Addis #FFD3: A taxing week

Some time around 9 p.m. on the third night of the third International Conference on Financing for Development in Addis Ababa, Ethiopia, negotiators agreed on an outcome document that will shape ongoing discussions about the future of development cooperation. On Thursday afternoon, it was officially adopted.

“Some may say that the negotiations felt like a marathon, but on this final lap, negotiators were inspired by our hosts — a nation of runners — and reached the finish line just in time,” said Wu Hongbo, United Nations under-secretary-general for economic and social affairs, closing the conference.

Now that the dust has begun to settle and most delegates are on their way home — if they’re not lucky enough to be squeezing in a day or two of sightseeing in beautiful, historic and hospitable Ethiopia — we’re left with the question: did we witness three pivotal days in the journey toward a new era for development, or are we back where we started?

Big international development conferences will always be scrutinized for the time and expense they consume, and they should be. This is a sector of limited resources, after all — itself a topic of conversation here at #FFD3. So it would therefore seem appropriate to reflect on whether the Addis conference, flying in thousands of delegates from thousands of miles away, achieved an acceptable return on investment.

Of course, the short and easy answer is: we don’t know yet. We won’t know until we see how discussions here feed the sustainable development goals in September and climate change commitments in December.

Though #FFD3 was never billed as a pledging conference, we’ve seen a number of new initiatives and pledges this week — $150 billion from the Islamic Development Bank, the European Union’s $2.8 billion boost to join-up with Power Africa, and a new Addis Tax Initiative, among others — but it will take time to judge whether those actually deliver.

On two opposed sides of the discussion, the conference was either a major success or a “tragic” failure, and in between there are many shades of grey.

The biggest surprise of the final negotiations on the Addis outcome document was that it required negotiation. Delegates who arrived expecting to sign on the dotted line and participate in some side events met fierce opposition from a bloc of developing countries who — spurred on by enthusiastic and vocal advocacy campaigns — demanded the creation of an intergovernmental tax body at the U.N., to enforce standards around tax evasion and avoidance.

At one point it appeared possible that negotiations could be derailed over the issue, that Addis could end without an agreement in place, or that not all countries would affix their approval to the outcome document. In the end, the agreed draft of the accord includes revisions to paragraph 29, which deals with the tax issue, increasing the frequency of meetings for an existing U.N. group — albeit only to two — and increasing its budget. What it did not do is to go so far as to create a new, intergovernmental body, as civil society organizations and a number of developing countries from among the G-77 had proposed.

Skeptics, critics, and powerful operators from within country delegations argue a new tax body is unnecessary, since the Organization for Economic Cooperation and Development already works on tax issues. Some argue the numbers around tax evasion and avoidance are not well enough understood to justify the furor, and others struggle to imagine a U.N. panel with real global tax enforcement authority.

Adamant supporters of this proposal maintain it is key to rebalancing the global tax system towards fairness for developing states. The OECD, they argue, is not representative, composed of only 34 member states — all of them developed or emerging nations.

And if developed nations are going to demand poor countries foot a greater share of the development bill with domestic tax resources, then they should also do what they can to keep money from bleeding out of those countries through loopholes and tax havens.

Devex spoke with a U.S. government official who felt frustrated that tax, as an important topic for discussion, had been pared down to the technical details of one particular proposal. The official recalled the last financing for development conference in Doha in 2008, where tax hardly appeared on the agenda. In Addis, nearly every panel discussion dealt with taxes in some form or another, and that should be seen as a victory for the issue, the insider told Devex.

Civil society groups aren’t taking much heart from that though.

“It was a painful moment to see the developed countries celebrating the fact that nothing will change and everything will remain the same,” said Tove Ryding, policy and advocacy manager of the European Network on Debt and Development, in a press briefing attended by Devex. Ryding added that she wouldn’t expect any CSO representative to regard the conference as a success.

The official line is a much more optimistic one. Variously referring to a “milestone week,” a “quantum leap,” and “an historic international deal,” Addis Ababa Action Agenda enthusiasts lauded the outcome’s endorsement of sustainable infrastructure investments, better data, and alternative financing sources like pensions and sovereign wealth funds.

Not only did the Addis conference conclude a months-long process of negotiations on the document itself, it also crystallized a fragmented conversation about the need to move beyond official development assistance. South-South cooperation, private sector investments in national development priorities, and more effective use of domestic resources will undergird sustainable development priorities in the future.

Those priorities share a common feature: they’re fundamentally dependent on partnership — between countries, between the private and public sectors, and between governments and their citizens.

In the critical months before a broad conversation gives way to the hard work of implementing undoubtedly ambitious development goals and critical climate change action, has Addis improved the prospects for international development cooperation, maintained the status-quo, or revealed new divisions?

In making that judgement it’s difficult not to rely on the anecdotal: an agreement between multilateral development banks to jointly commit $400 billion to financing the SDGs, cooperation among small island developing states to see their unique concerns reflected in financing plans, and, ultimately, the arrival of 193 countries at consensus, however strained.

The Financing for Development Framework is non-binding. The results of this conference were never going to be concrete and measurable. If nothing else we’ve learned that discussions around development will be taken seriously this year — that you better show up ready to make your case.

Devex is in Addis to give you the inside track on #Fin4Dev. Check out our blog for conference highlights, and follow @Devex, @richard_devex and @AlterIgoe to get the latest news and developments from #FFD3.