In Addis Ababa
Over the last three years, the United Nations has been working to establish a global sustainable development agenda to succeed the eight Millennium Development Goals, which are about to expire. Unlike the MDGs, which were drawn up by bureaucrats behind closed doors, the new Sustainable Development Goals have been subject to the largest consultation in UN history. Negotiators came up with 17 goals and 169 targets covering everything from abolishing poverty to achieving gender equality to rescuing the planet from climate catastrophe. They are due to be adopted at a UN summit in New York in September. In Addis Ababa last month, member states met to agree on ways to pay for them. The cost of achieving the SDGs is estimated at between two and three trillion dollars a year for fifteen years: roughly 15 per cent of annual global savings, or 4 per cent of world GDP.
The G77 group of developing countries argued that the global financial system worked to their detriment and needed to be reformed. Multilateral financial institutions, they said, impose loans with strict conditions, dictated by developed nations. Regulatory failures mean that the developing world often loses more in outward illicit financial flows than it gains in international aid. And the international tax regime allows multinational corporations to make money in developing countries but only pay tax in the jurisdiction of registration. The G77’s central demand was that the OECD surrender regulatory powers to the UN, to allow developing countries a seat at the table and change the rules so that more of the money that’s earned in the developing world stays there.
Unsurprisingly, developed countries – led by the United States and the EU – had no interest in reform. Non-interventionist foreign policies, growing nationalist sentiment and domestic austerity programmes mean that international development is low on their list of political priorities. They were unenthusiastic about making new commitments and wouldn’t countenance changes to the international tax regime that would expand the tax base of developing countries and erode their own.
As the rain lashed down outside, developed nations laid down an ultimatum: either developing countries concede or there would be no deal. Late into the night on the penultimate day, the G77 blinked and it was settled: there would be no global tax reform, no new debt relief and no new money on the table. The following morning, the UN hailed the agreement as bold and groundbreaking but in private, G77 ministers were furious, describing the proceedings as ‘bullying’, ‘blackmail’ and ‘a new wave of colonialism under UN auspices’.
The USA and EU may have got their way in Addis, but they have also pushed the developing world closer to Russia and China, shifting power from the World Bank and International Monetary Fund to China’s Asian Infrastructure Investment Bank and the BRICS’ New Development Bank. And the damage goes further: the diplomatic tensions will continue into future intergovernmental negotiations, threatening both the SDG summit in New York next month and the COP21 climate summit in Paris in December.