FINANCING FOR DEVELOPMENT
Proposals for Action

1. The International Council on Social Welfare (ICSW) is a democratic global alliance representing thousands of non-government organisations that are actively involved in promoting social welfare, social development and social justice at local, national and international levels. Our membership network comprises community-based and representative organisations in more than seventy developed and developing countries throughout the world.

2. ICSW has conducted an extensive series of global and regional forums beginning in 1999 in order to consult our membership and many other civil society organisations about issues relating to financing for development. We have now developed the following proposals for inclusion in the final agreement of the International Conference on Financing for Development ("the FfD Conference") to be held in Monterrey in March 2002.

3. The Millennium Summit in 2000 was the most representative and authoritative gathering of world leaders ever to be assembled. The Summit formally adopted nine specific goals for reducing extreme poverty, child and maternal mortality and HIV/AIDS as well as for improving access to food, water, education and shelter (see Millennium Declaration, para 19). Most of these goals had been proposed several years earlier by the OECD countries that provide direct financial assistance for developing countries.

4. These International Development Goals (IDGs) have substantial strengths. They focus on areas where inadequate development is especially damaging for people and nations and where improvement would provide especially great economic, social and environmental benefits. Most of them are numerical and measurable, and all have specific target dates for their achievement. They are appropriately ambitious but are not so unrealistic as to lack credibility.

5. These Goals will not be achieved, however, unless urgent and substantial improvements are made in the mobilisation of relevant resources at both national and international levels. They also will not be achieved unless there is a clear and agreed timetable for that mobilisation and compliance with that timetable is openly and effectively monitored. This will require the same degree of specificity in commitments to resource mobilisation as has been agreed already in relation to the IDGs.

6. The Millennium Summit agreed that the FfD Conference should play a key role in helping to mobilise these resources, especially by addressing obstacles facing the developing countries where poverty is most widespread. Unless the FfD Conference agrees on firm, specific and time-bound actions for this purpose it will clearly have failed in its mandate and responsibilities.

P1. ICSW proposes that the FfD Conference should call on the United Nations to initiate a Campaign to achieve the International Development Goals and should commit its participants to full involvement in that Campaign.

An International Anti-Poverty Pact

7. ICSW believes that the centrepiece of the Campaign for the International Development Goals should be adoption and implementation of an International Anti-Poverty Pact. The proposed Pact should include the nine IDGs and should match them with a similar number of new resource commitments that are also specific and time-bound. The Pact should be negotiated by governments through the United Nations, with final negotiation and adoption as a resolution of the General Assembly, and should be for overall achievement by 2015.

8. The nine specific, time-bound International Development Goals involve

• halving the proportion of people whose income is less than US$1 per day;
  
• halving the proportion of people who suffer hunger;
  
• halving the proportion of people who cannot access safe drinking water;
  
• reducing maternal mortality by three-quarters;
  
• reducing under-five child mortality by two-thirds;
  
• enabling all children to complete a full course of primary education;
  
• achieving full gender equity in access to all levels of education;
  
• reversing the spread of HIV/AIDS, malaria and other major diseases;
  
• achieving significant improvement in the lives of at least 100 million slum dwellers.

The agreed date for achieving each of these goals is 2015, except for the last one that is for achievement by 2020 and could be modified accordingly in the Pact.

9. These goals should be matched in the Pact by nine specific, time-bound commitments in relation to mobilisation of resources. ICSW proposes the following areas as the highest priorities for inclusion in this part of the Pact:

• improving the provision and application of official development assistance;
  
• improving arrangements for debt cancellation and debt relief;
  
• enhancing the flows and benefits of private investment for developing countries;
  
• reducing unfairness for developing countries in international trade agreements;
  
• enhancing the efficiency, fairness and sustainability of taxation systems;
  
• reducing corruption and misappropriation of public resources;
  
• strengthening corporate governance and responsibility;
  
• discontinuing excessive military expenditure and arms trade;
  
• enhancing equity and security in land ownership.

10. These proposed areas involve a balance of contributions from developed and developing country sources. For example, improvements in official development assistance (ODA) and debt relief are to be accompanied by reductions in military expenditure and in public and corporate corruption. They also involve a balance between mobilising public sector resources through taxation, ODA and debt relief, and mobilising private sector resources through business enterprise, investment and trade. The proposed Pact also recognises that, while tax reform is necessary to help generate and sustain adequate levels of public revenue, heavy emphasis must also be placed on making better use of existing revenue.

11. The Anti-Poverty Pact should initially include one or two specific actions under each of the nine resource commitment headings. For example, these actions could involve specific increases in ODA, establishment of a debt arbitration mechanism, reductions in specific trade barriers, and establishment of an annual international tax forum. This first round of agreed actions under the Pact could be for achievement by 2005.

12. Towards the end of this first phase, a further round of specific actions could be agreed for achievement by 2010, with a third round being agreed subsequently for achievement by 2015. This approach reflects the inevitable time lag between providing resources and achieving their full impact on the International Development Goals. It also reflects the fact that agreed resource commitments in this context are likely to be vague or insubstantial if the deadline for achievement is too close or to be unduly delayed and uncertain if the deadline is too far away.

13. The fundamental purpose of the proposed Pact is to achieve credible and sustained commitment to achievement of the International Development Goals by the agreed date of 2015. It should be a brief document of firm commitments. Lengthy descriptions, rhetoric and analysis are readily available from other sources and their inclusion in the Pact would serve only to delay its adoption and divert attention from its key operative commitments.

P2. The Conference should agree that development and implementation of an International Anti-Poverty Pact will be the centrepiece of the Campaign for the International Development Goals. It should agree in principle that the Pact will consist of

• the nine specific, time-bound International Development Goals, to be achieved by 2015 (see para 19 of the Millennium Declaration);
  
• a similar number of specific, time-bound commitments for resource mobilisation to be achieved by 2005 (with further commitments to be agreed subsequently for achievement by 2010 and 2015).

P3. The Conference should request the UN Secretary General to prepare a report in time for consideration by the 2002 meeting of the Economic and Social Council (ECOSOC) proposing

(a) a framework for an International Anti-Poverty Pact; and

(b) a process and timetable for developing a detailed draft Pact for finalisation as a resolution of the General Assembly.

[For further details of the proposed International Anti-Poverty Pact, see later in this paper and also two other ICSW papers: A Campaign for the International Development Goals: The International Anti-Poverty Pact (2001) and Globalization and Social Development (2001).]

14. The Millennium Summit agreed that sustained development and poverty reduction would benefit substantially from greater international cooperation and coordination in developing and applying economic policies. The current arrangements have three principal weaknesses. First, most of the key institutions either consist solely of the wealthiest countries or are effectively dominated by one or more of them. This applies, for example, to the G8, OECD, IMF and World Bank. In consequence, insufficient informed consideration is commonly given to the circumstances and interests of developing countries (a striking example being the IMF reaction to the so-called Asian financial crisis in 1997).

15. Second, structures and processes for resolving conflicts between different aspects of economic policy - and between economic, social and environmental policies - are commonly non-existent or ineffective. There are few equivalents at the international level of the kinds of "whole of government" processes (established and overseen by a Cabinet or President’s Office) which resolve such conflicts at the national level in order to balance competing policy considerations and the interests of different sectors of the community. This problem was at the heart of the disputes that forced abandonment of the WTO meeting in Seattle.

16. The third weakness is that, in the absence of effective processes for resolving cross-sectoral differences, the dominant role tends to be played by organisations and processes that have relatively narrow and short-term economic perspectives. Yet their decisions often have major and decisive impacts on matters that are largely outside their expertise, experience and mandate. This applies, for example, to many decisions taken by the key international financial regulators

17. At the global level, only the United Nations system has the breadth of responsibilities and membership that can provide a sufficiently comprehensive and balanced framework to overcome these problems. Within that system, it is the Economic and Social Council that has the most appropriate mandate and composition to play the principal coordinating role, under the ultimate oversight of the General Assembly. Developed countries have tended to resist ECOSOC’s involvement in high-level policy coordination, especially on economic matters, and the developing countries have tended to give insufficient attention to improving its efficiency and expertise rather than merely increasing its membership. During the last few years, however, there have been some encouraging signs of improvement, especially after the latest series of financial crises began in 1997. This includes ECOSOC beginning to convene regular high-level meetings with the World Bank and IMF in which the G20 and other key institutions are also now becoming involved.

18. The Millennium Summit endorsed the view agreed previously by many major UN conferences during the 1990s that ECOSOC should be strengthened in order to enable it to fulfil the role vested in it by the UN Charter. The leaders of the developed countries, in particular, should now honour this commitment by ensuring that organisations such as the World Bank, IMF, WTO, OECD and G8 both recognise and cooperate with ECOSOC’s central over-arching role.

19. For its part, ECOSOC should continue and accelerate its process of internal reform. It needs to develop structures and processes that substantially increase its ability to act expeditiously and expertly on high-level policy issues, especially in the economic sphere. It should devolve more of its work to be handled principally by sub-groups of its membership, structured in ways which strike an appropriate balance between broad representativeness and the realities of international power. It should involve Ministers and leading non-government experts more centrally in its ongoing activities. It also should greatly strengthen its engagement with key inter-governmental groupings at the regional level.

P4. The Conference should request ECOSOC to strengthen at its 2002 meeting both the composition and role of its Bureau. It also should request ECOSOC to adopt processes which increase its capacity to focus on timely and in-depth policy discussion and give greater opportunities for effective contributions to those discussions by non-governmental experts.

P5. The Conference should request ECOSOC to develop a practice of establishing Special Working Groups involving Ministers or other representatives with high political authority, and of making greater use of independent experts, especially in areas of major economic policy.

P6. In particular, the Conference should request ECOSOC to establish at its 2002 annual meeting a Special Working Group on Economic Cooperation. The Working Group could consist of up to 25 members, of whom approximately one-third are the G8 countries, another one-third are countries with very large populations, and the other one-third are members elected triennially by the remaining countries on a regional basis.

[For further explanation of these proposals, see the ICSW paper, Strengthening the Economic and Social Council System (2001).]

20. One of the most potentially beneficial corollaries of increasing globalization in recent decades has been the development of a number of regional inter-governmental groupings that are led at heads-of-government level. The most obvious example is the European Union (EU) but other groupings which have emerged or strengthened in the last decade or so include the Association of South East Asian Nations (ASEAN), Southern African Development Community (SADC), Mercosur and the South Asian Association of Regional Cooperation (SAARC). Many other regional groupings are also growing in importance. Uncertainties and setbacks in the processes are inevitable but, in general, these new and predominantly sub-continental groupings appear to be increasingly effective.

21. The relatively rapid development of the European Union reflects a clear recognition that, even for some of the most powerful countries in the world, greater regional cooperation is essential if countries are adequately to develop their capabilities and protect their interests. It recognises that, while many forms of economic and social interaction and of governance can and should occur at the global, national and local levels, there is also a clear need to strengthen them at the regional level. Indeed, without greater regional cooperation, the national and local levels may be overwhelmed and the global level may be ineffective. This applies especially to developing countries.

22. Greater regional cooperation can help to maximise the potential benefits of internationalisation in economic and other fields while also helping to minimise the dangers. It can help to strike an appropriate balance between globalization, with its risks of excessive uniformity and dominance from afar, and localisation, with its risks of impotence and stagnation. Some of its principal potential benefits relate directly to economic activities, where it can help to provide enterprises with greater resources and opportunities, reduce vulnerability to local setbacks or instability, and facilitate effective implementation of economic policy and business regulation. But there are also broader potential benefits, including cross-country assistance in the form of resources, information and experience, protection of public revenue by combating excessive tax competition and avoidance, and protection of physical and social environments from commercial exploitation which individual governments could not effectively restrain.

23. In some circumstances, these benefits can be, and may only be, obtainable through global or multi-regional cooperation. But in many situations regional cooperation can be effective and will often be more quickly mobilised and more responsive to particular circumstances. It may sometimes be easier at that level to develop close, informal and frequent contact between key actors (both governmental and non-governmental) and to achieve sufficient mutual understanding for problems to be addressed effectively. It may be easier to develop principles, rules and standards which are sufficiently specific to have practical impact yet also are appropriate and acceptable in the circumstances of each country. The predominantly sub-continental groupings that have emerged or strengthened in the last decade or so reflect a recognition that these potential advantages are less likely to occur if a region is very large and diverse. Conversely, of course, small groupings may be of little value if they do not achieve a "critical mass" of resources and potential impact.

24. It is very important that greater regional cooperation takes place in a global framework and contributes to effective operation of that framework. Otherwise, there is a clear danger of excessive tension and competition between regions, including exploitation by the stronger of the more vulnerable. Far from eroding global cooperation, however, stronger regional cooperation can help to provide the building blocks for achieving appropriately representative and effective processes for negotiation and decision-making at the global level. (For example, the EU is represented in its own right on the recently-established G20 and its members increasingly operate collectively within ECOSOC and other international processes.) Developing a range of strong regional groupings is also an essential response to the inequity and eventual instability of global dominance by one or more "super-powers".

P7. The Conference should strongly support the concept of "constructive regionalism" by which regional inter-governmental groupings are encouraged to be positive in their engagement with other parts of their world rather than unduly defensive or exclusive, and also to operate as building blocks for an appropriate framework of representation and cooperation in global institutions.

P8. The Conference should call on the UN and other global institutions to strengthen substantially their cooperation with regional groupings. In particular, the Conference should

• request ECOSOC to begin convening by 2003 an Annual Regional Consultation of its own regional commissions and appropriate non-UN regional groupings;
  
  
• request the World Bank, IMF, WTO and G20 to provide greater opportunities for appropriate regional groupings, especially of developing countries, to operate as such within their deliberative and negotiating processes.

[For further explanation of ICSW’s proposals in relation to regional cooperation in a global framework, see ICSW paper, Globalization and Social Development (2001).]

25. It has long been recognised at the national level that binding rules and other types of official economic standards are essential in order to help mobilise private and public resources for sustained development and poverty reduction. In general, the existing network of standards is more extensive and detailed in the developed countries. This applies even in those countries, such as the United States, which regard themselves as especially "free market" economies. They have recognised from harsh experience that markets and competition do not achieve effective mobilisation of resources unless rigorous standards in areas such as financial markets, competition and trade, corporate responsibility and taxation are adopted and enforced.

26. As economic interaction between countries has become more widespread and intense in recent decades, so the need for a similar network of economic standards at the international level has increased. Some response has occurred at the global level, including under the auspices of the UN system, but the standards are often very limited in scope or unduly orientated towards the circumstances and interests of the more economically powerful countries and enterprises. Moreover, they are commonly either non-binding or inadequately monitored and enforced. A growing number of relatively specific standards have been agreed and implemented by groupings of developed countries, especially the OECD and EU. These standards are often beneficial for those developed countries but, especially in the absence of standards from other sources, they can acquire a broader impact on developing countries that is not always appropriate or fair.

27. The FfD Conference should acknowledge that mobilisation of resources in the interests of national development and poverty reduction would be greatly enhanced by substantially strengthening the existing framework of international economic standards. It is essential, however, that these standards are developed in a balanced and equitable manner. This means, in particular, ensuring adequate respect for the interests and circumstances of both developed and developing countries, emphasising the importance of economic development being sustained rather than transient, and taking adequate account of social and environmental considerations. In some instances, it may be desirable to encourage separate development of detailed standards on a regional basis within an overall global framework, taking advantage of the recent strengthening of regional groupings mentioned earlier.

P9. The Conference should emphasise the importance of improving resource mobilisation for development by strengthening international standards in relation to financial speculation, tax avoidance and evasion, corporate governance and responsibility, and competition and trade.

P10. The Conference should identify key elements of the processes, principles and priorities that should apply to the development of these standards. In doing so, it should seek to ensure that appropriate recognition is given to the interests and circumstances of developing countries, and to the relevance of social and environmental considerations. It should also seek to ensure that the standards are developed by appropriate global or regional institutions under the overall auspices of the UN system.

[For further details of ICSW’s general proposals for strengthening international standards, see ICSW’s paper, Globalization and Social Development (2001).]

28. It is now seven years since ICSW first called for vigorous action to reduce the excessive volume and volatility of international financial speculation, warning of adverse impacts on sustained productive investment and economic development especially in developing countries. Despite the subsequent financial crises in several parts of the world, regulation of international financial speculation, especially in currency markets, remains dangerously inadequate. Prudential requirements remain too lax as do the broader processes for monitoring market movements. Much has been promised in these areas but once it was clear that the crises would not spread to the major developed countries they have displayed a growing tendency towards complacency and denial of the extent to which the crises were caused by international shortcomings.

29. The volume and volatility of financial speculation are greatly increased by the major tax advantages that it enjoys by comparison with many other forms of transaction. They are also increased greatly by the historical likelihood that speculators will be protected by public bailouts, at the expense of taxpayers, in the event of major collapses. Failure to address these problems adequately is due largely to the fact that the key international institutions are dominated by narrow economic analyses and, especially, by the short-term business interests of developed countries. Accordingly, insufficient weight is given to the severe difficulties being caused for long-term economic management, enterprise development and poverty reduction, especially in developing countries. These difficulties can be acute even when there is no overt financial crisis.

P11. The Conference should propose modest expansion by the end of 2002 in the composition of the Group of 20, the Financial Stability Forum and other key bodies in international financial regulation in order to include representation of developing countries’ experiences and interests. It should endorse the regular meetings that are now being convened by ECOSOC with these groups and other key inter-governmental institutions as having an over-arching role of coordination in financial market regulation.

P12. The Conference should call for readier recognition by the International Monetary Fund and other relevant institutions of the need for capital controls in vulnerable circumstances, especially for developing countries. It also should call for the developed countries, in particular, to adopt standards requiring stricter prudential regulation of speculative investment funds and tighter limits on public bailouts of fund failures.

P13. The Conference should agree on the need to reduce tax privileges for speculative transactions (for example, through coordinated adoption of currency transaction taxes that increase from a low rate in times of special volatility). It should request ECOSOC to make development of detailed options in this area a high priority for its Expert Group on International Cooperation in Tax Matters and the proposed annual International Taxation Forum (see below) with a view to full consideration by ECOSOC in 2003.

30. International tax avoidance and evasion causes enormous damage to genuine and sustained economic development by reducing productive investment, fair competition and economic efficiency. Even the richest countries provide an extensive array of concessions and loopholes which harm both efficiency and equity by distorting investment and location decisions, favouring multinational over local enterprises, and depleting public revenue and infrastructure investment. These problems have been aggravated by lack of international cooperation in tax administration and enforcement, thereby encouraging massive tax evasion. In general, it is developing countries that suffer most from this lack of international cooperation, especially through flight of scarce domestic capital and diversion of sorely-needed foreign investment. Some smaller countries, of course, have sought economic survival by becoming tax havens themselves.

31. There is growing recognition of the need for greater international cooperation in order to enable domestic tax systems to be designed and administered in an efficient, equitable and sustainable manner. The OECD and EU have made some useful attempts at achieving better cooperation although the OECD’s "harmful tax competition" initiative tended to be somewhat too lenient on its own members, most of which provide major tax distortions and loopholes, and offered no compensatory assistance for those poorer countries that would lose their tax haven benefits. While such initiatives need to be refined rather than abandoned, the OECD, EU and other such groupings cannot expect to serve as an appropriate substitute for a properly global and transparent process of tax cooperation under the auspices of the UN.

P14. The Conference should commit its participants to cooperate in strengthening international standards on matter such as tax bases, minimum tax rates and taxation of multinational enterprises and in reducing tax avoidance and evasion through devices such as transfer pricing, secret bank accounts and non-reporting of foreign income. It should also agree that participants will cooperate in reducing under-taxation of cross-border payments (such as interest, dividends and royalties), unearned assets, speculative capital gains, and electronic commerce.

P15. The Conference should request ECOSOC to begin convening by 2003 an annual International Tax Forum, involving key global and regional groupings such as the OECD, in order to discuss and promote cooperation in tax design, administration and enforcement. Such cooperation should include conducting research, exchanging information, identifying problems, proposing standards, monitoring implementation and facilitating action to promote compliance.

P16. The Conference should also request ECOSOC to strengthen the role, composition and resources of its existing Expert Group on International Cooperation in Tax Matters so that it can play a key role in coordinating preparation and conduct of International Tax Forum meetings.

[For further details of these proposals in relation to taxation, see ICSW’s paper, Outline of Evidence to the United Nations Hearings on Financing for Development (2000).]

32. Multinational enterprises are of crucial significance to the extent and nature of development, especially in developing countries. They can have substantially beneficial or adverse impacts on the communities and markets in which they operate. The rising tide of economic globalization has increasingly eroded the ability of communities and countries, especially developing countries, to ensure that their economic and social development is enhanced rather than retarded by multinationals’ exploitation of local resources and competition in local markets. This deterioration in the practical potency of democracy and the rule of law must be addressed partly by strengthening public governance at national and international levels. It is also essential, however, to improve the quality and accountability of corporate governance, especially in relation to multinational enterprises.

33. Mobilisation of resources for sustained development and poverty reduction, especially in developing countries, would be substantially enhanced by achieving greater transparency and integrity in the operations of multinational enterprises. The same applies to promoting longer-term corporate planning that takes due account of social and environmental issues which, though not narrowly economic, are likely to have a substantial impact on the eventual extent and sustainability of economic development. Many developing countries are especially at risk of short-term exploitation by multinational enterprises over which they have little or no effective influence. While a number of international codes have been drafted in response to some of these problems, they tend to be very vague, merely advisory or to lack effective monitoring and enforcement mechanisms. Some, indeed, do little more than provide a veneer of public relations benefits for major corporate interests.

P17. The Conference should request ECOSOC to establish an Independent Group of Experts to prepare by 2003 a draft International Code on Corporate Governance and Responsibility. The Panel should comprise experts from the ranks of government, business and civil society in both developed and developing countries. It should draw on existing codes and guidelines such as the OECD Code on Multinational Enterprises and the ILO Declaration of Principles Concerning Multinational Enterprises and Social Policy.

P18. The Conference should call for the Code, and other relevant international initiatives, to give special attention to corporate reporting requirements, independent financial and social audits, minority shareholders’ rights, anti-corruption measures, compliance with labour and environmental standards, and local re-investment. The Conference should also urge pension funds and other major institutional investors to insist upon good corporate governance and responsibility by corporations with which they are involved.

34. A substantial proportion of international trade is, in reality, internal trade within individual multi-national enterprises. The largest of those enterprises command greater economic resources than most governments, and many industries are dominated by a handful of them, almost invariably based in the wealthiest countries. As mentioned earlier, while some of their activities can provide major economic benefits for some developing countries, in other circumstances their dominance greatly disadvantages domestic enterprises and consumers and also reduces the extent to which profits are retained and re-invested in local communities. There is an urgent need to strengthen the international regime for regulating international mergers, takeovers and other conduct that may inappropriately reduce fair competition. This must be done under the auspices of the UN rather than, for example, merely by arrangement between developed countries. Establishing a stronger and fairer international regime should be a much higher priority than strengthening domestic regimes in developing countries in ways which may unfairly weaken domestic challengers to multinational competitors.

35. The last decade or so of global free trade negotiations has shown a marked propensity to favour the interests of developed countries by focusing on those areas where they expect to benefit from freer trade and ignoring those in which they might lose. Developing countries were assured that they would derive great benefits from implementation of the Uruguay Round agreements but in practice they have received very little. Indeed, their hardship has been aggravated in many instances and solemn promises to act on areas of importance to them have been broken. It is essential that the new Development Round delivers promptly, and as its highest priority, on reducing trade barriers which especially harm developing countries. Moreover, further progress must be made in enabling developing countries to utilise the complaint, adjudication and enforcement systems of the WTO. The proposed annula International Tax Forum should also seek to dissuade developed countries from using tax concessions, exemptions and other tax privileges to achieve unfair trade advantages as currently occurs, for example, in relation to finance and stock markets and to internet commerce.

P19. The Conference should request ECOSOC to convene an Independent Group of Experts to prepare by 2003 a detailed proposal for establishing a Multinational Enterprises Competition Authority with responsibility to investigate and report upon possible breaches of fair competition policy by multinational enterprises. After an initial period of advisory status, the Authority should establish adjudicatory processes analogous to those of the WTO.

P20. The Conference should emphasise the need for the WTO Development Round to give top priority to removing trade barriers in relation to agriculture and textiles that harm developing countries, preventing abuse of anti-dumping rules, providing tariff- and quota-free access for exports from least developed countries, and strengthening the availability of exemptions for developing countries from TRIPS and other trade agreements which impact harshly upon their people.

36. There can be no doubt that, especially for many of the poorest countries, the flow of international private investment will remain gravely deficient for a very long time. The same is true of their domestic resources, both public and private, no matter how well they are mobilised. It is essential that these countries receive substantially improved assistance from external public resources in order to relieve their widespread poverty and, over time, assist them to become increasingly self-sufficient through sustained development. The current amount of ODA provided by almost every developed country is deplorably low and their sustained refusal to meet the agreed goal of 0.7% of GNP is both unfair and counter-productive.

37. It is important that a specific timetable for achievement of the 0.7% goal by the defaulting donor countries is agreed without yet further delay. This should be part of the proposed International Anti-Poverty Pact, which would also involve both donor and recipient countries committing themselves to achievement of the International Development Goals. In consequence, there should be no justification for ODA continuing to be provided largely on a tied basis. However, recipient governments should be required to consult closely with civil society organisations about allocation of ODA funds. Further improvements in coordination between donors would also enable more effective allocation of ODA grants.

P21. The Conference should unequivocally reaffirm the ODA target of 0.7% of GNP and call on each donor country to reduce its shortfall by at least one-half by 2005 with full achievement of the target by no later than 2008. This commitment should form part of the proposed Anti-Poverty Pact.

P22. The Conference should also agree that by 2005 most ODA should be on an untied grant basis, within the framework of the Anti-Poverty Pact, and most should be provided through pooled arrangements with other donors.

38. Despite unduly protracted negotiations and optimistic promises by the wealthiest countries, very few of the poorest countries have received substantial relief from the debts that cripple their development opportunities and on which the interest payments may outweigh their ODA income. Many of these debts were incurred unwisely at the urging of major financial institutions in the developed countries and others were incurred by leaders whose power stemmed more from foreign interference than a genuine democratic mandate. Some are unpayable because leaders transferred public resources to private accounts in foreign banks where they remain protected by excessive secrecy laws.

39. The main priorities for further debt relief are to provide immediate relief for the least developed countries, accelerate and extend the HIPC initiative, and adopt appropriate international processes for establishing debt standstills and arbitration mechanisms, analogous to those provided under national bankruptcy laws. Specific commitments on these matters should be part of the first round of the proposed International Anti-Poverty Pact.

P23. The Conference should agree to an immediate moratorium on debt repayments by the poorest countries and a process for providing full debt cancellation for those countries by 2003. It should also agree to relax the conditions for access to relief under the HIPC initiative.

P24. The Conference should request ECOSOC to appoint an Independent Group of Experts to prepare a draft proposal for an international debt arbitration system to be operative by no later than 2003. A specific commitment to action in this area should form part of the Anti-Poverty Pact.

40. The developed countries can readily afford the improvements in ODA and debt relief proposed above. For example, the total cost to them of meeting the International Development Goals is equivalent to about one cup of coffee per week for each of their citizens. In any event, the revenue from introducing two forms of taxation that are highly desirable for other reasons could also be partially earmarked for this purpose. The first form involves taxation of currency transactions, especially those of a speculative nature, in order to reduce current tax biases towards such transactions, encourage long-term productive investment and reduce excessive volatility in financial markets. The second form is a carbon tax aimed principally at encouraging more efficient and sustainable generation of energy and reducing environmental pollution. Taxes of this kind have already been adopted in several European countries.

41. Another major source of additional revenue for increasing direct assistance to developing countries is the programme proposed above for reducing tax avoidance and evasion. This would generate enough revenue in itself to meet the International Development Goals. Some aspects of the programme would be difficult to implement fully without the cooperation of a number of developing countries that currently depend heavily on their status as tax havens. They cannot reasonably be expected to cooperate, nor are other developing countries likely to support change, unless there is a firm guarantee that a substantial proportion of the resultant revenue (which will accrue largely to wealthier countries) is to be directed towards major sustained improvements in ODA, debt relief and other assistance for poorer countries. The proposed Anti-Poverty Pact process would be an appropriate mechanism for negotiating, implementing and monitoring an interdependent arrangement of this kind for the generation and allocation of additional public resources.

P25. The Conference should request ECOSOC to develop by 2003 detailed draft proposals for coordinated adoption of currency transaction taxes at the national level. It should also request development of detailed draft proposals for coordinated adoption of national carbon taxes.

P26. Introduction of such taxes should be high priorities for possible inclusion in the first round of resource mobilisation commitments in the Anti-Poverty Pact, together with a programme for reducing tax avoidance and evasion as proposed earlier. These initiatives should be accompanied by commitments to devote a specified proportion of the revenue to additional assistance for developing countries, such as commitments in the Anti-Poverty Pact for specific improvements in ODA and debt relief to help achieve the International Development Goals.