LDCs handed rawest deals by unfair global financial system

Antinio Guterres, secretary general, UN

Doha, 8 March (Prerna Bomzan) – At the official high-level opening of the Fifth United Nations Conference on the Least Developed Countries (LDC5) on 5 March in Doha, Qatar, UN Secretary-General Antonio Guterres remarked that a “deeply dysfunctional and unfair global financial system is handing the Least Developed Countries the rawest of deals” when spelling out the myriad of developmental challenges faced by the 46 UN-defined LDCs.

The ongoing second part of the LDC5 Conference being attended by over 100 world leaders is scheduled until 9 March and is expected to adopt a political declaration committing to the implementation of the new generation Doha Programme of Action for the LDCs for the Decade 2022-2031 (DPoA) which was adopted by the first part of the Conference on 17 March 2022 (See TWN article).

[LDC5 was originally scheduled in January 2021 following completion of the preceding Istanbul Programme of Action for the LDCs (2011-2020), but got rescheduled to January 2022 and further postponed to March 2023 due to the COVID-19 pandemic and hence, the  DPoA was adopted without further delay in March 2022 with the UN General Assembly adopting a resolution to hold the Conference in two parts on an “exceptional basis”].

When pointing out the unjust global financial system, Guterres said that LDCs face interest rates that are “up to 8 times higher” than developed countries, drawing attention to their steep debt-service payments when already their “systems are stretched – from health and education, to social protection, infrastructure and job creation”.

He underlined that LDCs are being “stranded amidst a rising tide of crisis, uncertainty, climate chaos and deep global injustice” and given “global tensions and divides are deepening”, he added that “there is no more important issue around which we can and must unite than in transforming the words of the Doha Programme of Action into results”.

The DPoA includes six priority focus areas for action: (i) Investing in people in least developed countries: eradicating poverty and building capacity to leave no one behind (ii) Leveraging the power of science, technology, and innovation to fight against multidimensional vulnerabilities and to achieve the Sustainable Development Goals (iii) Supporting structural transformation as a driver of prosperity (iv) Enhancing international trade of least developed countries and regional integration (v) Addressing climate change, environmental degradation, recovery from the COVID-19 pandemic and building resilience against future shocks for risk-informed sustainable development (vi) Mobilising international solidarity, reinvigorated global partnerships and innovative tools and instruments: a march towards sustainable graduation.

Guterres called for a “revolution of support” to LDCs urging developed countries to live up to their commitment to provide 0.15-0.20% of their gross national income for official development assistance and also stressed on expanding international efforts to “fight tax evasion, money laundering and the illicit financial flows that drain domestic resources”.

He emphasised that the DPoA contains concrete targets and deliverables such as a ‘Sustainable Graduation Support Facility,’ an ‘Investment Support Centre’, and an ‘Online University’, which can play a “game-changing” role in implementing the SDGs in LDCs further calling upon development partners to support the implementation of these DPoA deliverables.

“We need to reform the global financial system through a new Bretton Woods moment”, he underscored, and called for “expanding contingency financing and integrating disaster and pandemic clauses into debt instruments” including “re-allocation of Special Drawing Rights” received most by the richest countries as well as “developing lending criteria beyond Gross Domestic Product”.

The official opening was presided by the Emir of Qatar, Sheikh Tamim bin Hamad al Thani and saw statements delivered by the President of the UN General Assembly, Csaba Korosi (Hungary); the President of the Economic and Social Council, Lachezara Stoeva (Bulgaria); the Chairperson of the Group of LDCs, President Lazarus McCarthy Chakwera (Malawi); Prime Minister Sheikh Hasina (Bangladesh); Minister for Foreign Affairs, Mevlut Cavusoglu (Turkiye) and a youth representative Reekelitsoe Molapo (Lesotho).

Sheikh Tamim bin Hamad al Thani (Qatar) announced the allocation of USD 60m to LDCs to assist the implementation of the DPoA and urged developed countries to follow suit reminding that that the “DPoA adopted by consensus is the basis of a roadmap to support and confront the problems faced by the LDCs in the upcoming decade”.  “There is a moral obligation incumbent upon the rich and developed countries to contribute more to assist LDCs to overcome the global challenges they are dealing with. This is a responsibility and not a favour”, he emphasised.

Korosi (Hungary) highlighted the need for “partnerships with a view to overcoming structural challenges, eradicating poverty, achieving development goals, and enabling more and more states to graduate from the LDC category”. He called for impactful decisions and transformative actions, “starting from what the international finance institutions should focus on, to how we measure wealth and sustainable development”, including “from improving standards of governance to a new understanding of global common goods”.

Stoeva (Bulgaria) stressed that “graduation must be irreversible, resilient and sustainable” and that would require “country specific support” from the international community. She pointed out that “tightening financing conditions” have reduced the ability of the LDCs to invest in sustainable development and to address climate change impacts, further underlining the need for adequate funding, accessible debt relief programmes and concessional public development financing.

President Chakwera (Malawi) cautioned that the DPoA cannot suffer the same “disruptions” that the preceding IPoA suffered, expressing confidence that “development partners will respond with the necessary technical and financial support the same way the State of Qatar has done”. He emphatically voiced that “just as the ancient era of world-conquering and war-mongering kingdoms and empires gave way to a modern era of world-policing, wealth-controlling, and earth-polluting superpowers, so must this era give way to a post-modern one in which international and multilateral cooperation between nations that treat each other as equals rules the day”.

Prime Minister Hasina (Bangladesh) highlighted the success story of her country’s upcoming graduation in 2026, nonetheless, underlining that “for graduating LDCs, there should be some incentives for their performance. They should enjoy the international support measures for LDCs for an extended period of time. They need enhanced investments and know-how to build their productive capacities. There can be some innovative and transitional financing mechanisms meant for them”.

She further added that “LDCs need sustained support to double their share of global trade. ODA targets for LDCs from developed countries deserve to be fulfilled. International Financial Institutions have the means to support debt sustainability in LDCs. Climate financing for LDCs should be made flexible and predictable. Technology transfer to LDCs needs to be tangible and meaningful. Our migrant workers need protection for their rights and well-being. We cannot fail the 226 million youth in LDCs”.

Minister Cavusoglu (Turkiye) reaffirmed his country as a long-standing and reliable partner of LDCs having hosted the previous fourth Conference in Istanbul in 2011 which adopted the IPoA. He expressed hope and confidence that the new DPoA will be “a cooperation that will ensure the global economic and financial system does not create further inequalities”. “We must break the vicious cycles that make development difficult. The global economic and financial system must be reformed. We must find ways to combat climate change, which affects LDCs most, although they did nothing to cause it”, he added.

Following the official high-level opening was the 50th anniversary commemoration of the LDC category which was established in 1971 by the UN General Assembly with a view to “attracting special international support for the most vulnerable and disadvantaged members of the UN family”. The theme of the event was entitled “A New Generation of Partnerships for Progress” to kick-off the new generation DPoA which has set a new target to enable additional 15 LDCs to meet the graduation criteria by the end of the decade (currently 16 LDCs are in the pipeline towards graduation).

In parallel to the official LDC5 Conference, the civil society track is also underway with the Civil Society Forum which opened one day in advance on 4 March with remarks by the UN General Assembly President Csaba Korosi, Qatar’s State Minister for Foreign Affairs Soltan bin Saad Al-Muraikhi and Under-Secretary-General Rabab Fatima, Office of the High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States (OHRLLS), who is also serving as the Secretary-General of the LDC5 Conference. The Core Group organising the Civil Society Forum are Social Watch, Global Policy Forum, LDC Watch and Third World Network. – Third World Network