The Monterrey Process and Beyond: An Interview with Tim Wall

Tim Wall is an Information Officer in the United Nations Department of Public Information Strategic Communication Division, Development Section. This interview was conducted at the United Nations on May 22, 2008.

WALL: The Monterrey Process on financing for development started in the late 1990s. Official Development Assistance—foreign aid—had been going down since the end of the Cold War rather than going up as expected. The Asian financial crisis had just struck, and later on it affected Brazil and Russia and even shook the economies of the developed world. There were pullbacks in foreign investment, especially portfolio investment. So the question developing countries had was—we’re supposed to be financing our own development less through the public sector, but although private flows can be large at times they can also be volatile; they can turn off and disappear overnight; so how are we going to finance our own development? What’s the strategy now?

Monterrey basically emerged as a way to answer this question. It was a Group of 77 developing countries-led process but, almost to their surprise, the northern countries Europe came on board. Also involved were the IMF and the World Bank. There had been strong disputes between the UN and Bretton Woods in the 80s and the 90s about structural adjustment, and differences on how to finance development. The UN delegates wanted these agencies to be part of this conference process.

COLLINS: That’s the UN and Bretton Woods institutions?

WALL: Yes, it was a tripartite arrangement. The process was initiated by the UN but it was co-sponsored by the UN, the World Bank and the IMF, and the WTO also took a leading role. As a matter of fact on the opening day in Monterrey, a press conference was held with the chiefs of the United Nations (Kofi Annan), the World Bank (James Wolfensohn), the International Monetary Fund (Horst Kohler) and the World Trade Organization (Mike Moore). I believe it is the only time that that has ever happened. In terms of substance, you found the UN taking the point [traditionally made by the Bretton Woods institutions] that fiscal balance is necessary; you can’t finance development just by printing money. But you also had the Bretton Woods [bodies, the IMF and the World Bank] taking the UN’s point that the main purpose of development, economics, and finance was not to balance the books. The main point is to meet human needs, and you had to gear the process to have that end result.

Part of the process in the negotiations leading up to the Monterrey consensus was that the northern countries recognized that foreign aid was needed to jump start development in many areas, especially in the poorest and smallest countries, those that are landlocked, etc., and foreign aid had been falling to levels that were really unprecedented since 1950 in terms of per capita income. The developing countries basically recognized the importance of markets in generating economic surplus and economic growth, and that the main job of amassing additional resources had to come or should come from the developing countries themselves. They discussed various aspects of the six-part Monterrey agenda, on aid, trade, debt, mobilizing domestic resources, foreign investment, and international financial architecture.

To the surprise of many people, the March meeting in Monterrey 2002 was met with pledges from the European Union two days in advance to increase development assistance by substantial amounts. The U.S. followed with its own pledge the next day. And in point of fact those increases started in during the next fiscal years. This effectively reversed the decline in foreign aid, and marked the beginning of the upward run in ODA that we’ve seen since. Even though many believe that ODA levels are still not sufficient, over this period they have roughly doubled from $50 billion to more than $100 billion. The kickoff of that process was Monterrey. I think the increase in ODA did something even more important. It helped the developing countries take seriously all the talk from the rich countries about openness...