|DESA News Vol. 12, No. 07||July 2008|
Rising commodity prices, deepening income disparities, climate change ‘serious threats to our efforts to lift people out of poverty,’ says Council President Léo Mérorès
With soaring commodity prices and the onset of global warming threatening to undo hard-won progress made to alleviate poverty in the developing world, the President of the Economic and Social Council on 30 June urged national Governments and the United Nations system to collaborate on integrated approaches to development that placed sustainability at the core of coherent economic growth strategies.
Council President Léo Mérorès, of Haiti, said that the 54-member body, which opened the high-level segment of its annual substantive session in New York today, was meeting as recent global prosperity and economic growth was being pressured by rising food and oil prices, deeper income disparities, and increased competition for resources. “We are facing serious threats to our efforts to lift people out of poverty,” he said, adding that those challenges were further compounded by climate change and the more frequent and more intense storms, floods and droughts that came with it.
This year’s Annual Ministerial Review, which traditionally kicks off the Council’s month-long session, would contribute to promoting collective solutions, including strengthening governance and global cooperation, increasing financial assistance and promoting technology transfer, he said. The two-day Review would also bolster current efforts to better integrate the three elements of sustainable development – economic growth, social development and environmental protection – because, he said: “It seems that if development is not sustainable, it will not be attainable.”
He also said that with uncertainty growing about the achievement of the Millennium Development Goals, the Council’s Development Cooperation Forum, which held its first biennial meeting today, was envisioned as a United Nations forum for ensuring coherence in cooperation towards attaining globally agreed development targets. The Forum was uniquely placed to bring together a wide range of development actors and, therefore, had the potential to be a leading venue for inclusive global dialogue and policy review on key development issues.
Under-Secretary-General of Economic and Social Affairs Sha Zukang, who delivered a message on behalf of the United Nations Secretary-General, noted that this was “a critical juncture” in the implementation of the United Nations development agenda. The fragile state of the major developed market economies, and broader economic turbulence were slowing global economic growth, while rising food and energy prices were hitting the poor and vulnerable especially hard.
Urgent collective action was needed, particularly to address global economic imbalances and widespread scepticism about globalization, which many felt was leaving behind the most vulnerable and increasing economic insecurity among the middle classes. “No social or economic order is secure if it fails to benefit the majority of those who live under it,” he said, adding that: “This session of ECOSOC should give new impetus to the realization of our long-standing goal of achieving economic growth, social development and environmental protection in an integrated and balanced manner, which is the key to the prosperity of humankind.”
The opening session also featured keynote addresses by Rajendra K. Pachauri, Chairman of the Intergovernmental Panel on Climate Change, the Nobel-prize winning group of scientists tasked with studying human activity’s effects on the environment; and Lord Stern of Brentford, economist and author of the Stern Review on the Economics of Climate Change, the groundbreaking 2006 report that assessed the effect of climate change and global warming on the world economy.
“We’re all in this together,” said Lord Stern, outlining the key elements of a global framework to tackle climate change. The targets of such a framework would include worldwide cuts in emissions by 50 per cent by 2050, with rich countries cutting at least 80 per cent. Developing countries should take on targets by, at latest, 2020, as rich countries demonstrated low-carbon growth, lived up to funding agreements, and shared technologies.
He cautioned that any new deal must not “be like a WTO deal where nobody does anything until everybody agreed on everything. We don’t have that kind time.” There was a need to accelerate public policy design, and research and technology development, and to generate the political will to put policies into action, especially towards low carbon growth. The new framework for action required each individual country to start acting now, with the understanding that other countries would come along. The effort depended on global political leadership and would involve the largest collaborative effort the world had ever seen.
The Council also held a high-level policy dialogue with international financial and trade institutions on current developments in the world economy that featured statements from: Supachai Panitchpakdi, Secretary-General of the United Nations Conference on Trade and Development; Murilo Portugal, Deputy Managing Director of the International Monetary Fund; Justin Lin, Senior Vice-President and Chief Economist of the World Bank; Valentine Rugwabiza, Deputy Director-General of the World Trade Organization; Ricardo French-Davis, Chairman of the Committee for Development Policy; Achim Steiner, Executive Director of the United Nations Environment Programme; and Mr. Sha.
Ms. Rugwabiza said that, while the WTO’s Doha Development round could not provide immediate solutions to many problems, its successful conclusion could form part of the midterm solutions to help put the world back on the path of economic growth. But, differences would have to be bridged, and every attempt be made to push the limits of political will and to strive for the adoption of the modalities in agriculture and non-agricultural goods by the end of next month.
Indeed, Mr. Panitchpakdi cautioned that, although the world was now standing at the threshold of a breakthrough for this round of negotiations, a breakthrough had to be made by July or a crucial window would close.
Based on DPI news release ECOSOC/6346; for more information: http://www.un.org/ecosoc/
Lord Stern of Brentford, author of the Stern Review on the Economics of Climate Change, presented a keynote address to the high-level segment of the Council on 30 June. Complete video coverage is available online at http://www.un.org/webcast/ecosoc/hls/
Interactive discussions with civil society and the business sector were held on 18 June in New York as part of preparations for Doha review conference
In preparation for the Follow-up International Conference on Financing for Development to Review the Implementation of the Monterrey Consensus to be held in Doha from 29 November to 2 December, two half-day hearings were held on 18 June in New York, the first in the morning with civil society and the second in the afternoon with the business sector.
The hearings took the form of a series of panel presentations followed by a debate on the six thematic areas of the Monterrey Consensus, as well as new challenges and cross-cutting issues. The President of the General Assembly, Srgjan Kerim, opened the session. Ambassadors Maged Abdelaziz of Egypt and Johan Lovald of Norway served as Co-Chairs.
On the domestic front, participants discussed impediments for effective financial resource mobilization in developing countries such as low national saving rates, high inflation and inefficient financial systems. In particular, detrimental effects of corruption were highlighted. The UN was asked to support initiatives to return looted assets to the nations of their origin. Networking of civil society organizations was advocated as a key means of raising grassroots awareness of critical issues in financing for development.
With regard to mobilizing international resources for development, a proposal was presented to introduce a currency transaction tax at the rate of 0.005 percent to raise funds for development. This minuscule tax would have no negative effect on financial markets but would generate enormous annual revenue. Research had shown that it was technically feasible. The introduction of the tax was therefore mostly a question of mobilizing sufficient political will. It was recommended that the UN should administer and disburse these extra funds.
As for international trade, participants expressed their dissatisfaction with the current state of trade negotiations at the bilateral, regional and multilateral levels. There were calls for urgent measures to reduce agricultural vulnerabilities and enhance food security of developing countries. It was proposed to impose a moratorium on the EU-APC Economic Partnership Agreements and to redesign “aid for trade” schemes, in order to enhance ownership thereof by developing countries.
Regarding international financial and technical cooperation for development, it was noted that official development assistance had declined in 2006 and 2007. Moreover, 70 percent of foreign aid in 2004-2005 was funneled to debt relief and not actual development aid. Speakers called for increased donor accountability, transparent monitoring of development targets, national ownership and elimination of conditionalities for aid. The donor community should pay special attention to the development needs of post-conflict nations. South-South cooperation could enhance aid predictability and strengthen mutual accountability.
Participants noted positive developments resulting from recent debt relief initiatives, such as the MDRI. However, debt relief had fallen short of its intended objectives and many countries were still facing unsustainable debt burdens. The Norwegian government was commended for cancelling illegitimate debt arising from flawed lending processes. More responsible financing and impartial processes for evaluation of debt disputes were needed. A view was expressed that using loans as funding mechanisms to combat the current food and climate crises would lead to unsustainable debt of developing countries. There were also renewed calls for orderly debt workout mechanisms.
In addressing systemic issues, speakers reiterated the need for increased voice and participation of developing countries in economic decision-making and norm-setting. There was a need for appropriate regulations of the international financial system and institutional arrangements that could provide sufficient international official liquidity during crises. It was suggested that developing countries should promote regional financial institutions.
Concerning gender perspectives in financing for development, speakers encouraged deeper dialogue on such issues as women’s wages, unpaid labor, gender-sensitive taxation schemes and the household sharing of financial risks. There were calls for participatory and gender responsive budgets and the development of gender-sensitive indicators, as well as tools and methodologies for the evaluation of the quality and development effectiveness of aid. The international community should support and strengthen women’s involvement in multi-stakeholder oversight processes at all levels.
On another cross-cutting issue, the meeting addressed financing of climate change adaptation and mitigation. It was stressed that the UN Framework Convention on Climate Change should serve as the main framework for the international response to climate change. In addition, there was a request for the establishment of various funds to support developing countries suffering from climate change, including an adaptation fund, a mitigation fund, a technology fund and a risk insurance fund.
Regarding trade and investment contributions to development financing, it was noted that there had been a rapid rise in foreign direct investment and other transfers of wealth to the developing world. Trade and investment were the largest sources of funding for development. Increased policy priority was given to seeking a global solution to climate change and addressing hunger, high energy and commodity prices. Developing countries were urged to resist protectionist impulses and national governments were encouraged to find the necessary political will to improve the domestic investment climate. Regarding the spending of ODA funds, there was a reiteration of the need to engage regional and national institutions and not just governments. There was a proposal to consider the possibility of refocusing aid to the most urgent areas such as energy and food production.
It was reported that microfinance had largely been a success story in development, improving the lives of millions. Microcredit was moving from the services sector to insurance and housing finance. Further applications included the Grameen Bank’s telecom subsidiary offering mobile banking and the World Bank’s credit linked notes. Concerns were expressed about the shortage of microfinance services despite the huge demand. There was a need to promote collaboration between governments and civil society organizations as well as stronger coordination between banks. Participants expressed optimism that the microfinance industry would replicate successful business models beyond local and national boundaries and that platforms would be leveraged to address broader development issues.
It was noted that the business sector had increased its role in development and was actively engaged in public-private partnerships. To increase consistency, coherence and cooperation between the business sector, governments and civil society, there was a call to “deliver as one.” The business sector had a responsibility not only to seek profits, but to create value and protect the planet. Moreover, there was a need to move from dependency creating aid to self-creating entrepreneurship. Finally, it was proposed to create a sustainable development council, with inputs from all relevant parties.
There were repeated calls on the business sector and governments to promote responsible private investment for sustainable development. To facilitate private flows of capital, developing countries needed to put in place liberal trade regimes, strong rule of law, sound macroeconomic policies, data transparency, institutional and market infrastructure and financial regulation and supervision. Participants highlighted the e-Standards Forum website, which monitored countries’ adaptation of best practice standards. It was also reiterated that private enterprises should promote ethical and conduct corporate social responsibility.
The role of domestic financial institutions in poverty alleviation and sustainable development was demonstrated by the Nigerian Bank of Industry. Developing countries were encouraged to look internally for financial resource mobilization and formulate a coherent response to their development needs. When the capacity of the domestic financial sector was insufficient, the challenge of external resource mobilization prevailed.
Many participants stressed the need for developing countries to build attractive platforms for investments by providing enabling environments with transparency and accountability. Speakers emphasized the importance of dealing with underlying factual reasons for low investment, instead of engaging in financial engineering to solve the problem. There were suggestions to tackle the problem of illicit capital flows and arrange a better flow of information between investors and recipients.
For more information: http://www.un.org/esa/ffd/