The United States has officially withdrawn from the four-day Financing for Development conference held in Seville, Spain, after rejecting a 38-page outcome document negotiated by the United Nations’ 193 member nations. Issuing this proposal will impede global efforts to end extreme poverty. It jeopardizes the potential for long-term, sustainable economic development in poor countries.
The U.S. is withdrawing while major changes in foreign aid policy are occurring here at home under the Trump administration. This administration has disassembled the U.S. Agency for International Development and eviscerated foreign assistance funding. The United States is by far the largest single donor of foreign aid in the world. Its contributions are critical to its ability to move the needle on international development initiatives. Its recent actions raise concerns about the future of such collaborative efforts.
This year, low- and middle-income countries are on track to spend $947 billion just servicing their debts. Alarmingly, more than 3.3 billion people reside in countries where debt service payments outstrip government spending on health and education. This figure is projected to increase to 3.4 billion as other nations feel the effects of economic pressure.
The scrubbed outcome document showed some promising proposals at the center of negotiations. It called for a new minimum tax revenue floor of 15% of each country’s gross domestic product and proposed tripling the annual lending of multilateral development banks. It called for multiplying private finance by creating inducements for investment in essential public goods like infrastructure.
The U.S. did make its mark by opposing various aspects of the document. They particularly took issue with the provisions on trade, tax, and innovation that run counter to their policy desires. At the U.S.’s insistence, a U.N. framework convention on international tax cooperation was rejected this summer. This latest step just adds to the landscape of confusion around collaboration.
U.N. Secretary-General Antonio Guterres emphasized the urgency of the situation, stating, “Financing is the engine of development. And right now, this engine is sputtering.” He called for a renewed commitment to international cooperation and expressed hope that the Seville conference would serve as a catalyst to “repair and rev up the engine of development to accelerate investment at the scale and speed required.”
U.N. Deputy Secretary-General Amina Mohammed echoed this sentiment, highlighting the importance of continued engagement with the U.S. in pursuing many of the conference’s recommendations: “Many of the recommendations you see cannot be pursued without a continuous engagement with the U.S.”
American diplomat Jonathan Shrier reaffirmed that despite the withdrawal, “Our commitment to international cooperation and long-term economic development remains steadfast.” He admitted that the proposed text goes beyond most if not all of our red lines. That means that disagreements on the direction of policy should not prevent working together in the future.
The global development financing gap is steep. Indeed, it is an estimated $4 trillion annually. This underscores the critical importance of a robust international financial architecture to support developing countries. Yet, as U.N. trade chief Rebeca Grynspan recently warned, development is going in reverse. This declaration further emphasizes the increasing alarm that world leaders are feeling toward the plight of low-income countries.
