But the Pacific has never had a voice here.

Despite being UN members, no Pacific island nation has ever served on the UNSC in its 70-year history. Why is this? Is it something Pacific nations should aim for?

So far only Fiji began the process for selection, but withdrew its bid in 2011. The Solomon islands is currently exploring a bid for 2032-2033. To be a member of the UNSC you have to put your name down on the Asia Pacific Group candidature chart and so far APG countries have put their names down until 2042-2043 (Qatar). This suggests that it will be up to the next generation to decide. However if the Solomon is elected unopposed by the General Assembly then it will be a role model for other Pacific island countries to follow suit.

For decades now, there have been growing calls for reform of the UN system and in particular the UNSC. The question often asked is whether the 5 permanent members of the UNSC adequately reflect our changing times. At a time when nations like India, Brazil and Germany have become economic and political powerhouses, why are they not permanent members of the UNSC? Why is Africa, South America and the Islamic world not represented at all? Many would argue that the US, China and Russia remain the most powerful nations in the world, thus their presence is undisputed. But Britain and France?

The realpolitik view is that the current permanent members (known as the P5) would never willingly give up their seats, so the only way forward is to add to the P5, perhaps to have 9 permanent members which better reflect the many centres of power and population in today’s world. This may improve “inclusiveness” but may not make the UNSC more effective. Since each permanent member has the power of veto, which is often exercised, the idea of having a P9 with their own interests could mean even more use of the veto, thus paralyzing UN action on key issues. So far, reform in this area has been glacial and there is little room for the Pacific to wield much influence on the permanent members.

However, there is nothing stopping Pacific island countries from having a go for a non-permanent seat. But to do this requires concerted diplomat efforts and deep pockets since nations must campaign and convince others to vote for them when the seats become available. An additional problem is the way the Pacific is lumped in with Asia. Rules for membership of the UNSC state that one member from each regional block is appointed each year. According to the UN website, the Pacific is not even mentioned by name here – it is considered part of Asia:

Each year the General Assembly elects five non-permanent members (out of 10 in total) for a two-year term. In accordance with the General Assembly resolution 1991 (XVIII) of 17 December 1963, the 10 non-permanent seats are distributed on a regional basis as follows: five for African and Asian States; one for Eastern European States; two for the Latin American and Caribbean States; and two for Western European and other States.

For some time there have been calls to decouple “Pacific” from “Asia-Pacific” as they are in fact different regions and Asian countries usually dominate the process. If there was enough will, Pacific diplomats could take up this issue with the P5 members and the UN Secretary General and seek to create a distinct “Pacific” category, like Africa, which would certainly enable Pacific nations to have permanent representation. Then the only lobbying they need to do is among themselves.

Realistically, no country in the Pacific could wage a campaign on its own under the current rules. But there is nothing to stop Pacific nations from coming together to all get behind one candidate, pool resources and aim for the top. Some have suggested that the Pacific Small Island Developing States (PSIDS) grouping would be the best group to help get behind such a bid.

Right now, the world is focused on climate change ahead of the Paris COP21 summit. There has never been a more urgent time for Pacific nations to have a voice at the global table to highlight their concerns and demand action to keep global temperature rise from under 2 degrees Celsius. We have eloquent leaders such as Kiribati’s President Anote Tong who have a high international profile and whose concerns for his country also reflect the concerns of all Pacific nations. Why not get all the Pacific nations behind Kiribati – or another climate-vulnerable nation – to ensure our concerns are not just heard but acted on. Climate change has become a global security issue and to have a Pacific voice at the UNSC for a one year term would give some leverage to improve the awareness of our issues and be part of a process that demands compliance to agreed resolutions.

There is frustration that financial pledges from developed countries to those most vulnerable often don’t materialize. A voice on the UNSC can add pressure to make sure climate change financing – including pledges of $100 billion by 2020 – actually happen. The key for PICs to be in the UNSC is to ensure that climate change and the special vulnerabilities of Small Island Developing States (SIDs) become an integral part of the security agenda. This is opposed to the current view of security meaning ‘boots on the ground’.

And it is not just climate change – increasingly global security issues involving war, peacekeeping operations, refugees and tax avoidance by multinationals also affect the Pacific and we have every right to have input into the way the UN decides on its course of action.

What would be involved if a Pacific nation tried to bid for a seat? What are the challenges?

To begin with, it would require most of the nations’ diplomatic resources to be devoted to UNSC work, which means less on other UN work, such as sustainable development goal (SDG) efforts. It would be a strain on capacity since the government would have to deploy their best diplomats, which may mean important bi-lateral relationships could suffer along the way.

Like many small states, our current disadvantage is that most Pacific UN missions are very small and lack depth of experience in UN matters. Furthermore most of our diplomats are politically employed and when their contracts end they are not retained by the civil service – so experience is lost.

Another factor that counts against island nations is political instability – we need our vision and policies to be stable. Regular changes of government does not allow us to strategically reposition ourselves and maintain long term stability of purpose in the UN arena.

It is fair to question whether there is any real value in bidding for a UNSC seat given the time and expense involved, and to what meaningfully could be achieved by having such a term. Yet many will recognize the need for reform within the UN system and the need for the Pacific to have a greater – and more united – voice in this global institution, and have a stake in the process of reform underway there. In terms of long term vision, PSIDs governments need to reposition themselves strategically in global affairs. This can be done.

A point to remember is that it is not only the concern of the Pacific, but more broadly the SIDS too – including Caribbean and Africa and Indian small oceans states because their development issues are very similar. This could be addressed by the current debate on UNSC reforms – advocating for SIDs non-permanent seats. After all, SIDs issues are global issues (i.e. climate change) but they need to be seen from a SIDs lens, so a seat for SIDs could help.

Australia and New Zealand have both served terms on the UNSC and invariably get the support of Pacific nations to do so. Perhaps it is time to enlist their help in backing a Pacific nation for a change. At the very least, it may be worth exploring the idea of challenging the UN to create a distinct “Pacific” region for UNSC membership so that Pacific nations would have a permanent voice there and the only lobbying they need do is among themselves.

The Pacific is being courted by all the P5 members in various ways and is mostly unaligned – that is, it is friend to all. Enlisting support from the P5 to reform the UNSC and allow for a permanent, rotating Pacific member is one strategy to get our voices heard in the most powerful room in the world.

Photo credit: UN

Announcing release of the final MDG progress report last week, Forum Secretary General Dame Meg Taylor praised Pacific governments for their ‘substantial progress’ in meeting the development goals, and offered a modest excuse for the lack of performance measured in many areas, particularly in poverty reduction, gender equality, and environment improvements: ‘The MDGs were global goals and applying them at the national level was difficult. In addition many of the MDG indicators did not suit the national context.’

I suggest a different way of evaluating lack of progress on MDGs. Juxtapose the Forum’s MDG assessment with the following headlines: ‘Another PNG MP to stand trial for fraud,’ ‘14 Vanuatu MPs heading to jail,’ ‘Eight sacked over government fraud in Solomon Islands,’ ‘Widespread fraud suspected in Marshall Islands government departments,’ ‘Green light for former Cooks minister to be tried,’ and so on.

It starts from the top and rolls down the line of government workers who view ‘government money’ or aid funding as a pot of money to put in their own pockets. Unfortunately, anti-corruption institutions and enforcement systems are weak in most islands such that there are more government leaders and workers focused on manipulating government finance systems for their own benefit than there are people and resources attempting to enforce accountability and rule of law.

Speaking last week about the Marshall Islands’ membership in the United Nations Convention Against Corruption, Auditor General Junior Patrick confirmed this concern about the reliability of enforcement systems. He said the initial UN review of government systems shows there is a framework in place for preventing corruption. But, he added, he would like to see the UN anti-corruption review go a step further “to see if implementation is effective, what is the time frame for investigations and prosecutions, and what resources are available (for accountability efforts). We have a framework, but is it functional?” For small island countries in particular, where enforcement capability is modest, this is the $100 question.

These same political leaders and personnel in government ministries and agencies—mentioned in the headlines above—were supposedly responsible for delivering performance on the Millennium Development Goals, development plans, and a host of other government services. But when large numbers of government officials are focused on personal instead of national interests, it is obvious their nations are not going to be effectively implementing poverty reduction schemes or gender equality goals.

In an earlier blog in this space, I commented: ‘Corruption comes in many forms: coming late and leaving early but getting fulltime pay, not carrying out the mission of a government office, manipulating tenders and funds for personal interest, and seeing some or all of the above and doing nothing about it.’

From the many corruption investigations, some of which have led to high-profile prosecutions in the region, we now know that leaders in many countries are running government as if it is their personal business. So when people talk about island leaders and saying things such as, ‘Strong political leadership and commitment’ is what is needed to make progress, are we simply kidding ourselves? Political leadership and commitment for what agenda? We simply cannot continue to ignore the fact that widespread corruption is undermining rule of law and slowing progress to a crawl in many countries. The imprisonment of 14 Vanuatu MPs is a landmark anti-corruption development for the Pacific. But over recent past years, penalties in the region for corrupt actions by politicians have been modest to non-existent in many islands, reinforcing a prevailing message, at least at high levels of government, that crime does, indeed, pay.

So eight of the 14 Forum members managed to implement only two or fewer MDGs. In September, all the countries in our region signed onto the 17 Sustainable Development Goals (SDGs), promising to implement these over the next 15 years. We could not manage seven MDGs and now we’ve got 17 SDGs, with 169 targets—who exactly is going to make these 17 SDGs a reality in our islands? This is not to say that public health professionals, doctors, educators, community development specialists, and staff at the Forum Secretariat are not committed to making improvements in their respective islands. The point is that for them to be successful, they have to have the attention and support of political leaders. Yet many of these leaders appear to be more focused on self-interested business deals or embezzling aid funding than they are on implementing national development priorities.

Only two nations—Cook Islands and Niue—met all seven MDG targets, while Palau accomplished six. These nations should be recognized for this laudatory performance and probably the most helpful development for the rest of the Pacific islands would be for this trio to convene a working group to identify and share the ingredients that allowed for their success so that other countries in the region can see if there is anything in the Cook Islands/Niue/Palau models that would work elsewhere. Still, until corruption is minimized and rule of law is emphasized, getting traction on the new SDGs is going to be a challenge in many islands.

Caption: The Vanuatu bribery case has made headlines across the region (pictured here). The Vanuatu Appeal Court will deliver its ruling next Friday on appeals by 14 MPs jailed on bribery convictions.

In his presentation, President Nakao check marked the main objectives for ADB in the region: Private sector to take the lead in creating opportunities for growth; substantial infrastructure investments in communications, seaports and airports to reduce the high cost of doing business; institutional and policy constraints such as barriers to imports and slow and complex customs procedures to be addressed; expand opportunities for education which can promote innovation and develop the skills required for Pacific countries to engage globally; and Pacific islands to keep their unique cultures, social fabric and environmental beauty as they aim at greater integration.

Worth considering is President Nakao’s observation that while life expectancy has risen and average income has increased in the region in recent years, the flip side has seen a greater number of islanders facing hardships, increasing vulnerability of the islands to natural disasters, and the need for ‘renewed’ efforts to implement the eight Millennium Development Goals (to be replaced, next month, by 17 Sustainable Development Goals). A Pacific Islands Forum Secretariat report showed that 10 of 14 Pacific members failed to implement a majority of the eight MDGs, while three could not manage to implement a single one. This is a big red flag and suggests a leadership gap — or an absence of ‘champions’—that has prevented the region from delivering on health, education and poverty reduction goals despite massive foreign aid.

Official development assistance to the 14 independent Pacific nations doubled since 2002. ADB has kept abreast or even ahead of this trend. President Nakao confirmed that ADB’s assistance to the Pacific more than doubled in the last decade, with over US$2 billion in loans, grants and technical assistance approved from 2005 to 2014 compared to US$856 million from 1995 to 2004. Meanwhile, President Nakao emphasized that ADB is integrating ‘resilience’ to climate change and natural disasters ‘into everything we do in the Pacific.’

The lack of social, health and economic progress in many island nations, the increasing urban overcrowding that exacerbates vulnerability to poverty and disasters, and rising unemployment forces the obvious question: What benefit is the public receiving from this multi-billion dollar aid flowing into governments in our region?

In addition to asking what benefit the public is getting from this government aid largesse, another worth asking is, ‘Who is resilient in the Pacific?’ It is certainly not people in the urban centers, which are on the receiving end of most of this foreign aid. If container ships that bring imported goods stopped coming, villagers and outer islanders would survive because they are resilient, having self-reliance skills for survival on these islands. One hundred years ago, when a cyclone swept through, there was no International Red Cross or U.S. Agency for International Development to swoop in with food, water and other aid. Life was harder, but traditional systems were honed over centuries so that islanders could live on remote islands. These traditional systems, many of which are still in practice in rural areas, conserve coastal fisheries, manage agriculture crops, and govern teaching of navigation, canoe building and local medicine. We have a lot to learn about resilience from outer islanders, and should be incorporating traditional systems into resource management because they have worked for centuries.

A key challenge for many islands is that most aid projects are initiated by donors in conjunction with urban center-based government officials with little participation from outer islanders and local community leaders in addressing sustainability needs of their islands. A vestige of cargo cultism, often people think if it’s from the outside it must be better. When it comes to ‘resilience,’ however, this is not the case.

The World Happiness Report 2015 makes an important point about ‘resilience’ without actually using the word: ‘Countries with sufficiently high quality social capital appear to be able to sustain or even improve subjective well-being in the face of natural disasters or economic shocks, as the shocks provide them an opportunity to discover, use and build upon their communal links.’ Translated, this means people whose culture and bonds are strong, who work together as a way of life are better able to withstand problems that befall their islands. Like sharing fish from the day’s catch with your neighbors, you come together to fix a problem. Phrases in the Marshall Islands such as ‘kan dikdik kan yokwe’ (we share what little we have with love), ‘jiban dron’ (helping each other) and ‘jake jobol eo’ (share the wealth) do, in fact, govern life in the rural areas of the Pacific where culture remains the underpinning of life — in great contrast to the centers today.

Yet donors and recipient governments want to concentrate funding into cities or sub-centers because it is ‘very costly’ and more difficult to invest in services on outer islands or rural villages, a point emphasized by President Nakao. Still, if these remote areas are the backbone of our islands’ cultures and sustainable living, perhaps the most important question to ask is, are they worth saving? Because if we want to keep people on the outer islands, we need to get engaged in a ‘conversation’ about development needs and priorities on the outer islands instead of just giving things to them — solar lights, water catchment tanks, small fishing boats — as now typifies rural development projects. If maintaining this self-reliance strength is not a priority, then following current policy toward development will have the desired impact: In another 15 years, the remote islands will be empty, everyone gone to capital cities, where stresses on already over-taxed government services will multiply, or migrated out to the United States, Australia, New Zealand or elsewhere.

The donor aid cycle perpetuates itself: as more people leave rural locations, resilience declines, requiring more aid to boost resilience and help people find a way out of poverty that doesn’t exist to the same degree on remote islands. Maybe the important point to keep in mind is that current policies keep the aid industry chugging away. They are not expanding existing resilience and self-reliance but attempting to create it in an urban environment where dependency, corruption, and poverty combine to undermine most donor efforts at creating resilience that is already in place just a few miles away on another island. Island government departments that cheerfully jump on the aid bandwagon instead of pushing for island-centered development strategies that promote rural development to increase self-reliance are as much a part of the problem as the people arriving on airplanes with draft plans waiting on signatures to implement.

*This blog was updated by the author on September 18 from the original text posted on September 9, 2015.

The complexity arises from two factors:

• The People’s Republic of China (mainland) maintains a “one-China” policy that does not recognize the Republic of China (Taiwan) as a separate nation or accept ties with any nations that recognize Taiwan.
• Several Pacific islands have flip-flopped between the PRC and the ROC over the years.

Fortunately, the competition for diplomatic partners died down after current Taiwan President Ma Ying-jeou took office in 2008 and pursued closer ties with the mainland. But there could be more behind-the-scenes machinations looming. In recent times we’ve seen Solomon Islands leaders courting Chinese investment with political overtones, and in the Marshall Islands leaders making unannounced visits to China that lead to speculation about stability of the relationship.

The relationship for Pacific countries that have alternated diplomatic recognition between PRC and ROC is akin to a man who has divorced his wife in favor of a new one. When he goes to meet the ex-wife without mentioning it to the current wife, tension results as can be seen over the years in any of the islands that have changed diplomatic ties with the ROC and PRC.

In the 1990s and early 2000s, island leaders angled to see which of the two would offer “the best deal” for diplomatic ties. The practice of checkbook diplomacy was chiseled into our consciousness. And with it, so-called “good governance” largely went out the window as political leaders bartered diplomatic recognition for benefits. As various media reports showed, the “benefits” often were in the form of “constituent funds” that provided large amounts of money to political leaders to use as they wanted, with no accountability attached. The Australian newspaper The Age, for example, reported in 2011 that Nauru politicians received thousands of dollars monthly in exchange for ties with Taiwan, while China distributed tens of thousands of dollars prior to an election in 2007.

Because of the diplomatic competition, both PRC and ROC are in a constant state of edginess about their island ties to the point of overbearing scrutiny of the tiniest nuance in word or deed of island leaders. In some islands, leaders have not hesitated to use this as an opportunity to seek more money from one or the other. But it is one of the clearest examples of corrupt practices in government, because “getting more” often simply means more for political leaders.

Instability that results from uncertainty in development aid or diplomatic partnerships causes interruptions in program and service delivery by government representatives whose work depends on or is supported by aid and technical support from one of these countries, and can tarnish the reputation of governments when, for example, auditors say they can not verify that the amount deposited to the government treasury was the actual amount received from a donor — which happened in an audit issued this year in the Marshall Islands. 

This diplomatic game makes it difficult for either PRC or ROC to enforce accountability in donor aid relations with their diplomatic partners. In the heyday of the checkbook diplomacy period in the late 1990s to the early 2000s, the word “accountability” in relation to Taiwan or PRC aid wasn’t in the vocabulary. Islands received their funding or soft loans with little-to-no performance requirement — which suits political leaders focused on their own interests over national development interests.

Since 2008 when Ma took office in Taiwan, this changed to a degree in ROC partner countries. Over the past several years, we’ve seen ROC Embassies and their Foreign Ministry requiring progress reports prior to release of funding — which has, on occasion, resulted in funds being held up because the governments, unaccustomed to having to show any results from donor aid or simply not having any results to show, have been late to produce reports. This last point is important to emphasize: Some Taiwan aid has been earmarked for such things as “outer island projects” or “new infrastructure” or some other purported development. But funds have actually either gone to pay for government workers’ salaries — not the projects stated — or been diverted by political leaders to something entirely different. One example of this is in the Marshall Islands, where Taiwan quarterly budget allocations listed hundreds of thousands of dollars for a new prison in Majuro over a several year period. Despite this being the case for many years, no new prison has been built.

The problem, however, is that if the PRC-ROC diplomatic competition swings back into gear, even these modest efforts at ensuring performance in regards to donor funding will likely be scrapped, since the overriding goal, particularly for Taiwan, is the diplomatic partnership. With the number of nations that recognize Taiwan now at 22, suffice to say Taiwan pays close attention to and honors its relations with these nations, six of which are in the Pacific (Nauru, Solomon Islands, Marshall Islands, Tuvalu, Kiribati and Palau).

China’s recent muscle flexing for territory in Asia is ruffling relations with Japan, Vietnam, the Philippines and the United States. It’s hard to believe that the resource-rich Pacific — with oil, forests, mines, fish and deep sea nodules — won’t soon be seeing greater interest from China given its current expansionist policy. ‘Greater interest’ will likely result in a resumption of the diplomatic dueling. Couple this with next year’s national election in Taiwan that current indications suggest is likely to result in President Ma’s party losing the executive branch and the environment may be primed for a resumption of the bad old days of competition for diplomatic partners in the Pacific region.

Caption: A Taiwan Navy marching band performing in the Marshall Islands, one of six islands with ties to the Republic of China.

The United Nations has circulated a discussion paper on financing for development, which is guiding debate on the financing framework for the Sustainable Development Goals (SDGs). The financing framework is due to be considered in Addis Ababa on 13-16 July, and the SDGs themselves at the UN General Assembly in September.

Seven elements of the financing framework

The discussion paper canvasses a broad range of sources of finance to support the achievement of the SDGs, and proposes seven ’elements’, which are broadly as follows.

The first is domestic public finance. On the revenue side, this refers to the taxes and government income generated by developing countries themselves. Despite increases in revenue over the past decade, they are insufficient and problematic: tax can have a negative impact on inequality; it can be difficult to capture resource rents; and tax evasion and avoidance lead to large losses. On the expenditure side, budget processes are often weak and efforts to tackle corruption insufficient.

The second element is domestic and international private finance, which have both increased substantially over the last decade. Nevertheless, it is recognised that these flows are primarily profit-motivated and as a consequence leave gaps (e.g. there are important market failures in the provision of public goods). Remittances are important, but the cost of sending money is often high. Finally, financial markets are often inadequate, leading to limited access to finance for poor people, especially women, and small businesses.

The third element is international public finance. Net Official Development Assistance (ODA) has increased significantly over the past decade, but remains below commitments (especially if climate finance is netted out), often doesn’t reach the poorest countries, and further efforts are needed to improve effectiveness (e.g. through results-based aid, and ‘smarter’ aid that leverages other flows).

The fourth element, trade, has been an ‘engine’ of development in many advanced and emerging economies, yet it has been elusive for many poor countries and small island states, who face capacity constraints, struggle against subsidies in trading partners, and need to tackle tough trade rules and fragmented agreements.

The remaining three elements cover:

•  Technology, innovation and capacity building, which are constraints in many poor countries and negatively affect the productivity of the aforementioned flows.
•  Sovereign debt and the challenge of balancing debt financing against the need to prevent debt crises.
•  Systemic issues in global financial markets, essentially the need to be aware of the impact of liquidity, and prudential and regulatory policies on poor countries.

Towards an agreement on financing for development

The seven elements form the framework for specific commitments that are contained in the draft outcome document. There has been extensive consultation on the discussion paper and outcome document, and a number of countries, UN organisations and NGOs have provided comments (which are available here).

It’s beyond the scope of this post to fully review all of these. Nevertheless, it is instructive to consider some of the comments on the broad elements, especially ODA.

Broad elements

There seems to be general acceptance of the broad elements being proposed. At a very high level, they are hard to argue with, but important differences emerge in the emphasis, contextualisation and details.

There is debate in the various submissions about the relative emphasis on public versus private flows. There is also debate about the applicability of different flows to different country contexts (e.g. the scope of domestic resource mobilisation in small island states, or private investment in conflict-affected states). And there is debate about the detail, including who does what. Some countries, such as India, point out that the ‘South’ is being asked to do a lot, whereas the ‘North’ needs to offer to do much more (e.g. on trade, tax avoidance and climate finance).

ODA targets

There is a clear consensus that ODA has an important role to play in helping developing countries, especially the poorest countries, initiate and push faster rates of public spending to improve infrastructure and social services.

Given the important role that ODA plays, there is significant support across developing countries and civil society for the 0.7% aid target, with 0.15 to 0.2% of GNI to be directed to the least development countries.

Views diverge among donors though. For example, the EU, led by the UK and Scandinavians, reaffirms its commitment to the 0.7% aid target. While Australia, perhaps unsurprisingly, goes to great lengths to talk up the role that ODA can make in ‘leveraging’ other flows, whilst simultaneously sidestepping the issue of the aid target.

Another thorny issue is quantitative aid targets for emerging economies: something that the BRICS have baulked at so far, while at the same time enthusiastically pushing targets for advanced economies.

Rescheduling past aid commitments

Recipients are clearly aware that commitments to aid targets have not been honoured in the past.

The G77+China group have come up with an interesting proposal:

[T]he unfulfilled ODA commitments on the unfinished MDGs should be carried forward and be estimated in the context of the review of the implementation of the Monterrey Consensus and Doha declaration as a matter of urgency.

It’s a novel idea, and one that is sure to get the attention of donors—especially the more recalcitrant ones. But it is actually a milder form of my April Fool’s Day proposal, and no more likely to be accepted.

Aid predictability and monitoring

Developing countries and NGOs continue to express concerns that aid predictability is a problem.

NGOs have suggested the International Aid Transparency Initiative (IATI), should be reflected in the framework. There are also calls for donors to make clear, time-bound commitments: both in aggregate and for individual countries.

India has suggested that this is an area where the multilateral system can help, and where independent monitoring of aid commitments could provide valuable feedback. More generally, there is a need to ensure that some countries do not get overlooked by the international aid system. This can especially be a concern for fragile states, which present more pressing challenges for donors to do business with. Monitoring of aid commitments needs to keep a close eye on these countries and draw attention to unmet needs, if some countries look like being ‘left behind’.

Final thoughts

The ‘elements’ and discussion paper provided a sound starting point for the debate on financing for development. The consultations that followed illustrate the importance of the issues, as well as some of the tensions and challenges.

Clearly a one-size-fits-all approach won’t work, but the framework provides enough scope for tailoring to the country context. So long as common sense prevails, then it can be applied in practice.

On aid targets, I share some of the concerns expressed by developing counties and civil society that some rich countries are using the framework to divert attention away from their failure to honour aid commitments, and that there are risks going forward. This needs to be managed by pressing for individual and binding commitments, especially for aid to least developed countries, and backed up by independent monitoring.

Looking beyond aid, the proposals to stimulate trade and non-aid financial flows look like they need more substance. In particular, I would like to see more tangible commitments from the major economies (i.e. G20) on actions to deal with tax avoidance and tax evasion, including in the resource sector; what steps they will take to tackle trade barriers, such as subsidies and standards; and how they will encourage their major companies to honour their corporate responsibilities when investing in developing countries. None of these issues are new, but past efforts have been insufficient.

Overall, I am cautiously hopeful though—not for a perfect plan, but for an evolution of existing commitments and a stronger consensus on financing for development

The question posed is instructive. It reflects the mood of the negotiations now entering the ‘horse trading’ phase: negotiators begin to bargain on critical issues and resort to ‘fallback positions’ to avoid the risk of crossing ‘red lines’. It also reflects a degree of frustration about the negotiations that have become somewhat protracted. But more importantly, it reflects the stage when arguments on the basis of objective criteria are beginning to meet increasing resistance and thus requiring political solutions.

What is also instructive is the nature of the issues that are frustrating the negotiations. The issues are those that are characteristically divisive in the context of an inter-regional FTA agreement between a group of developed countries on one hand and a group of developing and least developed countries on the other. They are in fact reminiscent of the issues, for instance, under the EPA negotiations between the ACP Group and the EU and even under the multilateral trading system (MTS) where the contrasting styles and interests of diametrically opposed groups go head to head.

I raised the issues of developmental resources and labour mobility in my most recent blog ‘Who should be part of the regional architecture?’ The issues being put up for direct horse trading here are those that relate to the extent of relative protection and preferential treatment of foreign service providers vis-à-vis those of the FICs and vice-versa. The infant industry provision, for example, is “strongly opposed” by ANZ, says Maclellan. This may be so because the provision is essentially protectionist in nature. Arguments for its developmental rationale are often drowned out in a concerted push for free trade and for the removal of any discriminatory measures.

The MFN provision remains unresolved. The problem is likely to be that ANZ will want all concessions negotiated by the FICs from other regional economic communities (RECs), or with a big trading partner, to also apply to them, regardless of the membership of those RECs – whether they are developed countries or developing countries. The FICs are likely to restrict such application, again for developmental reasons.

Pre-establishment provisions which deal with the making of new investments, including the participation in existing enterprises by foreign or non-resident investors, is likely to be traded against the FICs’ “positive list’ approach: a list of sectors that can be accessed and how. Developing countries tend to be reluctant to make offers relating to pre-establishment due to their national policy to reserve some sectors for local investors for the development of domestic entrepreneurship and domestic industrialization. Developed countries on the other hand tend to demand the same national treatment accorded to domestic investors.

Division on the other unresolved issues is along this same political economy line which only highlights our differences. As a matter of fact, the ANZ stance on these issues are predictable. They reflect their WTO stances. Their commitment to the WTO principles forms the basis of their proposals for the negotiations. However, the WTO is undergoing changes. It has changed from GATT to WTO and further changes are now evident. Some have even predicted its demise – the dismal state of the Doha Development Agenda representing the ‘death of multilateralism’. Gordon Wong, a London-based researcher in international relations wrote last January of ‘The Beginning of World Trade Disorganization’. Before that Dr Jason Hickel wrote of ‘Free trade and the death of democracy’, noting the real interests at play behind the concept of free trade.

WTO is a product of the post-Cold War era when the US reigned supreme in a uni-polar world and dominated through the Washington Consensus. The WTO as an organization and its principles became a tool of that period with stronger dispute settlement provisions and the acceptance of the single undertaking provision. In contrast, the relatively weak trade regime of the GATT before that in the context of a bi-polar world at the time, had its soft provisions relating to the Special and Differential Treatment (SDT) and a softer approach to preferential trade.

Now, however, with a multi-polar world and in the aftermath of the global financial crisis, the WTO and the MTS are undergoing further changes. Regionalism is growing. The BRICS, especially India, are threatening the powers that be in the Organization. The US’s underwriting of the Organization is coming under increasing pressure. A Beijing Consensus is on the rise.

Where is the WTO heading? Wong anticipates a way out: Capitalism with a Human Face, i.e. to transform the “social purpose” of the WTO in a return to the GATT’s ‘welfare state’ model. This comprises a compromise between laissez-faire capitalism and social welfare, genuine application of the SDTs, and greater appeal to flexibility and pragmatism in condoning protectionist behavior.

I suggest therefore that ANZ take all these changes to heart and re-visit all their proposals that are proving divisive under the PACER Plus negotiations. Why can’t they, for instance, be a lot more creative and generous as regards FICs’ proposal on ‘infant industry’ provision and negotiate offsetting measures under a ‘post-establishment’ phase under National Treatment and/or under Modes 1- 4 of service delivery under the Trade in Services agreement? Such an approach builds complementarity and maximizes value adding. Furthermore, it removes any fear of unbalanced negotiations and firmly re-enforces a win-win situation for both sides. In any case, aren’t we supposed to be essentially unitary in our approach since we belong to the same regional economic community?

His third scenario was that of doing nothing and maintaining the status quo. From his analysis of that scenario, he drew the following conclusions, viz: (i) Fiji will not resume PIF membership; (ii) Fiji will continue promotion of PIDF, PSIDS and the MSG; (iii) the region will see the entrenchment of two competing Pacific regional systems with overlapping membership; and (iv) regional unity will be hampered and scarce human and financial resources will spread thinly and inefficiently.

My blog further explores this same scenario. It subscribes to the conclusions arrived at by Professor Fry and identifies more of that ilk. All in all, this scenario will drastically set Pacific regionalism backward and all FICs will be worse off.

The stunted performance of Pacific regionalism to date is reflective of its political economy aspects. Political economy analysis of any society in general investigates how political and economic processes interact and support or impede the ability to solve development problems that require collective action.

For PIF, the relative privileged position of Australia and New Zealand (ANZ) vis-à-vis the FICs is the fundamental ingredient of the political economy of PIF and has played a major role in its conduct. ANZ are developed countries, members of the OECD that are well-resourced and affluent; they are fully integrated into the global economy. They have their own bilateral ANZCER agreement. They are signatories to the WTO and as such are determined, similar to the other big global traders, to push for free trade and the Washington Consensus. They are generally opposed to preferential trade on which the FICs still pivot their economic development strategies with the aim of integrating into the global economy. ANZ are part of Western Europe in the UN grouping of nations, whereas the FICs/PSIDS are categorized together with Asia. In geo-political and geo-strategic terms, ANZ interests vary in nuance and sensitivity vis-à-vis those of the FICs. Furthermore, ANZ are major donors and development partners to the FICs with whom they share PIF’s membership.

As developed country members of the PIF, ANZ pay the lion’s share of the PIF Secretariat budget. In addition, they often times subsidize the additional cost of regional meetings – part and parcel of regional cooperation and integration processes. Given the need to be accountable to their taxpayers, ANZ naturally seek a return on their investment. This has led them in the past to assert undue influence on management and political decisions in order to win concessions, thus breaching good governance practices and trust. The FICs, being recipients of ANZ’s ODA, have tended to turn a deaf ear to such indiscretion and not to rock the boat for fear of losing their national share of the ODA. This situation has given free rein to ANZ’s unrestrained expressions on issues. Such a scenario has proven costly for the FICs when ANZ’s undue influence had undermined FIC positions on issues of critical importance to them, for example, climate change, trade and migration.

As principal markets for FIC trade, ANZ pressed the FICs to start the negotiations on PACER Plus even though the FICs have not been able to secure any gains nor strategic advantages from the EPA and PICTA negotiations as leverage for trade talks with ANZ . Both negotiations have yet to conclude. The PACER Plus negotiations, on the other hand, appear to be faltering on two issues to which ANZ are not giving concessions. On development resources, their quantum and modality of disbursement are proving divisive. On labour mobility, ANZ are not in favour of incorporating this issue in any Free Trade Area agreement. Such incorporation would bind the two developed countries to the provisions of the agreement. Instead, they prefer to retain unilateralism in decisions on this scheme on which FICs clearly enjoy comparative advantage.

The PACER Plus is intended as a developmental agreement, like the EPA and the Doha Round before it. The ‘Plus’ sub-joinder was intended for this purpose. ANZ and FIC politicians were equally enthused on this matter. However, ANZ trade officials remain adamant about full compliance with WTO principles on trade negotiations as per Article XXIV of GATT. Their trained eyes only see the single linear pathway going forward. Flexibilities on the basis of Special and Differential Treatments and derogations from general provisions for the alternative pathways are not the language they understand. Should the PACER Plus negotiations proceed to conclusion without incorporating developmental aspects into the text of the agreement, it is clear that net gains from this agreement will accrue to ANZ and not FICs. Earlier feasibility study by Professor Wadan Narsey had reached this conclusion. In any case, any market access gained from the negotiations may be negated by the imposition of non-tariff barriers.

ANZ are keen to conclude the PACER Plus negotiations so that the agreement can replace SPARTECA, which, according to the ANZ officials, has outlived its usefulness – SPARTECA being a preferential and non-reciprocal trade agreement – an antithesis to free trade.

The various situations depicted above will tend to continue unabated under Professor Fry’s third scenario. Furthermore, the state of Pacific regionalism will be worse off without Fiji back in the fold. It can be envisaged that without Fiji’s participation in PICTA and in PACER Plus, regional trade, especially intra-FIC trade, will be missing an essential ingredient. Any possible growth, if any, in economic activities between and amongst FICs will be piecemeal and lack the needed augmentation and singularity of purpose that a united region would generate. In Fiji’s absence from PIF, the region will also lack a maverick to prick our collective consciences on occasions when we lose sight of our regional diplomatic aspirations.

As regards AfT, Forum Island Countries (FICs), for instance, have been discussing this matter, on and off, since 2005 when it was launched. They have even agreed on the various governance structures to put in place in readiness for the surge in AfT funds. Admittedly, some AfT funds have trickled in. Some are still locked up in protracted trade negotiations like the Economic Partnership Agreement (EPA) and PACER Plus. However, Messrs Joseph Stiglitz and Andrew Charlton have reviewed AfT and their verdict is that it has “failed to live up to its promise of additional, predictable and effective finance to support developing countries’ integration into the global economy”. It is interesting to note that these two gentlemen had co-authored ‘Fair Trade for All – How Trade can Promote Development’ in 2005 and which explored how poorer countries of the world could be helped to help themselves through freer, fairer trade. Furthermore, Stiglitz himself is the former Chief Economist at the World Bank and a Nobel Laureate in Economics in 2001. He published ‘Globalization and its Discontents’ in 2002.

Emily Jones, Deputy Director of the Global Economic Governance Program, University of Oxford, wrote in 2013: “Having raised deep concerns about the failure of AfT, Stiglitz and Charlton make ambitious proposals for rebalancing the global trading system. The first pillar of their proposal is to enshrine and enforce a ‘right to trade’ and a ‘right to development’ through the WTO’s dispute settlement mechanism”. I hope that that these proposals fall on fertile ground as far as CEGT is concerned.

The second aspect of CEGT’s new course has in fact made a lot of progress in the Pacific. The EU, through Facilitating Agricultural Commodity Trade (FACT) in 2008 from the 9th European Development Fund (EDF), followed by Increasing Agricultural Commodity Trade (IACT) in 2011 from the 10th EDF, have had a head start in supporting commercial ventures and producer groups in becoming export oriented, market driven enterprises that will consistently supply overseas markets with competitive agricultural and forestry products. Appropriate value adding and with relevant certification have taken full advantage of the niche markets in developed countries offering premium pricing. The Pacific Horticultural and Agricultural Market Access (PHAMA) Program, now jointly funded by Australia and New Zealand, has added additional resources for the same general purpose and thus widening the number of beneficiaries.

There are prospective gains in value adding in other products in the region to which the Commonwealth can direct its attention. Apart from that, the Commonwealth can also address the non-tariff barriers whose imposition tends to grow with increasing market access negotiated under various trade agreements. The Commonwealth can first of all research and learn from the case of the fresh Fiji ginger exports to Australia in order to establish guidelines to follow when sanitary and phyto-sanitary requirements have been strictly complied with and yet there were still sectorial resistance existing in the import market.

The third element in the new course by the CEGT is perhaps the weakest of the three. Promoting inclusive negotiations at the WTO is not going to change the attitude of the large traders, the large developed country members. They will continue to preach free trade at the multilateral level and thence turn around to pour substantial resources for domestic subsidies. They will continue to determine who gets the nod to go into the Green Room for critical trade talks. Lessons from the past are instructive. Have the Small and Vulnerable Economies (SVE) achieved much as a special category of members? Have the applications of the Special and Differential Treatments (SDT) made much difference to the interests of the developing and least developed country members? The status of the Doha Round trade talks, intended to be developmental – but still inconclusive and in disarray – speaks volume as to who is running the show in Geneva.

If the ‘death of multilateralism’, in referring to the stalling of the Doha Round is of any substance, what is the merit in promoting inclusive negotiations at the WTO? Should we be directing our resources at regionalism and plurilateralism? Or even South-South coalitions?

The Commonwealth CEGT should take serious note. Group members should also take note of Dr Jason Hickel’s “Free trade and the death of democracy”. In this publication, Dr Hickel states that free trade is not about freedom at all. The term, he says, “is a trap – a brilliant framing device that neatly neutralizes opposition. If you take a stand against free trade you appear to be taking a stand against freedom itself, which is clearly not a tenable position”. He adds: “It turns out that it has very little to do with meaningful human freedom, and rather a lot to do with corporate freedom – the freedom of corporations to extract and exploit without hindrance”.

The Office of Development Effectiveness (ODE) at the Department of Foreign Affairs and Trade strives to find stronger evidence for more effective aid. ODE monitors the performance of the Australian aid program, evaluates its impact and contributes to international evidence and debate about aid and development effectiveness.

As part of its evaluation into the aid program’s engagement in policy dialogue – Thinking and Working Politically: An evaluation of policy dialogue in AusAID – ODE commissioned a think piece by PiPP executive director, Derek Brien.

Presented as a Pacific perspective on more effective donor engagement in policy dialogue, Derek’s think piece suggests the need for better engagement and understanding so that there may ultimately be a meeting of minds on the common development expectations, and the means to achieve them.

The evaluation also included a literature review of international best practice, case studies from Indonesia and Solomon Islands, interviews with AusAID staff and a web-based staff survey.

Broadly, the evaluation recommended that policy dialogue be better incorporated into the agency’s practices by:

• promoting a common understanding and providing senior direction on policy dialogue
• embedding policy dialogue into aid management practices
• ensuring policy dialogue is properly resourced
• supporting the skills development of staff.

In our region we have over one thousand languages, and a cultural make up that is as diverse as it comes. Some rules of engagement cross cultural boundaries, and some don’t. The way one person says something, is not necessarily the way the other person hears it. Engaging in policy dialogue in this context is about effective communication: building trust, understanding and consensus for action.