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Tuesday, 23 September 2008 - Brussels
Follow-up to the Monterrey Conference of 2002 on Financing for Development

European Parliament resolution of 23 September 2008 on the follow-up to the Monterrey Conference of 2002 on financing for Development (2008/2050(INI))

The European Parliament,

–   having regard to the Monterrey Consensus, adopted by the United Nations (UN) International Conference on Financing for Development in Monterrey, Mexico, on 18-22 March 2002 (the Monterrey Conference),

–   having regard to the commitments made by Member States at the European Council in Barcelona on 14 March 2002 (Barcelona commitments),

–   having regard to its resolution of 25 April 2002 on the financing of development aid(1),

–   having regard to its resolution of 7 February 2002 on the financing of development aid(2),

–   having regard to the Joint statement by the Council and the representatives of the governments of the Member States meeting within the Council, the European Parliament and the Commission on European Union Development Policy: 'The European Consensus'(3) signed on 20 December 2005,

–   having regard to the Commission Communication of 9 April 2008 entitled 'The EU - a global partner for development - on speeding up progress towards the Millennium Development Goals' (COM(2008)0177),

–   having regard to the Commission Communication of 4 April 2007 entitled 'Keeping Europe's promises on Financing for Development' (COM(2007)0164),

–   having regard to the Commission Communication of 2 March 2006 entitled 'Financing for development and aid effectiveness – the challenges of scaling up EU aid 2006-2010' (COM(2006)0085),

–   having regard to the Commission Communication of 12 April 2005 entitled 'Accelerating progress towards attaining the Millennium Development Goals – Financing for Development and Aid Effectiveness' (COM(2005)0133),

–   having regard to the Communication of 5 March 2004 entitled 'Translating the Monterrey Consensus into practice: the contribution by the European Union' (COM(2004)0150),

–   having regard to the European Council conclusions of 14 March 2002 on the international Conference on Financing for Development (Monterrey, Mexico, 18-22 March 2002) ,

–   having regard to the Millennium Development Goals (MDGs) adopted at the UN Millennium Summit in New York on 6-8 September 2000, and reaffirmed at subsequent UN Conferences, notably the Monterrey Conference,

–   having regard to the commitment made at the Göteborg European Council on 15-16 June 2001 for Member States to reach the UN target for Official Development Assistance (ODA) of 0,7% of Gross National Income (GNI),

–   having regard to the Commission Communication of 2 March 2006 entitled 'EU Aid: Delivering more, better and faster' (COM(2006)0087),

–   having regard to its resolution of 22 May 2008 on the follow-up to the Paris Declaration of 2005 on Aid Effectiveness(4),

–   having regard to Rule 45 of its Rules of Procedure,

–   having regard to the report of the Committee on Development and the opinion of the Committee on Budgets (A6-0310/2008),

A.   whereas for the second time in history the UN is organising an International Conference on Financing for Development, which is to be held in Doha from 29 November to 2 December 2008, aimed at bringing together Heads of State and Government and not only development but also finance ministers, as well as representatives from the international financial organisations, private banking and business and civil society, to examine the progress that has been made since the Monterrey Conference,

B.   whereas, to achieve the MDGs, there is a need for greatly increased financing,

C.   whereas financing for development should be defined as the most cost-effective way to respond to the world's development needs and global insecurities,

D.   whereas the need for adequate predictable and sustainable financial resources is more urgent than ever, especially taking account of the challenge of climate change and its implications, including natural disasters, and the particular vulnerability of developing countries,

E.   whereas the EU is the world's biggest aid donor, a major shareholder in the international financial institutions, and the most important trading partner for developing countries,

F.   whereas the EU has committed itself to a clear and mandatory timeframe for reaching the 0,56% of GNI target by 2010 and the 0,7% of GNI target by 2015,

G.   whereas, if current trends regarding Member States' ODA levels continue, some Member States will not meet the targets to which they are committed of 0,51% for the EU 15 (i.e. the Member States part of the EU prior to the 2004 enlargement) and 0,17% for the EU 12 (i.e. the Member States which acceded to the EU on 1 May 2004 and 1 January 2007) of GNI by 2010,

H.   whereas programmable aid to Africa is rising despite the general decrease in ODA in 2007,

I.   whereas significant new development challenges have recently emerged, including climate change, structural changes in commodity markets and in particular those for food and oil, and important new trends in South-South cooperation, including support for infrastructure by China in Africa and lending by the Brazilian Development Bank (BNDES) in Latin America,

J.   whereas financial services in many developing countries are underdeveloped as a result of many factors including restrictions on supply of services and lack of legal certainty and property rights,

1.  Reaffirms its commitment to poverty eradication, sustainable development and the achievement of the MDGs, as the only ways to bring about social justice and improved quality of life for the approximately one billion people globally who live in extreme poverty, defined as an income of less than one US dollar a day;

2.  Calls on Member States to place a clear division between development spending and spending on foreign policy interests and emphasises, in this regard, that ODA should be in line with the criteria for ODA established by the Development Assistance Committee of the Organisation for Economic Co-operation and Development (OECD/DAC) and the OECD/DAC recommendations on untying ODA;

3.  Underlines the absolute need for the EU to aim for the highest level of coordination in order to achieve coherence with other Community policies (environment, migration, human rights, agriculture, etc.) and avoid duplication of work and inconsistency of activities;

4.  Recalls that the immediate and necessary actions to be taken by the EU to tackle the dramatic consequences of the soaring food prices in developing countries should not be understood and carried out as part of the financial efforts required by the Monterrey Consensus; therefore looks forward to a concrete proposal from the Commission on the use of emergency funds;

5.  Stresses that the excessive and disproportionate administrative burden in some of the partner countries impairs the effectiveness of development aid; fears that this burden risks jeopardising the achievement of the MDGs;

6.  Notes that the EU still has to find the right balance between two contradictory approaches towards development aid: on the one hand, to trust partner countries in the adequate allocation of the funds and to help their administrations develop the right tools for implementation of the funds; on the other hand, to earmark the financial aid in order to avoid misuse or ineffective allocation of the aid;

Volumes of ODA

7.  Points out that the EU is the world's leading donor in ODA, representing almost 60% of the world official development aid, and welcomes the fact that the EU share of global ODA has been increasing over the years; nevertheless requests the Commission to provide clear and transparent data on the share of the EU budget devoted to EU development aid in order to assess the follow-up to the Monterrey Consensus by all European donors; also expresses its regret that the level of EU financial contributions to developing countries lacks visibility and invites the Commission to develop appropriate and targeted communication and information tools to increase the visibility of EU development aid;

8.  Welcomes the fact that the EU met its binding ODA target of the EU average of 0.39% of GNI by 2006, but notes the alarming decrease in EU aid in 2007 from EUR 47,7 billion in 2006 (0,41% of EU collective GNI) to EUR 46,1 billion in 2007 (0,38% of EU collective GNI) and calls upon Member States to raise ODA volumes to achieve their promised target of 0,56% of GNI in 2010;

9.  Insists that reductions in Member States' reported ODA should not take place again; points out that the EU will have given EUR 75 billion less than was promised for the period 2005-2010 if the current trend continues;

10.  Expresses serious concern that a majority of the Member States (18 out of 27, especially Latvia, Italy, Portugal, Greece and the Czech Republic) were unable to raise their level of ODA between 2006 and 2007 and that there has even been a dramatic reduction of over 10% in a number of countries such as Belgium, France and the United Kingdom; calls on Member States to fulfil the ODA volumes to which they are committed; notes with satisfaction that some Member States (Denmark, Ireland, Luxembourg, Spain, Sweden and the Netherlands) are certain to reach their ODA targets for 2010, and is confident that these Member States will maintain their high levels of ODA;

11.  Welcomes the firm stance of the Commission on the efforts to be concentrated on both the quantity and the quality of development aid from Member States, and strongly supports its warning against the potential highly negative consequences of the Member States' failing to fulfil their financial commitments; calls on the Commission to use its expertise and authority to convince other public and private donors to honour their financial promises;

12.  Is extremely concerned that some Member States are backloading ODA increases, leading to a net loss for developing countries of more than EUR 17 billion;

13.  Welcomes the approach of some Member States to develop binding multi-annual timetables for increasing ODA levels to meet the UN target of 0,7% by 2015; asks Member States that have not yet done so to disclose their multi-annual timetables as quickly as possible; stresses that Member States should adopt these prior to the above-mentioned Follow-up International Conference on Financing for Development to be held in Doha and fulfil their commitments;

14.  Observes that the 2007 decreases in reported aid levels are due in some cases to the artificial boosting of figures in 2006 by debt relief; calls on Member States to increase ODA levels in a sustainable manner by concentrating on figures with the debt relief component removed;

15.  Views as totally unacceptable the discrepancy between the frequent pledges of increased financial assistance and the considerably lower sums that are actually disbursed and is concerned that some Member States are demonstrating aid fatigue;

16.  Stresses the fact that consultation with partner governments, national parliaments and civil society organisations is crucial in the decision making on ODA volumes and destinations;

Speed, flexibility, predictability and sustainability of financial flows

17.  Stresses that assistance needs to be delivered in a timely manner and expresses dissatisfaction that the processes for delivery are often subject to undue delays;

18.  Stresses the need to balance flexibility in the delivery of cooperation funds, in order to respond to changing circumstances, such as rising food prices with the imperative for predictable funding to allow partner countries to plan for sustainable development and climate change adaptation and mitigation;

19.  Calls strongly for the clear observance of the principles of responsible lending and financing, to make lending and financing operations sustainable in terms of economic and environmental development along and in line with the equator principles; calls on the Commission to participate in establishing such principles and press in international fora for binding measures to put them into practice in such a way that their coverage extends to new development actors from public and private sectors;

Debt and capital flight

20.  Fully endorses efforts by developing countries to maintain long-term debt sustainability and to implement the initiative for very Heavily Indebted Poor Countries (HIPC), which is of key importance to fulfil the MDGs; regrets, however, that the debt relief plans exclude a large number of countries for which debt remains an obstacle to fulfilling the MDGs; stresses the need for an urgent international debate on extending the reduction of international measures to a number of indebted countries currently excluded from the HIPC initiative;

21.  Calls on the Commission to address the issue of 'odious' or illegitimate debts, meaning debts having arisen from irresponsible, self-interested, reckless or unfair lending and the principles of responsible finance in bilateral and multilateral negotiations on debt relief; welcomes the Commission's call for action to limit the rights of commercial creditors and vulture funds to be repaid, in the event of judicial proceedings;

22.  Calls on all Member States to adhere to the framework of debt sustainability and push for its development to take account of a country's internal debt and financial requirements; calls on all Member States to recognise that lender liability does not just involve compliance with the sustainability framework, but also entails:

   - taking into consideration the vulnerability of borrowing countries to external shocks, making provision in such cases for the possibility of suspending or easing repayment;
   - incorporating transparency requirements, for both parties, in borrowing agreements;
   - exercising greater vigilance in ensuring that the borrowing does not contribute to human rights violations or an increase in corruption;

23.  Urges the EU to promote international efforts which aim to put in place some form of international insolvency procedures or fair and transparent arbitration procedure to deal efficiently and equitably with any future debt crisis;

24.  Regrets that the Commission does not place more emphasis on the mobilisation of internal resources to finance development, as these are sources of greater autonomy for developing countries; encourages Member States to be fully involved in the Extractive Industries Transparency Initiative (EITI) and to call for it to be strengthened; calls on the Commission to ask the International Accounting Standards Board (IASB) to include among these international accounting standards a country-by-country reporting requirement on the activities of multinational companies in all sectors;

25.  Regrets that the Commission communication package on aid effectiveness (COM(2008)0177) does not mention capital flight as a risk factor for the economies of developing countries; points out that capital flight does serious damage to the development of sustainable economic systems in developing countries and points out that each year tax evasion costs developing countries more than they receive in the form of ODA; calls on the Commission to include measures to prevent capital flight in its policies, as required by the Monterrey Consensus, including a frank analysis of the causes of capital flight, with the goal of closing down tax havens, some of which are located within the EU or operate in close connection with Member States;

26.  Notes, in particular, that according to the World Bank the illegal component of this capital flight amounts to 1 000 to 1 600 billion USD each year, half of which comes from developing countries; supports the international efforts made to freeze and recover stolen assets and asks those Member States that have not done so to ratify the United Nations Convention against corruption; deplores the fact that similar efforts are not being made to combat tax evasion and calls upon the Commission and Member States to promote the global extension of the principle of the automatic exchange of tax information, to ask that the Code of Conduct on tax evasion currently being drawn up at the United Nations Economic and Social Council (UN ECOSOC) be annexed to the Doha declaration and to support the transformation of the UN Committee of Experts on International Cooperation in Tax Matters into a genuine intergovernmental body equipped with additional resources to conduct the international fight against tax evasion alongside the OECD;

Innovative financing mechanisms

27.  Welcomes the proposals for innovative financing mechanisms put forward by the Member States and calls on the Commission to examine them against the benchmarks of ease of practical implementation, sustainability, additionality, transaction costs and effectiveness; calls for financial mechanisms and instruments that provide new funding and do not put future financial flows at risk;

28.  Calls for financial mechanisms and instruments which provide measures to leverage private money as stated in the Monterrey Consensus and deploy credit guarantees;

29.  Calls on the Commission greatly to enhance funding of climate change adaptation and mitigation measures in developing countries, in particular of the Global Climate Change Alliance; emphasises the acute need for funding beyond current ODA flows as ODA alone should not provide adequate support for measures for adaptation and mitigation for climate change in developing countries; stresses that innovative finance mechanisms should be developed urgently for this purpose, such as levies on aviation and oil trading, as well as by earmarking of auctioning revenues from the EU Emissions Trading Scheme (EU ETS);

30.  Welcomes the Commission's proposal to establish a Global Climate Financing Mechanism, based on the principal of frontloading aid to finance mitigation and adaptation measures in developing countries; calls on Member States and the Commission to make substantial financial commitments in order to implement the proposal urgently;

31.  Calls on the Commission and Member States to earmark at least 25% of future auctioning revenues from the EU ETS to finance climate change adaptation and mitigation measures in developing countries;

32.  Calls on the Commission to develop access to finance for small-scale entrepreneurs and farmers, as a means of increasing food production and providing a sustainable solution to the food crisis;

33.  Calls on the European Investment Bank (EIB) to investigate possibilities for the immediate setting up of a guarantee fund in support of micro-credit and risk-hedging schemes that respond closely to the needs of local food producers in poorer developing countries;

34.  Welcomes the proposal to set up a multi-donor gender fund that was launched at the UN and would be managed by the United Nations Development Fund for Women (UNIFEM), with the aim of promoting and funding gender equality policies in developing countries; calls on the Council and the Commission to examine and endorse this international initiative;

35.  Calls for a redoubling of efforts to encourage the development of financial services, given that the banking sector has the potential to unleash local financing for development and that furthermore a stable financial services sector is the best way to combat capital flight;

36.  Calls on all stakeholders to appreciate fully the enormous potential of revenues from natural resources; in this regard sees it as essential that resource industries are transparent; considers that, while the EITI and the Kimberley Process are moving in the right direction, much more needs to be done to encourage the transparent management of resource industries and their revenues;

Reforming international systems

37.  Calls upon the Council and the Commission to include the European Development Fund in the EU budget at the 2008/2009 Midterm Review, in order to enhance the democratic legitimacy of an important part of EU development policy and its budget;

38.  Notes the first step taken in April 2008 towards the better representation of developing countries within the International Monetary Fund (IMF); regrets that a wealth-based weighting continues to govern the breakdown of voting rights at the IMF; calls on the Commission and Member States to demonstrate their interest in double-majority decision-making (shareholders/States) within the institution responsible for international financial stability, the IMF;

39.  Calls on the Commission and Member States to use the above-mentioned Follow-up International Conference on Financing for Development, to be held in Doha, as an opportunity to present a common EU position on development aimed at achieving the MDGs through a sustainable approach;

40.  Calls on Member States to undertake a rapid and ambitious reform of the World Bank so that those most directly concerned by its programmes are better represented;

o   o

41.  Instructs its President to forward this resolution to the Council, the Commission, the UN Secretary-General, and the heads of the World Trade Organisation, the IMF, the World Bank Group and the UN ECOSOC.

(1) OJ C 131 E, 5.6.2003, p. 164.
(2) OJ C 284 E, 21.11.2002, p. 315.
(3) OJ C 46, 24.2.2006, p. 1.
(4) Texts adopted, P6_TA(2008)0237.

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