The Global Economic Meltdown is Hurting the Poor Countries Most   

 [James Quilligan is one of the major US activists for a Global Marshall Plan]

Rich Nations Boycott UN Economic Summit
                                        James B. Quilligan
June 27, 2009 - United Nations - The centuries-old dream of representatives from every
nation in the world assembling to discuss their common economic issues was realized --
or at least attempted -- at a United Nations summit last week in New York.
Representatives from three-quarters of UN member states attended a Conference on
the World Financial and Economic Crisis and its Impact on Development, where they
discussed emergency and long-term measures to combat the worst global economic
downturn since the Great Depression. It was the first high-level summit on international
financial reform in history.

UN Secretary-General Ban Ki-moon opened the conference, noting that “the global
economic crisis shows why we need a renewed multilateralism”. Since recession has
gripped many of the worldʼs industrialized nations during the past year, nearly $18000
billion has been raised or pledged to prop up global banks, financial institutions and
corporations. Yet global investment in anti-poverty programs and development has
sharply declined. “Surely if the world can mobilize more than $18 trillion to keep the
financial sector afloat,“ Ki-Moon observed, “it can find more than $18 billion to keep its
commitments to Africa.”

Although the financial crisis began in the developed nations, the worldʼs poor and
vulnerable populations have borne the heaviest burden of the global economic
meltdown. Commodity prices have fallen, global exports have slumped, foreign direct
investment has declined, domestic incomes have dropped, food and energy costs have
risen, debt has mounted, credit has become more expensive and aid flows and
remittances have flattened.

Financing for the UN Millennium Development Goals targeted for 2015 is also falling
dramatically as capital flows from rich to poor nations continue to plunge. The World
Bank predicted last week that private capital flows to poor nations will decrease from a
high of $1.2 trillion in 2007 to less than $363 billion this year. At the same time,
economic growth in developing nations is expected to fall from 8.3% GDP in 2007 to
1.6% in 2009. Without coordinated efforts by developed nations to help the worldʼs
poorest nations, 100 million people may fall into extreme poverty each year for the
foreseeable future, with women and children suffering the brunt of food insecurity,
decreasing access to health care and education and deteriorating social protection. The
effects of climate change have also intensified as a result of the economic crisis.
The summit was conceived last November in Doha at a UN conference on financing for
development. It was shaped with input from a group of former economic policy-makers,
academics and private sector representatives chaired by former World Bank Chief
Economist and Nobel Laureate Joseph Stiglitz. The summitʼs proposals include new
measures for external financing, debt relief, increased aid, sovereign debt restructuring,
a global reserve currency, and systemic reforms for creating sustainable development
and restoring global economic growth.

The creation of a new international economic system is hardly a new idea. During the
past half-century, many leaders and activists have called for a global emergency
stimulus for poor nations to enable them to become equal trading partners with
developed nations, thereby raising demand for goods and services, expanding global
trade and investment and reducing world unemployment. Designing a broadly
representative framework to address the deep systemic flaws in the international
system and provide new financing for poor nations was a central topic of the Non-
Aligned Movement and the Group of 77 (1960s); the campaign at the United Nations for
a New International Economic Order (70s); the international development commissions
of Willy Brandt and Julius Nyerere (80s); the Commission on Global Governance (90s);
and the Monterrey Conference on Financing for Development (this decade). It is
sometimes forgotten that the Group of Seven -- now called the G8 -- was created in
1975 for the express purpose of countermanding any proposals of this sort that would
change the structure of the global economic system and give poor nations a voice in
how global development funding is organized.

Those fault lines were evident in the negotiations leading up to last weekʼs global
summit. Developed nations wanted to focus on development issues that could be
ameliorated through free market policy decisions and discretionary aid and loans by the
G8, the G20, the IMF and World Bank, while developing nations preferred to examine
the deeper causes of the global crisis in order to overhaul the international financial
system. During the past year, as many of the G20 nations generated huge domestic
stimulus packages to mitigate the effects of recession, their relief efforts for developing
countries have stagnated. At the same time, the worldʼs indebted nations lack the
resources to create their own stimulus plans, not only because of the current financial
and economic crises but also because of IMF conditionalities on loans.
While the Group of Twenty includes both the G8 nations as well as many former
ʻdevelopingʼ countries  -- such as China, India, Indonesia, South Korea, Brazil, Mexico,
Saudi Arabia and Turkey -- the worldʼs poorest nations are increasingly recognizing that
these newly emergent industrial and oil powers no longer speak for them. The
international press has also blurred the distinction between developing and emerging
economies, making little mention that the G20 nations have become part of the global
financial oligarchy in recent years, even though their views may not be fully in sync with
the Western-based G8. With the onset of the global recession, the G20 has been
anointed the new center of global economic decision-making by the International
Monetary Fund, the World Bank, the World Trade Organization, the international press
and the public in the worldʼs wealthiest nations. Yet in spite of their recent promises to
tackle the current economic crisis through effective global regulation, most G20 nations
are still pursuing policies of financial and capital market liberalization, deregulation and
trade protectionism.

The UN Economic and Social Council, which United Nations founders in 1945
envisioned as a leading determiner of international economic policy, has only been
given authority over UN development policy. Meanwhile, the IMF and World Bank, which
are technically United Nations institutions, have always made autonomous decisions
based on input from the world's richest nations. Hence, during the post-war period,
voting power and representation at the IMF and World Bank have been granted only to
nations with the strongest economies, and developing nations are rarely given an
opportunity to address their meetings or those of the G8 and G20.

Some analysts believe that the IMF and World Bank should be abolished, or at least
marginalized, and that decisions on the management of the global economy should be
transferred to the UN General Assembly -- the only universal body of sovereign states,
the only body with global political legitimacy, and the only body with the capacity to
analyze global financial crises and their impact on development. Last weekʼs summit
marked the first time that all UN member nations -- the G192 -- had been invited to offer
a coordinated response on the world's financial and economic conditions.
But the historic significance of inclusive global decision-making is not appreciated by
everyone. Itʼs no secret that G20 nations are not interested in addressing the structural
causes of poverty or their impact on development and human rights, and have worked
behind the scenes to undermine the creation of a broad economic decision-making
framework. At its last summit in April in London, the G20 declared that the UNʼs role was
merely to “monitor the impact of the crisis on the poorest and most vulnerable”, not to
address the long-term restructuring of the international monetary and financial
architecture to restore global economic stability.

 Unsurprisingly, the planning process before the UN
 summit was contentious, including a
whisper campaign of political pressure to dampen conference participation. As a
consequence, only 10 presidents and prime ministers attended, mainly from small
Caribbean nations. G20 leaders either boycotted the meeting altogether or sent low-
level representatives. Of the 142 delegations present, nearly half were comprised of UN
ambassadors. Nor did the G20 news media cover the event in much breadth, although
numerous articles discrediting General Assembly President Miguel dʼEscoto Brockmann
as a former leftist Nicaraguan foreign minister were peppered throughout the Western
press during the weeks leading up to the summit. Pundits expressed relief that
DʼEscotoʼs term as head of the General Assembly is slated to end in September,
perhaps also ending the UNʼs quest for international economic coordination.

As the G8 meets in Italy next month and the G20 assembles in Pittsburgh this
September, many issues remain unresolved. How long will these self-appointed clubs
go on wielding the authority and legitimacy of an international free market agenda over
the worldʼs 6.7 billion people? Was the UN summit on the world economic crisis a
wasted opportunity or a historic step toward global economic governance? Can the UN
overcome its bureaucracy and inefficiency and establish a permanent working group to
carry out a plan of action for transforming the worldʼs financial architecture?
How these concerns will be addressed is uncertain. What is clear is that in shoring up
the worldʼs financial institutions through a short-term stimulus for private capital, banks
and corporations, effectively ignoring the long-term stimulus of human and social
development through the eradication of poverty, the G20 seems to be engineering
another ʻlost decade of developmentʼ for poor nations. The worldʼs impoverished people
will continue to suffer the results of a systemic global crisis they did not create but must
pay for nonetheless.
 
James B. Quilligan worked with the Brandt and Nyerere commissions in the 1980s.