Economic and Social Council

2012 Substantive Session

27^th & 28^th Meetings (AM & PM)

Economic and Social Council Encourages United Nations System to Strengthen Efforts

to Raise Profile of Global Education Agenda, Maximize Results Towards Agreed Goals

Coordination Segment Adopts Consensus Resolution on Education,

Holds Panel Discussion, General Debate on Innovative Development Financing

Recognizing the growing issue of youth unemployment and the importance of education to enhance their employability, the Economic and Social Council pressed the United Nations and the relevant international financial institutions today — by a consensus resolution — to strengthen collaboration to advance technical and vocational training, as well as other international education targets.

As part of the outcome of the Council’s 2012 Coordination Segment, the text on the United Nations’ role in implementing the internationally agreed goals and commitments in education, stressed the importance of the contribution of voluntary partnerships to the achievement of the internationally agreed development goals, including the Millennium Development Goals.  The text went on to reiterate that such partnerships “are a complement to, but not intended to substitute for, the commitment made by Governments with a view to achieving those goals”.  

Further by the text, the relevant United Nations entities working in the education, health and food sectors were urged to seek synergies to enhance enrolment, retention, participation and achievement of girls and boys at school.  By its other terms, the Council stressed that achieving development goals on education required a coordinated and integrated approach in support of national and local efforts, involving all relevant stakeholders, including, as appropriate, civil society and the private sector.

The Council held a panel discussion yesterday on “Addressing the challenges of education, skills and the job mismatch”.  The panel examined how to move from theory to practice in closing the skills gap and improving prospects for young people to enter — and thrive — in modern job markets.  It also held a general discussion on the United Nations’ role in implementing the Council’s Ministerial Declaration adopted at the 2011 high-level segment on “Implementing the internationally agreed goals and commitments in regard to education”, in which representatives of Governments and United Nations agencies alike acknowledged collective efforts to improve learning outcomes. (See press Release ECOSOC/6533.)

A related panel discussion held during the Council’s session this morning examined the potential and limitations of various innovative financing mechanisms for development.

Panellist Syed A. Samad, Executive Chair of the Board of Investments of the Office of the Prime Minister of Bangladesh, said his country had once been heavily dependent on foreign aid, but what was once “a surge of development assistance” had now become “a trickle”.  In its place, many new forms of aid had been adopted by donors.  A number of public-private partnerships were emerging, and in some infrastructure projects, such as construction of elevated expressways, as well as ports and bridges, the bulk of investment would come from the private sector, with the public sector acting as a “very minor partner”.  With the improved banking system and other measures, foreign direct investment had risen in 2011.  “Private capital now finds Bangladesh an attractive place to do business,” he said, as it offered high returns and low levels of risk.

Next, Denis Broun, Executive Director of UNITAID, highlighted the success of that five-year-old health initiative, which was financed by a tax on airline tickets.  Unlike such traditional financing as official development assistance (ODA), that new funding mechanism had not been as sensitive to economic and political turbulence.  UNITAID had become “a guinea pig” for others wishing to experiment with innovative development financing.  It had been able to make market interventions by successfully drawing the interest of for-profit corporations to make drugs for children suffering from HIV/AIDS and malaria.  As a result, the cost of treatment was substantially reduced.  UNITAID saved not only many lives of children but also saved money.    

Taking the floor next, panellist David O’Connor, Chief of the Policy Analysis and Network Branch of the Division for Sustainable Development of the Department of Economic and Social Affairs, said public financing could act as a lever of private financing flows, for instance by absorbing a portion of investment risk through loan guarantee.  As for climate change, a number of innovative mechanisms were already in place, including the Clean Development Mechanism (CDM), the Kyoto Protocol’s Joint Implementation Mechanism, and international emissions trading.  However, each of those mechanisms was still relatively small in scale, and they were made unstable by the uncertain future of the Kyoto Protocol.

Panellist Shari Spiegel, Senior Economic Affairs Officer for the Development Strategy and Policy Analysis Unit in the Development Policy and Analysis Division of the Department of Economic and Social Affairs, noted that most existing “innovative” mechanisms were not designed to raise new or additional resources, with UNITAID an exception.  Some instruments restructured existing resources to better match funding needs, and others captured only near-term flows and were thus not stable or predictable.

In other business, the Council held its general discussion on the follow up to the International Conference on Financing for Development.  The Council was expected to conclude its Coordination Segment next week or the week after, with the adoption of a resolution on the issue. 

Speaking during this afternoon’s general debate was the Deputy Director General of the Ministry of Foreign Affairs of Norway.

Also participating in that segment were the representatives of Algeria (on behalf of the “Group of 77” developing countries and China), Nepal (on behalf of the Least Developed Countries), Belarus, Russian Federation, Mexico, Brazil, Cuba, Venezuela, Chile, the United Kingdom, China, the United States and the European Union delegation.

The Economic and Social Council will reconvene at 10 a.m. Friday, 13 July, to begin its operational activities segment.

Background

The Economic and Social Council met today to continue and conclude the coordination segment of its 2012 substantive session, with action expected on a draft resolution, submitted by the Council Vice-President on the basis of informal consultations, entitled:  The role of the United Nations system in implementing the internationally agreed goals and commitments in regard to education (document E/2012/L.9).  A panel discussion was to be held on “Innovative mechanisms of financing for development”, followed by a general debate on “Follow-up to the International Conference on Financing for Development”.

For the day’s discussions, delegates had before them a summary by the President of the Economic and Social Council of the special high-level meeting of the Council with the Bretton Woods institutions, the World Trade Organization and the United Nations Conference on Trade and Development (New York, 12 and 13 March 2012) (document A/67/81-E/2012/62).  Among other things, it outlines the Council President’s idea to set up a small joint working group to explore ways to enhance cooperation between the Council and major institutional stakeholders in the financing for development follow-up process, in particular in the area of financing for sustainable development.

Panel Discussion

This morning, the Council held a panel discussion on “Innovative mechanisms of financing for development”, which was moderated by Alexander Trepelkov, Director of the Financing for Development Office of the Department of Economic and Social Affairs.  It featured Syed A. Samad, Executive Chair of the Board of Investments of the Office of the Prime Minister of Bangladesh; Denis Broun, Executive Director of the International Drug Purchase Facility (UNITAID); David O’Connor, Chief of the Policy Analysis and Network Branch of the Division for Sustainable Development of the Department of Economic and Social Affairs; and Shari Spiegel, Senior Economic Affairs Officer for the Development Strategy and Policy Analysis Unit in the Development Policy and Analysis Division of the Department of Economic and Social Affairs.

Opening the session, Council Vice-President MOOTAZ AHMADEIN KHALIL said that the panel was a timely one.  While reaching the Millennium Development Goals and addressing new and emerging challenges required considerable amounts of financing, in 2011, official development assistance (ODA) flows had declined in real terms for the first time in many years.  The need for additional and more assured funding had led to a search for innovative development financing mechanisms.  A number of initiatives had been launched in that respect, he said, adding that they could be classified into two broad categories:  sources of revenues for global cooperation, and intermediate financing mechanisms.

Briefly listing a number of initiatives in each category, he went on to say that an estimated $5.8 billion in health financing and $2.6 billion in financing for climate change and related programmes had been managed through such mechanisms since 2002.  However, those resources were not additional to traditional official development assistance; probably, only a few hundred million dollars had in fact been added annually.  Most recently, innovative mechanisms of financing for development were highlighted at the United Nations Conference on Sustainable Development (Rio+20).

He posed several key questions for the panellists to consider in their presentations.  Among those, he asked:  how could the United Nations help to reach an international agreement on the definition and scope of innovative financing mechanisms?  How could providers of such financing assure that those were stable and additional resources that could be aligned to recipient countries’ priorities and strategies?  How could innovative finance be mobilized for the effective implementation of the Rio+20 outcome document?  How could innovative financing leverage resources from the private sector for sustainable investment policies?  How could delivery and monitoring mechanisms be streamlined and parallel systems and complicated structures for innovative financing be reduced or eliminated?  Who should monitor and evaluate the delivery, allocation and impact of those finances on development outcomes?  And what follow-up modalities could be undertaken by the Economic and Social Council and the General Assembly in that regard?

Mr. TREPELKOV said that since the adoption of the 2002 Monterrey Consensus — the outcome of the International Conference on Financing for Development — the issue of innovative financing mechanisms had featured prominently on the United Nations development agenda.  During the past decade, all major United Nations conferences and summits in the economic, social and related fields had recognized that such mechanisms could make a positive contribution in assisting developing countries to mobilize additional resources for development on a voluntary basis.

In its resolutions on financing for development, the General Assembly had reiterated that such voluntary mechanisms should aim to mobilize resources that were stable and predictable, should supplement and not substitute traditional sources of financing, and should be disbursed in accordance with the priorities of developing countries, he said.  While highlighting the considerable progress in the area achieved to date, the Assembly had stressed the importance of scaling up present initiatives and develop new mechanisms, as appropriate.

The objectives of today’s panel discussion was to explore how existing and new mechanisms of innovative development finance could enhance their contribution to the achievement of the Millennium Goals by 2015, and how the potential of such mechanisms could be realized for the implementation of the outcome of the Rio+20 summit — “The Future We Want” — and in the context of post-2015 development framework.  The outcome of this event would be summarized informally and would serve as an input to the intergovernmental deliberations on financing for development follow-up in the Council and the General Assembly.

Mr. SAMAD said that his country, Bangladesh, had once been heavily dependent on foreign aid, however, “what was once a surge of development assistance has now become a trickle”.  In its place, many new forms of aid had been adopted by donors, as “necessity is the mother of invention”.  Indeed, the idea of innovative development financing was not actually new.  Development scholars had called for taxes on financial transactions as early as the 1970s, however, such a tax would “throw some sand in the wheels of speculation”, he said, and the idea was never implemented.  The importance of innovative sources of financing had also been repeatedly recognized in such past conference outcomes as the Monterrey Consensus, among others.

More than $6 billion had been raised in innovative financing for development since 2002.  Most recently, the Rio+20 outcome document had highlighted the importance of innovative financing, and noted the need to scale up those sources in order to eradicate poverty.  Some examples included a debt-to-health initiative launched by Germany in 2007, which converted portions of old debt into new domestic resources for health in developing countries. 

In addition, the 2008 Doha Declaration on Financing and other nascent agreements — including the proposed financial transaction tax and the carbon tax — could go a long way to raise funds.  Another important initiative, he continued, was the reduction of the transaction costs on remittances, which was expected to increase the transmission of those funds to developing countries.  Bangladesh, for example, was heavily dependent on remittances; sometimes those flows were not as great as they should be, and many illegal channels of remittance flows frequently opened up.

“Bangladesh is a real challenge to development thinkers, actors, innovators, teachers and activists”, he said. The country’s budget was heavily focused on poverty alleviation, with $40 billion spent each year on social safety nets and income transfers to the poor and other disadvantaged groups.  Bangladesh’s Public-Private Partnerships office had a number of programmes aimed, among other things, at improving infrastructure.  There was a technical gap assistance fund and new policy guidelines on technical assistance.

Further, he said, a public-Private partnership unit had been established in the Ministry of Finance.  Although the number of such partnership projects was not currently large, many had been approved and would be implemented in the near future.  Such projects included the building of elevated expressways and highways, as well as ports and bridges.  The bulk of that investment would be done by the private sector, he said, with the public sector acting as a “very minor partner”.

Bangladesh suffered from a very “shallow” financial sector — one which was not well developed — and there was very little long-term financing available.  The country had been too dependent on foreign aid, which had not allowed banks to take root.  Therefore, two non-government mega banks had recently been set up by foreign actors.  Additionally, foreign direct investment, which had traditionally been low in Bangladesh, had also risen in 2011.  “Private capital now finds Bangladesh an attractive place to do business,” he said, as it offered high returns and low levels of risk.  The country continued to learn, he concluded, and it was working to adapt to the changing development landscape.

Mr. BROUN described the success of the five-year-old UNITAID initiative.  Two visionary political leaders of France and Brazil had first spotlighted the need to improve access to medicines for the world’s poorest people as part of the global fight against the three major diseases:  HIV/AIDS, malaria and tuberculosis.  Then in 2006, Chile, Brazil, France, Norway and the United Kingdom decided to create an international drug purchase facility financed with resources that would be both sustainable and predictable.  The initiative was given the name UNITAID, and a tax on airline tickets was chosen as the most appropriate means of providing sustainable funding. 

Unlike such traditional financing as official development assistance, new funding mechanisms had not been as sensitive to economic and political turbulence, he said.  Since its creation, more countries had joined UNITAID.  Now it had 29 members, with 15 contributing financially.  Contributors tapped different types of funding sources, such as air ticket levies and carbon taxes.  About 70 per cent of funding came from “innovative financing” and UNITAID had raised 1.2 billion dollars of resources that were additional to existing funds.  Of this, 86 per cent went to low-income countries.  UNITAID had become “a guinea pig” for others wishing to experiment with innovative development financing.

He went on to describe how UNIAID had addressed market failures, explaining that in 2006, only a small number of babies had been born with HIV in advanced countries.  While the private sector in those countries had not seen this as a market opportunity, in poor countries, there were more of such births but no money for investment. “This was an example of a market failure,” he said, adding that UNITAID had set aside a fund and negotiated with Indian pharmaceutical companies to produce treatment. 

Eventually, about 400,000 children had been treated, 80 per cent of them through UNITAID.  The cost of treatment had decreased from $400 per person to far below $300 and was continuing to drop.  But when the first line of treatment had become ineffectual, the cost of receiving the second line of treatment stood at $1,500 per person.  But that amount had since been brought down to $450.  This not only improved child mortality but also saved millions of dollars, reducing the need to draw money from other sources.

As for malaria, he said that a market intervention was made through a global subsidy, which helped to create an effective treatment at half a dollar, which would drive out of the market an ineffective drug selling for the same price.  Innovating financing was very important because it enabled UNIAID to make a market intervention in a targeted way and for the long term.

Speaking next, Mr. O’CONNOR asked what he saw as a major question:  were innovative financing mechanisms well suited to address sustainable development challenges?  Answering, he said that they were, as innovative mechanisms were particularly good at matching financing to needs.  However, even as positive initiatives on innovative financing were under way, they often lacked scale.  The Division for Sustainable Development of the Department of Economic and Social Affairs had agreed to prepare a report proposing options on an effective sustainable development financing strategy to facilitate the mobilization of resources for sustainable development objectives.  That issue was linked to some other Rio+20 outcomes, he said, including an agreement to set in motion a process to define Sustainable Development Goals, roughly by 2014.  That elaboration would include a consideration of how those goals would be achieved, including questions of resources.

“We’re not reinventing the wheel here,” he said, noting that innovative channels of financing had been discussed in the 2010 report of the Secretary-General’s High-Level Advisory Group on Climate Change Financing, as well as in other reports and meetings.  Domestic resource mobilization outweighed all other sources of development financing, but foreign direct investment now outweighed public financing in many countries.  Innovative instruments for directing financial flows to their users were in place, such as loan guarantee schemes and other ways to combine finance sources in “hybrid” instruments.  The weakest link, he said, was that between the sources of financing and their end users.  Other key issues in the financing supply chain centred around insufficient resources, he added, describing, in that respect, the world’s incrementally increasing energy investment needs.

Public financing could act as a lever of private financing flows, having a “multiplying” effect.  One way it could do so was to absorb a share of the investment risk — as in loan guarantees — lowering the costs of capital through low-cost capital injections as part of co-financing agreements.  In the case of climate change in particular, a number of innovative mechanisms were already in place, including the Clean Development Mechanism (CDM), the Kyoto Protocol’s Joint Implementation mechanism, and international emissions trading.

However, each of those mechanisms was still relatively small in scale, and they were made unstable by the uncertain future of the Kyoto Protocol.  The bond market was another possible source of financing with the potential depth and scale required, he said.  Other examples included REDD+ — a form of payment for ecosystem services — which was a new market, with all the challenges of any new market.  While it was still just an idea, there had also been talk about Advance Market Commitments for CDM and REDD+ credits, which eliminated the uncertainly about the future costs of carbon.

Finally, there was a large, untapped pool of resources available in the form of investment funds, pension funds and sovereign wealth funds.  Strong regulatory frameworks would be critical if those were to be integrated into the sustainable development financing framework.  In that respect, corporate sustainability reporting could be integrated with sustainability.  There was such a system in place in South Africa, with procedures set by the Johannesburg Stock Exchange, which provided very interesting examples for other countries, he said.

Ms. SPIEGEL highlighted the main findings of World Economic and Social Survey 2012:  In Search of New Development Finance published by the Department of Economic and Social Affairs.  Experts who had carried out the survey saw the potential to raise more than $400 billion per year through new innovative mechanisms.  Global development financing needs were vast, but private-sector flows did not address global priorities, she said, citing her past experience of working in the private sector.  With traditional aid falling short of commitments and, given the volatile nature of aid flows, there was a real need for additional, stable and predictable international public financing to complement ODA.

The definition of “innovative development financing” varied, she continued.  For instance, the World Bank had a broad definition.  At the same time, the Leading Group for Innovative Financing for Development focused on new international public finance that had such components as official sector involvement; international cooperation and resource transfer to developing countries; and innovation in resource collection and new applications of old ideas, allocation or governance.  Desirably, such facilities were “additional to existing ODA” and “stable and predictable,” she said.

Describing the complex landscape of existing innovative development finance, she noted that most existing mechanisms were not designed to raise new or additional resources.  Some restructured existing resources to better match funding needs.  That was not “additional” funding.  Other instruments captured only near-term flows and were thus not stable or predictable.  Although “innovative” mechanisms administered $5.8 billion in health financing and $2.6 billion in climate financing over the last decade, only several hundred million dollars had been additional to ODA.  Only UNITAID had a high proportion of funding additional to ODA.

The private sector had an important role to play, but the problem was, she said, those stakeholders only invested in areas where they could gain profits. Private sector actors also avoided investing in high-risk fields.  A host of private-public initiatives existed, but there were concerns about what type of partnerships would work best.  By example, she explained that the United States Government had offered a start-up in the solar power industry a low interest loan.  The company went bankrupt shortly thereafter.  So, the problem was not the Government investing in an emerging field, but that it had not recognized that many new companies stood a good chance of failing.  If the Government had instead supported a host of start-ups, it might have been able to capture the upside to cover losses.  And long-term investors, such as sovereign funds, could be partners, she added

Potential sources of funding for development included internationally coordinated taxes, such as a financial transaction tax, currency transaction tax, carbon tax, airline transportation tax and “billionaire’s tax”, and the use of International Monetary Fund (IMF) Special Drawing Rights.  “But to realize potential, international political agreement was necessary,” she said.

In the ensuing dialogue, many delegates welcomed today’s debate, especially as the need for new and additional resources was greater than ever.  A number of speakers had questions, however, about the existing models, including the REDD approach, which Bolivia’s delegate said did not tackle that issue at its roots. The problem was that deforestation and pollution were being transferred from industrialized countries to developing nations. Funds were being provided by environmental services to compensate, but conflicts always arose over the issue of sovereignty.

Further, he said, developing countries expected the funds would be forthcoming and invariably there were domestic conflicts about that.  The funds became just another source of conflict among development stakeholders, which only distracted from the goal of reducing emissions at their source:  industrialized countries.   Bolivia favoured a tax on international transactions instead and he asked what the United Nations could do to move that idea forward.

Other speakers remarked that tangible success had indeed been reported in the implementation of innovative mechanisms for development financing, notably in the field of health with reductions in drug costs.  While recognizing the importance of that, Egypt’s delegate said some aspects required more understanding, especially regarding the eligibility or priority of countries, and guarantees that resources were aligned with national priorities.

On a related point, a representative of the Academic Council of the United Nations System, a non-governmental organization with consultative status in the Economic and Social Council, asked how UNITAID chose its implementation partners and, more broadly, “who was doing what at the country level”.  Specifically, she asked what was being done to ensure that drugs got to the patients.  There were performance-based indicators.  Could countries track which networks were using those indicators and how networks were working with national health systems?

Adding another perspective, the European Union’s delegate said that while aid from development partners could catalyze other flows, international trade, foreign direct investment and remittances were the largest catalysts for stimulating economic growth.  The European Union was largest and most open market for developing countries, and was at the forefront of promoting the three pillars of sustainable development— economic growth, social development and environmental protection.

Other comments centred on the lack of definition for “innovative sources of finance”, which obscured the issues.  Germany’s speaker appreciated that the 2012 World Economic and Social Survey report had provided a broad view of innovative financing, especially in the areas of domestic resource mobilization and private sources of finance.  Others pointed out that public sources would always be limited; the private sector must be better incorporated into development cooperation.  Still others said that the funds raised through innovative financing were not necessarily “new”, and indeed some countries considered it part of their ODA.  China’s delegate asked panellists how Governments could differentiate ODA from innovative financing.  How did innovative financing contribute to development cooperation?

In response to a point raised by the representative of Bangladesh, Mr. TREPELKOV said he was not aware of plans to establish a new agency on financing for development.

Mr. SAMAD agreed that international trade, FDI and remittances were important, as they formed the bulk of domestic resources to finance projects funded by the budget.  Innovative sources could not substitute for this.  Trade constituted 40 per cent of gross domestic product (GDP) in Bangladesh; total aid received from ODA was less than 1 per cent of GDP.  “How much more can you innovate,” he wondered?  Expensive, “lumpy” projects must be financed — they would help to elevate the issue of poverty and health care.  That had been seen in the Republic of Korea, where poverty was alleviated through large project in the absence of a national programme.

Mr. BROUN said he was grateful for Cameroon’s contribution to UNITAID.  He said UNITAID had a small secretariat based in Geneva.  It carried out its work through “implementers” — or large non-governmental organizations — which were responsible for detailed monitoring.  From UNITAID countries received help in transforming the market so products became cheaper.  Every implementer must have an agreement with the country that implementation of UNITAID grants corresponded with national mechanisms.  Joint visits were also conducted to ensure that actions were carried out in line with those rules.

General Debate

The Economic and Social Council launched its general discussion on the follow up to the International Conference on Financing for Development.

LARBI DJACTA (Algeria), speaking on behalf of the Group of 77 developing countries and China, said this year’s coordination segment afforded a timely and appropriate occasion to strengthen the financing for development follow-up process, with a view to contributing to the overall strengthening of current institutional arrangements in that sphere.  The relevant discussions should also make progress towards the establishment of a functional commission of the Economic and Social Council on finance and development. 

The Group welcomed discussions held in the context of the annual High-Level Spring Meeting of the Council with the Breton Woods Institutions, World Trade Organization and the United Nations Conference on Trade and Development (UNCTAD), particularly the proposal made by the Council President to establish a joint group consisting of the Council Bureau and representatives of those organizations.  It was also important to explore ways to expedite organizational arrangements of the annual Spring Meeting, for example, adopting its dates and defining its themes earlier.

The “Group of 77” expressed deep concern about the lack of fulfilment, by many developed countries, of their ODA commitments, and urged those nations that had not yet done so to meet the target of 0.7 per cent of GDP for ODA, including 0.15 per cent to 0.2 per cent of GDP for ODA to least developed countries.  He reiterated his delegation’s belief that greater efforts were needed to support developing countries towards achieving the internationally agreed goals, including through the fulfilment of all commitments on official development assistance, debt relief, market access, financial and technical support and capacity building.

GYAN CHANDRA ACHARYA ( Nepal), delivering a statement on behalf of the Least Developed Countries, said that since Monterrey, there had been upheavals in the economic and financial situations of many countries.  Moreover, the current globalization process had not been able to ensure benefit to all in an equitable and judicious manner.  With the widened gap between rich and poor, and the least developed countries pushed further to the margins, the emergence of multiple crises and the ongoing adverse impacts of climate change undermined the gains made so far in those poor and most vulnerable countries.  As a result, the livelihoods of millions of people were threatened.

International trade was fundamental for development and poverty reduction in the least developed countries.  As the integration of those nations into the global financial market was rather weak, they should be provided with greater access to the developed country trading markets.  In addition, debt service consumed a significant portion of scarce budgetary resources which the least developed countries could otherwise direct towards productive sectors.  It was therefore urgent to continue to take effective measures, particularly through full cancellation of multilateral and bilateral debts owned by their creditors, both public and private.  The delegation called on the Bretton Woods Institutions to renew the extension of the Heavily Indebted Poor Countries (HIPC) Debt Initiative to address the debt problems of all least developed countries.

DENIS ZDOROV (Belarus) noted the discussion’s relevance to issues such as technology transfer that would meet all stakeholders’ interests.  The March 2012 high-level meeting with international financial and trade institutions contributed to the success achieved in Rio.   Belarus attached importance to trade development and called for international practices to be observed in that regard, as efforts to combat protectionist measures were important in preventing economic crises.

Those practices, he continued, were aimed against States that lacked sufficient resources and were vulnerable to external shocks. Such countries included low- and medium-income countries.  For its part, the United Nations must take consistent steps to help those nations, providing assistance that met their unique financial and economic needs.  It also should help sideline sanctions. Indeed, economic coercion against unfavoured States must be eliminated, as it impacted the development of international trade and undermined both the United Nations Charter and international law.

Mr. ZAGREKOV (Russian Federation) said that the Council had a key role to play in promoting the coherence of the follow-up to the Monterey and Doha development financing summits.  His delegation felt that Council resolutions should not duplicate the efforts of the General Assembly’s Second Committee (Economic and Financial).  It was necessary to fully leverage the comparative advantages of the Economic and Social Council, including with regard to the main stakeholders in the post-Monterey process.

He commended the efforts of the Council to establish working contacts, in particular with the International Monetary Fund (IMF) and the World Bank, and further noted the promising efforts to establish a compact joint working group at the bureau level in the area of follow-up activities in development financing.  However, the Russian Federation would like to see the regular holding of briefings on pressing financial and economic matters.  He said the Russian Federation had consistently supported consolidating the multiple and diverse discussions on financing for development, he continued.  Work to implement the Rio+20 outcomes, in particular with regard to financing, needed to be integrated in to the broad post-Monterey process; harmonizing those two processes could help to harness the power of the United Nations Financing for Development office.

THIERRY MUÑOZ LEDO ( Mexico) said the economic crisis had reduced growth, increased both debts and unemployment, and affected ODA flows to least developed countries.  At the Monterrey conference, which Mexico had hosted, it was recognized that an interdependent global economy required an integrated approach to national and systemic problems and he reiterated the need to move towards a fair, inclusive system in that regard.  Ten years after its adoption, the Monterrey Consensus remained in force, reflecting a clear international commitment to mobilize domestic resources, promote international trade, increase international financial and technical cooperation and adopt measures to alleviate external debt.  It was a solid basis for supporting national and international efforts for overcoming the current economic crisis.

He encouraged the Council to reflect on the idea of convening a follow-up conference to the Monterrey and Doha summits that would allow for drawing up a road map to address poverty post-2015.  Mexico supported strengthening coordination between the United Nations and the Bretton Woods Institutions, especially to increase the coherence of development policies.  For its part, the Council should adopt measures allowing for dialogue. The Rio+20 outcome should follow the holistic approach adopted in Monterrey and integrate the three pillars of sustainable development.  The process to create the financing strategy for sustainable development agreed in Rio should use existing mechanisms to mobilize resources.  He hoped the resolution would strengthen the Council’s role in the implementation of the Monterrey Consensus and the 2008 Doha Declaration.

ASTRID HELLE AJAMAY, Deputy Director General, Ministry of Foreign Affairs of Norway, said:  “There are enough resources in the world, but they are not distributed equitably.”  As such, a more equitable wealth distribution was needed between and within countries, and innovative financing was but one of several mechanisms to promote that agenda.  Norway allocated 1 per cent of gross national income (GNI) to ODA, while recognizing that ODA alone was not sufficient for reaching existing and future sustainable development goals.  She urged that the broader range of financial flows for development and innovative financing be part of that picture.  Norway supported various initiatives promoted by the Leading Group on Innovative Financing for Development in the health field, including UNITAID.  The Government also promoted the introduction of global taxes that limited the adverse effects of globalization and created global redistribution mechanisms, including a tax on currency transactions, on financial transactions and carbon emissions.

Noting that the foreign exchange market was more than 40 times larger than international trade in goods and services, she said placing a small levy on currency transactions in that market could substantially contribute to what was needed to fight poverty and climate change.  Norway was one of 14 countries that had signed the Leading Group’s declaration in support of a tax on financial transactions for development and urged more countries to follow suit.  A currency transaction levy could be viewed as a reasonable contribution from the financial sector to global stability and sustainability.  The same applied to levies on air and sea transport, she added.

SÉRGIO RODRIGUES DOS SANTOS (Brazil) said that, in 2004, his country’s Government had joined Chile, France and Spain to launch an initiative to fight poverty and hunger, calling on the international community to create new sources of financing for those purposes.  Since then, Brazil had actively participated in all forums to discuss innovative financing mechanisms, and its actions had been guided by a willingness to pursue economic growth based on social inclusion and human development.  Innovative sources of financing must be stable, predictable and additional to traditional financing for development, he said.  They could never substitute for the financing commitments and responsibilities of developed countries.  In that sense, Brazil underscored the importance of those countries meeting the commitment, agreed in Monterey, to allocate 0.7 per cent of their GDP to ODA.

Brazil, for its part, was participating in a number of initiatives in the field of innovative financing mechanisms, especially UNITAID and the Global Alliance for Vaccines and Immunizations.  Further, in May 2011, the country passed a law that would enable the Government to continue to make such contributions in a stable and sustainable way.   Brazil had closely followed the debates and work of the Task Force to study the feasibility of implementing a tax on international financial transactions.  The issue was under examination by the Brazilian Government.  Finally, the current scenario of multiple crises made it imperative that the international community redouble its efforts to achieve the Millennium Goals.  Additional resources would also be needed in order to implement the transformational change in the economic paradigm towards ensuring sustainable development, as agreed in Rio last month.

JAIRO RODRIGUEZ HERNANDEZ Cuba said that the peoples of the global South were the main victims of the recent economic and financial crisis, which, in turn, had been used as an excuse not to make good on the “modest development commitments” of developed countries.  Very few of those commitments had been implemented, and as such, there should be a follow-up meeting to the Monterey and Doha summits in 2013.  In the last few days, it had been recognized that capital was, in fact, flowing from the South to the North.

Meanwhile, the developing world could not take up development challenges alone.  Innovative sources of financing should be additional to ODA and should be aimed at eradicating poverty, he said in that respect.  Billions of dollars had been use to bail out bankrupt banks and countries, while the responsibility for development still fell squarely on the shoulders of developing countries. Innovative financing for development should not pose an additional burden in that respect, he said.

JULIO RAFAEL ESCALONA OJEDA (Venezuela) outlined his concerns about conflicts and problems linked to climate change.  Financial capital, which made money from war, hunger and other global ills, was a real obstacle for countries in the global South.  In the United States and Europe, there was social upheaval.  Libya, which once had been prosperous, today had been “destroyed by the Security Council”.  At one time, Haiti had produced enough rice to support itself, but the International Monetary Fund (IMF) had seen to it that the island nation had become dependent on international support.  While IMF was becoming more radical, Goldman Sachs and others were becoming richer.

Against that backdrop, he urged developed countries to meet their pledges to transfer technology and other resources to eradicate poverty.  “We need a guarantee of peace and stability for humanity and nature,” he said, pressing States to fight the hegemony of international capital in that regard.  The policy for bailing out banks must be changed.  Without a fundamental change in the financial system, the bailouts were meaningless.  Agriculture was now genetically modified organism (GMO) agriculture controlled by international companies that were destroying small-scale producers.  He reiterated Venezuela’s support for Special Drawing Rights for financing development, as it would be more difficult for the global South to fight poverty and meet the internationally agreed development goals without them.

EDUARDO GÁLVEZ (Chile) said the International Conference on Financing for Development held in Monterrey was successful because it had been organized by the United Nations in cooperation with other multilateral bodies.  That spirit of inclusiveness had led to a consensual outcome document.  In addition, there was an unusual agenda, aimed at forging a comprehensive approach to mobilizing domestic resources, and addressing international trade, external debt and the systemic aspects of the international economy, to ensure everyone’s voice was heard, especially in establishing rules for international financial and trading systems.

He went on to say that, for the first time, an “association for development” was discussed.  That was the only real way to hold a successful follow-up conference.  The United Nations had the ability to link together a broad set of development actors.  He agreed that the vision in Monterrey was to move to a fair and inclusive global system.  He urged not losing sight of those objectives, as only then could the United Nations make a valuable contribution.

ALEXANDRA DAVISON (United Kingdom) stressed that adequate financing for development was key to reaching the Millennium Development Goal targets.  The United Kingdom was meeting its aid targets, including its commitment to devote 0.7 per cent of its GDP to ODA by 2015.  It believed that innovative financing mechanisms could play an important role in leveraging resources, and achieving results that would not otherwise be possible — “more development results for the money”.  She further highlighted the London Summit on Family Planning, held earlier this week, which had sought to bring about transformational change through new commitments to ensuring access to family planning methods for millions of women across developing countries.  Through such initiatives, she said, progress on the ground could be achieved.

WANG QUN ( China) said the Monterrey Consensus and the Doha Declaration provided a comprehensive framework for such development financing, but the amount of ODA subsequently delivered fell far short of the committed target, and the sovereign debt crisis in developed countries had aggravated uncertainties.  Noting that the Council should play an active role in development financing, he pressed the 54-member body to promote the steady recovery of the world economy.  Countries should study systemic risks and work together to overcome the European debt crisis.  Upholding the position of ODA as the main channel of development financing was also important.  Developed countries should show greater political will to honour pledges to provide 0.7 per cent of GDP to ODA.  Innovative financing and South-South and triangular cooperation were not a substitute for North-South cooperation, he added.

For their part, developing countries should be assisted in achieving sustainable development, he said, urging enhanced international support for the implementation of the Rio+20 outcome document.  He voiced hope the General Assembly would launch the intergovernmental process as soon as possible to submit a report on proposing options for a sustainable development financing strategy.  China had cancelled debts owed by 50 heavily indebted poor countries and least developed countries, which totalled nearly 30 billion renminbi.  With the United Nations Development Programme (UNDP), it had established the International Poverty Alleviation Centre to share its poverty alleviation experience with others.  The President also announced China would donate $6 million to the United Nations Environment Programme (UNEP) Trust Fund to help developing countries build capacity in environmental protection.

ROBBIE MARKS (United States) said that while the direction of financial flows should be examined, strong enabling national environments that could bring in those flows were needed in developing countries.  That required the rule of law, supported by strong institutions such as independent courts and a free press.  The United States was the world’s single largest provider of ODA, with some $30 billion annually, much of which went to the least developing countries. However, the international community should be mindful that ODA was only a small part of development financing. Today, new partners, such as emerging economies, the private sector and others were major components of the world’s development reality.

The latest Secretary-General’s report had noted that developing countries now accounted for one third of outward direct foreign investment, he said.  Developing countries were also playing an increasingly important role as sources of debt finance.  “We need to focus on development results,” he said, and in that regard, the Council could help integrate more development partners into an agenda based on common goals and common principles.  The United States was a strong supporter of the Council and its major meetings, including those aimed at financing for development. “We have an obligation to minimize duplication and overlap of efforts” between the Council and the second committee of the General Assembly, he concluded.

JOHN BUSUTTIL, speaking on behalf of the delegation of the European Union, said that the Monterey Consensus, as reaffirmed in Doha, had been a landmark agreement for development.  The European Union fully supported global initiatives and actions to deal with the many current global challenges, including by meeting its ODA commitments, by promoting policy coherence, and supporting the poorest and most vulnerable in developing counties.  However, there was a need to reflect on how to mobilize additional funding, involving the private sector and increasing job creation.  The Union and its member States were making substantial efforts to achieve international targets on the quantity and quality of official development assistance; collectively, it was the largest provider of ODA in value and its ODA/GNI index was more than double those of Japan and the United States. It was keeping to its commitments on fast-start climate finance, and had increased its ODA to sub-Saharan Africa by around 5.5 billion Euros in real terms between 2004 and 2011.

However, aid was not sufficient to achieve the Millennium Development Goals and other internationally agreed targets.  In its recent Cannes formal agreement, the G20 had, for the first time, supported innovative financing for development and tackling climate change, and had agreed to move forward using a “menu” of options.  Twelve European Union member States were currently using or planning to use one or more of those existing innovative financing methods.

The European Union also consistently supported developing countries in using trade as a tool for development.  Since 2007, the Union had been driving the global Aid for Trade efforts, and it was the largest Aid for Trade provider in the world.  Indeed, the Union and its member States together accounted for around 32 percent of those flows in 2010, or some 10.7 billion Euros.  Finally, the European Commission and the European Union member States were steadfastly committed to providing debt relief and were increasingly prioritizing the prevention of the unsustainable debt, in addition to providing debt relief through participation in the World Bank’s Debt Relief Trust Fund.

Action on Draft Resolution

Following those statements, the Council heard an introduction to the draft resolution before it on “the role of the United Nations system in implementing the internationally agreed goals and commitments in regard to education” (document E/2012/L.9), by AMIRA FAHMY (Egypt).  It then adopted the text by consensus.

In remarks summing up the Coordination Segment, Council Vice-President KHALIL said it had provided an opportunity to identify ways for the United Nations to promote more integrated approaches and recommend ways in which support could be strengthened against the backdrop of current challenges.  The dialogue with the Regional Commissions had shed light on the situation of youth and efforts to promote their participation in decisions that affected their future, particularly on employment.  The Council’s focus on the implementation of its 2011 Ministerial Declaration yielded discussion on the need for education to be part of the post-2015 development agenda.  Speakers noted that partnerships on education could help achieve Education for All.

In that regard, he said the United Nations must enhance its partnership capacity to deliver its mandate on a greater scale, maximize synergies and ensure coherence.  There also should be an increased focus on accountability and impact. Also during the session, views were also heard that the education/skills and jobs mismatch was a serious challenge and that future labour market demands must be better predicted.  “All these issues have been captured in the resolution adopted by the Council under this segment”, he said.  Today’s panel on innovative development financing mechanisms explored how present and new mechanisms could increase the scale of such financing and provide predictable funds for sustainable development.

Finally, he said a draft resolution on the follow-up to the International Conference on Financing for Development was being facilitated by Mexico.  Informal consultations on it had begun this week.  As such, the Council would resume its consideration of agenda item 6(a) — Financing for Development — at some point next week or the following week, to adopt that text.  With that, he suspended the Coordination Segment.

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For information media • not an official record