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ARTICLE 21 -- FINANCIAL MECHANISMS:

This Article was initially viewed as the most contentious article in the entire Convention. The key issue to resolve was the establishment of a global fund for combatting desertification. While the G-77 strongly supported the idea of a fund, the EU and the US were opposed to the establishment of a new institution. Instead, they stressed the need for improved management, mobilization and coordination of existing funds. Sweden pointed out that a global institution would have high administrative costs, which would result in few funds getting to the local level. Some of the Africans were also concerned that the establishment of a global fund would strip the Convention of the priority to Africa.

There appeared to be no way out of this deadlock until the small contact group met Monday night, 13 June, and Canada suggested the establishment of a coordinating mechanism. The US then took the lead and circulated a proposal to identify an existing organization to serve as a "Global Mechanism" to monitor and evaluate the activities of financial mechanisms and facilitate the mobilization of adequate and timely assistance. After lengthy discussions within the OECD and the G-77, delegates agreed to use the US proposal as the basis for further negotiation. Thus, a breakthrough was achieved and the door was opened for productive negotiations.

Paragraph 1 of the final text states that the Conference of the Parties (COP) shall promote the availability of financial mechanisms and consider approaches and policies that: facilitate the provision of necessary funding at national, subregional, regional and global levels; promote multiple-source funding approaches, mechanisms and arrangements; provide information on available sources of funds; facilitate the establishment of mechanisms, such as national desertification funds; and strengthen existing funds and financial mechanisms at the subregional and regional levels. In paragraph 2, the COP shall encourage the provision of support at the national, subregional and regional levels through the UN system and multilateral financial institutions. Paragraph 3 states that affected developing country Parties, when necessary, shall establish and/or strengthen national coordinating mechanisms to ensure the efficient use of all available financial resources.

Paragraphs 4 and 5 establish a Global Mechanism to promote actions leading to the mobilization and channeling of substantial financial resources, including for the transfer of technology, on a grant basis, and/or on concessional or other terms, to affected developing country Parties. This Mechanism shall function under the authority and guidance of the COP. At its first ordinary session, the COP shall identify an organization to house this Global Mechanism and ensure that the Mechanism: identifies and inventories relevant bilateral and multilateral cooperation programmes; provides advice, upon request, to Parties on innovative methods of financing; provides interested Parties and relevant intergovernmental and non-governmental organizations with information on available sources of funds and funding patterns; and reports to the COP. Paragraphs 6 and 7 address the administrative operations of the Mechanism and call for a review of the Mechanism's operations at the third session of the COP. [Return to start of article]