The French government published a summary, which patently ignored the criticisms and calls from several Global South leaders on the process and the lack of ambition from Global North countries (Photo: consilium.europa.eu)
French President Emmanuel Macron had hoped that last week’s Summit for a New Global Financial Pact in Paris would be a show of global unity for international financial architecture reform.
Instead it showcased the wide chasm between what the global south needs and what the global north is willing to concede.
Barbados prime minister Mia Mottely in her opening address stressed that “what is required of us now is absolute transformation- and not reform- of our institutions.”
Yet, beyond some individual countries and institutions announcing new initiatives and pledges, not a single global joint commitment was made. This is to be expected from an ad-hoc, global-north driven process without any institutional legitimacy.
The ugly
While some of the outcomes presented by the French government claim to be “based on an open and inclusive consultation process,” the reality is that the process towards the summit was chaotic and far from inclusive, with global south countries and civil society side-lined during the discussions of the working groups.
Even the carefully-managed public relations could not disguise the open discord between the global south and the global north, particularly in the final high-level dialogue.
The French government published a chair’s summary of discussions, which patently ignored the criticisms and calls from several Global South leaders on the process and the lack of ambition from Global North countries.
The repeated calls for reforming the IMF and World Bank, created when most Global South countries were still under colonial rule, were particularly striking. For Kenya’s president, William Ruto, the three weeks that were taken to create the current Bretton Woods Institutions should be enough to design their replacement.
The summary is accompanied by a roadmap that signposts different opportunities to take some of the summit’s discussions forward.
Tellingly, UN-agreed processes such as the discussion on a UN tax convention or the FfD process are widely ignored in this roadmap, as if the French presidency and the Global North countries are afraid of having discussions on international financial architecture transformation on an equal footing with Global South countries.
The bad
The reality is that the summit ended without tangible results. As such, it has lowered the ambition of the extent of action needed to secure the levels and quality of public finance needed for development and climate action. There was no pact nor global commitments, nor anything really new in the summary shared by Macron on the final day. The hoped for “reform” was merely a repackaging of already existing proposals, some quite problematic.
One striking example is the call for Multilateral Development Banks (MDBs) to ‘step up’ on climate by mobilising more (private) finance. Such a focus on private finance solutions will only increase the financialisation of development and climate action, instead of bringing about the much needed qualitative change in how the multilateral financial architecture works and conceives development.
This agenda is a risky gambit, blind to evidence that private finance has never rushed into countries or sectors that do not guarantee substantial returns.
Moreover, in the face of a spiralling debt crisis in global south countries, the discussions on how to address the increasing debt problems were utterly unambitious. Clinging on to improvements to the Common Framework is a recipe for disaster. And last week’s announcement of an agreement for Zambia -two years and a half after the country defaulted and which hasn’t delivered on any real debt cancellation- is just a clumsy way of trying to cover for the lack of political will to deal with the debt crisis.
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The widely advertised inclusion of “Climate Resilience Debt clauses” in new loans by the World Bank, France or the US, following in the steps of the Inter-American Development Bank (IADB) and the UK, also seems to cover up for the lack of real commitment on loss and damage finance and solutions to the debt crisis.
The proponents of these so-called ‘pause clauses’ made it clear last week that one good aspect of such clauses is that they cost lenders nothing. Furthermore, while these can be positive for countries facing climate shocks in the future, they do nothing to deal with the debt crisis today, as they only apply to future lending.
The good
It boils down to political will, as UN secretary general Antonio Gueterres hinted in his opening address. And what the summit organisers, as dictated by G7 governments, were willing to concede to were baby steps compared to the giant strides that the global south has been demanding and, to a certain extent, have started securing.
At the end of last year, led by the Africa Group at the UN, countries reached consensus on a proposal to start a fully inclusive and truly global tax negotiation at the United Nations.
The process is a lesson on how global negotiations should happen. After the debacle of the Paris summit, France and the Global North would do well to fully support and engage in the next steps of this process. The same logic should also apply to debt architecture and global economic governance.
“Broken promises cost lives,” said Vanessa Nakate, a Ugandan climate justice activist, on day one.
Now that the summit is over, we can leave distractions and vague promises behind and get on to more serious processes. The UN General Assembly in September, including the SDG Summit; the UNFCCC COP28 in December; the ongoing UN FfD process, with a new FfD conference probably in 2025; are all unique opportunities to promote real transformation based on democratic and fair discussions, with all countries around the table on an equal footing.
Source: euobserver.com
