Ms. Hilde F. Johnson, Minister of International Development, Norway

Opening remarks at Roundtable on New Proposals on Financing for Development

Washington, D.C., 20 February 2002

Excellencies, ladies and gentlemen

Yesterday I had the pleasure to welcome most of you to the roundtable on regional cooperation and the important role of the regional development banks. Our debate brought forward a number issues and proposals that I think will enrich and inspire the Monterrey agenda. The more so since regional cooperation has not been adequately addressed in the "Monterrey Consensus".

Today I have the double pleasure to welcome you to a roundtable that will focus on new proposals on Financing for Development. I am proud that Norway is a co-sponsor of this important event which has been excellently prepared by the Institute for International Economics and the Center for Global Development. I am convinced we will have an interesting debate, a debate that will highlight proposals and ideas that will merit further attention at the highest political level in Monterrey.

The Conference on Financing for Development is a unique event in several respects. It is the first opportunity for world leaders to take a comprehensive look at all sources of development financing, domestic as well as external, public as well as private, aid as well as trade, investment as well as debt relief.

There will be the temptation for the developed countries to talk about what the developing countries must do and vice versa. That would make Monterrey a missed opportunity. We must all focus on our own responsibilities, on the things that we, and only we, can and should do something about. The developed countries should talk about the volume and quality of assistance, of market access, of enhancing the representation and participation of developing countries in all multilateral organizations. The developing countries should talk about the whole range of domestic preconditions for development, about good governance in the broadest sense of the term.

There will be the temptation as well for all of us to talk about our accomplishments and to skirt the hard and difficult issues. That would also make Monterrey a missed opportunity. For Monterrey is the place and the time to take a long, hard look at policy coherence. Our own policy coherence. At how our policies in various fields add up – or don’t add up – in terms of development support. That is why Monterrey is the place for prime ministers, for development ministers, for finance ministers, and for trade ministers alike.

Monterrey also represents a unique opportunity for world leaders to chart the course and set the priorities required to reach the Millennium Development goals. For we have now translated those goals into specific, measurable targets. We have initiated serious costing analyses, in the Zedillo Panel Report, in the report by the Commission on Macroeconomics and Health, exercises that should enable us to make concrete and specific implementation plans. Therein lies the major challenge to world leaders in Monterrey.

Individual liberties have been at the heart of American democracy and American enterprise ever since the Declaration of Independence. Yet the basic fact that there can be no sustainable development without freedom, has been overlooked surprisingly often by the development community. Overlooked at our peril!

Mr. Amartya Sen, the Nobel Prize winning Indian economist speaks of development as freedom. He makes the connection between the ideas of the American founding fathers and our thoughts about poverty and development in the twenty-first century. His main point is that development depends on individuals being granted liberties and rights– political and civil as well as economic and social. As a former human rights activist, this is music in my ears. The same message comes out a thousand times in the eye opening World Bank study "The voices of the poor".

The link between development and freedom can be extended to include good governance. The World Bank studies Assessing Aid and Aid and Reform in Africa advocate concentrating development assistance to countries with good governance. That is where aid is most effective.

The "Monterrey Consensus" rightly recognizes that good governance is a prerequisite for development, not a donor driven conditionality. The rule of law, transparency and accountability is good for business.

While rewarding good governance we must at the same time address the plight of the poor in so-called failing states, countries in conflict, countries where the social fabric for one reason or another has broken down. We must assist the poor in these countries without propping up ineffective regimes or supporting corrupt practices. To that end the World Bank has initiated a study that I hope will provide us with useful guidance on how to assist poorly performing countries.

Before Monterrey we are at a historic junction. We have it within our power to break the back of poverty. To give everyone the right to development. To do away with macabre income and welfare differentials. Differentials that will otherwise forever prevent us from coming fully to grips with global challenges such as environmental degradation, climate change, international crime, terrorism, trafficking in women and children.

We agree on the goals. The Monterrey Consensus demonstrates that we have never had greater agreement on the means, on the tools. What we still lack is the political will to marshal the necessary resources. To forge that will is the goal we must set for ourselves and the world leaders in Monterrey.

Now, permit me to make a few comments on some of the specific issues in the "Monterrey Consensus".

On debt relief it rightly calls for the so-called enhanced HIPC to be fully financed over the longer term. Financing must be additional as well to make a real difference. HIPC has permitted us to deal with debt relief for the poorest countries in a comprehensive manner. It is being further developed to deal with the issue of longer term debt sustainability. It has helped pave the way for poverty reduction strategies emphasizing greater country ownership and improved donor coordination. It would be a tragedy if we didn’t support it further.

We recognize that many middle income countries face serious debt problems as well, but we believe solutions must be tailored to individual country circumstances. We are intrigued by the proposal put forward by Anne Krueger, Vice President of the IMF for a Chapter 11 type mechanism for countries hit by a debt crisis. It is an interesting proposal that merits further attention.

Most of the additional financing needed to reach the Millennium development goals must come from other sources than ODA. A large part must come from the private sector including innovative private-public partnerships. It must come from trade, FDI and access to markets. And it must come from new and innovative financial mechanisms, such as the idea presented by George Soros. I challenge you to show how we can move ahead in Monterrey in this area.

Yesterday I made the point that the "Monterrey Consensus" document is good, but not good enough. We need to move beyond Monterrey – at Monterrey. Taking that as a point of departure, I will concentrate my final comments on ODA, the offensive three letter word. ODA is where we so far have come up woefully short.

ODA is where Monterrey most urgently must move beyond the "Monterrey Consensus" reached in New York.

I do think it is important to discuss the quality of ODA. We owe it to ourselves, as well as to our development partners, to constantly strive for greater development effectiveness. An important part of that effort should be the further untying of development assistance.

But improved quality cannot resolve the under-funding of our development efforts. In a situation where the donor countries collectively provide only a third of the aid level they have committed themselves to, we have every reason to also concentrate on the volume of development assistance.

Within areas such as health, education, and infrastructure there are programs and projects where more money, much more money, can be spent reliably and productively. Investing in health and education, particularly girls’ education, is profitable. It has measurable development impact. Calls for greater effectiveness are needed, but no excuse for withholding development resources. We know what works, and what doesn’t. We know how to get results, results for the poor.

Norway long ago committed itself to the international target of providing 0.7 per cent of its GDP to international development. We have for many years exceeded that target with broad popular support. We have committed ourselves to reach 1 per cent within 2005. My Government regards the maintenance of the support for a high level of development assistance as a top priority. As the responsible minister I must keep Norwegian voters convinced that the assistance provided is being put to good and effective use. I can do that only in close cooperation with our development partners, including the multilateral development organizations.

The mutual responsibilities and commitments entailed in the Consensus Document to deliver, following up on NEPAD is crucial in this respect.

The countries that maintain a level of development assistance at or above 0.7 percent of GDP are sometimes referred to as the G 0.7. It is a small group. Monterrey would be the perfect occasion to expand it. If all the G7 countries joined, we could rename it G 7.7. In that case I would also be willing to drop all talk of aid volume and focus our debate exclusively on aid effectiveness.

More seriously, I do appreciate the efforts by many EU countries to set time frames for achieving the 0.7 target. I look forward to hear more about that - at Monterrey, or perhaps even here today. I also look forward to hear more about Gordon Brown’s proposals for a "Marshall Plan" for development linking the provision of funds to their effective use. The United Kingdom is currently providing encouraging leadership on development ideas as well as development assistance figures.

ODA will remain an important source of development finance. I challenge you to come up with ideas and proposals on how we can use Monterrey to move closer to the 0,7 target. Whether timetables or commitment towards 50 billion USD is the best way, or any other brilliant ideas, I leave it for you to consider. If you regard this to be unrealistic, please provide us with more achievable proposals. The "retreat" of heads of state and government leaders should provide the basis for such serious commitments. It is all about leadership. Global leadership. To set a roadmap to fulfill our commitments.

We must always keep in mind what Monterrey is really about. It is about those who are not here. It is about the hundreds of millions of poor people. We must make a collective effort to lift them out of poverty as soon as possible. Children must get their vaccines, shantytowns and villages must get access to clean drinking water. The Millennium Development goals must be met. This is the real reason why we are gathered here in Washington today. And on which the success of Monterrey will be measured.

Monterrey must move beyond the status quo. Anything else would mean letting down the millions of people who depend upon us as leaders and decision-makers. Monterrey is a historic opportunity. It will be the first time world leaders are gathered to discuss financing for development. We must arrive well prepared, not to play the regular game of diplomatic positioning, but to set a new course for the future. Poverty can be eliminated, if we really want to. That is the yardstick by which Monterrey will be measured.

Let us make it a success.

Thank you.