High on jargon, low on justice!

“Mis-selling products, the bankers invented a new crime, taking the most useless and sophisticated instrument to the most gullible investors and selling it to them… tying them in a vicious spiral of debt…”

-- Meltdown, The men who crashed the world, Al Jazeera

“If the income-share of the top 20 per cent (the rich) increases, then GDP growth actually declines over the medium term, suggesting that the benefits do not trickle down… The poor and the middleclass matter the most for growth.” An income bump to the poorest 20 per cent is associated with higher GDP growth!

-- Causes and consequences of income inequality: A Global Perspective, IMF staff discussion note

In less than a week, the world financial leaders from 193 United Nations’ country governments will meet at Addis Ababa, Ethiopia, from July 13-16, 2015, to discuss the challenge of financing the new set of global development goals and deal with the vexatious issues of finance, namely the third international conference of Financing for Development (FfD). The outcome draft for Addis Ababa negotiation was revised in May, 2015. The International Monetary Fund (IMF) note debunking their long-propagated trickle-down economics came out with the revised draft of the FfD outcome document. This FfD draft was the outcome of the grinding consequences of the global meltdown, though bankers, economists and financiers who scripted it, lead a consequence-free life, while the common citizens endured enormous hardships.

Yet the FfD draft outcome document, also referred to as the draft Addis Accord, seems to have chosen to not address any of these meta-truths into cognizance with the seriousness they deserve. It is a maze of words, platitudes of intents, lacking purpose, written in the most inaccessible English.

It offers more trepidation than hope! Yet, considering FfD is a process anchored by the G-77 (which now has almost 140 countries) and China, hope is not a dead letter! A better final document, which anchors on the principles of the Common But Differentiated Responsibility (CBDR), where the developing countries show leadership and script punitive consequences for greed, is still a possibility.

However, there are sections in the outcome document, which are inspirational and deserve applause. For instance:

• Recognising the long road to Addis Ababa and all the processes that contributed to it --- from Moneterray, Mexico to Istanbul and Vienna. The new development framework “the African Union’s Agenda 2063” to ensure a positive socio-economic transformation in Africa.
• It recognises the specific challenges of Middle Income Countries and goes beyond the Least Developed Countries to recognise and enlist for special attention, the Land-Locked Developing Countries, Small Island Developing States.
• It boldly emphasises universal social protection and essential public services for all, including calling for a global fund for social protection.
• It also calls for scaling-up efforts to challenge hunger and malnutrition, including, but not limited to, enforcing voluntary guidelines on land tenure to reducing post-harvest loss and wastage of food.
• It recognises the pivotal role of Medium Small and Micro Enterprises (MSMEs), and calls for financing and prioritisation for job creation, decent work and ratification of the International Labour Organisation’s (ILO) ‘Global Jobs Pact’, which comprehensively addresses these issues.
• It recognises the role of peace and inclusion for development and just societies. Making that umbilical linkage with peace boldly is a first!
• In the Agenda for Action, it calls for capacity building on contract negotiation and management on extractives and natural resources vis-à-vis corporate majors, establishing transparent intra-country public procurement frameworks.
• It recognises the pivotal role that domestic finance plays in development, beyond Official Development Assistance (ODA).
• It also calls for studies among the Southern regions like the one done for Africa by the High Level Political Forum (HLPF), where debt servicing and extraction made Africa a net creditor debunking the commonly-held myth of its debtor status.
• It calls on the “too-big-to-fail institutions” and makes a case for cross-border international instruments that give hope that the rogue financial institutions will no longer bully sovereign states or international institutions.

At the same time, it is difficult to comprehend how the watering-down negotiation pressure has allowed the inclusion of glaring sections and other lapses. For instance:

• While the document has women contributors and entitlements, from access to credit, land and productive asset ownership to participation in workforce, it does not mention of care economy, the responsibility upheld by the women of the world! Nor does it mention emphatically the public financing and affirmative action needed to make women workforce participation a reality such as maternity entitlements (paid leaves, nutrition and healthcare) and public-funded crèche. The crisis of crèche in urban India has been singularly responsible for many women from the lower income and middle income strata withdrawing from the workforce.
• It continues to repose faith on Bretton Woods Institutions and multilateral bank finance to build infrastructure in the developing world. But it ignores the mountain of evidence of over-designed projects, their financial infeasibility and the crushing on-lending debt burden they impose on citizens, the end-users!
• The danger of public-private-partnership (PPPs) has been too evident and the meta-analysis of projects financed through these instruments has led to failures, cost-overruns and pain, including how sovereign states have being taken to courts and defeated! Yet the document continues to advocate blended finance (with public-private component) in multiple sections.
• The document continues to advocate global funds like Global Aids Vaccine Initiative and the Global Fund to fight Aids, TB and Malaria, but does not specify regulations and distribution mechanisms required.
• In an era of shrouded in secrecy, pro-corporate, super-sovereign trade negotiations like the Transatlantic Trade and Investment Partnerships, the document continues to repose faith in trade as the engine of growth and development without levelling the terms. There is tone-deafness in the document regarding trade. It also talks of an ideal world of quota-free and duty-free trade, without acknowledging the trade-distorting subsidies that have given an edge to the US, European Union, Australia and Japan. The fact that there are people’s movements calling for complete audit of Free Trade Agreements is missing in the document.
• Similarly, voodoo assumptions on the benefits of trade facilitation have been repeated even in the case of food, agriculture and food commodities without mentioning differential playing fields.
• While the migrant workers’ contribution has been recognised in the document, the conditions in which they work in have been ignored.
• The document calls on governments to increase transparency in debt management but forgets to mention the debt induction in the first place has been hugely non-transparent.
• The US, with its veto power (16.7 per cent votes) in the World Bank, needs a real stripping down and the IMF and the World Bank need real institutional reforms, but the draft outcome document is silent on this.
• Small countries with large chutzpah like Iceland have defaulted, but charted the bold path of imprisoning rogue bankers thereby recovering their country’s economy. Yet they are unrecognised and not mentioned.
• Though data monitoring and follow-ups get a mandatory mention, public data and accountability, financing of sunshine laws and embedding cultural transparency find passing reference.

The FfD is not just a fund-raising event, but truly a justice event. The developing countries need to recognise their power and read the signs of the time to take the initiative and make the rich countries of the Organisation for Economic Cooperation and Development live up to their 40-year-old commitment of 0.7 per cent Official Development Assistance. They need to actually pay much more, their fair share!

The rising ambition among emerging economies which manifests in BRICS (Brazil, Russia, India, China and South Africa) Bank should also translate into committing resources intra-country as well as globally to express solidarity with the impoverished and the marginalised.

Neither street rage about hardships and injustice nor appealing to the morality and philanthropy of the elite will achieve this. A new, just and transformative world order, calls for new rules, new structures, new solidarities, new leadership, and world leaders negotiating the Addis Accord should deliver that.

The author works on issues of poverty, public policy & citizen-state engagement in South Asia and Horn East and Central Africa

Subscribe to Daily Newsletter :

SUPPORT US

We are a voice to you; you have been a support to us. Together we build journalism that is independent, credible and fearless. You can further help us by making a donation. This will mean a lot for our ability to bring you news, perspectives and analysis from the ground so that we can make change together.