U.N. Plan for Financial Crisis Derided as Weak
By Thalif Deen
UNITED NATIONS, Jun 29 (IPS) - When the General Assembly adopted a proposed plan of action aimed at overcoming the global financial crisis, one of the political surprises was that all 192 member states gave their blessings to the wide range of proposals spelled out in an “outcome document”.
“We achieved what many believed to be unachievable,” the president of the Assembly, Miguel d’Escoto Brockmann, told reporters hours after the 16-page document was adopted by the U.N.’s highest policy-making body Friday.
But several non-governmental organisations and civil society groups have expressed their disappointment over the lack of concrete measures or time-bound commitments to meet specific needs relating to trade, finance, market access, development aid, debt, gender empowerment and sustainable development.
Perhaps one of the farthest reaching proposals was “the urgent need” for further reform of the governance of the Bretton Woods institutions (BWI) - namely the World Bank and the International Monetary Fund (IMF) - where rich nations exercise disproportionate power based on their shareholdings.
The outcome document calls for “a fair and equitable representation of developing countries, in order to increase the credibility and accountability of these institutions.”
“However,” said Irene Muchemi-Ndiritu of the Global Call to Action Against Poverty (GCAP), the U.S. delegates “indicated governance structures of the BW institutions should not be influenced by the United Nations (therefore refusing democratic scrutiny) and that the World Trade Organisation (WTO) should be left to do business as usual.”
She said the 27-member European Union (EU) complimented the outcome document as being highly ambitious, “which is cynical indeed when most developing nations feel they have been railroaded into accepting a very weak compromise, with only an ad hoc U.N. working group to continue the work.”
“Civil society is angry that no concrete bailout measures have been agreed on for the most affected: women and the socially marginalised,” she added.
The document also says: “We recognise that it is imperative to undertake, as a matter of priority, a comprehensive and fast-tracked reform of the IMF.”
Not so fast, says the United States.
Speaking after the adoption of the document, a U.S. delegate said the BWI had “governance structures independent of the United Nations”.
“Any decisions on their reform could only be made by shareholders and their boards of governors. The United States did not interpret the language in the document as endorsing a formal United Nations role in decision affecting them,” he said in a statement Friday.
The statement brought a strong rejoinder from Aldo Caliari, spokesperson for CIDSE, an international alliance of 16 Catholic development agencies that advocate poverty eradication and social justice.
“The U.S. was disingenuous at best in supporting the conference agreement, and then giving a speech saying they oppose most of the important provisions,” Caliari told IPS.
That said, the reality is that these explanatory statements don’t matter much, he added.
“This is not a vote - ironically, at the request of the U.S. The document is a triumph for the United Nations, against many odds, because it moves toward economic justice and gives the U.N. a more clear role in global economic policy.”
Caliari said endorsing the restrictions on capital flows and debt standstills for poor countries is not immediate help for the 50 million people expected to lose their jobs and more than 53 million falling into poverty.
“But it’s progress to a more just world,” he declared.
Asked to comment on the U.S. statement that the United Nations was not the proper forum for BWI reform, the president of the General Assembly D’ Escoto said: “This is about building for the future.”
On the positive side, he explained, the outcome document should lead to changes in the financial and economic system and help avert another crisis in the future.
Gigi Francisco, general coordinator of Development Alternatives with Women for a New Era (DAWN), described the outcome document as a text that opens up possibilities but lacks genuine reforms.
“The central role of the United Nations, or the G192, in economic governance nearly vanished,” she added.
On the upside, Francisco said, the text contains some progressive language related to financial, structural and systemic reforms, including debt relief, respect for policy space, right of countries to adopted counter-cyclical measures, reform of the global reserve system, need for effective regulation and oversight of the financial system and more balance trade.
She pointed out that women’s rights advocates welcome language that recognise women as facing “greater income insecurity and increased burdens of family care”, and that women and children had been the mostly impoverished by the current crisis.
“The biggest disappointment is the lack of any strong commitment to follow up,” she added.
Furthermore, she said, the consistent reference to a “United Nations Development System” throughout the text represents a disciplining of the U.N.’s role to a limited arena of humanitarian assistance and development cooperation.
“This is a clear attempt to shut out the G192 from the global economic governance system,” Francisco said.
Diana Aguiar of the International Gender and Trade Network said that in failing to reform the conditionalities of institutions such as the IMF, which force governments to cut social spending and consequently place an even greater burden on women, rich countries betray their lack of willingness to address the gender dimension of the crisis.
Gemma Adaba of the International Trade Union Confederation (ITUC) welcomed the proposal for the creation of an ad hoc open-ended working group to follow up on the proposals in the outcome document.
However, an overall enabling environment was required, and that could only be achieved with strong reform of international financial policy and institutions - particularly the BWIs.
“Such reform was not included in the document,” Adaba said. And those institutions, she pointed out, continued to oppose “counter-cyclical” spending in developing countries to boost social programmes during the crisis.
Instead, she said, the BWIs require a “pro-cyclical” approach asking these countries to cut spending during hard economic times, which would make problems worse.
