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C O N F I D E N T I A L USUN NEW YORK 000995 
 
SIPDIS 
 
USAID FOR ADMINISTRATOR FORE 
DEPT FOR U/S JEFFREY AND A/S SULLIVAN 
DEPT ALSO FOR EB/IFD AND IO/EDA 
DEPT PASS USTR FOR EBRYAN AND DSHACKLEFORD 
TREASURY FOR IDP-JHURLEY 
USAID ALSO FOR ODP AND EGAT/EG 
NSC FOR BRAUSE AND BROWN 
 
E.O. 12958: DECL: 10/30/2013 
TAGS: EAID EFIN ECON ETRD UN
SUBJECT: UPDATE ON DOHA FINANCING FOR DEVELOPMENT (FFD) 
NEGOTIATIONS 
 
Classified By: WILLIAM HEIDT FOR REASONS 1.4 (d) and (e) 
 
¶1. (U) Summary.  Delegations in New York have completed the 
first reading of the "zero draft" of the outcome document for 
the November 29 - December 3 Financing for Development Review 
Conference in Doha.  The Egyptian and Norwegian 
co-facilitators for the FfD process hope to finalize the 
outcome document by November 26, although there is a 
significant chance negotiations will need to be finalized at 
the conference itself.  The 2002 Monterrey Consensus was a 
breakthrough for the UN system on development issues because 
of its first-time emphasis on good governance and private 
sector growth, and stands as one of President Bush's legacies 
on development.  We have accordingly staked out a number of 
strong positions in the FfD negotiations, most based on 
long-standing policy concerns but some for tactical reasons. 
An update on key issues in the negotiations follows in 
paragraphs 3-14. End Summary. 
 
¶2.  (C) The Conference takes place at a difficult time for 
the U.S. (during a transition while we are on a continuing 
resolution), and we have indicated that major new U.S. 
announcements are unlikely.   The financial crisis and the 
emerging G-20 summit process also limit our flexibility on 
many of the systemic issues under consideration. 
Nonetheless, we believe the conference should provide a 
valuable high-level forum for a discussion of the impact of 
the financial crisis, and other current development 
challenges, on developing countries.  The conference also 
offers a chance to reiterate the importance of strong, 
private sector led growth and maximizing all sources of 
development financing.  These messages were noticeably 
missing from the September 25 MDG High-Level Event, which 
overwhelmingly focused on foreign aid. 
 
¶3.  (U) The Doha outcome document will follow the same basic 
structure as the Monterrey Consensus, with an introduction 
followed by substantive chapters on domestic resource 
mobilization, foreign direct investment (FDI) and other 
private flows, trade, debt, official development assistance 
(ODA), systemic issues, and "staying engaged".  The latter 
chapter deals with the FfD follow-up process.  There is also 
a new section entitled "other new challenges and emerging 
issues" that covers FfD-related topics that have arisen since 
Monterrey. 
 
Foreign Direct Investment and Trade 
----------------------------------- 
 
¶4.  (C) Based on proposals submitted by various delegations 
during the first reading, we expect that we will be able to 
close the sections of the document dealing with FDI and trade 
without excessive difficulty, although the breakdown of the 
 
 
Doha trade round has soured the atmosphere on trade issues 
and encouraged finger pointing. 
 
Official Development Assistance 
------------------------------- 
 
¶5.  (C) We expect pressure on the U.S. until the very end of 
the process to agree to stronger language on the 0.7 percent 
of GDP target for ODA.  We have indicated that we have no 
flexibility on this point, since agreeing to the 0.7 percent 
target would imply a massive increase of our current ODA 
levels, from approximately $22 billion a year to more than 
$105 billion.  Also, although the current version of the 
outcome document contains favorable references to the Accra 
Action Agenda on aid effectiveness, the UK and some other 
delegations are concerned that the G77 will oppose it 
vigorously because the Accra process took place outside the 
UN and without universal participation.  However, we believe 
that working with like-minded delegations we will be 
successful in keeping it in the document.  We remain hopeful 
that we will be able to close this section before going to 
Doha by resorting largely to previously agreed language. 
 
Debt 
---- 
 
¶6.  (C) Debt issues will be very tough because of a concerted 
effort by middle-income countries to win more favorable 
treatment of their debt (international debt relief processes 
to date have focused on least developed countries).   There 
is also strong pressure to agree to a "sovereign debt workout 
mechanism" linked to the UN, a step we have indicated that we 
are not willing to consider.  USUN is working closely with 
the Departments of State and Treasury and other delegations 
from Paris Club countries to advance our positions in this 
area. 
 
Systemic Issues -- Complications From the Financial Crisis 
--------------------------------------------- ------------- 
 
¶7.  (C) The current financial crisis is influencing the FfD 
negotiations strongly.  Developing countries are legitimately 
worried about the impact of the crisis on their ability to 
fund development, and want the Doha outcome document to 
reflect their concerns.   They also view the crisis as a once 
in a generation opportunity to take the U.S. down a notch and 
increase the role of the UN in financial issues.  The 
situation is complicated by European views (particularly 
those of France) regarding the nature of the November 15 G-20 
summit on the financial crisis.  In normal times, the EU 
would take positions very close to ours on issues related to 
the structure of the international financial system, but this 
year they are supporting uncharacteristically expansive 
 
 
language. 
 
¶8.  (C) We have indicated that the U.S. believes the FfD 
process, which is dominated by foreign ministries, is the 
wrong place for detailed discussions that impact on financial 
markets.  The current zero draft contains unacceptable 
language on a number of systemic issues, including reform of 
the IMF and World Bank, regulation of national financial 
markets, hedge funds, credit rating agencies, and the 
formulation of financial standards and codes.  There is also 
a sweeping but ill-defined proposal for a global conference 
to "review the international financial and monetary 
architecture and global economic governance structures" that 
would clash with the more carefully targeted November 15 G-20 
summit in Washington.  We have succeeded in freezing the 
negotiations on many systemic issues until after the 
financial crisis summit. 
 
¶9.  (C) We are working with the Department of State to 
arrange a briefing by a senior administration economic 
official on the G-20 summit.  We believe this will provide a 
useful opportunity to allow the UN Secretariat and the member 
states to feel included in the latest developments.  It would 
also be a useful opportunity to meet privately with the 
co-facilitators to provide a candid statement of the U.S. 
position on several difficult issues contained in the text. 
In order to retain the upper hand on the systemic issues 
section, we recommend the Washington interagency team draft 
an extensive re-write of this section of the zero draft to 
table at our first, post-financial crisis summit negotiating 
session on November 18. 
 
Staying Engaged -- Should We Do This Again? 
------------------------------------------- 
 
¶10. (C) The final section of the Monterrey Consensus outlines 
the various mechanisms to review the 2002 Financing for 
Development conference, including a biannual high-level 
dialogue in the General Assembly, the annual ECOSOC Spring 
meeting with the Bretton Woods Institutions, and the current 
review conference.   The current zero draft contains a 
proposal to "consider the need" to hold a second FfD 
conference by 2013, a commitment the G-77 wants to make more 
definite.  The zero draft also contains an equally 
unappetizing proposal to "strengthen" the intergovernmental 
FfD process, which is code for perpetual UN negotiations on 
the topic.  Few developed countries are enthusiastic about 
either proposal, but the default position in the UN 
invariably is to hold another conference. 
 
¶11. (C) We are skeptical as to whether holding a second 
review conference in 2013 is in the U.S. interest.   The 
logic of the current process is biased towards watering down 
E 
 
 
the important commitments by developing countries to manage 
their economies properly and create an enabling environment 
for growth.  This is because the U.S. and like-minded 
countries have not sought new commitments above those in the 
Monterrey Consensus, but on each specific policy issue, at 
least a few ofQhe G-77 members want more flexibility.  These 
commitments, in the sections of the document dealing with 
domestic resource mobilization, private financial flows, 
debt, and trade, are the prime Monterrey takeaways for the 
U.S., because they gave us additional certainty that our 
assistance dollars would not be wasted in countries with poor 
economic policies.  A related problem is that it is very 
difficult to focus on country-level commitments in a 
multilateral process. 
 
¶12.  (C) There is also strong pressure from a range of 
countries to shift the focus of the FfD process to issues we 
view as tangential to the core economic and governance policy 
messages of Monterrey, such as gender, the status of 
middle-income countries, climate change, and the food 
security crisis.  We expect the result of all these pressures 
will be, most likely, a weakening of the most important 
portions of the document coupled with an increase in emphasis 
on issues we view as less central to financing for 
development.  This is obviously not an ideal outcome for the 
U.S., and we have no reason to believe that a second review 
conference would be any different. 
 
¶13.  (C) Rather than rejecting a second review conference 
outright, the U.S. has tabled an alternative follow-up 
proposal that is more decentralized and holds open larger 
roles for the private sector and non-UN actors.  Winning 
acceptance of this proposal will be very tough. 
 
Comment: Strong USG Effort to Date 
---------------------------------- 
 
¶14.  (C) USUN has received outstanding support from 
Washington agencies throughout the 10-month FfD process, and 
the U.S. has consistently been the best-prepared delegation. 
However, if we are unable to wrap up negotiations by November 
26, it will be important to maintain a high degree of policy 
coordination at the Doha conference itself.  A strong 
interagency economic team at Doha will be essential. 
Khalilzad