Daily report for 29 November 1994

COMMITTEE OF THE WHOLE

AGENDA ITEM 6.2 - INSTITUTIONAL STRUCTURE TO OPERATE THEFINANCIAL MECHANISM UNDER THE CONVENTION:

The Chair of the GEF, Mohamed T. El-Ashry, opened Tuesday’sCommittee of the Whole with an address emphasizing the urgency ofa decision from the COP on the GEF’s role as the institutionalstructure for the financial mechanism. Delegates responded withrepeated questions about the balance of decision-making authoritybetween the GEF and the COP on financial matters. Severaldelegations expressed concern over whether the COP’s authorityand priorities would be carried out by the GEF, and how the twoinstitutions’ scientific advisory bodies would interact. El-Ashrysaid the GEF is ready and waiting to serve as the permanentfinancial mechanism for the Convention. He said a significantportion of the $2 billion pledged to the new GEF was intended tofinance activities under the Biodiversity Convention. He saidthat the GEF Council had approved a two-track programme of workto develop a strategy for funding work related to biodiversity.The first track is for an overarching strategy by July 1995, andthe second is to follow interim 1995 guidelines approved by theCouncil in early November. The guidelines provide resources forenabling activities, preferential projects, and ozone phase-outin countries not eligible for funds under the Montreal Protocol.El-Ashry cautioned, however, that the GEF would not be able toallocate financial resources to biodiversity at its Januarymeeting unless it receives guidance from the COP on policies,strategies, programme priorities and eligibility criteria foractivities to be funded under the Convention. He said that theGEF Implementing Agencies have been instructed to designate an$80 million programme of work for consideration by the Council inJanuary. El-Ashry said that the restructured GEF is strivingtoward universal participation and democratic governance. Sincethe restructuring, 138 countries have joined the GEF. In supportof the GEF’s candidacy as the financial mechanism, El-Ashry alsomentioned the collaborative relationship between the GEF andSecretariats of the related conventions, and the extensivenegotiations of ICCBD-2 to designate the GEF as the interimfinancial mechanism. He also noted that the $315 million that wasallocated to 57 biodiversity projects during the GEF pilot phaseis a solid foundation for continued work under the Convention.Following El-Ashry’s speech, Austria, Brazil, Uganda, Cameroon,Malaysia and Malawi questioned whether the authority andpriorities of the COP would be reflected in financial allocationsby the GEF. Brazil said that the determination of resources wouldbe made jointly by the GEF and the Convention Secretariat, butasked how the GEF would respond to the COP’s decision on the needfor funding. Malaysia and Malawi asked if the GEF was preparedto accept the authority and supremacy of the COP under Article 21of the Convention. Cameroon asked whether other implementingagencies’ priorities might interfere with those of the COP andthe GEF. El-Ashry responded that it was the COP’s responsibilityto provide programme priorities, strategy and other policyguidance. He said that the GEF would translate the guidance intoits funding and operations, and that the GEF Council would havefinal approval of projects. Mauritania said it represents 9 ofthe poorer GEF members as a GEF Council member, and that the GEFis accountable to decisions of the COP regarding the Convention.Chile, Brazil and Kenya requested clarification on therelationship between the GEF Science and Technical Advisory Panel(STAP) and the SBSTTA. Chile asked how work would be dividedbetween the two scientific bodies. Brazil asked whether the STAPwould scrutinize the SBSTTA and said it did not believe SBSTTA’srecommendations should be reviewed by the STAP. Kenya said thatSBSTTA’s decisions should not be reviewed by the STAP. El-Ashrysaid the role of the STAP within the GEF had changed since thepilot phase, when it reviewed all projects. He said the STAPwould be smaller and more strategic in the GEF activities, andthat the GEF had no intention for the STAP to duplicate theSBSTTA’s work. Chile and Mauritius questioned El-Ashry on theneed for funds beyond the resources provided by the GEF.Mauritius asked whether the need for additional funds meant thatthe COP would have to establish an additional financialmechanism. Chile asked how the GEF would determine whatpercentage of its resources would be applied to biodiversity, andwhether particular funds would be allocated for countries witheconomies in transition. El-Ashry said there would be noearmarking for regional groups or countries with economies intransition. He said the need for additional funds could beaddressed by using GEF funding to leverage contributions fromother donors and the private sector. Slovakia, speaking onbehalf of Albania, Armenia, Belarus, the Czech Republic, Estonia,Hungary, Kazakhstan, the Slovak Republic and Romania, fullysupported the GEF as the financial mechanism. She said the GEFshould be recognized as the permanent financial mechanism. El-Ashry said that while the GEF was prepared to serve as thepermanent mechanism, the Convention permitted the COP to choose adifferent mechanism in the future if it was not satisfied withthe GEF. He said that a permanent designation was preferable,noting that it would send a signal of certainty. Since manydelegations did not have the document UNEP/CBD/COP/1/6/Add.1 inthe morning it was agreed that the Committee would consider thisissue in the afternoon. Algeria, on behalf of G-77 and China saidthat given the late distribution of the document more time wasneeded for consultation. He said the earlier discussions on theGEF were useful and noted the particular importance of Article20, especially the issue of “new and additional financialresources” for developing countries. He said the financialmechanism in every case should operate in a system of governancethat is democratic and transparent and which is  accountable tothe COP. He asked the Committee for the use of the Conferenceroom in the late afternoon so that the G-77 could consultfurther. An NGO statement was presented on behalf of a number ofNGOs. Jesper Grolin of Greenpeace Denmark, said that underArticle 21, the financial mechanism must function under theauthority and guidance of, and be accountable to, the COP. Henoted that the GEF Instrument only mentions guidance andaccountability and hence there is clearly some incompatibility onthe issue of authority. He also noted that paragraph 3 of thedraft Memorandum of Understanding (MOU) states that the decisionsof the COP shall guide the institutional structure in theoperation of the financial mechanism. In paragraph 5, the COP canonly ask the institutional structure to reconsider any fundingdecision but cannot truly exert authority over the institutionalstructure. He suggested that there were three options before theCOP: amendment of the GEF; amendment of Article 21; andestablishment of an independent funding mechanism. Germany, onbehalf of the EU, stated that the concerns of many governmentshad been alleviated by the newly restructured GEF, which is nowtransparent, democratic and consistent with Article 21. He notedthat all country parties to the Convention are now represented inthe GEF. He said that the MOU is clear and helpful except forparagraph 5.2. A quick decision on the financial mechanism wasrequested. Australia supported the GEF as the appropriatepermanent institution, especially given the possibility of reviewnot less than two years after the Convention has entered intoforce and the fact that the GEF is now fully operational withfunding for the next three years. Australia and other donors havecommitted to new and additional resource replenishment on thebasis that the GEF would be the permanent institution. She alsosupported the survey of other financial institutions as reflectedin paragraph 11 of the Secretariat document. Slovakia, on behalfof the Eastern European Group, indicated support for the EU andAustralia and called for the GEF to be designated as thepermanent institution. The US fully supported the EU andAustralia regarding the GEF as the institutional structure forthe financial mechanism. He noted that the restructuring hasensured more transparency, new and additional resources, andpredictability, not to mention the fact that the use of GEFresources are expected to be in conformity with the criteriaestablished by the COP. Austria noted that the GEF will use itsreplenished funds (for the next three years at least) regardlessof whether the COP decides to use it as the financial mechanism.He urged that efforts be directed towards defining the programmepriorities. He also noted the efforts of the GEF to draw onadditional funds from outside the GEF, such as the World Bank andother regional banks. Norway cited several reasons for supportingthe newly-structured GEF as the institutional structure for thefinancial mechanism: if the COP is to implement the Conventionquickly, this crucial part of the process must be clarified; theGEF stands a better chance at resource mobilization from othersources; and all the different players can be activated moreexpediently if this decision is settled sooner rather than later.Finland also supported the EU and said that this COP should takea first step forward in implementing the Convention and that theselection of the GEF would be a move in the right direction.Japan also supported the GEF as the permanent financialinstitution, but urged against any hasty decisions in thisregard, calling for more detailed discussions. New Zealandsupported Australia, the EU and Norway and reminded delegates ofits original reservations about the GEF during the pilot phase.However, New Zealand fully supported adoption of the restructuredGEF as the institutional structure noting its full accordancewith Article 21 of the Convention. He noted the role of the GEFin ensuring the effective functioning of the Convention. On thequestion of arrangements of the financial mechanism, he welcomedthe Secretariat’s MOU as a good basis for future discussions.Sweden highlighted the fact that the longer uncertainty lingersabout use of the GEF, the harder it will be to build broad-basedsupport to mobilizing funds for any further replenishment of theGEF. He noted the lengthy and difficult process of restructuring,as well as the replenishment of the GEF’s $ 2 billion budget.Further replenishment will be difficult as long as the GEF’sfuture vis--vis the Convention remains uncertain. He noted thatattempts to develop alternatives to the GEF are not viable.

UP FROM THE BEACH

NGOs have been busy formulating their positions on several of thekey issues before the COP, as well as on those issues that theyfeel should indeed be addressed. NGOs want the issue of theBiosafety protocol to be included within the medium-termprogramme of work of the COP. Specifically, they would like anintersessional meeting to address this issue. As well, NGOs areconcerned about the gap between developed and developingcountries on this issue. They have noted that some countries whofavor a protocol, do so only on the condition that it apply onlyto the transport, and not the production of living-modifiedorganisms. Some NGOs are also promoting the idea of a forestsprotocol to be negotiated under the aegis of the BiodiversityConvention. NGOs list several reasons for this approach: forestsrepresent over 60% of all biodiversity; a protocol could dealeffectively with conservation and protection as well assustainable use; a separate negotiating track would take far toolong; FAO does not necessarily possess the forest conservationexpertise needed; and a forest protocol would in no way precludethe possible negotiation of a separate framework convention inthe future, if such an instrument was indeed needed.

THINGS TO LOOK FOR TODAY

COMMITTEE OF THE WHOLE: The Committee of the Whole will continuein the morning with its discussion of Agenda item 6.1 (Policy,strategy, programme priorities and eligibility criteria regardingaccess to and utilization of financial resources), 6.2(Institutional structure to operate the financial mechanism underthe Convention), and 6.3 (List of developed country Parties andother Parties which voluntarily assume the obligations ofdeveloped country Parties). It is expected that the Committee ofthe Whole will take up agenda item 9 (Medium-term programme ofwork of the COP) in the afternoon.

WESTERN CANADA WILDERNESS COMMITTEE: Biodiversity Destruction inCanada’s Temperate Rainforests - Second showing of the slideshowpresentation 12:00 - 1:00 pm in the Eleuthra Room, Crystal PalaceHotel.

CONSERVATION INTERNATIONAL: Topic to be confirmed from 10.00am - 12:00 pm at the Eleuthra Room, Crystal Palace Hotel.

GREENPEACE: Consideration of the merits of a forest protocolunder the CBD from 1:00 - 2:45 pm at the Cat Island Room, CrystalPalace Hotel.

LATIN AMERICAN GROUP: The Miami Summit from 3:00 - 4.00 pm inthe Eleuthra Room.

GOVERNMENT OF THE UK: Meeting and Discussion with UK NGOs from6:00 -8:00 pm at the Eleuthra Room, Crystal Palace Hotel.