April 22, 2002

The Center for Latin American Issues

Presents

The Monterrey Summit:
Achievements and Implications for the Americas

A panel discussion and luncheon to consider the accomplishments of the
International Conference on Financing for Development, Monterrey, Mexico

Luncheon Keynote Speaker:
The Honorable John Maisto
Special Assistant to the President
and Senior Director for Western Hemisphere Affairs,
National Security Council

P A N E L I S T S

 
Moderator: Mr. Euric Bobb
Chief of the Office of the Presidency,
Inter-American Development Bank

 
Some fifty heads of state and government leaders, as well as diplomats, environmentalists, labor representatives, and NGO officials attended the March 18-22 Monterrey Summit on Financing for Development at the Inter-American Development Bank. A follow-up commitment to the UN’s Millennium Summit in 2000, the Monterrey conference focused on official development aid and other means of helping poor nations.
 

The Monterrey Summit Colloquium panelists: Ambassador Lionel A. Hurst, Mr. Shaun Donnelly, Mr. Euric A. Bobb, Mr. Adolfo A. Franco, and Minister Mario Chacón (seated left to right).

The U.S. view of the Monterrey Summit was given by Adolfo A. Franco, Assistant Administrator for Latin America and the Caribbean of the U.S. Agency for International Development, and by Shaun Donnelly, Principal Deputy Assistant Secretary of State for Economic and Business Affairs at the U.S. State Department. In a speech at the Inter-American Development Bank on March 14, President Bush had called the fight against poverty a moral imperative and made it a U.S. foreign policy priority. Bush proposed a new compact for global development, which increases the accountability of both the developed and the developing countries. The president announced also that the U.S. will increase its core development assistance by 50% over the next three years, a $5 billion annual increase over current levels. These additional funds will be set aside in a new Millennium Challenge Account that will fund programs for improving the economies and the standards of living of developing countries.
 
Franco noted that one result of the Monterrey Summit was that the industrialized countries have committed to increase their official development assistance, provided that recipients foster the environment necessary for the aid to be successful. Thus, financial aid will be linked to sound policies. Franco outlined the commitments countries must demonstrate in order to receive the funds. First, recipient countries must have good governance, rooting out corruption, upholding human rights and adhering to the rule of law, all of which are essential conditions for successful development. Second, countries must promote the health and education of their peoples, investing in schools, health care, and immunization to provide for healthy, educated citizens who become agents of development. Third, countries must follow sound economic policies that foster enterprise and entrepreneurship, opening markets, adopting sustainable budget policies, and supporting development to unleash the enterprise and creativity of their peoples for lasting growth and prosperity.
 
Franco stated also that private capital is the key to development. The World Bank reports that countries that are integrated into the world economy grow substantially faster than those that are not. Again, sound policies are necessary: the evidence shows that where nations adopt sound policies, a dollar of foreign aid attracts $2 of private investment.
 
Donnelly said that the U.S. is pleased with the results of the Monterrey Summit, which laid a good basis for, and fits thematically with, upcoming meetings on trade, health, agriculture and sustainable development, all of which are intricately linked. A new vision of financial development emerged from the Monterrey conference. The consensus does not focus merely on development, but envisions a broader partnership in which all segments of society – governments, the private sector, environmental groups, labor unions, NGOs – will play a role in development.
 
Financial development has two sides. On the one hand, there is official multilateral and bilateral aid. Both donors and recipients will have more responsibility, the donors measuring success and results, and the recipients providing good government, improving the health and education of their citizens, and following sound macroeconomic policies. On the other hand, exports, direct and portfolio investment, and remittances are essential for economic development. Again, these development components are contingent on sound economic policies.
 
For its part, the U.S., with its new Millennium Challenge Account, is committed, among other things, to expand the fight against AIDS, to bring computer instruction to young professionals in developing nations, to assist African businesses and their people to sell goods abroad, to provide textbooks and training to students in Islamic and African countries, and to apply the power of science and technology to increase harvests where hunger is greatest. The goal is to provide developing nations the tools they need to seize the opportunities of the global economy.
 

Mr. Adolfo A. Franco (on the right), USAID, speaks on the U.S.’s perspective of the outcomes of the Monterrey Summit Also pictured, Mr. Euric Bobb, IDB.	Mr. Shaun Donnelly, U.S. Department of State, explains the new vision that resulted from the Summit.

Lionel A. Hurst, Permanent Representative of Antigua and Barbuda to the White House and to the Organization of American States, discussed the Monterrey Summit from the perspective of small countries. He noted that, since 1992, inadequate resources have been committed to combating poverty. Capital is to development what air is to health, and developing countries must import large quantities of capital in order to grow. But, unfortunately, most developing countries are net exporters of capital. Thus, Monterrey was of great importance to the Caribbean countries because of the increased resources that will be provided them. Hurst is pleased that the U.S. has increased its financial aid contributions and that the Monterrey Summit made special considerations for small states.
 
Hurst offered Antigua and Barbuda as an example of what can happen when a developing country receives sufficient official assistance. Antigua and Barbuda’s illiteracy has been eliminated; in the last three decades, its per capita income has increased by 30 times, from $350 per capita per year to nearly $10,000; and infant mortality is down to U.S. levels. Hurst agues that Haiti is a continuing problem and that, if the country receives the massive assistance it requires, it can experience the same positive results as did Antigua and Barbuda.
 
In his closing remarks, Hurst emphasized the importance of energy. Energy is to development what oxygen is to life itself. Some 200 million people in the Americas earn less than $1 per day. Hurst argued that there are not enough fossil fuels in the world to provide the energy needed to propel 200 million people out of poverty. Thus, if Monterrey is to deliver on its goal to reduce poverty, enormous resources must be dedicated to finding alternative energy sources.
 

Ambassador Lionel A. Hurst, Antigua and Barbuda, voices his concerns for the smaller nations of the region.

The Mexican government, the host of the Monterrey Summit, views the conference as a tremendous achievement, said Mario Chacón, Deputy Chief of Mission of the Mexican Embassy to the U.S. The Summit organizers tried hard to avoid having a typical North-South confrontation at the event. They attempted to foster an environment in which all parties could work together to find common solutions. In this regard, the Summit was highly successful.
 
A consensus emerged from the Monterrey Summit. For the first time, rich, poor, and emerging countries accepted a rule of conduct. Recipients of official aid must reform economically, socially, and politically. They must follow the rule of law, fight corruption, and respect human rights, as well as manage their budgets responsibly, fight inflation, and operate with financial transparency. In addition to providing increased official development assistance, donor countries must also help through trade, avoiding subsidies and promoting direct investments in productive areas.
 
For Chacón, Monterrey is part of a process that must continue; especially its emphasis on a country’s developing through self-reliance and making better use of its own and others’ resources. Chacón cited Mexico as an example of the success that can be achieved through sound policy and self-reliance. In addition to its participation in NAFTA, Mexico has free trade agreements with thirty-one countries. Mexico has also pursued tough public finance policies, improving its tax collection and budgeting its resources responsibly. Finally, the country continues to strengthen its democratic institutions. Mexico’s free trade relationships, sound fiscal policies, and democracy building have combined to foster growing prosperity in the country.
 
  

Minister Mario Chacón, Mexico, addresses his country’s concerns after the Monterrey Summit.

 
At the luncheon that followed the morning panel discussion, Ambassador John Maisto, Special Assistant to the President and Senior Director for Western Hemisphere Affairs of the National Security Council, addressed the issue of U.S.-Latin American relations in broad terms, with specific reference to the Monterrey Summit. Following the presentation, there was an extensive exchange of questions and answers. Per our agreement with Amb. Maisto, his comments were off the record.
 

Ambassador John F. Maisto, National Security Council, poses with Dr. James Ferrer, Jr., CLAI, after being named a Fellow of the Center.