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Q&A: "Wanted: A New Global Deal"

Thalif Deen interviews HEIDEMARIE WIECZOREK-ZEUL, German Development Minister

UNITED NATIONS, Nov 17 2008 (IPS) - A United Nations conference on Financing for Development (FfD) is scheduled to take place in Doha, Qatar, next week against the backdrop of a devastating global economic crisis that has threatened to undermine the basic foundations of Anglo-Saxon capitalism.

The U.S. economy is under siege; the Eurozone has fallen into recession; commercial and investment banks are in a state of collapse; unemployment is on the rise; consumer spending is on the decline; the U.N.'s Millennium Development Goals are threatened; and an entire country, Iceland, has virtually gone bankrupt.

Is there still hope for the 1.4 billion people who live on less than 1.25 dollars per day in some of the world's poorest countries?

The current crisis is related to the lack of transparency in financial markets, says Germany's longest-serving Federal Minister for Economic Cooperation and Development Heidemarie Wieczorek-Zeul, who along with the South African Finance Minister Trevor Manuel is U.N. Secretary-General Ban Ki-moon's Special Envoy for FfD.

"We need to prevent our development efforts from being swept away by the tide of financial markets," she said, pointing out that the Doha conference should reinforce confidence in the partnership launched at the first FfD in Monterrey, Mexico, in March 2002. The follow-up conference in Qatar takes place Nov. 29-Dec. 2.

In an email interview with IPS U.N. Bureau Chief Thalif Deen, Wieczorek-Zeul also called for a "new global deal" to fight poverty, hunger and climate change.

Excerpts from the interview follow.

IPS: Given the financial crisis which is spreading across the United States, Japan and Western Europe – mostly donor nations – how confident are you that the conference on Financing for Development (Ffd) will be a success? Or do you think the conference is badly timed even though the date was agreed years ago? HWZ: We have no choice but to make the Financing for Development (FfD) conference a success. The world must reaffirm its commitments made in Monterrey to fight poverty and must address the new challenges from the food, fuel and financial crises – and not to forget climate change.

The financial crisis does not stop at the borders of developed countries and the developing countries are hit by it quite hard as well. It will be the very poor that will suffer the most. These people do not have social security nets or savings. They will simply lose the base of their existence.

We therefore need to find global solutions taking on board all countries at all levels of development. The recent remarks by, inter alia, President [Nicolas] Sarkozy [of France] and Chancellor [Angela] Merkel [of Germany] clearly indicate that we do not forget the developing countries in this process. Therefore, I think the coincidence of having scheduled the FfD conference late November offers great potential to agree upon a "New Global Deal".

If the world can mobilise billions of U.S. dollars to save the banks, it can also mobilise the resources to save the world from poverty, hunger and climate change. It is a matter of political will.

IPS: How would you measure the success of the FfD conference? Increased development aid? Binding time-bound commitments? New innovative sources of financing? HWZ: Success of the conference is not to be measured by mere numbers. The landmark conference in Monterrey in 2002 was a great success especially because we created a spirit of true global partnership, recognising that both developed and developing countries share responsibilities for development and that all partners have to make commitments. Especially in the light of the current accumulation of crises it is now the time to renew this spirit of a global partnership.

The Financing for Development conference in Doha gives us the opportunity to do so, but, of course, confidence-building measures are necessary: On the donor side we must reaffirm our ODA commitments even in financially difficult times and show that we are on the road to fulfill them, for example, by increased budgets and by using innovative sources of financing such as the proceeds from emissions trading. We must also lay the foundation for domestic resource mobilisation in developing countries. Building efficient taxation systems offers a great potential here.

IPS: What are your thoughts on the draft outcome document to be adopted at the conference? Do you think it may have to undergo radical changes in the context of the financial crisis? How confident are you that it will be finalised before the conference? HWZ: The draft presented to us by the co-facilitators is a very good base on which we are working already now in New York. The various parties are currently proposing amendments which will surely add concrete measures and will thus make the document even more operable. Without wanting to comment on unfinished work, I have full confidence in the able facilitators and the U.N. delegates to tailor the document to the current circumstances and to make it even more ambitious.

From what I have seen reported, the paragraphs involving reference to international finance are under thorough review and will only be finalised at the very end in order to capture the latest developments – which I consider very wise.

IPS: The outcome document also calls for the convening of a major international conference to review the international financial and monetary architecture and global economic governance structures. Do you think this proposal will be supported by western donors since it may involve a change in the voting structure in the World Bank and the International Monetary Fund – a proposal long demanded by developing nations? HWZ: With the financial crisis, we have experienced a massive market failure. Investment bankers lost their gamble – and the world has to pay the price. There are a lot of discussions under way at the moment in which format, when and where leaders will gather to discuss the current financial crisis, which, of course, also has an impact on the Bretton Woods Institutions.

It is clear that the crisis requires the international community to rethink the global financial system. Since "laissez-faire" free market policies have failed, we have to decide upon new regulations for and create more transparency in the financial system.

However, I would like to recall that even before the current crisis the IMF has already undergone a reform of its voting rights and the World Bank has initiated a similar process to be concluded by the Spring Meeting in 2009. These processes are all aimed at increasing the voice and participation of developing countries.