TL: FINANCIAL RESOURCES [for UNCED PrepCom IV] SO: Greenpeace International (GP) DT: March 3, 1992 Keywords: greenpeace factsheets financial gp unced un conferences / Prepared for the Fourth Session of the Preparatory Committee for the United Nations Conference on Environment & Development 2 March - 3 April 1992 New York, USA Greenpeace International (GP) FINANCIAL RESOURCES INTRODUCTION The need for financial resources both to meet global environmental and development objectives has figured in all recent international declarations on global environmental conventions, including UN General Assembly Resolutions, the Ministerial Declaration of the Second World Climate Conference, the Beijing Declaration, and the Tlatelolco Platform on Environment and Development. This paper identifies several potential sources for new funds to support ecologically sound development; suggests why provision of such additional funds will not be sufficient, in themselves, to secure global environmental security without a simultaneous transformation in international economic relations and institutions; and identifies principles for governance that will be necessary to the success of any new funding mechanisms for the global environment. This paper also reiterates Greenpeace's opposition to World Bank control, through the Global Environmental Facility, of funds catalyzed by UNCED. Furthermore, it is important to recognize that, while there is a critical need to reform North-South economic relations in order to promote ecologically sound development, economic reform is also essential within Northern countries if we are to resolve any global environmental problems. Deep policy changes in the North must be made in order to shift Northern economies toward ecological sustainability and social equity. Such changes should include the abandonment of Gross National Product as the sole indicator of economic growth, and its replacement with a model based on social and ecological sustainability criteria. Other steps include, but are not limited to, increased incentives for energy conservation, full cost pricing of fuels, disposal taxes to meet real costs of cleanup, and an end to wasteful subsidies. This focus on the North should be properly reflected in Agenda 21 and other outcomes of UNCED. FUNDING REQUIREMENTS AND GENERAL PRINCIPLES New finance is a necessary, but not a sufficient, condition for achieving sound and equitable development. The prevailing model of economic activities and development has had catastrophic impacts on the world's ecology. On the other hand, vast sums are needed in a democratically governed international fund that developing countries can draw from in order to avoid repeating the mistakes of industrialized countries. The South cannot afford on its own to get off the industrialization path laid by the North which is creating poverty, environmental destruction and leading the planet to ruin. However, in order that these sums actually promote the long-term benefit of the majority of the people of the South and help remedy the global environmental crisis, fundamental changes in the global economy, starting with the issues of debt, trade, and militarism must be achieved. Such a transformation of economic structures and institutions will allow for movement toward ecologically sound and socially equitable development. WHERE MIGHT NEW RESOURCES COME FROM? While new and additional funds from OECD countries are necessary to compensate developing countries for the full costs of complying with the provisions of new environmental conventions and for funding development, new resources should not be seen as an end in themselves. Rather, substantial new funds should be a step in the process of reorienting global economic structures away from destructive patterns. Thus, resource transfers to the South must be accompanied by the following additional steps: Debt Relief Debt relief is essential to reverse the net annual flow of $45 billion from South to North. A more just and ecologically beneficial resolution of the debt crisis requires several steps to relieve both private and public debt. It is clear that "debt for nature" swaps do very little to alleviate the social and ecological burden of indebtedness. þ Official debt relief should be delinked from the so-called "Trinidad Terms," whereby governments offer debt reduction only if borrowers agree to standard macroeconomic structural adjustment packages. þ UNCED should call on private banks to make significant cuts in the commercial debt burden of Southern governments, which is a serious impediment to ecologically sound development. Trade Reform UNCED should commit itself to moves to change the trade relationship between North and South. There must be a change in trading patterns, in which goods from the South have always been devalued. The initiation of fairer, more equitable and more ecologically sound international trade mechanisms and the re-examination of commodity production in this light is essential for achieving far-reaching economic reform. Reduce Military Spending The global economic crisis is compounded by the $1 trillion that the world has been spending each year on arms. Oversized military budgets should be converted to environmental, economic and human security budgets under civilian control. Because environmental damage may well pose the greatest security threat to the next generation, it is appropriate that military spending be cut and funds reoriented to meet this new threat. All governments should strive to cut military budgets by 50 percent or more over the next three years, and to use the dividend to pursue sound development strategies at home and abroad. Private Sector Contributions Funds for global environmental protection and ecological development could also be generated by means of an energy tax, as Greenpeace has proposed to generate capital for a Climate Fund. Greenpeace estimates that a fund of $30 billion a year could be raised by a levy on fossil fuels of $1.20 a barrel of oil equivalent in OECD countries. FINANCING MECHANISMS FOR ACCOUNTABILITY, PARTICIPATION & TRANSFORMATION Before agreeing to the institutional form of new funding mechanisms, governments should commit themselves to basic principles of accountability and participation. Such a commitment requires the transformation of existing institutions. The current socially and ecologically destructive development model has been supported and propagated by the World Bank and other development finance institutions, which have been unaccountable to the public. A new financing mechanism, without fundamental changes in these institutions, will repeat the mistakes of the past and will benefit elites in North and South while marginalizing local communities, and sinking countries into another round of financial debt. A number of steps must be taken to transform these institutions: UNCED should advocate reform of existing development finance institutions to ensure their compatibility with ecologically sound and socially equitable development. In order to assure such a transformation, public participation and accountability is essential. Public Accountability Direct public accountability must be ensured. Global environmental breakdown cannot be avoided unless citizens and their organizations are given a voice in the use of natural resources, through the democratization of environmental policy making. New funding mechanisms must be directly responsive to the needs of local people's organizations which are on the front line in protecting their environment. Such mechanisms must be open to public scrutiny and accountable to locally determined priorities for meeting global targets. Thus administration of environment and development funds must: þ be based on transparency and access to information; þ allow for consultation and broad participation in policy meetings and an decisive role for local citizens and their NGO organizations in project development and implementation; þ provide local NGOs and people's organizations in recipient and donor countries with access to complete documentation on projects at every stage of the project cycle; þ include mechanisms to monitor funding activities, oversee consultation with local NGOs and communities, and hear public complaints; and þ acknowledge the right of affected communities to veto proposed projects, where traditional livelihoods or cultural practices will be damaged. 2 Institutions should not prioritise financial support to governments which only have a rhetorical policy of conservation but to those which actually adopt policies of upholding the rights to land and livelihood of indigenous peoples and other traditional communities, redistributing wealth and land, curbing commercial exploitation of their natural resources and planning for ecological development. Such criteria should be evaluated by a body independent of Northern dominated financial institutions and Northern governments. 3 Institutions should cease supporting projects which cause the destruction of forests and other non-renewable resources, or which destroy the livelihoods of people, or disregard the rights to land of indigenous peoples. 4 Governments should dissociate their aid programmes from structural adjustment schemes. Institutions should recognize the harmful effects of existing forms of structural adjustment and conditional programme lending on poverty and the environment, and reorient their programmes in accordance with such recognition. CONTROL OF THE GEF World Bank and Donor Government control of the GEF should be halted. þ Donor countries must not have full control over new funds, as they do presently over the Global Environment Facility. Governing bodies of such institutions should include a balanced representation of participating governments, including recipient governments, local and international NGOs, and people's organizations. þ Greenpeace has called on donor governments not to give control of funds committed for global environmental objectives to the World Bank. Despite these concerns, voiced also by NGOs and social movements from around the world, the World Bank has secured management of the GEF by promoting itself as the agency best able to disburse large sums of money quickly. The Bank has positioned itself as the institution to manage the large sums to be generated by the UNCED process and the conventions on climate and biodiversity. Yet, despite its "environmental reforms", the World Bank continues with many of its existing, destructive, practices. As it is currently structured under World Bank administration, the GEF will not meet the needs of either new biodiversity and climate conventions or local communities fighting to protect their resources and livelihoods. Early projects indicate that the direction of GEF projects represents no change from the World Bank's destructive practices. The World Bank should not be allowed to assume the role of global environmental manager, managing the GEF or any other such mechanism.