Report No. 13 to the Storting (2008-2009)

Climate, Conflict and Capital— Norwegian development policy adapting to change

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Summary

Climate change and violent conflicts are making the fight against poverty harder. Capital flows are more difficult to control. The eyes of the world are on these challenges. This creates opportunities for a Norwegian development policy that takes a strategic approach to climate change, conflict and capital, which are key factors affecting development and the fight against poverty. Norway can add value in the global efforts to address these issues.

Although the world’s rich and poor are becoming increasingly intertwined in a complex global economy, the goods remain unevenly distributed. Norwegian development policy is designed to challenge the unequal distribution of power within and between countries, as well as the conditions that underpin injustice, oppression and discrimination – at every level. A principal task of Norwegian development policy is to help countries gain control over their own development, and to help individuals gain control over their own lives. Our efforts are based on solidarity. The fight against poverty, our commitment to the UN Millennium Development Goals and the belief in a UN-led world order stand firm. We pursue a rights-based development policy that aims to assist states fulfil their obligations and enable individuals to claim their rights.

Through its development policy, Norway influences factors that promote or impede development. Norway has already initiated targeted efforts in key areas such as good governance, human rights, education, health, and gender equality. The results of Norwegian aid are good, but aid is just one of several development policy tools. In order to respond adequately to complex challenges, we have to use a range of other tools as well. We need to make active use of aid and diplomacy in a mutually reinforcing way. In Norway, foreign policy and development policy have already become more closely linked, but there are a number of other policy areas that also have significance for developing countries. Thus, it is necessary to view domestic policy and our development policy more coherently.

National action and global constraints

A national development process cannot be engineered by external actors. This white paper examines national opportunities, as well as the responsibility individual developing countries have for shaping their own future. There are three elements that the Government considers crucial for development: a functioning state, an active civil society, and a viable private sector. Developing countries must make their own choices and set their own priorities regarding the development of social services, democracy and policies for promoting employment and economic growth. Norway can support these processes by providing funding and expertise.

Every nation state operates within global framework conditions. Our development policy contributes towards ensuring that global organisations and processes have a clear development perspective that can expand room for action at national level where necessary, for example by promoting better terms of trade or better access to loans and capital. At the same time, binding international agreements, such as the international human rights conventions, are designed to strengthen the position of individuals.

The major global challenges cannot be addressed by any one country on its own. They can only be addressed through closer international cooperation and a better global order. This white paper employs the term «global public goods» to describe a number of conditions that are essential for development, such as a stable climate, international peace and security, control over infectious diseases, and a well-functioning global financial system. The global nature of these goods makes it difficult to apportion responsibility and costs for strengthening and securing them.

Norway will promote the development of an international policy for strengthening global public goods that includes strategies for funding and for the redistribution of power. This raises questions about the use of aid for such purposes that need to be clarified. Many measures, such as those employed in the fight against malaria, serve both to strengthen global public goods and to promote national development. Such measures can be funded through the aid budget. Others, such as capital injections to stabilise the international financial market, cannot be considered aid, even though they too are important for poor countries.

In this white paper, the Government advocates the development of an international system for identifying, and maintaining an overview of, the various countries’ contributions to the funding of global public goods. This would help to increase political focus on the need for funding.

Climate change

Climate change is making the existing obstacles to eradicating poverty even greater. Without an international effort to assist developing countries in adapting to climate change, global poverty will increase. This is primarily a matter of reducing poor countries’ vulnerability to the impacts of climate change. Norway’s efforts in the fight against poverty will also seek to address the problems caused by climate change. In order to be robust, environmental policy – in both rich and poor countries – must be linked to an economic policy that promotes employment and growth in income and production. The establishment of a ministerial post whose portfolio includes both environment and development has made it easier to ensure coherence and coordination across policy areas.

We will gradually see a substantial rise in greenhouse gas emissions from the major emerging economies. Rapid population growth will exacerbate the situation. But it is primarily the rich part of the world that must shoulder responsibility for climate change and address its impacts by demonstrating that climate-friendly economic growth is possible. Recognition of this fact, combined with emission cuts at home and effective support for economic growth in poor countries, will provide the foundation for a global climate policy that includes all the countries of the world.

The scale and speed of climate change make it imperative for the international community to reach early agreement on a common agenda, but with varying forms of action. Poor countries with far lower emissions levels than ours will not be willing to sacrifice their own economic growth for the sake of the global fight against climate change. This is why Norway and other rich countries must implement concrete measures that make it attractive for partner countries to choose climate-friendly development options.

The Government of Norway’s International Climate and Forest Initiative

Through its climate and forest initiative, Norway has taken a leading role internationally in protecting tropical forests. This initiative is part of overall efforts to secure global public goods. It is playing an important catalytic role by encouraging multilateral organisations and other countries to take part in urgently needed global action to prevent climate change. The initiative is designed both to facilitate the inclusion of emissions from deforestation and forest degradation in a new global climate regime and to support national development processes. Projects under this initiative must promote sustainable use and conservation of tropical forests. They must improve the living conditions of indigenous peoples and safeguard their rights, protect biodiversity, and reduce global emissions of greenhouse gases. The Government has therefore decided to use funds allocated over the aid budget for projects under this initiative, in cooperation with the recipient countries.

Conflict

Most of the armed conflicts in the world today take place in poor countries. Poverty in itself is not a cause of conflict, but the majority of armed conflicts are to be found in the poorest parts of the world. Efforts to resolve conflicts and build peace also help to combat poverty and to pave the way for development.

Armed conflicts entail security policy challenges that extend to areas and populations far beyond those that are directly affected. Neighbouring countries and whole regions can be destabilised and, at worst, drawn directly into the conflict. Some conflicts can have global repercussions.

The civilian suffering caused by armed conflict is enormous, and women and children are especially vulnerable to abuse and sexual violence. The objective of humanitarian efforts is to save lives and relieve suffering. The current situation where civilian personnel are increasingly regarded as targets on a par with military personnel is creating new dilemmas. The UN is the international actor that has made most progress in developing an integrated approach to peacebuilding. Peace and reconciliation efforts are based on respect for and promotion of human rights. The Government will continue to give priority to efforts in fragile states.

Capital

As a result of rapid growth in the world economy, the total gross national income of developing countries has doubled over the last five years. This has had positive ripple effects in the form of reduced poverty and higher living standards for millions of people. However, the financial crisis and the global downturn will lead to serious setbacks in the fight against poverty. It is not possible to foresee the full consequences of this.

Developing countries must be given greater access to global capital, better opportunities for value creation, and more control over their own economic resources. The Government will intensify efforts to support such developments, for example by stimulating trade, promoting investment and facilitating remittance transfers from migrants. At the same time, it is important to combat illicit financial flows from developing countries, which are estimated to total as much as NOK 4000 billion a year. The fight against tax havens will be a key element in these efforts.

Aid is an important source of funding for development. Aid is unique in that it is a source of funding that both donors and recipients have control over, and can thus be administered strategically. The Government will use aid tactically as a development policy tool to mobilise other resources, and to influence national and local development processes. Aid is also an important factor in various international contexts, and can be used to influence international framework conditions for development in poor countries.

Migration and development

The Government will highlight the development policy aspects of migration. Migrants send large sums of money back to their countries of origin – amounting to nearly three times as much as total global aid. And migrants who return to their home countries take back valuable work experience and skills. On the other hand, the need for qualified workers in Western countries has led to a loss of vital resources in many developing countries in what is known as the brain drain. Migration is expected to become increasingly significant for development in the future. Norway intends to play a proactive role in efforts to establish an international framework for ethical recruitment of health workers from developing countries. The Government will seek to facilitate better systems for remittance transfers by migrants to their home countries. The Government also intends to involve migrant communities more closely in development cooperation.

Consequences

With a view to taking a more strategic approach to development, Norway will focus on the comparative advantages of the various channels for providing aid and on ways to ensure that our policy produces the best possible results. Pursuing all our development policy goals through all the channels available is neither strategic nor effective.

Norwegian aid constitutes only 4 per cent of total international aid. It is important to see our efforts in the context of contributions made by other donors. In order to increase the overall effectiveness of global aid, it is vital to ensure a good division of labour between the various actors. This will have consequences for Norway’s policy, such as:

  • In sectors where many donors are already involved, and Norway does not have special expertise that is in demand, Norwegian aid will primarily be channelled through multilateral organisations. This applies in particular to sectors such as health and education, and to parts of other sectors such as governance, agriculture and general capacity and institution building. The shift towards multilateral channels does not mean that these sectors have lower priority. The total Norwegian aid to these sectors will be maintained at least at the 2008 level.

  • Bilateral aid, primarily government-to-government, will be increasingly focused on areas where Norway has recognised expertise. Norwegian support must be requested by, and provide added value for, the partner country. Relevant sectors include climate, the environment, sustainable development, peacebuilding, human rights and humanitarian assistance, oil and clean energy, women and gender equality, good governance and the fight against corruption.

  • Norway will move issues of significant political priority higher up on the agenda by providing funding to, and participating actively on the governing boards of, multilateral organisations. This applies in particular to climate policy and Norway’s climate and forest initiative, various peace initiatives, gender equality, management of non-renewable resources, and efforts to combat illicit financial flows.

  • The gradual shift in focus to countries that are emerging from armed conflict, and to countries that are facing particular challenges relating to climate change, will continue. This applies to all channels for Norwegian aid.

  • Environment and climate change is the sector where funding will increase most in the future.

Towards a more coherent, development-friendly Norwegian policy

In 2006, the Government appointed the Norwegian Policy Coherence Commission to examine the practical political opportunities for achieving greater policy coherence in relation to international development. In its report Coherent for development? (NOU 2008:14), the Commission examines Norwegian policy in a number of different areas, including trade, investment, financing for development, climate and energy, migration, transfer of knowledge and technology, and peace, security and defence. The report sets out several proposals for bringing Norwegian policy as a whole into line with Norway’s development objectives. The committee was divided on many issues. This shows just how challenging the ambition of achieving greater policy coherence is.

The report, together with responses from the round of consultations on this document, forms part of the background material for this white paper. The Government has already initiated and implemented measures in several of the areas covered by the report, and new measures have been proposed for other areas. The very broad approach of the report means that it is relevant not only for this white paper, but also for a number of other ongoing processes. The task of making Norway’s overall policy more development-friendly is a difficult and long-term process. The white paper proposes the establishment of a system of annual reporting on the coherence between Norway’s domestic and development policy. This would create a framework for further discussion of the proposals put forward by the Policy Coherence Commission and of other important issues that can increase coherence in the years ahead.

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