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Wednesday's discussions focussed on Agenda Item 7 and the Secretariat's documents on finance, E/CN.17/1993/11 and Add.1. Under-Secretary-General Desai said that negotiations leading up to Rio were taken up greatly by this item, and that in concrete terms, not enough had been done. He thought that if this meeting ended and we found ourselves in the same place as before on commitments, then implementation of Agenda 21 is in trouble. The CSD must define its relationship with the financial institutions.

Mohamed El-Ashry, Chair of the Global Environmental Facility, then briefed the Commission. He said the process of restructuring the GEF was launched last December in Abidjan where the principle of universal membership was endorsed. The governments then made progress in May in Beijing on the replenishment of the GEF. Donors said that they intended to decide by December 1993 on contributions to the core fund, provided that the restructuring of the facility is agreed upon by that time. There was consensus on the broad institutional framework for the restructured GEF and reaffirmation of a continuing role for the World Bank, UNEP and UNDP. Outstanding issues yet to be resolved are precise mechanics of the voting system, institutional arrangements, and the arrangements for the Secretariat.

El-Ashry responded to a question from Egypt that the Scientific Technical Advisory Panel (STAP) will evolve with the GEF, taking into account other advisory boards that may be set up. US$1.3 billion was the amount of the pilot phase and $2.4 billion is the amount for the next phase. A double majority system of voting would come into play only when consensus could not be reached. The Russian Federation asked if there is an intention to implement the status of economies in transition with the GEF, and did the GEF issue invitations to countries to join. El-Ashry replied that any country could join, and that an invitation had been sent to the Russian Federation to participate in the Beijing meeting.

India was concerned with linkages between the GEF and Agenda 21. El-Ashry replied that the GEF is only one of the financial mechanisms for environment and development. Uruguay wanted to know about the legal procedures and what the best relationship the governments could have with the GEF. El-Ashry said that in Abidjan the legal status of the GEF after the pilot phase had been discussed, and the restructured GEF would be created by resolutions adopted by the governing boards of the World Bank, UNEP and UNDP.

Poland asked about flexibility of resources in relation to the provisions of the conventions. El-Ashry replied that it was hard to say, since now there is only a concentration on programme. In response to Vanuatu, El-Ashry said that the GEF should have a clear mandate to deal with the global environmental conventions.

Mexico said that records and reports are a two-way street between the GEF and the CSD. Bolivia asked what is the practical procedure for becoming a member of the Participants Assembly. El-Ashry said everyone is welcome. Cuba shared India's concern about the scope of the facility. El-Ashry said that there was a narrow mandate because there are other funding institutions and facilities.

Canada asked if GEF funds actually sponsor work done in other entities. El-Ashry stated that GEF funds sponsor only the programme of the GEF. Benin wanted to know about possible inequities in the voting of the Participants Assembly. It was explained that there is no final decision on what the constituencies look like. Malaysia asked about linkages between the Montreal Protocol and the GEF. El-Ashry said that many countries did not qualify under the Montreal Protocol fund because the cut-off point related to either production or consumption, and that those countries would then qualify for GEF funding.

Morocco had a question about the criticism by NGOs of projects that might be funded. El-Ashry replied that GEF has a good relationship with NGOs, that there has been much criticism of projects from many places and some is justified and some not. Finland asked about the tripartite role of the partners and the importance of the small grants programme for NGOs. El-Ashry said that the role of the partners is important for the future.

Razali then opened the floor for consideration of agenda item 7. As no government wanted to take the floor, NGOs were invited to speak. Horace Levy, from the NGO Finance Working Group, asked governments where the financial resources needed to implement Agenda 21 will come from, who will decide how the resources will be used, and who will be the beneficiaries. Martin Khor from Third World Network spoke about the partnership of Northern and Southern NGOs stemming from Rio. The issue is not aid, but finance and the flow of resources from South to North that must be reduced. There is no value on the raw genetic material of the South, while Northern resources are protected.

Austria shared in the sense of frustration with the sober analysis of financial flows. If projects are presented in a convincing manner and in a solid institutional framework they will find the necessary funding. Austria wanted to know about the real function of ad hoc groups and warned against a proliferation of groups. Pakistan discussed the diversion of resources to new recipients apart from developing countries; the reverse flow of nearly US$50 billion from South to North in debt payments; conclusion of the Uruguay Round of GATT; commodity pricing; and GEF restructuring. He supported the creation of ad hoc working groups if their objective will be to optimize resources and the identification of mechanisms for financing Agenda 21.

Uruguay stressed the importance of the relationship between the CSD and other international trade and financial institutions. He emphasized the need to come to grips with practical needs at the national level. Malaysia said that the universal assessment of the outcome of Rio is a shortfall in financing. He mentioned the possibility of devoting 1% of military expenditure to the UN for environmental protection and stressed that financial flows cannot be divorced from the broad macroeconomic structure.

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