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ECOSOC Debate on New Ideas for Generating Funds (11 July 1996) ECOSOC Debate on "New and
Innovative Ideas for Generating Funds"
(11 July 1996)UNDPI Press Release
ECOSOC/5664, 30th Meeting
An advisory group of internationally recognized experts should be created to report on the feasibility of ideas for new and innovative funding for globally agreed development priorities, the representative of Ireland told the Economic and Social Council this morning as it began its general segment.
Speaking on behalf of the European Union, he suggested that the advisory group should be small and established within existing resources, which could be supplemented by voluntary contributions.
Stressing that his Government did not support international tax collection schemes, the representative of the United States said the mandate of the expert group should specifically delimit international taxation. The representative of Colombia said his delegation had reservations about the establishment of an expert group since that could lead to a vicious circle of reports and proposals which would rarely be discussed in depth.
The representative of Costa Rica, speaking on behalf of the "Group of 77" developing countries and China, said that new and innovative funding devices should be seen as a supplement, and not a replacement for official development assistance (ODA). The representative of Australia said that, without new funding strategies, the international community would not be able to undertake the development strategies to which it had agreed to in global development conferences.
Several representatives stressed that any new funding mechanisms should be predictable and should not place new burdens on developing countries. While some emphasized the role of private sector investment in development, others stated that private sector investment had been found wanting, especially in areas such as the environment. Divergent views were expressed on the usefulness of a conference room paper prepared by the Secretariat on "new and innovative ideas for generating funds".
Commenting on statements made, the Director of the Division for Policy Coordination and Economic and Social Council Affairs, Miles Stoby, said he was hesitant to accept criticism of the paper since the Council had provided no guidance on the documentation it expected from the Secretariat on the matter. "Officially, you had no right to expect anything from us at all", he said.
Statements were also made by the representatives of Jamaica, Guyana, Brazil, Mexico, India, Norway, Russian Federation, Lebanon, Indonesia, United Republic of Tanzania, Algeria, Latvia, Cuba, Chile, Pakistan, Ukraine, Uganda, Senegal and Iran. A representative of the International Student and Youth Movement for the United Nations also spoke.
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Discussion on New Ideas for Generating Funds
To facilitate the deliberations on new and innovative ideas for generating funds, a conference room paper on the matter was available to the Council. It provides an annotated checklist of proposals for the funding of economic and social development, including proposals for funding of activities emanating from world conferences. The paper's section I provides an overview of reports sought from the Secretary-General, while section II contains a bibliography of reports and studies on funding prepared, generally, by non- United Nations parties.
Among other documents, the paper refers to a report of the Secretary- General on funding United Nations operational activities (document A/48/940) which covered major funding mechanisms, including United Nations pledging conferences, assessed contributions, replenishment systems, negotiated pledges, and mixed-funding mechanisms. It contains a comparative analysis of advantages of various funding mechanisms.
Referring to reports and studies by external bodies, the paper states that they include proposals on revised funding for the United Nations such as negotiated pledges similar to those for international financial institutions. In that regard, the Nordic countries had proposed that assessed contributions should constitute 10 per cent of total funding for the administrative budget, negotiated contributions 60 per cent and voluntary contributions some 30 per cent. Other alternatives include the consolidation of United Nations trust funds into a single "super" trust fund; charges on transactions in the foreign exchange, securities and bond markets; levies on air travel and freight and telecommunications; and United Nations lottery or credit card.
Proposals for funding social development include a global human security account based on revenues collected from the peace dividend and taxes on international capital movement, which could generate some $250 billion annually, the paper states. Another option is the proposal for a levy on international currency transactions, known as the "Tobin Tax", as it was first proposed in the early 1970s by American economist and 1981 Nobel prize winner in economics James Tobin. The original proposal was for a 0.5 per cent minimum tax on foreign exchange transactions in all key currencies, currently estimated at $1 trillion daily. Other suggestions include a civil society development fund, global and regional funds for the environment, and environmental taxes.
Also available was a note verbale dated 1 March from the Permanent Representative of Japan addressed to the Secretary-General (document E/CN.17/1996/28), which transmits the Chairman's summary of the Third Expert Group Meeting on Financial Issues of Agenda 21, held at the Asian Development Bank, Manila, from 6 to 8 February.
Statements
The first speaker this morning, Oscar Acuna (Costa Rica), speaking on behalf of the "Group of 77" developing countries and China, said the conference room paper provided by the Secretariat on "new and innovative ideas for generating funding" provided a large menu of options, but no particular recommendations for generating funds. It contained ideas for fund mobilization which when new were not innovative, as they had little chance of being accepted by Member States. Similarly, those ideas which were innovative were not new for they had been discussed elsewhere.
Stating that official development assistance (ODA) had declined drastically in recent years, he said although foreign direct investment had increased, two thirds of those investments went to only eight developing countries. Therefore, new and innovative funding should be looked upon as a supplement and not as a replacement for ODA. It should not encourage donor countries to further reduce their ODA. Commitments made by donor countries should be honoured and new proposals to generate additional ODA and the burden of shortfall in such assistance should not be shifted to developing countries.
The Council President, Jean-Marie Kacou Gervais (Côte d'Ivoire), said the representative of Costa Rica had been critical of the conference room paper prepared by the Secretariat; however, issues that the speaker had raised were not dealt with in the papers. Hence, his comments had been unfounded.
Helen Brown (Ireland), speaking on behalf of the European Union, said she was disappointed that it had not been possible to arrange a technical briefing for interested delegations on the matter of generating funding. It was essential that the matter be kept separate from the examination of financing United Nations regular and peace-keeping budgets in the context of the General Assembly.
It was clear from the Secretariat paper that many ideas for new and innovative funding had been put forward, she said, suggesting that a small advisory group of internationally recognized experts be set up within existing resources. Such a group could also be supplemented by voluntary contributions. The mandate for the group would be to prepare a report on the feasibility of ideas and the possible contribution they could make to globally agreed priorities.
Victor Marrero (United States) said the principle source of financing for the United Nations should remain the assessed contributions from Member States. That would not preclude voluntary contributions from States. His Government would have no objection to certain "fee for service" charges by organizations such as the International Telecommunication Union (ITU) and the World Intellectual Property Organization (WIPO). However, it did not support international tax collection schemes.
The United Nations did not have the authority to impose or collect any form of tax, he said. Commenting on the European Union proposal that experts review new ideas, he stressed that the mandate of such a group of experts should specifically delimit international taxation. He emphasized that debt forgiveness issues belonged to other forums, and it was clear that in the future the primary source for development would be private sector investment. The stagnation of ODA and the rise of direct investment were indicators in that direction.
Vilma McNish (Jamaica) said that the question of funding for development programmes had been made more urgent by dramatic decreases in ODA. Over the years, the commitment to achieve ODA targets of 0.7 per cent of gross national product (GNP) had been repeatedly reaffirmed to no avail. Many of the innovative funding proposals contained in the conference room paper would have implications for national sovereignty. Industrialized countries should meet their obligations regarding the provision of ODA through voluntary funding and pledging conferences.
Mr. Acuna (Costa Rica) said that the President had made a "value judgement" on his earlier comments. The issue of development financing was a delicate one, and the Group of 77 wished to make clear that they did not believe that the conference room paper contained new and innovative ideas.
Samuel Insanally (Guyana) said that ODA remained pivotal to the development of most developing countries. New and innovative funding schemes should not be allowed to diminish the importance of continuing official assistance. His Government found the "Tobin tax" and environmental levies to hold great potential for generating significant resources. Other suggestions of interest had included an international tax on "low elasticity commodities", on the use of "common-use resources", such as the seabed, and on the profits of transnational corporations. The proposal of Japan and of the recent Lyon summit meeting of the "Group of Seven" most industrialized countries that savings effected from United Nations reform should be applied to development was also of interest.
Eduardo Paes Saboia (Brazil) said that any funds raised by new mechanisms should be considered "additional" resources. New mechanisms should bear in mind the principle of common but differentiated responsibilities and the need for developed countries to take the lead in changing production and consumption patterns. He had been pleased to hear from a representative of the United Nations Children's Fund (UNICEF) during the current Council session that the private sector provided one third of that organization's funding.
Ulises Canchola (Mexico) said that the new proposals for funding mechanisms should be complementary to funding commitments agreed to at the major global development conferences. It would be difficult to move forward with discussions unless those commitments were borne in mind. Arun Kumar Singh (India) said the statement by the representative of the United States had tried to orient "us towards private sector funding". However, such funding had been found wanting, especially in spheres such as environment. Any new funding should be predictable and should not attempt to replace ODA. Moreover, it should not place any new burdens on the developing countries. Ideas should also take into account the benefits that developing countries had unwittingly provided to developed countries in areas such as traditional knowledge and environment. Arman Aardal (Norway) said he did not see the innovative sources of funding as any replacement to the ODA. Also, he expressed concern at declining levels of ODA. He supported the European Union proposal for establishment of an advisory group on innovative funding. Jairo Montoya (Colombia) said the question of new and innovative funding should not constitute a substitute for existing commitments. A new and innovative political will was needed to fulfil commitments which had been made. Commenting on the European Union's proposal to establish an independent group of experts, he said his delegation had reservations because such a step could lead to a vicious circle of reports and proposals which would rarely be discussed in depth as representatives of governments would not have the time.
Alexandr Gorelik (Russian Federation) said that all governments should pay their assessed contributions to the United Nations. The Volker-Ogata report of 1993 had stimulated widespread discussion of the financing of the United Nations system. At the expert level, it was much easier to reach consensus on those matters than at the level of intergovernmental discussion. The universality and democratic nature of the United Nations were its most salient features. Russia believed that continuing dialogue was necessary in the area of non-traditional funding.
Hicham Hamdan (Lebanon) said that he had been pleased to see that the European Union had endorsed the view that the generation of new and innovative sources of funding should complement, and not negatively impact, ODA. International taxation of essential items such as energy should not be allowed to penalize countries dependent upon those commodities.
Herijanto Soeprapto (Indonesia) said that the conference room paper had done a good job of annotating the various proposals regarding new and efficient funding mechanisms. His Government was acutely aware that, at the very time that the global economy was changing in so many ways, ODA was at historically low levels, and the United Nations had been brought to the brink of insolvency. New and innovative funding mechanisms should emphasize international, and not national, sources of funding. Existing funding mechanisms would be made more predictable if they were based on multi-year programme targets.
Katinda Kamando (United Republic of Tanzania) said that his Government fully endorsed the remarks of Costa Rica on behalf of the Group of 77.
Kheireddine Ramoul (Algeria) said that discussions of new and innovative mechanisms for funding development involved billions of dollars, funding that could not be raised from "credit cards". Developing countries should be vigilant; discussion of new mechanisms should not be allowed to distract attention from the real issues that they faced.
Uldis Blukis (Latvia) said that discussions of new and innovative funding mechanisms for development should embrace all existing funding devices. Sustainability should be a paramount concern. History was full of civilizations that undertook unsustainable development, only to collapse after exhausting their forests, soils and water. It was not prudent to spend less than 1 per cent of gross domestic product (GDP) on environmental protection while allowing degradation to consume up to 15 per cent of GDP. The prudent response to the current decline in development assistance was to improve existing funding mechanisms while searching for new andinnovative funding ideas.
Miles Armitage (Australia) said that traditional sources of funding were not sufficient to the activities being undertaken at the United Nations in the economic, social and environmental fields. Without new funding strategies, the international community would not be able to undertake the development strategies to which they had agreed at the global development conferences. A more systematic and focused analysis of new mechanisms was necessary.
Anayansi Rodriguez Camejo (Cuba) said that analysis of new funding mechanisms should be undertaken independently of discussions on current funding of United Nations programmes and peace-keeping operations. The proposal of the European Union to establish an advisory group should be undertaken with caution. The ideas proposed in the conference room paper required more substantiation; many were not very realistic. Political commitment to carry out existing mechanisms was more required than new and innovative ideas for raising funds.
Eduardo Galvez (Chile) said that he doubted that there was sufficient political will to undertake new funding mechanisms, such as the taxation of weapons trading. An intergovernmental conference should be convened to discuss the generally academic proposals thus far seen. Popular support was essential for such idealistic and revolutionary proposals to work.
Syed Mansur Raza (Pakistan) said that the conference room paper had included a compendium of ideas without an analysis of their pros and cons. Discussion of those proposals should not be allowed to detract from the obligation to honour existing aid commitments. Any new funding proposal should not place additional burdens upon developing countries. The United Nations was not an ordinary commercial organization to be burdened with "demeaning" ways of raising funds. Member States should be invited to provide the Secretary-General with detailed analyses of their views.
Igor Goumenny (Ukraine) said that a weak point of the Volker-Ogata report had been that it had not emphasized the General Assembly's right to determine funding mechanisms.
Odyek Agona (Uganda) said that the international community should muster the courage to undertake a serious discussion of new funding mechanisms. Political will would be essential; there must be some form of organized forum for discussing those views at a high level. There should be no attempt to eliminate the role of ODA; new mechanisms for funding should be considered an additionality. The private sector worked. But there were certain things that it could not take care of.
Oumar Demba Ba (Senegal) said that a better balance between military and economic security should be pursued in any new funding strategy. The world was over-armed. A fraction of the world's wealth transferred from military spending to poverty alleviation could do much to cure global ills. New funding mechanisms should not lead to any additional burdens on developing countries.
Hamid Nazari Tajbadi (Iran) said his country associated itself with the statement made by Costa Rica, on behalf of the Group of 77. He stressed that new sources of funding should not lead to a decline in ODA.
Responding to statements made, Miles Stoby, Director of the Division for Policy Coordination and Economic and Social Council Affairs, said he appreciated the comments and criticisms by delegates. However, on the Secretariat's paper on innovative sources of funding, he would be hesitant to accept criticism, since the item was new and its substance was politically sensitive. Moreover, no guidance had been given to the Secretariat by the Council on whether or how it should prepare any documentation on the matter. Also, no requests for a briefing had been made by delegates. In short, there was no consensus on what the delegates wanted from the Secretariat.
He said the Secretariat on its own had decided to produce a guidance document and had been careful to not touch on regular budgetary funding. Instead, it had focused on extrabudgetary funding. "Officially, you had no right to expect anything from us at all", he said, adding that, therefore, he was less receptive of criticism.
Mr. Marrero (United States) stressed the necessity of conveying throughout the United Nations system the reality of government financing. There was a need to provide a mandate for United Nations system entities to draw upon and to consider ways of enhancing funding from other sources. The search for new ideas should be broadened to involve the entire system.
James Paul, of the International Youth and Student Movement for the United Nations, said traditional sources of funding for the United Nations had proved to be increasingly deficient. The United Nations was in deep financial crisis and, although one Member State bore special responsibility, nation States worldwide had difficulty in paying assessments and voluntary contributions. As potential resources existed, he suggested that the Council should call for detailed feasibility studies, consult with eminent experts and initiate intergovernmental deliberations to support innovative financing. The United Nations should consider innovative funding mechanisms not just as revenue-generating sources, but as steering devices to minimize destructive trends in the global economy.
Mr. Aardal (Norway) said he appreciated the paper presented by the Secretariat to the Council. He added that the Norwegian mission was under the impression that a request for a briefing had been made by the representative of the Netherlands.
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