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AGENDA ITEM 6.2 — INSTITUTIONAL STRUCTURE TO OPERATE THE FINANCIAL MECHANISM UNDER THE CONVENTION (UNEP/CBD/COP/1/6)
The COP examined the Secretariat’s document, which contains a non-exhaustive list of elements based on the decisions of the ICCBD. The Chair of the GEF, Mohamed T. El-Ashry, addressed the Committee of the Whole, emphasizing the urgency of a decision from the COP on the GEF’s role as the institutional structure for the financial mechanism. El-Ashry said a significant portion of the US $2 billion pledged to the new GEF was intended to finance activities under the Biodiversity Convention. He said that the GEF Council had approved a two-track programme for funding work related to biodiversity. The first track is for an overarching strategy by July 1995, and the second is to follow interim 1995 guidelines approved by the Council in early November. He cautioned, however, that the GEF would not be able to allocate financial resources to biodiversity at its January meeting unless it receives guidance from the COP on policies, strategies, programme priorities and eligibility criteria for activities to be funded under the Convention. He said that the GEF Implementing Agencies have been instructed to designate an $80 million programme of work for consideration by the Council in January. He noted that the restructured GEF is striving toward universal participation and democratic governance and, since the restructuring, 138 countries have joined the GEF. In support of the GEF’s candidacy as the financial mechanism, he also mentioned the collaborative relationship between the GEF and Secretariats of the related conventions, and the extensive negotiations of ICCBD-II to designate the GEF as the interim financial mechanism. He noted that the $315 million that was allocated to 57 biodiversity projects during the GEF pilot phase is a solid foundation for continued work under the Convention. Following El- Ashry’s speech, several delegations expressed concern over whether the authority and priorities of the COP would be carried out by the GEF. Malaysia , Mauritius, and Malawi asked if the GEF was prepared to accept the authority and supremacy of the COP under Article 21 of the Convention. El-Ashry said that it was the COP’s responsibility to provide programme priorities, strategy and policy guidance and that the GEF would translate that guidance into its funding decisions and operations, with the GEF Council retaining the final approval of projects. Mauritania said it was a GEF Council member representing nine of the poorer members, and that the GEF is accountable to decisions of the COP regarding the Convention. Chile, Brazil and Kenya requested clarification on the relationship between the GEF Science and Technical Advisory Panel (STAP) and the SBSTTA. El-Ashry said the role of the STAP within the GEF had changed since the pilot phase and it would avoid duplicating SBSTTA’s work. Chile asked how the GEF would determine what percentage of its resources would be applied to biodiversity, and whether particular funds would be allocated for countries with economies in transition. El-Ashry said there would be no earmarking for regional groups or countries with economies in transition. He said the need for additional funds could be addressed by using GEF funding to leverage contributions from other donors and the private sector. Slovakia, speaking on behalf of Albania, Armenia, Belarus, the Czech Republic, Estonia, Hungary, Kazakhstan, the Slovak Republic and Romania, fully supported the GEF as the permanent financial mechanism. In concluding, El-Ashry said that a permanent designation was preferable, as it would send a signal of certainty. A statement, which was presented on behalf of a number of NGOs, noted that the financial mechanism must function under the authority and guidance of, and be accountable to, the COP. It was pointed out that the GEF Instrument only mentions guidance and accountability and hence there is clearly some incompatibility on the issue of authority. The World Resources Institute, which was not associated with the earlier NGO statement, said that the restructured GEF still needed improvement in its reponsiveness to the Convention, but the COP should move forward with the GEF, as rejection could lead to a loss of already committed funds. Germany, on behalf of the EU, stated that the concerns of many governments had been alleviated by the newly restructured GEF. He noted that all country Parties to the Convention are now represented in the GEF. A quick decision on the financial mechanism was requested. Australia supported the GEF as the appropriate permanent institution, especially given the possibility of review not less than two years after the Convention has entered into force and the fact that the GEF is now fully operational with funding for the next three years. The US supported the GEF as the institutional structure for the financial mechanism. Austria noted that the GEF will use its replenished funds (for the next three years at least) regardless of whether the COP decides to use it as the financial mechanism. He urged that efforts be directed towards defining the programme priorities. Norway cited several reasons for supporting the newly-structured GEF as the institutional structure for the financial mechanism: if the COP is to implement the Convention quickly, this crucial part of the process must be clarified; the GEF stands a better chance at resource mobilization from other sources; and all the different players can be activated more expediently if this decision is settled sooner rather than later. Japan also supported the GEF as the permanent financial institution, but urged against any hasty decisions in this regard. After extensive consultations on document UNEP/CBD/COP/ 1/6/Add.1, Algeria, on behalf of the G-77 and China, recommended the GEF as the interim, rather than the permanent institutional structure. In a contentious debate, a number of developing countries strongly supported the G-77 position, while most developed countries opposed it. Brazil said that even though it is a member of the GEF Council, membership in that body, which also has non-Parties to the Convention, poses insurmountable difficulties. India said the structure of the financial mechanism is too uncertain and ambiguous to effectively serve the Convention. South Africa called for clear norms and standards for distributing funds without the political interference that characterized past GEF projects. Germany, on behalf of the EU, said it was disappointed in the G-77 and China proposal and had hoped that uncertainty over the financial mechanism would be replaced by certainty regarding the predictability of the flow of funds. He said the Convention had no provisions for: multiple institutional structures for a financial mechanism; new sources of funding; and an additional trust fund. He recommended that the Secretariat survey the availability of funds from existing institutions. Austria said that the COP was preparing to send a signal of hesitation, distrust and dogmatism, that the goodwill of donor countries might be weakened, and that the COP was engaging in an act of “self-mutilation.” Malaysia, speaking in support of the G-77 and China, objected to the threat that the replenishment of funds is contingent on selection of the GEF as the permanent mechanism. Algeria, on behalf of G-77 and China, circulated the draft decision on financial resources and a financial mechanism contained in UNEP/CBD/COP/1/CW/L.1. The draft decision called for: the adoption of the programme priorities for access to and utilization of financial resources and the list of developed country Parties in Annex I; designation of the restructured GEF as the interim institutional structure for a financial mechanism; authorization of the Interim Secretariat to sign the Memorandum of Understanding (MOU) with the GEF; a study by the Secretariat for COP-II on modalities for the establishment of the financial mechanism and a second study on the establishment of a Biodiversity Fund and on the mobilization of new and additional resources for the Fund; and a review of financial resources and the interim arrangements of the financial mechanism be addressed by COP-II. An open-ended contact group chaired by Antigua and Barbuda addressed outstanding issues on this agenda item. (See page 7.)