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FINANCIAL RESOURCES AND MECHANISMS: Working Group I resumed discussion on financial resources and mechanisms Wednesday afternoon. Several delegates, including Kenya and Bolivia, pointed out that many of the commitments made as part of the UNCED process, as well as the Spirit of Rio, appear to be forgotten.

Australia and Nigeria agreed that the emphasis should be on increased effort at the national level and increased coordination at the international level. Nigeria, Malawi, Bolivia, Kenya and Iran said new and additional financial resources are crucial. Iran also suggested that loans with preferential interest rates should be granted to combat desertification. Japan did not support the call for new and additional financial resources.

Benin said it is necessary to use existing financial resources and mechanisms more effectively and more efficiently, as stated in paragraph 102(a) in document A/AC.241/12. Sweden supported by the Netherlands, said that existing funds are not always used in the most effective way and implementation of the Convention will require better use of funds. Germany noted that the problem is not the provision of funds, but the capacity of the governments and technical services to use them effectively. Germany's experience has shown that strong political will, the participation of local resource users, and carefully planned and managed project activities are essential.

Nigeria and Niger, on the other hand, argued that previous programmes have failed because of inadequate finances. Senegal added that too many delegations have overemphasized the misuse of funds by developing countries. Senegal and Bolivia cited numerous other problems including lack of coordination, inefficient funding, debt, and terms of trade.

Australia, the Nordic countries and Switzerland supported the use of a "package approach," as referred to in paragraph 102(b). Australia stressed the need: to facilitate a consistent approach between bilateral and multilateral sources; to improve coordination with NGOs; and to provide funds within the context of a coherent country-driven approach designed to promote sustainable development. Australia and Switzerland supported the US suggestion for the compilation of an inventory of the resources that have been spent to combat desertification.

Australia, the Nordics, Spain and the Netherlands did not support the establishment of a new funding mechanism for this Convention. Tunisia cited former UNEP Executive Director Mostafa Tolba on the need for a specific, common fund to fight the dangers caused by environmental degradation. This was the case with the Montreal Protocol on Substances that Deplete the Ozone Layer. Niger and Malawi also supported the establishment of a special fund. Nigeria also supported Egypt's proposal in paragraph 105(d) for the establishment of an "international finance corporation for anti-desertification." Portugal commented that the INCD should not discard the idea of a special fund until there is more substantive information on this proposed mechanism.

Australia and the Nordics opposed the establishment of a new window in the GEF for desertification. The Nordics and the Netherlands added that some anti-desertification programmes could be funded through the existing windows of the GEF. Spain stated that the GEF could provide a compromise solution at "a later stage." Nigeria, Senegal and Portugal supported the use of the GEF as the financial mechanism for this Convention.

Sweden, on behalf of the Nordic countries, stressed the importance of retaining flexibility at this stage in the negotiating process. Switzerland and Portugal added that the contents of the Convention must be clarified before financial resources and mechanisms can be seriously addressed.

Sweden said that poverty alleviation has always been a cornerstone in Nordic aid programmes. Although this Convention will aid the alleviation of poverty, it is only one of the several means available. Kenya mentioned that poverty and desertification form a vicious cycle.

Switzerland said that the flow of funds should be determined in accordance with programmes to be carried out, not measured in percentages of GNP. Switzerland also supported adopting debt relief mechanisms in the area of desertification. Tunisia agreed that recycling external debt could provide a partial solution to financing anti- desertification projects.

Australia suggested that there might be need for a clearinghouse on methods of assistance through the various channels available. Bolivia suggested inviting representatives from international and regional financial institutions, including the GEF, to exchange views on the financial mechanisms for financing the Convention and to produce a report for the next INCD session in New York.

UNEP urged delegates to recognize that a cooperative effort is required by all participants when considering coordination mechanisms. With regard to financial resources, UNEP's 1991 estimate of the total recent expenditures on desertification control worldwide was less than US$1 billion per year. This is equivalent to only US$1 per year for each person at risk from desertification. Approximately US$12 per person per year is needed. This amounts to a global programme of about US$12 billion.

The Environment Liaison Centre International, on behalf of the NGOs, reminded delegates that only a few developed countries meet the UN target of 0.7% of GNP for development assistance. NGOs also supported: the establishment of an independent fund; reduction of debt burdens; improvement of market conditions; lowering trade barriers; and cushioning the effects of deteriorating foreign exchange measures.

COOPERATION AND COORDINATION: Malaysia alleged that there was a deliberate attempt to omit the reference to international cooperation and North-South cooperation and to transfer all the responsibility for combatting desertification to developing countries. She also noted that the financial resources provisions reflected a similar sentiment, calling for the bulk of financial resources to come from those countries affected by desertification, as if international cooperation had no role to play. This point was supported by Mali, on behalf of the African Group, and Saudi Arabia, who stated that if the South could solve all the problems of desertification there would be no need for these negotiations. Malaysia added her disappointment that the debate on financial resources had resorted to finger-pointing, thus regressing from the Spirit of Rio.

Canada highlighted, in part, the importance of improved and more efficient coordination of assistance and reduction of duplication in assistance programmes. She noted that the broad factors mentioned in paragraph 109, such as trade relations and debt burden, while related to the problem of desertification, cannot be effectively resolved through the Convention. This was echoed by Belgium, on behalf of the EC, who pointed out that other fora exist that are better suited to deal with these economic factors. Canada also referred to a Canadian initiative that will prepare discussion materials on trade and sustainable development for the next session of the Commission on Sustainable Development.

Algeria stated that the achievement of the INCD goals requires a new type of North-South cooperation based on a spirit of partnership and international solidarity. Mali, on behalf of the African Group, stated that coordination should be examined at both the national and international level and that bilateral and multilateral cooperation must be improved. Australia supported this point and further suggested that governments develop other approaches such as: integrating desertification into development planning programmes; directing activities away from treating the consequences of desertification towards creating alternative strategies; developing social indicators of desertification; developing programmes to monitor impacts; and enhancing community participation in desertification programmes.

Niger suggested that paragraph 108(d) should not be limited to water resources, but must take into account all transboundary resources. Egypt suggested that mechanisms are required to institutionalize and coordinate donor resources at the national level. Burkina Faso stated that cooperation should extend beyond past efforts and appealed to all governments to honor the commitments made at Rio. He added that despite the fact that recipient countries cannot always absorb development resources properly, improvements must be made in the coordination of financial resources. He noted that the "real situation" is different from what is being described in these discussions. Mauritania stated that desertification and poverty cannot be controlled without cooperation and coordination.

After the conclusion of the discussion, the Chair asked Bob Ryan, from the Secretariat, to describe the various proposals made by governments during the last two weeks that require Secretariat action. First, regarding the proposal to conduct an inventory of regional and sub-regional institutions involved in combatting desertification, Ryan noted that the project is already underway as part of the case studies. Regarding the proposed inventory of financial mechanisms, Ryan acknowledged the need, but noted the potential difficulties in carrying out such an initiative. He stated, however, that this could be a longer-term project that could extend to the first Conference of the Parties. Finally, Ryan reported that the proposal to convene a meeting of international financial officials should be taken up by the Chair of the INCD.

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