How the EU actually worked to undermine Global South debt reforms

The European Union has upheld the importance of multilateralism in various international forums recently. Yet the situation is not as it seems. The reality is that the EU is significantly undermining multilateral processes that aim to democratise and improve global economic governance. 

Supporting multilateralism is not only about showing up in international summits; it depends on the positions the EU chooses to defend within these spaces. 

A clear example of hypocrisy can be seen in the sovereign debt discussions.

While the EU supported declarations at the G20 heads of state summit and the AU-EU summit, acknowledging the need for a debt architecture reform, its actions in New York last week told a different story.

European Commission delegates tried to block a United Nations resolution that merely reiterated  commitments agreed by consensus at the Fourth Financing for Development Conference (FfD4) in Seville last July. 

The FfD4 outcome document, “Seville Commitment”, clearly calls for the launch of an intergovernmental process to discuss debt architecture reform at the UN — the only space where borrowers and creditors can participate on equal footing.

Yet, in the discussions at the UN Economic and Financial Committee (Second Committee) the EU tried to remove references to this commitment, which had been proposed by G77 plus China countries. 

This is not an isolated incident. 

Even during the final plenary of FfD4, the EU dissociated itself from the paragraph calling for an intergovernmental process on debt architecture reform - a move strongly criticised by civil society. 

The EU’s position is that discussions around debt architecture are already happening at the G20 or the Global Sovereign Debt Roundtable (GSDR).

However, both are non-inclusive informal forums where borrowing countries are not properly represented.

Most importantly, proposals coming from these spaces are highly inefficient and clearly not working for borrowing countries.

One example is the G20 Common Framework which, in the words of the African Union, “has not provided a pathway towards the quick restoration of debt sustainability, creating some considerable scepticism as to its potential to deliver effectively for highly indebted countries, particularly in Africa”. 

Is the EU really defending multilateralism when it entrenches itself in a creditor-dominated status quo? Or is multilateralism about creating truly inclusive and democratic spaces where all countries can discuss and implement the reforms the world urgently needs?

We would argue it is unequivocally the latter.

In this case, this means supporting an intergovernmental process that could lead towards a UN Framework Convention and the establishment of a multilateral sovereign debt resolution mechanism.

This is a proposal that borrowing countries, notably the African Union and the Alliance of Small Island States (AOSIS), strongly supported throughout the FfD process. 

Instead of a UN-mandated and structured decision-making process that incorporates all actors on equal footing, the EU is proposing an informal forum.

It appears the EU is reluctant to embrace multilateralism when real decisions are at stake, yet eager to participate in symbolic side-shows where it can be a champion in rhetoric while accomplishing very little.

By opposing a consensually agreed and urgently-needed intergovernmental process — solely  to defend a creditor-led debt architecture where Europe holds disproportionate power — the EU is acting in a way that is the very opposite of what we understand multilateralism to be.

What is needed now is less rhetoric and more real action in genuinely multilateral spaces. 

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