Economic and Social Council

2012 Substantive Session

17^th & 18^th Meetings (AM & PM)

Economic and Social Council President Urges Stronger, More Balanced Partnerships,

as Third Development Cooperation Forum Opens amid Shifting Development Landscape

Secretary-General Hails Forum as Platform to Improve Policy Coherence;

In Keynote Speech, South African Minister Says: ‘Script Is Ours to Rewrite’

The world had a shared calling to lift people from poverty and support long-term sustainable development, a task that was growing more urgent each day amid high food and energy prices and widening inequities between and within countries, United Nations Secretary-General Ban Ki-moon told the Economic and Social Council today, as he launched the Third Development Cooperation Forum.

In tackling such entrenched problems, Governments alone could not get the job done, said Mr. Ban.  “We need the active involvement and support of all major groups of civil society.”  As donors and partnerships continued to diversify, so, too, must the development architecture.  Developing countries were helping each other through South-South cooperation, introducing new approaches that were quickly delivered and carried light procedural requirements.

The private sector was also an important partner, he said, as were local governments and municipalities, which were facilitating improved delivery of basic social services.  The challenge was to ensure coordination among the broad range of actors.  “It is imperative that we capitalize on the comparative strengths of each and fully tap the opportunities that this diversity offers,” he said.

“As the landscape of development cooperation changes, so, too, must the United Nations,” he said.  The Third Development Cooperation Forum was a unique platform to identify best practices and lay the ground for improved policy coherence and coordination.  “I count on you to share concrete ideas about how this can be done,” he asserted.

Held over two days on the theme of “Drivers of change:  What is the future of development cooperation”, the 2012 Development Cooperation Forum will review the effectiveness and coherence of international development cooperation, with a view to spurring country-level progress.

Today’s meeting featured a panel discussion on the Forum’s theme, as well as two special policy dialogues entitled, “Can development cooperation be made more equitable, efficient and strategic”, and “How can development cooperation serve as a catalyst for other sources of development financing”.  At the end of the day, an interactive debate was held on “Strengthening capacity and political buy-in for mutual accountability”.  The Council’s work wrapped up with three thematic regional workshops, covering, respectively, post-conflict countries, accountability and transparency in Africa, and strengthening development cooperation in the Pacific.

Stressing that the Forum was “not an event, but a process”, Council President Miloš Koterec, in opening remarks, said it built on the positive momentum generated by a series of preparatory consultations held in Mali, Luxembourg, Australia and New York.  The Forum’s goal was to review key trends in international development cooperation and explore partnership options that were more inclusive, effective and sustainable.  To that end, delegates must look back at the changing landscape of development cooperation and the issues “that have shaped where we stand today”.

Doing just that, Nhlanhla Nene, Deputy Minister of Finance of South Africa — who delivered one of five keynote addresses at the outset of the meeting—reminded the Council that the gross domestic product (GDP) of the world’s 41 most heavily indebted countries was less than that of the world’s seven richest people.  “We will not stand for it”, he said of such vast inequity.

The lens through which we see the world was being readjusted.  With that in mind, the poor must be sought out and assisted so they could lift themselves out of poverty.  “Real” aid would fight aid dependence, empower the poor to realize their rights and incorporate a new balance of power — with an appropriate mix of actors.  “The script is ours to rewrite”, from aid dependency to intra-dependency; to win-win over the traditional win-lose, he said, adding:  “We have far to go and we need to get there quickly.”

In his address, Li Baodong, Permanent Representative of China to the United Nations said South-South cooperation should promote developing countries’ ability to trade, an engine for economic growth.  It was important to open markets to those countries, the least developed in particular.  South-South cooperation should also help them enhance their capacity to self-develop and cultivate local talent, especially technological personnel.  China, a developing country, would improve its foreign aid structure and increase the proportion of its grants, with an increased focus on least developed countries, landlocked developing countries and small island States.

Much of the day’s discussion zeroed in on the need to diversify away — however gradually — from the traditional avenues for carrying out development cooperation, to incorporate a wide range of stakeholders and new financing sources, which, in some cases, could be found in domestic coffers.  Continued heavy reliance on official development assistance (ODA), speakers said, would ultimately prevent local populations, sectors and businesses from flourishing in their own right.  To be sure, international resources were needed, especially for supporting national budgets that, in turn, bolstered everything from local health and sanitation services, to infrastructure projects to climate change adaptation.

“We need quality assistance that builds quality capacity”, said Joanna Kerr, Chief Executive Officer of Action Aid International, who moderated the morning’s interactive discussion.  That would only be possible if tax payers — both individuals and corporations — played their role.  “Bad aid” — or that which was self-interested and perpetuated unhealthy power dynamics — should be swiftly ended and replaced by mutual accountability frameworks that placed developing countries in the driver’s seat.  She added that along with a focus on policy coherence, gender empowerment must be a central component of aid, and its “catalytic role” must be utilized.

Also today, Sha Zukang, Under-Secretary General for Economic and Social Affairs, introduced the Secretary-General’s report on Trends and progress in international development cooperation, saying that among its key findings was a wide gap in advancing Millennium Goal 8 (global partnership for development).  On the debt front, 7 of the 32 countries receiving relief under the Heavily Indebted Poor Countries (HIPC) Debt Initiative were still at high risk of debt distress.  South-South and triangular cooperation must be scaled up, demand-driven, transparent and cognizant of recipients’ specific needs.

Finally, he said, the recently concluded United Nations Conference on Sustainable Development — known as Rio+20 — had generated a new momentum for advancing such development, in particular as Member States had decided to launch a Sustainable Development Goals process for the post-2015 period.  That summit had also identified a “green economy”, adapted to national circumstances, as one of the most important tools for achieving sustainable development and poverty eradication.  “Putting sustainable development at the heart of a future United Nations development agenda is an inexorable trend”, he stressed in that respect.  “It means we will have to evolve.”  Development cooperation would need to be designed and delivered to meet the needs of sustainable development.  The Development Cooperation Forum, for its part, would have an important role to play in that regard.

Also delivering keynote addresses during the Third Development Cooperation Forum were Bob Carr, Minister for Foreign Affairs of Australia, Marie-Josée Jacobs, Minister for Development Cooperation and Humanitarian Affairs of Luxembourg, and Michelle Bachelet, Executive Director of the United Nations Entity for Gender Equality and the Empowerment of Women (UN-Women).

The Economic and Social Council will reconvene at 10 a.m. Friday, 6 July, to continue its Third Development Cooperation Forum.

Background

The Economic and Social Council today launched its Third Development Cooperation Forum, during which policymakers, civil society representatives, members of parliament, local authorities and foundations were expected to address the theme “Drivers of change:  What is the future of development cooperation?”, and related issues where a common understanding could be advanced to spur country-level progress.

The day would feature two parallel special policy dialogues on: “Can development cooperation be made more equitable, efficient and strategic?”; and “How can development cooperation serve as a catalyst for other sources of development financing?”.  It will also include an interactive debate on “Strengthening capacity and political buy-in for mutual accountability”.

For those discussions, delegates had before them the Secretary-General’s report on regional cooperation in the economic, social and related fields (document E/2012/15/Add.1/Add.2), as well as the World Economic and Social Survey 2012:  In Search of New Development Finance (document E/2012/50).  Also before the Council was a 9 March 2012 letter from the Permanent Representative of the Republic of Korea to the United Nations (document E/2012/11), which transmitted the Outcome Document of the Fourth High-level Forum on Aid Effectiveness, held in Busan, Republic of Korea, from 29 November to 1 December 2011.

At its first meeting in 2008, the Council’s Development Cooperation Forum established itself as a principal platform for global dialogue and policy review on the effectiveness and coherence of international development cooperation.  It has since also become a venue for independent analysis, high-level and balanced participation by key actors, and the clear representation of multi-stakeholder positions.

Introductory Remarks

Opening the busy third day of the Council’s substantive session, the 54-member body’s President, MILOŠ KOTEREC, of Slovakia, said that, a fortnight after the close of the United Nations Conference on Sustainable Development (Rio+20), there was now broad agreement that the future of development must be built on the three pillars of sustainable development — economic growth, social development and environmental protection.

Furthermore, the target date for the Millennium Development Goals was drawing near, which drew attention to areas where insufficient progress had been made and raised questions about the design and objectives of the post-2015 development agenda.  “The growing importance of different development actors also demands that we gain a better understanding of their respective contributions and how we can build stronger, more balanced partnerships”, he said in that vein, stressing that those partnerships must be based on mutual accountability and trust.

“The Development Cooperation Forum is not an event — it is a process”, he continued.  It built on the positive momentum generated by a series of preparatory consultations.  Briefly reviewing those consultations — including high-level symposiums held in Mali, Luxembourg and Australia, as well as two special dialogues held in New York — he said that the goal of the present meeting was to review key trends in international development cooperation and to explore partnership options that were more inclusive, effective and sustainable.  To that end, it would be necessary to look back at the changing landscape of development cooperation and the issues “that have shaped where we stand today”.

At Rio+20, he said, Heads of State and Government had recommitted themselves to further strengthening the role of the Council.  The upcoming review of the General Assembly resolution A/61/16 (2007) on that matter would be an opportunity to take action on that recommendation.  “The Rio+20 outcome rightly recognizes ECOSOC’s key role in achieving a balanced integration of the three dimensions of sustainable development”, he said, noting that the Council was well placed to contribute to the development of an integrated and coherent framework post-2015.  Additionally, with its work on development cooperation trends, the Forum could provide important input into the report on a “Sustainable Development Financing Strategy”, to be presented to the General Assembly for a decision in 2014.

Launching the Third Development Cooperation Forum, United Nations Secretary-General BAN KI-MOON said it was only through collaboration, coherence and partnership that development goals would be achieved.  The development cooperation architecture was being transformed.  “We have a shared calling:  to lift people from poverty and support long-term sustainable development”, he said, a task that was growing more urgent each day amid a precarious global economy and risk of further recession.  He was concerned by high food and energy prices, especially when at least 50 per cent more food and 45 per cent more energy would be needed by 2030.  While progress in reducing extreme poverty had been made, there was much more to do to eliminate such harsh conditions and disparities.

Governments alone could not get the job done.  “We need the active involvement and support of all major groups of civil society”, he said, noting that developing countries were helping each other through enhanced South-South cooperation, introducing new approaches for development cooperation that were delivered quickly with lighter procedural requirements.  The private sector was also proving to be an important partner, as were private philanthropic organizations, and local governments and municipalities, which were facilitating improved delivery of basic social services.  The challenge was to ensure coherence and coordination among the broad range of actors.

“It is imperative that we capitalize on the comparative strengths of each and fully tap the opportunities that this diversity offers”, he said, urging that shortcomings of the current system also be addressed.

In that context, he saw five areas where improved efforts were needed, the first of which was in achieving the Millennium Development Goals.  “We need to keep our promises, even in times of fiscal austerity,” he said.  In addition, development assistance must go where it was most needed.  Some countries were at the centre of international attention, while others found it harder to attract funding.  The same held true for critical development sectors.  Aid continued to be burdened with conditions, which undermined national autonomy and distorted aid allocations.  It was essential to improve mutual accountability and transparency, which was critical for ensuring that external support aligned with the priorities of recipient countries.

Finally, he urged that a better balance be struck between short- and long-term considerations, and among the economic, social and environmental pillars of sustainable development.  Indeed, development cooperation was at the heart of the United Nations.  “As the landscape of development cooperation changes, so, too, must the United Nations,” he said.  The Third Development Cooperation Forum was a unique platform to identify best practices and lay the ground for improved policy coherence and coordination.  “I count on you to share concrete ideas about how this can be done,” he asserted.

Introduction of Report

“The Third Development Cooperation Forum is taking place at a critical moment”, said SHA ZUKANG, Under-Secretary-General for Economic and Social Affairs, as he introduced the report of the Secretary-General on Trends and progress in international development cooperation (document E/2012/78).  “We are here to recommit to global development partnership, rethink current practices and jointly reenergize global development cooperation”.  The world was facing a host of new and emerging challenges, including inequality, climate change, food insecurity and economic slowdown, and those challenges required a strong, collective response.

Reviewing some of the key findings of the Secretary-General’s report, he said that, in spite of renewed commitment to the Millennium Goals, there were wide gaps in advancing Goal 8, the global partnership for development.  Against the 0.7 per cent official development assistance (ODA) target, the gap between what was promised and what was being delivered stood at $167 billion per year; only a few development partners had honoured their commitments and maintained their levels of assistance thus far.

On the debt front, low-income countries had received debt relief under the heavily-indebted poor country (HIPC) initiative.  However, 7 of the 32 countries receiving relief remained at high risk of debt distress, and 12 more were at moderate risk.  In that context, he said, it was necessary to consider new ways to help countries in severe debt distress.

The report called on the international community to harness the benefit of South-South and triangular cooperation, and to scale up both of those approaches, which should be demand-driven, transparent and cognizant of the specific needs of partner countries.  Furthermore, the report finds that more needed to be done in terms of allocation and impact of development cooperation, as well as mutual accountability between stakeholders; the report suggests that development cooperation should be based on three- to five-year disbursement forecasts to improve predictability.

Finally, he said, sustainable development was a main focus of the Secretary-General’s report.  The Rio+20 Conference had generated a new momentum for advancing sustainable development, in particular as Member States had decided to launch a process to develop a set of Sustainable Development Goals for the post-2015 period.  The summit had also identified a “green economy”, adapted to national circumstances, as one of the most important tools for achieving sustainable development and poverty eradication.  “Putting sustainable development at the heart of a future UN development agenda is an inexorable trend”, he stressed in that respect.  “It means we will have to evolve.”  Development cooperation would need to be designed and delivered to meet the needs of sustainable development.  The Development Cooperation Forum, for its part, would have an important role to play in that regard.

Keynote Addresses

BOB CARR, Minister for Foreign Affairs of Australia, noted how a single tremor in 2004 had sent shock waves across an ocean, obliterating hard won development gains in just minutes.  Over 225,000 people from Indonesia to Sri Lanka lost their lives in the subsequent devastating tsunami.  The world had come together in what had been an unprecedented global recovery effort.  Australia had provided $68 million in immediate aid and a further $1 billion to Indonesia’s long-term reconstruction efforts.  Last year when Brisbane had been besieged by once-in-a-century floods, Indonesia had offered generous assistance.  There was the need to take the spirit of cooperation further here in New York.  To achieve Millennium Development Goals by 2015, business as usual would not suffice “and the time we have [left] is short”.

First, sustained and predictable financing was key, he said.  For many least developed countries, aid was a significant part of their national budget.  If aid flows could not be predicted beyond this year, many might struggle to chart a sustainable course for the future.  Despite a tight fiscal environment, Australia was one of very few countries to have found a way to continue expanding its aid programme:  by $300 million this fiscal year, and over 60 per cent in the next five.  That put his nation on track to become the sixth largest donor by 2017.  And with Australia’s aid budget now providing firm multi-year funding commitments, its development partners could plan with much greater certainty.

Second, he stressed the importance of heeding lessons learned, saying that “we have seen time and again that the only effective response is a joint one” — a combination of diplomatic, humanitarian and civil society action, and using military assets when requested.  Much had been learned from responses to the Haiti earthquakes, the Indian Ocean tsunami and the humanitarian crisis in the Sahel.  And there was still room for improvement in cooperation on disaster risk reduction.  He announced that Australia would provide $100 million over the next five years to strengthen partnerships, aiming to help developing countries increase their resilience to disasters by bolstering early warning systems, and by protecting schools, hospitals and other critical infrastructure.

Third, sustainable development required innovative partnerships, he said.  The world was changing and development cooperation needed to respond in an innovative way.  Through a $2.2 million contribution to the Women’s World Banking initiatives, Australia was supporting one of the best known women’s financial cooperatives, the Self-Employed Women’s Association Bank in India.  Australia was also a keen supporter of partnerships that combined different sources of expertise, including South-South cooperation.  Just over 10 years ago, Australia was providing bilateral development assistance to Malaysia.  Now the two nations worked together as partners to help others.  Australia had supported Malaysia in training over 150 Afghan master teacher trainers who were now returning home to train the next generation of teachers in Afghanistan.

He went on to note that Australia was also working with city councils in Zimbabwe and South Africa to apply African expertise to strengthen sewage systems.  This project had improved sanitation conditions for at least 450,000 local residents in Zimbabwe, repaired 1,200 leaks and cleared 250 kilometres of sewage pipes.  Australia was proud to host the third High-Level Symposium of the Development Cooperation Forum in May and saw its messages reflected at the Rio+20 Conference.  “ Rio gave us a platform, now we need to act.  And we need to do so together,” he said.  “This Forum is the place to make that happen; it has taken a long time, but we finally have all the right people around the table to build the future we want.”

MARIE-JOSÉE JACOBS, Minister for Development Cooperation and Humanitarian Affairs of Luxembourg, said the challenges of poverty, the economic crisis, climate change, growing physical insecurity, pandemics and migratory flows concerned all people in the North, South, East and West.  “Averting our gaze from these challenges would be unconscionable”, she said, declaring that only through collective and coordinated action would stakeholders stand a chance “to vanquish this pandemonium of difficulties, obstacles, impediments and complications”, which seemed to grow larger every day.

Against such a backdrop, she said that three realizations were unavoidable regarding the alliances necessary to react effectively.  First, the partnership between recipients and donors needed to be “revised profoundly”.  Second, the community of traditional development cooperation donors must not turn inwards, but — with a permanent concern for better coordination and greater effectiveness — should duly take into account the presence and action of new actors, notably emerging countries.  Third, coalition against common global challenges must abandon the traditional approach of compartmentalization and adopt a multidisciplinary approach, building on the differentiated capacities and comparative advantages of each and every one, including key players from civil society and the private sector.

She warned against the traps in that new approach.  The least developed countries and States in fragile situations suffered more from global warming than most industrialized countries.  “In our common approach, we must imperatively take this into account,” she said.  It was also essential to understand that, when faced with global challenges, a North-South approach of cooperation — or worse, a donor-beneficiary relationship — was decidedly out of place.  From that point of view, the strengthening of the concept of partnership outlined in the Busan outcome must be welcomed.  If international solidarity had traditionally been the primary engine of development cooperation and if that solidarity remained beyond a doubt a noble and relevant motivation, it may be useful to complement it with a self-interested position to act.  “The concept of aid may be at last enriched by the idea of an investment in our common future,” she said.

“The best of our intentions and declarations will remain empty, if we do not give ourselves the necessary means to implement them,” she said.  In this regard, she stressed the importance of ODA and inclusive finance, as well as public-private partnerships.  On public-private partnership, she said that some conditions must be met:  a public mission, which justified public fund expenditure; knowledge and capacities coming from private-sector specialists; and a commercial perspective for private partners, which, however, could only be exploited in strict respect of the underlying public mission.

NHLANHLA NENE, Deputy Minister of Finance of South Africa, said that the right question was often all that stood “between knowing and not knowing, or rather between not knowing and finding out”.  In that respect, he described the “why, who, when and where” of the future for sustainable development cooperation.  If the question was “why”, the answer was that the world was now rediscovering that it was flat.  Indeed, the so-called global public goods, as well as the concepts of peace and security, all served to reconfirm our interrelatedness.  To forget that all people were equal was to lose the essence of our humanity.  Moreover, he stressed, the gross domestic product of the world’s 41 most heavily indebted counties was less than that of the world’s seven richest people.  “We will not stand for it”, he said of such vast inequity.

Addressing the question of “who” was involved in the future of development cooperation, he named, among others, traditional donor countries, whose gross domestic products still dwarfed those of the rest of the world.  The global South also had a role to play, in particular in South-South cooperation, which was estimated at around 10 per cent of total development cooperation.  That approach would remain effective as long as the North remained a strong partner in traditional assistance, he said in that respect.  The private sector, it went almost without saying, was also a critical partner in development financing.

With regard to the “when” and the “where”, he said, “the lens through which we see the world is being readjusted”.  There was a need to seek out the world’s poor and assist them as they worked to lift themselves out of the scourge of poverty.  His hope, he said, was that the international commitments already made in that regard would become “great creeds” and a main focus going forward.  “Real aid” — that which would have a tangible impact — “is the future of development cooperation”, he stressed.

Such aid would help fight aid dependence, and it would empower poor men and women to realize their rights and combat inequality.  Referring, in that respect, to the five identified aid effectiveness principles, he said that capacity development and the building of human assets were also critical.  Indeed, while the Millennium Development Goals stood as a great baseline, to truly eradicate poverty, future goals must include human capacity development as one of their core focuses.

Additionally, new balance of power — an appropriate mix and balance of actors — was needed to lead global development cooperation.  A new, inclusive, and representative global partnership was needed in that respect.  Turning to several examples, he said that South Africa continued to receive and utilize development cooperation in the post-1994 era in order to help leverage its own capacity, to catalyse investments and to “push the envelope” in the way the Government did business.  Such aid had also been most effective in rebuilding a post-war Europe, he added.  “Is it not time for a Marshall Plan-like plan intervention for the challenges we face today?” he asked, calling for innovative new solutions.  “The script is ours to rewrite; from aid dependency to intra-dependency; to win-win over the traditional win-lose, he said, adding:  “We have far to go, and we need to get there quickly.”

LI BAODONG ( China) said promoting the steady recovery of the world economy and ensuring adequate resources for development were crucial to the progress of international development cooperation.  At present, public financing remained the core of international development cooperation, and expanding development financing constituted the basis for deepening development cooperation.  Ensuring adequate, stable and predictable core resources was both the basic condition for improving the resource situation of the United Nations development system and a central concern of developing countries.  In addition, aid effectiveness required adequate funding, and assessment of the effects of plans of actions concerned should focus on the effective implementation of the ODA targets, or the lack thereof.  Given that the assessment of aid effectiveness provided in the Paris Declaration applied only to North-South cooperation, it should not be extended to South-South cooperation.

He went on to note that the supplementary role of South-South cooperation in international development cooperation should be given full play under the principle of mutual respect, equality and mutual benefit.  South-South cooperation followed the principles of respect for national sovereignty, no political conditions, non-interference in internal affairs, equality and mutual benefit.  Partners in such cooperation were at approximately the same level of development.  The flexible and diverse forms and cost-effectiveness of South-South cooperation made it an effective means to achieve development results.

He highlighted three points learned from China’s own experience.  First, that South-South cooperation should give importance to promoting developing countries’ trade development.  Trade was the engine for economic growth, so it was particularly important to open markets to developing countries, the least developed countries in particular.  Second, South-South cooperation should help developing countries enhance self-development capacity and focus on solving the most urgent and real problems concerning people’s livelihood.  Third, South-South cooperation should focus on helping developing countries cultivate local talent and technological personnel and strengthening capacity-building.  China attached great importance to the training of personnel from developing countries, he added.

Despite its large economic volume, China was still a developing country with per capita national income ranking around the ninetieth in the world, he noted.  Nevertheless, China would continue to take an active part in South-South cooperation.  It would gradually increase input in foreign aid.  It would further improve its foreign aid structure and increase the proportion of grant and focus more on least developed countries, landlocked developing countries and small-island developing States.  He said that China would also increase human resources training for recipient countries and work to build up the latter’s capacity for self-development.  In the five years from 2011 to 2015, China would train 80,000 trainees in various fields for other developing countries.

Rounding out the keynote speeches, MICHELLE BACHELET, Executive Director of the United Nations Entity for Gender Equality and the Empowerment of Women (UN-Women), recalled that article 55 of the United Nations Charter obliged the Organization to promote higher living standards, full employment and conditions of economic and social progress and development.  “After all these years, this goal remains fully valid”, she said, stressing that the majority of humanity continued to live in precarious conditions.

The Third development Cooperation Forum was taking place within two weeks of the Rio+20 Conference and, she said, amid discussions about a post-2015 agenda and how to mainstream sustainable development at all levels.  That Conference had highlighted that development should be people-, especially women-, centred, understanding that the main objectives were poverty eradication, changed consumption and production patterns, equitable economic growth, reduced inequalities and enhanced gender equality.

To reach those objectives, she urged accelerating progress to attain internationally agreed development goals, including the Millennium Goals, identifying new targets reflecting the three pillars of sustainable development, and integrating them into the development cooperation agenda beyond 2015.  “We all understand that we are at a very important juncture”, she said, marked by economic and financial crises, high food and fuel prices, the impacts of climate change, inequalities between and within countries, and louder calls for Government accountability.

Against that backdrop, development cooperation was moving from a model based on donors to one that favoured a multi-actor landscape, she said.  The focus on aid had shifted to a nationally owned process.  Twenty years ago, 90 per cent of the poor lived in poorest countries; today, those living on less than $2 a day lived in middle-income countries.  The multi-actor landscape provided new opportunities for partnerships, including South-South and triangular cooperation, and other ways to bring about more and predictable financing sources to solving the world’s problems.  In addition, development posed cross-cutting challenges that did not respect national borders.  Coherent policies that engaged all stakeholders were needed at the global, regional and national levels.  “We can and must do much better,” she said.  “We can avoid fragmentation and duplication.  We can push for better practices based on lessons learned.”

But development cooperation that drove sustainable development was not only about structures and processes, she said.  Development cooperation also must address the root causes and symptoms of poverty.  In that context, one important issue was ensuring that policies linked to key areas — including trade, security, climate change, agriculture, migration, investment, food security and taxation — and were, in turn, aligned with development cooperation.  It was essential to eliminate any policies that hindered development progress, and to encourage those that positively impacted it.

Another important issue hinged on external assistance that reinforced national capacities.  Development cooperation must support women’s efforts to identify obstacles, gaps and priorities for achieving gender equality.  In Rio, leaders agreed that gender equality and women’s full participation were essential to sustainable development.  So, too, must development cooperation allow women that needed power and she urged reviewing the way resources were allocated to ensure they advanced a better world for women.

“It is time to turn words into action,” she said.  Gender equality was good for all of us.  Achievement of sustainable economies demanded a transformation in women’s lives and it was time for development cooperation to work towards that end.  Development cooperation actors — traditional and new — must build a common agenda to respond to people’s expectations.

Interactive Panel Discussion

The Council then held a panel discussion led by two presenters, Heikki Holmås, Minister of International Development of Norway, and Supachai Panitchpakdi, Secretary-General of the United Nations Conference on Trade and Development (UNCTAD).  It was moderated by Joanna Kerr, Chief Executive Officer of Action Aid International.

Opening the discussion, Ms. KERR said that the most recent resolutions taken by the Group of Eight (G-8) and the Group of 20 (G-20) were failing, among other things, to ensure food security for nearly 1 billion people.  The recent G-20 summit held in Los Cabos, Mexico, was a missed opportunity, and the Rio+20 summit had failed to identify a “critical path of change” or put the international community on a safe track to sustainable development.  “It is a worrying trend”, she said, noting that in Rio, while the United States and Europe had had “great things to say”, they had been silent when asked to put forward the money to ensure the implementation of the very ideals they had espoused.  Moreover, without “real money” on the table, sustainable development, poverty eradication and gender empowerment would never be a reality.

As “where is the money?” had, therefore, become a common refrain, she noted, for instance, that a small tax on financial transactions could raise billions for development and sustainability.  Her organization, Action Aid — an international non-governmental organization working in 50 countries — had taken a clear stand on the need to reform development cooperation.  Last year, it had published a report entitled “Real Aid”, which called for such reform and for civil society to play a key role in avoiding aid dependency.  It was critical for all developing countries to become more self-reliant.

“We need quality assistance that builds quality capacity”, she said in that respect; however, that would only be possible if tax payers — both individuals and corporations — played their role.  Additionally, “bad aid”, or those types that were self-interested and perpetuated unhealthy power dynamics, should be swiftly ended, and mutual accountability frameworks “putting developing countries in the driver’s seat” were needed.

The Secretary-General’s report had discussed policy coherence, and how “dismal” those practices had been, she said.  Indeed, the need for policy coherence applied to developed countries, but it also applied to developing countries, many of which were creating a disempowering environment for civil society organizations.  Those organizations should play an important and creative role in holding Governments accountable, she stressed.  In addition, “rich countries have a pivotal responsibility”, as they must shut down loopholes created by their companies, including those that engendered tax havens.  “The choice is stark”, she said in that respect:  the world could “keep playing the same game, or get serious about creating a sustainable development-oriented paradigm”.  That meant an end to the current “exploitative economic model”.

“Aid still matters”, she said, agreeing again with the Secretary-General’s report.  In addition to a focus on policy coherence, gender empowerment must be a central component of aid, and its “catalytic role” must be utilized.  In the short future, the world would be developing the post-Millennium Development Goals framework, she said, and the devil was indeed in the details.  Goals for the future must be based on five principles.  They must build sustainability, they must be based on a human rights framework, they must tackle inequality, they must be universally applied, and they must be built upon accountability, meaning that they should “have teeth”.

Turning to the panellists, she asked them to consider two main questions in that context.  Those were:  what have we learned about development cooperation?; and what should we change today?

Mr. HOLMÅS responded that one of the main challenges was distribution of wealth — not just between rich and poor countries, but also within countries.  Ten times more money leaked illegally out of developing countries than the total amount of aid to those countries, and the current economic system actually encouraged such illicit flows.  Money flowed from the poor to the rich and hampered growth and investments in developing countries.  In that respect, he was glad that illicit flow was mentioned — for the first time ever — in the Rio+20 outcome document.

There were also security and economic reasons for reducing those flows, he said, citing crime, uprisings and other concerns.  For Norway, a steadily larger part of aid was concentrated on such issues.  He recalled, in that respect, a recent meeting with a Tanzanian Government official, who had stressed that renegotiating the country’s deals with its mining industry would be more important than all the ODA it was currently being given.

Turning to other important financial considerations, he said that a currency transaction levee was a reasonable option.  In many countries, 70 per cent of assistance once came from ODA, while 30 per cent came from foreign direct investment; now it was the reverse ratio in that outside investments needed to focus much more on development.  Additionally, the way investment was going needed to be followed by policies to ensure that they were translated into stronger development.

Addressing the critical areas of energy and gender empowerment, he cited Norway’s “Energy Plus” initiative, and stressed that finding ways to get clean energy to developing countries was key to development, as well as to combating climate change.  With regard to gender policies, he said, the value of women working in Norway had led to a huge amount of wealth.  Therefore, talking about development without talking about gender empowerment didn’t make sense.  Finally, the reproductive rights of women were vital.  In developed countries, the value of education of women — and their right to family planning — had led to many positive outcomes, and it would be unfair not to offer those benefits to the women of the developing world.

Sharing his thoughts on how development cooperation could best support a global development agenda in the current trade environment, Mr. SUPACHAI said sustainable development was a “highly loaded” phrase.  It involved more than growth.  It involved equity, women, job creation and environmental stewardship — a huge agenda.  Given that, he highlighted three major issues that would determine the future of development cooperation — coherence, effectiveness and assessment — saying that the dialogue must move beyond aid approaches to cover investment, technology transfer and capacity-building.

On coherence, he said the 2012 Organisation for Economic Cooperation and Development (OECD) assessment of donor countries found that they had a problem with coherence.  Climate policies, for example, should not become another form of “green protectionism”.  Countries were using them to close their markets to poor nations that did not meet standards, which themselves had been set by the private sector and not assessed by the World Trade Organization (WTO).

On effectiveness, he said he had not seen the specification required for determining effectiveness criteria.  One instrument for determining effectiveness was capacity-building.  There could be no open trade regimes, for example, without the capacity to compete.  Development cooperation must lead to capacity-building in such areas as health and information technology.  He highlighted the Nagoya Protocol to the Convention on Biodiversity in that regard, which was crucial because it gave developing countries the capacity to compete in the use of genetic resources and in the benefit sharing of those resources.

Assessment was also needed to review aid effectiveness, he said, not just by donors like the OECD, but by recipients to ensure that assistance met national strategy requirements.  Was assistance, for example, being used to help countries facilitate regional integration?  Often it was not.

In the interactive dialogue that followed, delegates from least developed, developing, middle-income and industrialized countries alike outlined their priorities for the changing development cooperation landscape.  Key questions hinged on how to ensure that the new cooperation architecture would produce results on the ground and bring about the needed coherence among a diverse set of stakeholders — from Governments and the private sector, to civil society, philanthropists and academics.

Even with new cooperation modalities, ODA was still very much needed, said several speakers representing developing countries, and further, they warned that could be replaced by South-South cooperation.  Civil society and the private sector were important, some said, but such assistance should be channelled through Governments, since they were responsible for translating development plans into reality.  Nepal’s delegate said almost two thirds of development activities undertaken in least developed countries were possible only because of international support.  Those vulnerable nations must be looked at comprehensively to ensure their concerns were taken on board in the post-2015 agenda.

Taking up one case in point, Uganda’s delegate asked what kinds of instruments and actions could be used to sanction oil and gas companies that had not made their contracts with Governments available for public scrutiny.  Sharing a similar experience, Zambia’s delegate said that, when his Government cancelled an agreement in the mining sector, donors criticized the move as a unilateral step.  “We are trapped in a familiar space:  the words have changed, the problem has remained the same,” he said.  The hard-won Paris Principles on Aid Effectiveness had been recycled as challenges for the future.  At the end of the day, trade was most important for unlocking growth potential of the least developed.  “Unless you stop shying away from the unpleasant aspects of Doha [Round of WTO negotiations], you will not create the solutions you are looking for,” he said.  “Deal with the baggage, including the economic partnership agreements.”

Adding a donor-country perspective, Belgium’s delegate said ODA would remain an important instrument for some time to come, mainly for the least developed countries, where 90 per cent of the poor would reside by 2030.  Belgium would target its aid to those nations.  While up to 70 per cent of the poor today lived in middle-income countries, their Governments had significant domestic resources to help.

The European Union’s delegate added that his delegation would increase the impact of its development policy by directing aid to where it was most needed, and considering cooperation with more developed countries.  Programmes would work to bring about political and economic reforms and create jobs.  It also would better align plans with national priorities and take a results-based approach to improve accountability.

As for the United Nations, a number of speakers pressed the Organization to live up to its Charter responsibilities to promote higher living standards, full employment and economic and social progress.  There was general consensus that the least developed countries should be at the heart of the post-2015 agenda.  Bangladesh’s delegate asked how that work would be carried out in terms of activating a high-level political forum in which the Council would play a pivotal role.  He cautioned against being recklessly optimistic.  “ Mission without action is a nightmare,” he said.  “Action without vision is a daydream.”

Responding to several of those questions, Mr. HOLMÅS said that, regarding mining and other extractive industries, developed countries should understand that, when there was a “super profit” to be gained, products must be taxed in the same way.  In Norway, for example, there was a 78 per cent marginal tax on the petroleum industry.  Openness was also critical; developing countries should demand transparency in all the contracts of companies operating in the country.

Regarding ODA, he stressed that private investment had been critical in developing the competence that was needed in industry.  Official development assistance alone could not do it.

Mr. SUPACHAI, for his part, said there were many issues outside of assistance that were equally critical for development.  Among those, trade was one of the most powerful instruments, but there was a lack of effort to ensure an equitable and balanced trade environment.  In the stalled Doha Round of trade negotiations, countries should demand an “early harvest” for those matters that related to development.  Another issue was that of investment.  Borrowing was not always easy, and more heavily-indebted poor countries were not needed.  Investments, however, needed to be responsible.  A set of responsible investment principles were needed.

He agreed with other speakers that ODA was not going to be sufficient in the future, adding, “we have to be realistic”.  To achieve the same level of official development assistance, or see it increase in the coming years, was indeed “dreamlike”.  The world must consider the next-best option, he said, and it needed to be serious about reducing aid dependency.  Finally, he said, the issue of accountability was critical.

Policy Dialogue A

This afternoon, the Council held two parallel policy dialogues, the first of which was on the theme, “Can development cooperation be made more equitable, efficient and strategic?”.  Moderated by Helen Clark, Administrator of the United Nations Development Programme (UNDP) and Chair of the United Nations Development Group, it featured three panellists:  Somchitch Inthamith, Deputy Minister of Planning and Investment of the Lao People’s Democratic Republic; Jon Lomøy, Director of the Development Cooperation Directorate in the Organisation for Economic Cooperation and Development (OECD); and Lydia Alpizar Duran, Executive Director of the Association for Women’s Rights in Development.

Ms. CLARK said that the present dialogue was being held against a background in which the global poverty map had changed dramatically, with many countries moving from low-income to middle-income status.  Official development assistance was becoming relatively less significant, constituting a smaller part of financing for development. In 2011, 16 of the world’s top donors had decreased their aid levels; in that context, it was even more important that aid was both catalytic and strategic.  Additionally, assistance going into least developed countries had risen from under one third to one half of all aid in recent years.  Eighteen of the world’s “under-aided” countries were least developed, and many were in a post-conflict status, she said, explaining that membership in those categories did not necessarily mean that countries would receive a large amount of financial support.

She went on to say that the quality of aid going to least developed countries and transition economies tended to be lower than other types of aid.  Among other needed changes was a reduction in the conditionality of aid, she stressed.  Partners also needed to consider ways to strike the right balance between short-term, quick-impact interventions and longer-term measures which would sustain development in the long run.  Other related issues included the rising influence of the global South, the private sector and civil society.

Weighing in on several of those issues, Mr. INTHAMITH said that 60 per cent of the Lao People’s Democratic Republic’s development assistance was now in the form of public investment.  Regarding the quality of assistance, he stressed that social and environmental components needed more emphasis; additionally, more ownership was needed on the part of local authorities and local people in assessing the quality of aid.  Briefly describing the landscape in the Lao People’s Democratic Republic — which was a least developed country — he said that the majority of people lived in rural areas, and that there was a major need for permanent housing.  Official development assistance projects must also be linked with trade and the global market, he added.

For its part, the Lao People’s Democratic Republic planned to move out of its least developed status by 2020.  He called, in that respect, for a balance between technical assistance and infrastructure development, adding that South-South cooperation and triangular cooperation were also critical for his country.  An infrastructure development fund and a capacity development fund should be created.  The country utilized a round-table meetings process as its platform for development cooperation at the national level, he said, and it was trying to bring official development assistance to the Lao people transparently.

Mr. LOMØY agreed that the development financing landscape was changing rapidly.  Official development assistance was, indeed, becoming less important.  Though that assistance had reached $133.5 billion in 2011, it was still dwarfed by other resource flows.  The big question to be considered, then, was how best to use that $133 billion.  Should it be used primarily to compensate countries that received few other sources of aid, or should the “catalytic” use of aid be considered, instead?  Should a balance be struck between the two approaches?  On aid allocations, he said a major factor currently being considered was the fact that a large share of the world’s poor people lived in middle-income countries.  Weren’t poor people deserving of aid no matter where they lived, he asked, or was the wealth context of one’s home country an important consideration?

Low-income and middle-income countries had different aid needs:  low-income countries would need more aid as resource transfers, while middle-income countries would need more experience- and knowledge-sharing, as well as more assistance to improve their policies.  “There is no universally agreed formulation for the distribution of aid”, he said in that regard.  Moreover, allocation of aid was highly decentralized, and the creation of such a global system was not likely.  Instead, it was important to improve the information basis on which that decentralized decision-making took place.

Was aid currently effectively used? he asked, and answered:  “Partially yes, and partially no.”  There was a systemic problem, as there has been an increase in the number of aid providers.  One solution to that problem was to increase and strengthen leadership, so that countries could chose the providers they wanted.  There was also a series of operational problems related to the effectiveness of aid, as well as a “politics” to the question of aid.  Lastly, in a situation where other providers were becoming increasingly important, there needed to be an inclusive discussion on allocation, and he hoped the United Nations would use its policy space to further those conversations.

Ms. DURAN, addressing the gender perspective of issues related to development cooperation, said that, of the OECD’s 2011 aid, only $3 billion had been targeted specifically towards the gender dimensions of development.  Additionally, foundations, corporate donors and others needed to do a better job in reporting their allocations.  How could donors best allocate aid to advance gender and women’s rights?  The answer was to continue investing in women and girls.  Progress had indeed been made in showing how central women were to achieving development targets, she said.  However, reducing a broad women’s rights and gender empowerment agenda to a few specific issues was not the best approach, nor was it a rights-based approach.  What was needed was to ensure that such investments were really transforming the “structure of injustice and oppression”.

“The famous ‘gender mainstreaming’ — another popular strategy — has not had any significant impacts to enhancing women’s rights,” she said.  Therefore, the world’s donors needed to rethink the concept of mainstreaming, and instead make gender empowerment and women’s rights a central priority in each development sector — not an “add-on”.  That didn’t mean that gender-specific programming shouldn’t continue, she stressed, but “we need to increase the amount of resources, and the quality of resources, for women’s rights”.

Additionally, donors needed to improve the tracking of aid and other financial flows, in order to better understand how they related to gender empowerment and women’s rights.  It was also necessary to move beyond the mutual accountability paradigm towards a “multiple accountability” paradigm.  Finally, in many cases, gender empowerment and women’s rights were placed as conditions in aid, another practice which should end.

During the ensuing dialogue, the representatives of several least developed countries called for more global coherence on aid allocation, as well as more support for trade and market access and more investment in capacity development and technology transfer.  Enumerating the challenges they faced, including the lack of productive capacity, limited infrastructure and the impacts of climate change, they stressed that it was very difficult for them to fund their own development domestically.  Priority should be given to those most in need, many stressed in that regard.

However, the representative of one recently-graduated least-developed country worried that there was a lack of support for countries transitioning into middle-income status.  A smooth, coherent transition process was lacking, she said, calling for special measures to support countries such as hers.  Regarding aid allocations, support should be delivered based on real development needs, she stressed.  Other speakers agreed, noting with alarm that the removal of official development flows could serve to penalize the development of graduating countries, where many poor people still lived.

Several representatives of donor countries — including one Member of Parliament from Belgium — also shared their experiences.  As illustrated by the Human Development Index, there were other indicators besides GDP that contributed to development and lowered poverty levels.  There should no automatic shift in the modalities of aid as countries graduated from least developed to middle-income status, some said; instead, what was needed were aid programmes that were sustainable, and which built in sustainability “from the start”.

In contrast, lead discussant GUSTAVO MARTIN PRADA, Director of Development Policy for the European Union, said that bloc’s “Agenda for Change” was refocusing ODA away from wealthier middle-income countries.  That was, in part, because, within 20 years, most of the world’s poor would live in low-income countries, while middle-income countries would continue to grow.  Additionally, wealthier middle-income countries had their own means to fund development.  Despite those changes, however, the European Union would remain engaged with wealthier middle-income economies through thematic programmes and capacity-building, if not through official development assistance.

Many speakers also supported Ms. Duran’s call for more a central role for the gender dimensions of development.  One of the representatives of several non-governmental organizations speaking this afternoon also wondered how to leverage such sectors as tourism, among others, into tangible improvements in the condition of women’s lives in low- and middle-income countries.

Responding to some of those comments and questions, Mr. LOMØY said that transition to middle-income status should be seen not as an event, but as a process.  “There is no magic happening when you pass an income level”, he said in that regard.  Countries were, in fact, increasing their ability to solve their own problems, and that would naturally change the relationship between those countries and donors.  “Growing out of aid is not being penalized”, he said, adding that it was much better not to need aid anymore.  He agreed with those who had enumerated the barriers and challenges facing least developed countries, but said there was a substantive possibility to increase domestic revenue collection by increasing their competence to tax international companies, among other ideas.

At the end of the day, he said, the allocation of aid would be a political process.  There was a need to combine a needs-based discussion with one about the capacity of countries to make good use of those resources.

Ms. DURAN agreed with the speakers who had noted that other types of indicators, apart from GDP, must be incorporated into discussions about the allocation of aid.  Among those were issues of social inclusion, as well as the strength of civil society.  The human rights framework should be used for both policy design and to implement accountability, she added.  Thus far, there had been little work on how to integrate women’s rights and gender equality issues into South-South cooperation, she said, emphasizing again the need to go beyond “gender mainstreaming”, which was not translating into the improvement of the condition of women’s lives around the world.

Responding to the comments issued by several speakers, Mr. INTHAMITH agreed that it was critical to link least developed countries to markets, as well as to ensure technology transfer and capacity-building.

Speaking briefly on the theme “Making accountability operational:  Practice and perspectives” was MARTIN DAHINDEN, Director-General of the Agency for Development Cooperation of Switzerland.  Citing evidence from surveys conducted for the Development Cooperation Forum on mutual accountability, he said that there were encouraging signs of effective accountability systems in place in several countries surveyed.  But the surveys also demonstrated that “we haven’t been good enough so far at living and practising accountability and transparency”, he stressed.  It had become clear in recent years that domestic accountability was vital to aid effectiveness and that mutual and cosmetic accountability was closely linked.  Aid — especially in aid-dependent countries — could skew away from citizens and towards donors.

Development cooperation, therefore, ought to address not simply the question of how to ensure mutual accountability, but the whole complex system of domestic “accountabilities”, or the lack thereof.  “Donor behaviour that aims to ‘do no harm’ and support capacity for domestic accountability is critical”, he said in that regard.  All stakeholders, including partner countries, civil society organizations, local governments, parliamentarians, political parties, development partners and others — must work together to build robust accountability systems that were mutually supportive.  Moreover, evidence was growing that lack of transparency was a major obstacle to mutual and domestic accountability.  The Forum could, therefore, ask how a spirit of inclusiveness and common responsibility could inspire its work and endeavours.

Characterizing a mode of development cooperation that promoted ownership, transparency and accountability, he said that such cooperation recognized that ownership and accountability were goals that development cooperation could contribute to achieving.  It would similarly recognize that ownership and accountability should never be considered as granted or permanent, but rather as a negotiation process of checks and balances.  Additionally, cooperation based on ownership, transparency and accountability aimed at strengthening institutions.  It cared first and foremost for the poor and discriminated, and it left space for local and national actors to design their own ways and negotiate peaceful means to find agreement on how to run public affairs.

Mr. SHA, Under-Secretary-General for Social Affairs, also made remarks on that topic.

Policy Dialogue B

The policy dialogue on the theme:  “How can development cooperation serve as a catalyst for other sources of development financing?” was moderated by Pitchette Kampeta Sayinzoga, Permanent Secretary and Secretary to the Treasury, Rwanda.  The panel featured three presentations by:  Anne Sipiläinen, Under-Secretary of State, Development Policy and Development Cooperation, Ministry of Foreign Affairs, Finland; Min Zhu, Deputy Managing Director, International Monetary Fund (IMF); and Jesse Griffiths, Director, EURODAD.

Ms. SAYINZOGA launched the dialogue recalling that ODA was not increasing at the pace it had been over the last decade.  Today’s discussion would examine to what extent ODA could attract other capital flows — including private investment, private capital flows or domestic resources.  To what extent were institutional changes required to achieve those goals?

As for how ODA could be used as a catalyst, Ms. SIPILÄINEN said the question to ask was about the provision of equal opportunities for all.  There was more reason to focus on least developed countries than on others, and predictable ODA had an important role to play going forward.  It was a crucial catalyst for broad-based development, as it contributed to education, health and infrastructure services.  Development cooperation must focus on creating an enabling environment for responsible businesses.  Rule of law and fair rules for combating corruption were important in that regard, as they enhanced confidence and provided incentives for creating decent jobs.

She said another area of action should be around taxation and customs.  Improving those systems — including by eliminating arbitrary taxes — was needed, which would allow companies to invest in the countries in which they operated.  Revenues generated from those reforms would also give Governments badly needed funds for education, training and health care.  On trade, efforts must continue to integrate developing countries into the international trade system, while trade agreements must be implemented so that developing countries had a voice at the table.  International trade policies must take account of the poorest countries in market access issues.

On preventing illicit capital flows from developing countries, she said that, to close tax havens, international standards for the accounting of individual records must be developed, while information exchange between jurisdictions must be increased.  As for the effectiveness of development cooperation, she said existing resources were as important as fulfilling pledges to allocate 0.7 per cent of gross domestic product (GDP) to development assistance.

Speaking next, Mr. ZHU focused on ensuring national income resource growth, saying that success hinged on using domestic policy to mobilize domestic resources.  There was much room to improve tax collection in many countries.  In most low-income countries, it was essential to prevent tax avoidance and evasion.  Closing tax loops would increase the GDP of those countries by 2 to 4 per cent. Subsidy reforms for energy, water and fertilizer were also needed.  To criticism that such reforms would hurt poor people, he pointed out that rich people received six times more in energy subsidies than poor people.

In one of its studies, the IMF had found that only 7 per cent of subsidies went to 20 per cent poorest people, he said.  If the OECD taxed $25 on carbon emissions, for example, it would see more than $2 billion raised in budget revenue.  Ireland, even in the midst of its financial crisis, had successfully introduced a carbon tax, which started at €15, and gradually increased, generating a few billion dollars in revenue.

As for how low-income countries attracted external capital flows, he said external financing was particularly important for local budgets and local infrastructure investments.  The bad news was that such flows were growing more volatile.  In 2008-2009, they had caused huge exchange rate volatility.  Managing those flows had become crucial to managing domestic affairs.  One thing was clear:  good local institutional capacity and good governance were essential.  In environments where those things were in place, the Fund had found that capital flows tended to stay.  On local financial sector development, he said low-income countries needed better banking systems and better local bonds markets to support small and medium-sized enterprises.  Improving local supervision was also key.  There was huge room to carry out that work.

Rounding out the discussion, Mr. GRIFFITHS said he represented over 40 non-governmental organizations on finance, tax and debt issues.  Finance flows continued to move from developing to developed countries; $827 billion had been used to purchase treasuries in developed nations.  Foreign direct investment was important but nowhere near as important as domestic resources.  Resources alone were not enough.  For countries to make use of them, good plans driven by those countries themselves were needed.

In that context, he urged donors to “stop undermining the framework”.  Drawing a parallel between donors and someone who filled car tyres with air only to slash them later, he said illicit financial flows from developing countries neared $1 trillion a year, mainly with the help of multinational companies. Many private sector companies were domiciled in tax havens.  It was important to ensure that donors did not use resources to support their own agendas.  The Busan outcome document had showed that procurement in developing countries could help build a local private sector. Today, over half of foreign aid was spent on procurement — $70 billion in 2010.  One fifth of aid was tied to buying goods and services from donor countries.  There was a huge opportunity wasted to use aid to support local sector development.

Next, he said countries needed policy space, pressing donors to remove conditions.  Finally, he said that in 2010, $40 billion went from international financial institutions to support private companies, which could overtake the scale of aid in the coming years.  Sixty-three per cent of International Finance Corporation (IFC) funding went to firms domiciled in OECD countries.  Why could not such funding be used to support firms in low-income countries?  In 2008, the majority of IFC funding went to private equity firms. There was a tendency to replicate models that might not be most appropriate for developing countries.

In the ensuing dialogue, representatives from developed and developing countries alike put forward their ideas on how development cooperation could best strengthen national capacities for domestic resource mobilization.  Participants asked the panellists how development cooperation could be used to leverage other financing sources, and specifically, how to change the mentality of the public — particularly in the West — so they supported different types of instruments to foster development, not just ODA.  One question looked at whether risk reduction could be at the centre of non-ODA efforts and, if so, how it should be measured.

Framing his case for why new financing resources were needed, Nicaragua’s delegate said his country would grow 5 per cent this year.  In the last five years, exports had doubled and there was now a $10 billion contracted portfolio for investment.  Tax collection comprised 21 per cent of GDP, the highest in Central America.  Amid such gains, “there are new needs”, he said.  Nicaragua had lost 3.5 points of GDP due to drought or floods since 2005.  It also had to build an entire new city for climate change refugees from areas of chronic flooding.  There was $1.9 billion in climate change adaptation needs.  The 800-pound gorilla in the room was finance and technology transfer and developing countries could not wait until 2020 for that to happen, he said.

In response, Mr. GRIFFITHS said the last review of technical assistance was in 2005.  “It’s not been an effective aid modality, mainly because it’s donor-driven,” he said.  Why not give the money to the Government to spend it on the technical assistance of its choice?  To Nicaragua’s point, he said the climate assistance debate was being framed in terms of a lack of funds to fulfil pledges.  Why not institute a financial transaction tax or other innovative revenue generators?

Mr. ZHU said the Fund was committed to low-income countries and currently focusing on the spill-over effects from shocks to those countries.  It had found that 60 per cent of industrial output variation was due to external shocks.  Vulnerability tests had been carried out for low-income countries.  Also, the Fund had developed new, more flexible lending instruments, including a precautionary liquidity line and zero-interest rate loans.  It was looking to expand that type of lending.  On technical assistance, he said the Fund had not typically been in that area but had gradually entered it.  It received resources from OECD economies and other advanced economies for that purpose.

Ms. SIPILÄINEN said ODA remained vital, but it must be used more strategically.  More than two thirds of Finns thought ODA should be increased, showing that both the public and Government supported that approach.  Finland’s new development policy addressed climate sustainability.  It also was focused on capacity-building — vis-à-vis budgetary and broader governance issues — and creating an enabling environment for that to happen in least developed countries.

Interactive Discussion

Following the policy dialogues, the Council held an interactive discussion on “Strengthening capacity and political buy-in for mutual accountability”.  It was moderated by Sigrid Kaag, Assistant Secretary-General, Bureau for External Relations and Advocacy, United Nations Development Programme (UNDP), who was joined by four panellists:  Oburu Oginga, Assistant Minister for Finance, Kenya; Gisela Hammerschmidt, Deputy Director-General, Federal Ministry for Economic Cooperation and Development, Germany; Saber Hossain Chowdhury, Member of Parliament, Bangladesh; and Meja Vitalice, Development Policy Analyst, Reality of Aid Africa.

Participants were invited to deliberate on the key capacity development measures needed, especially by programme country Governments and non-executive stakeholders, to increase the ability to effectively hold partners to account.  They were also asked to reflect on the major constraints that were thwarting the efforts of political leaders to make the accountability agenda a priority.

Ms. KAAG asked the panellists to discuss ways to overcome constraints that made mutual accountability difficult.  One goal, she said, was to strive for clearly defined mutual accountability and to share what lessons had been learned.

Taking the floor first, Mr. OGINGA said that Kenya adopted a new Constitution in 2010, which had helped improve mutual accountability.  By example, he said, the process of budgeting had become more transparent to the members of Parliament and the public.  The Constitution also empowered 47 executive units to negotiate directly with donors, thus eliminating layers of red tape and increasing aid effectiveness.  Previously, development assistance had had to pass through many layers of bureaucracy before it actually reached to those who needed it.

Speaking next, Ms. HAMMERSCHMIDT said mutual accountability was the heart of the development cooperation agenda.  Over the past year, there had been a shift of focus towards aid effectiveness.  First, mutual accountability should be integrated at the country level, and it must go hand in hand with the activities and initiatives of partner countries.  She said that solid monitoring mechanisms were prerequisites for aid.  In addition, she urged the Development Cooperation Forum to work further on mutual accountability.  “It is our joint responsibility” to bring mutual accountability to a success, she said.

Mr. CHOWDHURY said parliamentarians were far removed from the process of mutual accountability, although the Paris and Busan meetings on aid effectiveness both acknowledged the role of parliamentarians in that regard.  There was no entry point for parliamentarians in the absence of policy agreements and clear targets.  There was also often the issue of conflict between parliament and executive branches.  As for the role of the Forum, it should come up with a model aid policy aimed at defining the role of parliamentarians.  It was important not to see parliamentarians as an add-on in mutual accountability.

Mr. VITALICE stressed the importance of a citizen-centric mutual accountability system, and said that Governments and citizens must sit together; otherwise mutual accountability “is up in the air”.  It was important to create an enabling environment for citizens, he reiterated.

In the brief discussion that followed, the representative of Japan said that his country’s Government made data for ODA data available online to domestic stakeholders for better accountability.  The delegate from Uganda said there were costs attached to ensuring mutual accountability, including those brought about by elaborating amendments to legislation.  In addition, Zambia’s representative lamented the lack of information on mutual accountability available to parliamentarians.

In response, one panellist agreed, saying that parliamentarians were often invited into discussions without sufficient information.  Another said that donor financing could not be channelled through parliaments due to the separation of powers, with the role of parliamentarians limited to overseeing the executive branch.

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For information media • not an official record