US seeks to weaken global development finance efforts, UN document shows

Nevin Al Sukari - Sana'a - The previously unreported document sheds light on how the Trump administration is seeking to imprint an 'America First' agenda, including opposition to efforts to slow climate change and promote diversity, on the institutions at the heart of fixing global systemic crises. — Reuters pic

BRUSSELS, May 5 — The United States is seeking to weaken a global deal aimed at helping developing countries struggling with the impacts of climate change and other issues, an internal United Nations document seen by Reuters showed.

The Trump administration opposes draft reforms of the world’s financial system intended to help developing countries, including around taxation, credit ratings and fossil fuel subsidies. It also wants mentions of “climate,” “gender equality” and “sustainability” stripped out.

The previously unreported document sheds light on how the Trump administration is seeking to imprint an “America First” agenda, including opposition to efforts to slow climate change and promote diversity, on the institutions at the heart of fixing global systemic crises.

The once-a-decade, 4th International Conference on Financing for Development (FFD4) in Seville, Spain, in June aims to influence the strategic direction of the world’s development finance institutions. Countries agreed at FFD3, for example, to broaden tax cooperation efforts so that developing countries could help set the rules and as of last May more than 140 countries were involved.

“This conference is about bringing the world’s leaders together and setting the underlying rules and priorities for financing development goals over the next decade,” Tom Mitchell, executive director of the International Institute for Environment and Development, told Reuters.

Compiled by the permanent representatives to the UN of Mexico, Nepal, Norway, and Zambia, with help from the UN secretariat, the April 11 negotiating draft is annotated with the positions of the 193 nations involved in the discussions.

With ongoing changes at the World Bank and International Monetary Fund in the fight against climate change already facing pushback from US Treasury Secretary Scott Bessent, the document showed it was seeking to water down further reform efforts.

Among specific points in the text that refer to the systemic reform, the document shows the US wants to remove a reference to a “package of reforms” for sustainable development. It wants to replace a line promising to “commit to reform the international financial architecture” with a pledge to “recognise the need to enhance its resilience and effectiveness in responding to present and future challenges and crises.”

Such changes in language signal the degree of shared commitment that can then be used as support for action or inaction in future talks.

UN Secretary-General António Guterres has acknowledged the need to overcome multiple challenges ahead of the conference, but urged “all countries to be at the table in Sevilla focused on solutions,” spokesperson Florencia Soto Niño said in an email to Reuters.

The White House and Treasury Department did not respond to requests for comment. The State Department declined to comment.

While the US’ position on development has become tougher under Trump, the negotiating document shows it remains supportive of efforts that include developing countries working more closely with the private sector, and fostering innovation and financial literacy.

Climate change

A key goal of the global reforms is to better help poorer nations cope with weather disasters, which are worsening due to climate change, and to boost economic development using low-carbon energy rather than traditional fossil fuels.

President Donald Trump has quit the UN Paris climate agreement, slashed US foreign development aid by more than 80 per cent as part of a government overhaul led by billionaire Elon Musk and embarked on a trade war that is hurting many poorer nations.

Among areas of the FFD4 document that the US objects to is a call for countries to explore “global solidarity levies” that could include taxes on highly polluting activities or on the super-rich to finance sustainable development.

If included, the levies could be taken up in UN negotiations on taxes this year and would bolster a task force led by France, Kenya and Barbados that aims to develop such taxes among smaller groups of countries.

Other countries to object include Russia, Saudi Arabia and China.

The US is also seeking to delete a paragraph calling for companies to pay tax to the countries where economic activity occurs; a paragraph on helping developing countries bolster tax transparency; and another on phasing out inefficient fossil fuel subsidies, the document shows.

Many of the world’s poorest countries struggle with high debt and the costs of rebuilding after disastrous storms, but the FFD4 document shows the US wants to strike a paragraph on reforming the credit-rating system.

That includes a push for raters to take a more forgiving approach to poorer nations that voluntarily restructure their debt to invest in green projects, it showed.

The US also opposes a commitment to ensure countries receive “adequate and uninterrupted funding on appropriate terms of social protection and other essential social spending during shocks and crises,” the document shows.

While the US has considerable influence as the biggest shareholder in both the World Bank, which provides loans and grants to developing countries, and the IMF, and is currently reviewing its role in both, the draft deal is likely to change further as countries continue negotiations in May, before reaching consensus on a final document in mid-June.

The US position puts pressure on other countries to accept a weaker deal, since the talks aim to adopt a deal by consensus. — Reuters