2004 NGO-Roundtable with German Federal Minister for Economic Cooperation and Development

6 October 2004 | Minutes

German minister for economic cooperation and development, Heidemarie Wieczorek-Zeul held a now-customary meeting with NGOs. On the agenda was debt, financing of the MDGs and so-called ‘voice’ issues.

On debt, the minister put the role of debt relief into the context of the potentially larger gains to be had from changes in trade structures. She had concerns that the US proposal for 100 per cent multilateral debt cancellation could lead to a running-down of the World Bank’s lending facilities. In contrast, she welcomed the UK proposal to use new resources to fund multilateral cancellation. She believed that Germany would have to do something alongside the UK proposal.

On financing the MDGs, Ms. Wieczorek-Zeul gave her opinion on the feasibility of various proposals for innovative sources of additional finance. The Tobin tax proposal was said to be workable but lacking broad support. A tax on arms sales was “perverse” according to the minister, risking providing an incentive for increased sales to fund development. The UK’s international financing facility was, in her opinion, the most feasible. However the implications for EU members’ obligations to the stability pact had yet to be fully examined.

On so-called ‘voice’ issues, the minister, who has been a champion of these issues in the past, showed little optimism. She mentioned four proposals explicitly: an increase in basic votes to at least the levels at the time of the establishment of the Bretton Woods institutions; the institution of double majority voting to ensure that issues of broad interest to developing countries could not be overruled by a few creditor countries; changes to the capital structure; and additional chairs in the development committee for Africa. The German interest, according to Ms. Wieczorek-Zeul, is to strengthen the voice of the poorest.

Questions were raised by NGO representatives on all three issues. Soni Kapoor of the New Economics Foundation outlined a proposal to use IMF gold sales to fund IDA debt cancellation. The minister asked Kapoor to table the proposal with her advisers. In response to a question about the new Bank-Fund debt sustainability framework, the minister said that it enjoyed German support, but that there were some concerns that debt thresholds could be set too high. In response to further questioning from the New Rules for Global Finance coalition and the Bretton Woods Project on the voice issue, the minister expressed fears that changes to quotas or the composition of the board would primarily benefit emerging countries. She believed it would be “very bad” to lose the voice of the Swedes, the Dutch or the Swiss on the board. She promised to re-examine proposals on the question of leadership selection, which had been dropped from South African finance minister Trevor Manuel’s ‘roadmap’ for increasing the voice of developing countries at the institutions. The German Executive Director added that the pre-condition of political will did not exist: “there is no appetite for change”.