After discussion in Working Group II, this item was addressed by the Contact Group chaired by Amb. Mateos. This issue was highly sensitive and politically charged from the outset. With two strongly polarized views, divided along North/South lines, no texts could be negotiated and, as a result, no recommendations will be forwarded to the COP.
In general, the developed countries want the recently restructured Global Environment Facility (GEF) to become the permanent institutional structure to operate the Convention's financial mechanism. They argue that the GEF restructuring was negotiated by the countries present at the ICCBD. Many developed countries claim that their governments have committed finances to the GEF for funding of biodiversity projects and it is unlikely that any new money will be forthcoming. On the other hand, many developing countries do not want the GEF to become the permanent institutional structure until it has proved that the restructuring has responded to all the developing country concerns. Other developing countries refused to even consider the GEF on an interim basis. Pakistan said that the restructured GEF does not qualify under the Convention, since it is not democratic or under the authority of the Convention. Kenya, Syria and Mauritius called for a different mechanism.
The discussion also focused on the merits of one versus two or several institutional structures. It was noted that the GEF does not allow contributions from non-governmental sources and, therefore, an independent fund should be developed to allow contributions from individuals and non-governmental organizations. It would also provide a means for government contributions that were earmarked for particular projects.
Australia's proposal for an arrangement such as a memorandum of understanding between the COP and the institutional structure was strongly supported. The Bahamas suggested that an intermediary body between the COP and all agencies operating under its authority, including the institutional structure be developed. This body would then evaluate the performance of the institutional structure.
During discussion on this item in the Contact Group, the Chair distributed a draft text that he hoped would be used as the basis for negotiating a set of recommendations for the COP. The strong polarization of views on this topic, however, prevented any discussion of the text. The draft text called for the GEF to remain as the interim structure while a study is made of alternative structures. Many developed countries informed the Chair privately that they were unwilling to even discuss the document and all further discussion of this issue was suspended until the COP. Some countries have expressed concern that if the GEF is only an interim structure, donor countries may not contribute the sums of money they have previously committed.
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