline for achieving the Millennium Development Goals. Within this framework, programmes oriented to raising educational skills and some professional capacities as well as basic transportation infrastructure should get priority.

The fifth part of the Monterrey Consensus advocates the continuous implementation of the debt relief programmes initiated during the Cologne G8 summit for the highly indebted poor countries (HIPC) and a reduction of the debt burden for other developing countries within the framework of the Paris and London Clubs. The Socialist International supports the efforts made by certain OECD countries, the World Bank and regional development banks but urges them and especially the IMF to assist all the highly indebted developing countries threatened by financial crisis in overcoming their debt problems.

Debt relief should be emphasised in HIPC and should be conditioned on respect for basic human rights and extension of democracy.

The Socialist International supports the questions concerning the system raised in the sixth part of the Monterrey Consensus. It advocates the leading role of the United Nations in representing the interests of the developing countries, especially the strengthening of the role of the General Assembly and the Economic and Social Council (ECOSOC). It favours a stronger participation of the developing countries in the international financial institutions and the World Trade Organisation (WTO). Further discussions and decisions concerning quota or voting rights are necessary. The SI favours a reform and strengthening of the international financial architecture specifically in relation to preventing and overcoming financial crises, a stronger involvement of the International Labour Organisation (ILO) in the solution of the social problems of globalisation, the intensification of international cooperation with regard to taxation and the fight against money laundering, drug trafficking, corruption, international organised crime and the financing of terrorism. An increased coherence of policies at the international, but also at the national, level is essential for the follow-up process of the Monterrey Conference. The "global alliance for development" that the heads of state and government at Monterrey have to commit themselves to deserves the fullest support of all the parties of the Socialist International, of civil society, the trade unions, the employers and of every individual with a certain amount of good will.

The SI expresses concern that despite numerous financial crises and the recent turmoil in Argentina the Monterrey document claims that "important international efforts are already underway to reform the international financial architecture". Moreover, it should be addressed that the international financial institutions have to engage in a participatory review of their deliberative bodies to ensure equitable participation of developing countries. Also, that the WTO will ensure that its full membership will be properly represented in all its bodies and working groups. The role of the UN on global economic issues should be strengthened and it should obtain the mandate to design innovative mechanisms for enhancing democracy in global economic decision-making.

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