UN conference looks at better ways to flow funds

A dirt-poor Brazilian farmer could improve his lot in life if he had access to far-off markets to sell his tiny melon crop. But he lacks the capital and can't get financing to ship his fruit to potential buyers.

A third world country is drowning in debt, but rich nations won't refinance loans after corrupt leaders funneled previous aid into their own pockets.

A multinational energy conglomerate sees opportunity in a development project that would benefit millions, but the country in question bars private investment in the energy sector.

President George W. Bush and 57 other world leaders gather this week in Monterrey, Mexico, at the United Nations Conference on Financing for Development, to consider solutions to just such scenarios.

Representatives from both rich and poor nations are meeting with the world's most successful business leaders to find ways to make the world's wealth flow more smoothly and fairly. Organizers say this conference marks an unprecedented level of participation by the private sector.

"The private sector is much better qualified to create jobs than governments," said businessman George Soros in an address on Monday. But it will be up to governments of developing nations, he added, to set the conditions that would encourage private investors to come.

"This is not just another UN conference," says Ruth Jacoby, a Swedish diplomat to the United Nations and a senior delegate at the Monterrey meeting. "This conference is not about aid."

This, say organizers, marks a change from typical aid conferences where donor-nations pledge large sums of money that often go unpaid.

Conference officials admit privately that aid alone is not enough to bring real development to the world's poorest nations. Or put another way, there will simply never be enough aid given out.

The reason is "donor fatigue." Representatives of rich nations say they are tired of handing out multi-million-dollar rescue packages where 70 percent goes to cover either administrative costs or into the pockets of corrupt leaders.

Organizers say the meat of the conference will probably come, from side meetings of private business leaders and world financiers. Those side meetings, lasting through the week, will consider proposals that would aid development, such as the reduction of punitive tariffs and the opening up of nationalized industries, which are currently blocked by governmental, logistical, or trade-related barriers.

"We are taking what is ultimately a very practical approach," says Paul Underwood, executive director of the Business Council for the UN. Mr. Underwood says his group spent months asking investors what it would take to get more private funds flowing to these regions.

"There is a whole realization among the business people that this search for development coincides with investment," Mr. Underwood says. "It is opposite sides of the same coin."

The other major theme of the conference is corruption – seen as one of the biggest bugbears to both private investment and development aid.

Rich nations are routinely castigated by poor ones for tying aid to political principles or for requiring recipients to use companies or aid groups from the donor nation. Conference organizers want to work toward breaking such binds and giving recipient nations more flexibility. They also hope to pressure developing-world leaders into increased efforts at combating corruption.

Lead delegates from poor nations say this may be the first world summit of this level where representatives from rich and poor nations have equal say. "If [rich countries] want to help us put an end to corruption," says Pakistani delegate Shamshad Ahmad, "they can start by returning all the money stolen by corrupt leaders and stored in first-world bank accounts."

That the conference is taking place in prosperous Monterrey is no accident. The city blossomed from an industrial outpost when the North American Free Trade Agreement was signed in 1994 to one of the richest, most well-educated places in all of Latin America, thanks entirely to private investment.

Antiglobalization protesters who have marred previous conferences have begun to arrive. Machete-wielding farmers marched through Monterrey Monday, though the protests remained peaceful. A security force of 6,500 has sealed off a perimeter around the summit center, and people are being screened rigorously at various checkpoints.

Whether any concrete decisions will come out of the meetings is not the issue, say delegation leaders. More important, they say, is that the issue of rich versus poor is finally being discussed among leaders from various sectors of society who can make a difference. "Solutions will not come overnight," says Mr. Ahmad. "But this is the beginning of a partnership."