More than 70 world leaders gathered in Seville for the UN’s fourth Financing for Development conference (FfD4), launching 130 projects to address a $4.2 trillion shortfall in sustainable development funding. With the U.S. absent, the Seville Compromise signals a new era of multilateral reform driven by the Global South.
More than 70 leaders of state and government gathered in Seville in early July for the fourth United Nations Financing for Development (FfD4) conference to rescue what could be spared. In times when everyone is closest to oneself, a big collaborative effort was undertaken to develop ways to mobilise the urgently required finances to accomplish the Sustainable Development Goals.
Outside temperatures of more than 43 degrees Celsius in some locations did not make conversations any easier, but they did starkly demonstrate how climate change will compound the difficulties. Civil society activists had messages like “Polluters pay,” “Debt kills development,” and “Tax the ultra rich” emblazoned on fans that the delegates waved at each other.
The elephant in the room was the absence of the United States, which had announced its withdrawal from the FfD process two weeks earlier. Only the withdrawal of the superpower made the consensual adoption of the final document, the “Seville Compromise,” by the remaining member states possible even before the conference began. Its early adoption was unexpected.
At the previous conferences in Doha and Addis Ababa, negotiations continued until the last minute. The agreement was seen as an important sign of life for a multilateralism that had long been declared dead, and which, if necessary, could continue to function even without the United States. The importance of standing together in difficult times was repeatedly emphasized. The “Compromise,” however, lives up to its name. It is a true compromise document that presents the lowest common denominator.
While it contains a clear commitment to fair and progressive taxation and reforms to the debt architecture, its wording remains vague. In concrete terms, it lacks operationalization steps that would make its implementation measurable. There also appears to be no plan for how the much-vaunted mobilization of private funds will actually be aligned with the Sustainable Development Goals. Similar to the Future Summit last year, the success was primarily due to the negotiations not failing.
FfD4 should create the urgently needed momentum for development financing and initiate urgent reforms to the international financial architecture. It doesn’t take many words or figures to illustrate that something fundamental is wrong here.
An estimated USD 4.2 trillion is missing annually to achieve the Sustainable Development Goals. The international sovereign debt crisis and low tax revenues leave countries in the Global South with little fiscal leeway to invest in sustainable development. Trade conflicts, the US withdrawal from development cooperation, and an overall decline in official development assistance from other donor countries will further exacerbate the situation. 3.3 billion people worldwide live in countries that spend more on debt servicing than on education and health, while according to Oxfam estimates, the wealth of the world’s ten richest men grew by USD 100 million a day in 2024.
The international financial architecture is characterized by the perpetuation of colonial power asymmetries. In Germany, the importance of equal partnerships with countries in the Global South is often emphasized. The latter had made their priorities clear in the preparatory process for the FfD4 conference.
A central item on the agenda was the high costs associated with raising capital. Developing and emerging countries see this as an unfair competitive disadvantage compared to the Global North, as it results in significantly higher costs for them, for example, when investing in infrastructure. They are therefore calling for a reform of the rating agency system that aligns risk assessment with the goals of sustainable development – the African Union has already taken concrete steps in this direction with its decision to establish an African rating agency at the beginning of the year.
Another demand was the reform of the International Monetary Fund’s Special Drawing Rights (SDRs), in order to be able to provide developing and emerging countries with cheap capital in times of crisis. It is of little help if these are distributed primarily to rich countries like Germany.
At the top of the list was the reform of the debt architecture. The Indian economist Jayati Gosh called on the German government to grant the same generous conditions in today’s debt restructuring that enabled Germany to return to a path of economic growth after the Second World War. At that time, there was comprehensive debt relief.
The repayment of the remaining debt was linked to the generation of surpluses. While the G7 countries consider a reform of the “Common Framework for Debt Restructuring” created by the G20 to be sufficient, African countries in particular are calling for the creation of a more inclusive mechanism under the auspices of the United Nations, in which debtor countries would also be represented.
The United Nations Organization for Trade and Development had long ago proposed the creation of a corresponding “Global Debt Authority.” It was therefore disappointing that the “Compromiso” only mentions the initiation of an intergovernmental process at the United Nations to develop recommendations for improving the debt architecture and sustainability assessment criteria.
Civil society demonstrations on the sidelines of the conference called for a UN Debt Framework Convention. Development financing is about jointly solving global challenges, not handing out handouts. Gosh saw the G7 countries’ lack of commitment to making progress on the debt crisis as a sign of a lack of enlightened self-interest.
More important than the content of the final document will be the steps that follow the conference. Host Spanish Prime Minister Pedro Sanchez emphasized that Seville was not the end, but only the beginning of the process. The aftermath of Seville will show whether the call for reform of the international financial architecture for the Global North remains lip service or, if necessary, whether important reform projects will be pushed forward without the USA in cooperation with partners in the Global South.
Based on the final document of the FfD4 process, 130 concrete projects were launched within the framework of the Seville Platform for Action . Among other projects, Brazil, Spain, and South Africa initiated a coalition of the willing for a tax on the ultra-high net worth. Other projects addressed the debt crisis, which Sanchez himself described as one of the greatest threats to development. Among other things, a club of debtor countries was founded to facilitate the exchange of experiences and a joint positioning of indebted countries.
An association seeks to advocate the suspension of debt service in emergency scenarios caused by climate change or health emergencies. Reforming the international financial system is also a primary priority for South Africa’s G20 presidency, and it will be discussed at the climate discussions in Brazil. This will demonstrate the extent to which the Seville momentum continues. “Turn Debt into Hope” was one of the conference’s civil society mantras, and we all know that hope dies last.
Author: Sarah Ganter | Source: IPG | Follow Europeans24 for more analysis
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