Economic and Social Council Concludes Special High-level Meeting with Bretton Woods Institutions, Other Bodies
Economic and Social Council Concludes Special High-level Meeting with Bretton Woods Institutions, Other Bodies
|Department of Public Information • News and Media Division • New York|
Economic and Social Council
Special High-Level Meeting
7th & 8th Meetings (AM & PM)
Economic and Social Council Concludes Special High-level Meeting
with Bretton Woods Institutions, Other Bodies
Two-Day Event Ends with Broad-based Discussions on Partnership for Development,
Assistance to Fragile States, Role of United Nations in Global Economic Governance
Weak institutions in fragile and conflict-affected States constrained efforts to reduce poverty and deliver basic services, and efforts to build peaceful, prosperous nations required aligning priorities — both between domestic and global agendas, and among the world’s influential multilateral bodies, the Economic and Social Council heard today as it concluded its annual high-level meeting with marquee international finance and trade institutions.
“We succeeded in having an open exchange of views between Government representatives and major institutional stakeholders,” Economic and Social Council President Lazourous Kapambwe ( Zambia) said in concluding remarks. The two-day meeting had provided a good forum for dialogue, whose active nature showed the need for more interaction among and between the United Nations, global finance bodies, civil society and regional groupings.
“We were speaking with each other rather than talking at each other,” he said. The Council’s work yesterday had focused on bolstering the Organization’s financing for development mechanisms and commitments, especially in the service of ensuring sustainable development in the least developed countries and middle-income countries. The discussions had featured presentations by officials from the World Trade Organization and United Nations Conference on Trade and Development (UNCTAD), as well as an address by United Nations Secretary-General Ban Ki-moon.
Much of today’s debate centred on how the Bretton Woods institutions – namely the World Bank and the International Monetary Fund (IMF) — the United Nations and other actors in the development sphere could adjust and coordinate their strategies in helping the world’s poorest nations emerge from conflict and settle onto a solid development path.
In a thematic panel discussion on “Follow-up to the 2010 MDG Summit outcome: Building the global partnership for development, including in response to new challenges and emerging issues”, top officials from those bodies described efforts to collaborate and restructure their programmes to better serve recipients’ needs.
With that in mind, panellist Joachim von Amsberg, Vice-President of Operations Policy and Country Services at the World Bank, said the Bank, in its preparation of the World Development Report 2011: Conflict, Security and Development, had worked closely with organizations that had a mandate in that area, including the United Nations. The agenda laid out in the report provided a blueprint and impetus to transform the relationship between the Bank and the United Nations.
The report’s conclusion that efforts to strengthen security, justice and economic support must proceed hand-in-hand over the long term fundamentally challenged the Bank’s regular business model, he said, which was to invest through a country’s institutions. The report was a potential “game changer” for its engagement with low-income and fragile States — a shift that was part of a series of changes taking place at the international level.
Changes also were under way at the IMF, said Siddharth Tiwari, Secretary of the Fund’s International Monetary and Financial Committee, in large part to better reflect the global economy and enhance its legitimacy and effectiveness. Quotas were being shifted in order to widen representation among dynamic emerging markets and low-income countries. Together, the changes would bring representation among these two groups to roughly 9 percentage points.
Also, the Fund was expanding its technical assistance by gearing up “assistance centres” throughout the developing world, he said, especially in Africa and in some areas of Latin America. It would continue to consider the requirements for rebalancing, and work to enhance the stability and effectiveness of the global monetary system, including in managing capital flows, assessing reserve adequacy and assessing the special drawing rights (SDRs). Importantly, it would strive to take stock of how its recent reforms affected global economic stability.
In the ensuing debate, senior representatives of Governments, intergovernmental bodies and civil society underscored the need for earlier and deeper international engagement in fragile and conflict-affected countries, and identified soaring food prices — now at “dangerous” levels — as another new and emerging issue on which multilateral coordination was required.
This afternoon, in a related thematic debate on “the role of the United Nations system in global economic governance”, panellist Serge Tomasi, Director for Global Economy and Development Strategies in the Ministry of Foreign and European Affairs of France, and Co-Chair of the “Group of 20” (G-20) Development Working Group, said stronger ties between the G-20 and the United Nations were needed. Although institutionalizing the participation of the United Nations Secretariat was difficult, the Secretary-General was invited to attend the Group’s meetings, as were representatives of regional groups. Another proposal aimed to organize forums on issues that included non-members.
In the meantime, the United Nations must reform its own internal processes to stay relevant, said panellist Vanu Gopala Menon, ( Singapore) and Convener of the Global Governance Group (3G), an informal gathering of 28 countries promoting dialogue between the United Nations and the G-20. Parts of the Secretariat still were trying to “protect their turf” at the expense of the system as a whole. “This must stop,” he said. States too must stop obstructing reform and instead propose constructive ideas.
Accommodating the concerns of 192 countries often led to outcomes that were watered down to the lowest common denominator, he said, and it was important the Organization tackle the tension between inclusiveness and efficiency, which was key to strengthening the global governance framework. If the United Nations could not agree on the important issues of the day, it risked disenfranchising itself in the global debate.
During the interactive discussion, which focused on the possible routes for reforming global economic governance — whether to “start from scratch” or retool current structures — the majority of participants argued strenuously for the latter approach. Yet, some noted that the rapid emergence of the G-20 during the global financial crisis was a sign that current structures, including the United Nations, were outdated and had been caught flat-footed. Despite that, many said the G-20 should not be seen as a competitor to the United Nations, but rather as a complementary group.
Also speaking as panellists in the thematic debate on “new challenges and emerging issues” were Axel van Trotsenburg, Vice-President of Concessional Finance and Global Partnerships at the World Bank, and Sarah Cliffe, Director and Special Representative at the World Bank.
The Economic and Social Council will reconvene at a time and date to be announced.
The Economic and Social Council continued its annual special high-level meeting with the Bretton Woods institutions, the World Trade Organization and the United Nations Conference on Trade and Development (UNCTAD). Built around the theme “Coherence, coordination and cooperation on Financing for Development”, the two-day meeting will include four informal thematic debates in addition to its plenary.
Today’s thematic debates will include expert presentations and will focus on: “Follow-up to the 2010 MDG Summit outcome: Building the global partnership for development, including in response to new challenges and emerging issues”; and “The role of the United Nations system in global economic governance”.
JORGE FAMILIAR CALDERÓN, Vice-President and Corporate Secretary, World Bank Group, and Acting Secretary of the Development Committee, said the Committee would meet on 16 April to examine measures to reduce poverty, especially in fragile and conflict-affected States. The development community must recognize that violence could not be resolved by short-term solutions in the absence of institutions that provided security and jobs, among other things. Indeed, building capable institutions was key to security, he said, efforts that required much greater partnership to manage the risks inherent to assisting States in fragile and conflict-affected situations.
For its part, the World Bank Group would move such assistance to the forefront of its agenda, with a strategic focus that was in line with the institution’s mandate. Among other things, he said the Bank was improving its approach to justice reform to emphasize partnerships, while building on other areas of such reform. Its work streams would be aligned under a “community of practice” to help those States in conflict situations. At the end of fiscal year 2011, it would establish a centre of excellence targeting specific countries or regions, such as Africa.
In addition, the Development Committee was examining food price volatility, he said, noting that food prices were spiking again for the second time in two years. One of its analyses had concluded that today’s situation differed in a few ways from 2008, when food prices had also soared. Recent price increases were more widespread across agricultural products than in 2008, while weather-induced production shortfalls also were more of a factor. Combined with other factors, today’s situation had resulted in a net increase of 44 million more people in poverty, with 24 million net producers unable to escape a poverty line of $1.25 dollars a day. Beyond that, mild forms of malnourishment also had affected economic growth.
The Bank was promoting agriculture and food security, he said, notably by helping clients manage risk and prepare for crisis. Its food crisis response programmes had allocated $1.25 billion to those efforts, which had benefited 44 million people. Further, it was scaling up support for agriculture, which would help dampen supply shocks associated with price volatility. However, coordinated action was essential to genuinely tackle food challenges, especially in increasing investment in small holder farmers. The Bank was partnering with the United Nations in numerous ways, he said, noting that the Consultative Group on Agriculture Research had provided long-term agriculture funding through research funding. It had supported the United Nations High-Level Task Force on the Global Food crisis since its 2008 creation.
Finally, the Committee would review the joint World Bank-International Monetary Fund (IMF) Global Monitoring Report, which analysed the diverse record of improving human development in and among countries. It concluded that progress had been mixed. For countries that were on track to meeting the Millennium Development Goals, solid economic growth, coupled with good policies and institutions had been key factors. In sum, he said, enhancing resilience to adverse economic shocks would need greater attention and support. Those countries with slow growth and poor institutions were the furthest behind, reinforcing the need for international support.
Reviewing the last year of work at the IMF, SIDDHARTH TIWARI, Secretary of the International Monetary and Financial Committee, said the Committee was currently engaged in choosing its next Chair, with significant progress having been made and a selection expected before the Fund’s spring meeting. With its new Chair in place, the Committee would be able to build on its agenda, as well as its past year of accomplishments.
He said that in response to the global economic crisis, the Fund’s lending had been stepped up, with $250 billion going to nearly 60 countries. There had been a sharp rise in concessional lending to low-income members and roughly $4 billion in concessional lending had been made available to sub-Saharan Africa. The Fund had injected liquidity into the world market, resulting in a nearly 10‑fold increase in special drawing rights (SDRs).
Moving forward, the Fund’s quotas — which were its permanent resources — were to be doubled, he said. A general lending framework had been adopted to make it better suited to country needs, while a new Flexible Credit Line, which was a crisis response tool, had been created for countries with robust policy frameworks and a strong track record in economic performance. Colombia, Mexico and Poland had been provided over $100 million under this facility. A new Precautionary Credit Line had also been established for countries that had sound economic policies and fundamentals, but were still facing vulnerabilities.
He further noted that the concessional financing framework had been modified to make it flexible and better able to address the needs of low-income members. This modification included a doubling of the credit limit and a zero interest rate through the end of this year. A Post-Catastrophe Debt Relief Trust had been set up and would allow the Fund to contribute to international debt relief efforts for very poor countries hit by the most catastrophic natural disasters. Moreover, the Fund’s architecture for lending facilities to low-income countries had increased emphasis for social safeguard spending and strengthening social safety nets.
Over the last year, it had provided analysis and targeted advice, including through forecasting and policy consultations with roughly 120 members in fiscal year 2010, he said. The Fund was also working to strengthen multilateral mechanisms, including through supporting the “Group of 20” (G-20) mutual assessment process. Financial sector assessments would now be mandatory for countries with systemically important sectors, moving the IMF-surveillance into the realm of risk assessment.
Highlighting reforms in the Fund’s governance structure, he said those changes were being made to better reflect the global economy and enhance the Fund’s legitimacy and effectiveness. Quotas were being shifted in order to widen representation among dynamic emerging markets and low-income countries. Together, the changes would bring representation among these two groups to roughly 9 percentage points. The Fund was also expanding the technical assistance it extended by gearing up assistance centres throughout the developing world. This expansion would extend coverage throughout Africa and in some areas of Latin America.
He said the Fund would continue to consider the requirements for rebalancing and would work to enhance the stability and the effectiveness of the global monetary system, including in managing capital flows, assessing reserve adequacy and assessing the SDRs. It would strive to take stock of how its recent reforms affected global economic stability. It planned to build on the recent Basel Agreement to further strengthen the global architecture. Among other things, it would strongly support its low-income membership, including by working on a vulnerability assessment exercise.
The Fund also planned to review its work on and with fragile and conflict-affected countries. In addition, he said the future of the Heavily Indebted Poor Countries (HIPC) Debt Initiative, which was substantially concluded, would be reviewed. The expected amount of debt relief to countries having reached completion point had reached $72 million.
Concluding, he noted that the Fund’s work agenda included over 400 meetings on nearly every day of the year. Although much had been accomplished over the last year, the work was not finished. Many steps, while far-reaching, presented only the early stage of the Fund’s efforts to strengthen its engagement with its membership.
Thematic Debate I
Moderated by Economic and Social Council President LAZAROUS KAPAMBWE, the thematic debate of the Council’s special high-level meeting focused on “Follow-up to the 2010 MDG Summit outcome: Building the global partnership for development, including in response to new challenges and emerging issues”.
It featured presentations by Axel van Trotsenburg, Vice-President of Concessional Finance and Global Partnerships at the World Bank, on “Delivering development results — IDA 16: A global coalition for the poorest”; Joachim von Amsberg, Vice-President of Operations Policy and Country Services at the World Bank, on “The MDGs and fragile and conflict-affected situations”; and Sarah Cliffe, Director and Special Representative at the World Bank, on “World Development Report 2011: Conflict, Security and Development”.
Mr. VAN TROTSENBURG said the International Development Agency (IDA) supported 80 countries, half of which were in Africa. In its 50-year existence, the Agency had provided $350 billion in real terms. In the last two years, it had provided an average $14 billion per year, making it one of the world’s largest sources of financing for health, education, infrastructure and agriculture, among other things. Among its strengths was its focus on country-led development, for which its funds were not earmarked. Another key strength was its “value for money” and it had put in place a rigorous results measurement system, which had been regularly improved since 2002. “What ultimately matters is that we deliver results,” he said.
Turning to negotiations for the Agency’s sixteenth replenishment window, he said the global financial crisis had caused major fiscal challenges for many donors. There also had been a change in public sentiment in donor countries, seen in more — and more specific — concerns about “what do I get out of development aid”, as well as pressure on Governments to show and communicate results that made clear that “investment in development pays”. Working with its 52 donors and partner countries, the Agency had found a platform that had yielded $49.3 billion for the next three years, half of which would go to Africa. Strong pledges had been received from both traditional and new donors.
On the substantive front, “development results” had become the theme of the Agency’s sixteenth replenishment, he said, noting in that context, four special themes that had emerged. One on “crisis response” had prompted the Agency’s creation of a “crisis response window” to strengthen support to countries affected by severe global or regional exogenous economic crises (like the food, fuel and financial crises), and natural disasters. A second special theme on “fragile and conflict-affected countries” had prompted efforts to deepen collaboration to improve the effectiveness of assistance to those States, while another on “gender” had generated efforts to scale up gender mainstreaming in all the Agency’s operations. In response to a final special theme on “climate change”, the Agency would scale up analytic and advisory activities on adaptation and mitigation.
Underscoring a sense of urgency, he said the Agency’s sixteenth replenishment marked the last opportunity for donors and poor countries to use its funds to make progress on reaching the Millennium Development Goals. The funding pledges received showed that, with support, an “extraordinary” global coalition of donors and borrowers offered hope to the world’s poor.
Turning to the Millennium Development Goals and fragile, conflict-affected situations, Mr. VON AMSBERG said those countries would not be able to achieve the targets. More progress was needed, and the International Development Agency’s replenishment had made the support of fragile States a cornerstone for contributions. While that effort had gained momentum, it must be built on, and the World Bank was discussing how it could better fit into the new international development architecture.
He stressed that there was a “deep and sincere” recognition within the Bank that support to the fragile and conflict-affected countries had to be provided in close partnership with those organizations that had a mandate in that area, including the United Nations. The preparation of the World Development Report 2011: Conflict, Security and Development had deepened that partnership, but the agenda laid out in the report provided a blueprint and impetus to transform the way the World Bank worked with the United Nations system.
Providing some of the messages emerging from the report, Ms. CLIFFE said the main thrust was that, despite great progress over the last 30 years in reducing the trauma caused by civil wars, 1.5 billion people still lived in areas affected by the legacy of such conflicts, ongoing hostilities and criminal violence. Further, their children were many times less likely to have access to schools or to maternal care. Overall, the ability of conflict-afflicted countries to lower their poverty rates was itself slashed by 20 per cent.
She said that in terms of solutions, the report’s main message was that a lack of institutions providing security, justice and employment were a key cause of vulnerability to conflict. Countries that had made difficult transitions from the brink of violence had done so by leveraging inclusive coalitions to mobilize national support for change and through early results for confidence building. When violence loomed, countries did not have the luxury of developing 5- to 10-year plans. Instead, undertaking rapid action to demonstrate results to their citizens was critical. Those countries that had made these transitions had also consolidated their efforts through multiple steps over time.
Further, the report looked at four basic tracks for international action, including, among other things, the need for newer United Nations-led capacities on policing and justice. It also looked at how to ramp up investments in job creation in insecure areas, including through increasing the provision of electricity and building up public-private partnerships. She said the report indicated that it was critical to move away from seeing employment only through its income benefit to consider the social opportunity employment provided young people.
The report also considered reforming internal procedures to allow different actors to work faster to build State institutions, she continued. It also analysed how to address the problems of countries that faced risks from situations that were not under their national control, such as cross-border criminal organizations.
Finally, the last section looked at the low- and middle-income countries, focusing on the lessons learned in States that had made the transition out of conflict. It was clear that in fragile and conflict-affected countries, efforts to achieve the Millennium Development Goals moved slowly and the quick feedback loop donors needed did not exist. Thus, she said, the report looked at how different institutions such as those aimed at peacebuilding could help with providing the lacking information.
Taking the floor again, Mr. VON AMSBERG said the report indicated that conflict and fragility were not temporary disruptions and should never be considered as such. Also, efforts to strengthen security, justice and economic support had to proceed hand in hand over the longer term. That analysis had fundamentally challenged the World Bank’s regular business model, which was to invest through a country’s institutions and was suited to learning by doing.
Currently, the Bank was translating the report’s conclusions into new procedures and ways of doing business across six strands, he said. In the first, it was working to recognize how to incorporate conflict risk analysis in its work and identifying what short-term efforts could be made while shifting its focus to the necessary long-term horizon. The second area of work focused on better linking security and justice initiatives with the Bank’s area of expertise in financial and economic support. This included strategy formulation at the early stages with the United Nations and other agencies, he said.
The Bank’s third stream of work focused on increasing employment creation efforts by combining private-sector tools and public-sector support. Too often in the past, the Bank had neglected to build up national institutions and its fourth stream sought to do so, including through concrete work that was focused on management guidelines for procurement procedures. The fifth work stream sought to promote less volatile financing, including through the previously reference review of the International Development Agency. Indeed, the report showed that continuous financing for basic services was critical. Lastly, the Bank was working to increase its own capacities in low-income and conflict and fragile countries, including through a Nairobi-based centre of excellence.
He said that the Bank’s management saw the report as a potential game-changer for its engagement with low-income and fragile States and that shift was part of a series of changes taking place on the international level. Finally, he reiterated that work on low-income and fragile countries had moved to the centre of the Bank’s efforts.
In the ensuing dialogue, senior representatives of Governments, intergovernmental bodies and civil society raised questions about the global actions that were needed to respond more quickly and effectively to new challenges, and offered ideas for improving coordination among the patchwork of multilateral institutions that provided support to the world’s poorest countries. They discussed ways to facilitate the flow of international private capital, particularly long-term investment, to developing countries, and urged a successful conclusion to the Doha Round of World Trade Organization negotiations.
The World Bank, the International Monetary Fund and the United Nations brought expert analysis and understanding to macroeconomic policymaking, some said, a need that was particularly urgent in fragile and conflict-affected countries, whose situations were not “security as usual” or “development as usual” and thus, required an extraordinary coherence of policy and other measures. Whether addressing situations of fragile States or broader development needs, there must be a reinforced partnership between the United Nations and those institutions. “Business as usual” could no longer be the norm.
Among the challenges, said the Dean of the World Bank Board of Directors, were soaring international food prices, which carried enormous risks for economic growth and were now at “dangerous” levels. Coordination among multilateral institutions was essential for tackling long-term food security problems, and helping countries achieve the Millennium Development Goals. Further, international engagement in fragile and conflict-affected countries must take place at an earlier stage and be sustained over longer periods, he said. Emerging economies also played an increasingly important role in global growth, many of which still had to tackle “large pockets” of poverty, and required assistance in such efforts.
Identifying one way forward, an Executive Director of the World Bank who represented the eight Nordic countries on the Board suggested that the Bank’s willingness to “take risks and make mistakes” was one element that could be changed in dealing with fragile and conflict-affected States, as the highest costs were associated with not doing anything, or doing something too late.
In the past, the thinking had been that the United Nations should be active in one phase and the Bank another, she said, but both institutions must act much earlier and more decisively in difficult situations, each using their comparative advantages. To make that happen, “we need to create incentives in institutions so that higher risk tolerance would be acceptable”, she added.
Suggesting one area for cooperation, another Executive Director of the World Bank identified the issue of transparency, saying improved access to data and knowledge in compatible formats was essential. Data could be useful if it was easily found, used and applied. Another aspect of transparency related to decision-making, and still another related to the type of support extended to countries to achieve specified goals. Such efforts would be particularly useful for donor coordination in fragile and conflict-affected countries. Finally, there should be transparency around results, and he hoped the Agency’s example could provide a model for others.
Offering a solution for improving coherence in the form of a question, Spain’s representative asked if the World Bank would be open to joining the United Nations’ “Delivering as One” initiative, with the goal of improving national ownership of the development process by beneficiary countries. He wondered how the Bank ensured ownership of development strategies in fragile and conflict-affected countries.
Bangladesh’s representative asked how goals set for least developed countries would be achieved, particularly ahead of the Fourth United Nations Conference on Least Developed Countries, and given that the number of those countries had increased to 48 today, from 21 in 1971. Moreover, least developed countries’ share of global trade remained stagnant. Were there plans to restructure the global financial structure?
Offering a different perspective, Iran’s delegate said the vague nature of so-called “new and emerging issues” did not track with the clearly defined goals articulated by multilateral institutions in their development mandates. He asked who defined the notion of “value for money” – donors or beneficiaries.
Canada’s delegate asked which two or three factors would enable a fragile or conflict-affected country to move onto a “classic development track”.
Responding, Ms. CLIFFE said there was an important question to be asked about the links between high unemployment, for example, and other stresses on a society that elevated the risk of conflict. In that regard, the Bank worked with others which had more expertise in conflict and security. On prevention, it was important to examine situations where a confluence of factors, such as high youth unemployment, high food prices or inequality between groups, could combine with issues of weak institutional accountability to create risk. In such work, the Bank was going back to its original mandate in the broader sense of prevention.
Next, Mr. VON AMSBERG, addressing joint programmes between the United Nations and the Bank, said adjustments had to be made at Headquarters and in the field. In that context, he emphasized the inclusion of the development and security communities early in the design of peacekeeping operations, for example. Also, security might need to be involved for longer periods of time in development strategies. There were distinct business models in the international development architecture, with the Bank’s model country-driven and defined in dialogue with national authorities. To Iran’s query, he said there was a large overlap between country directives for poverty eradication and job creation, for example, and the international targets set. The challenge was to bring those elements together.
Rounding out the responses, Mr. VAN TROTSENBURG discussedthe changing sentiment in donor countries, saying that debate centred on how to ensure that scarce dollars were best employed and produced results. In the multilateral context, the Agency was purely poverty-focused and its funds were not earmarked. More broadly, many coalition partners wondered how to ensure the process was seen as a truly global effort. The Bank’s main vehicle for supporting least developed countries was the Agency, which had provided $45 billion. Finally, he said the “value for money” concept had originated with both donors and beneficiary countries. For those countries, “the quality of design matters”.
Taking the floor for a second round of questions and comments, a number of the Bank’s Executive Directors said the Bank’s private arm, the International Finance Corporation (IFC), and its political-risk arm, the Multilateral Investment Guarantee Agency (MIGA), must also be part of the change in relations between the United Nations and the World Bank. One recommendation to demonstrate the renewed relationship between the Bank and the United Nations was conducting joint high-level visits. Several speakers also stressed the need for ongoing joint actions on the ground in the field.
Delegations continued to underline the need for predictable aid flows, results-based financing approaches, and stronger mutual accountability mechanisms. Further information on the so-called “spill over” report from the World Bank was requested. Several speakers called for more attention to the private sector’s role in the global partnership, with some of them pressing the panellists on how the World Bank and the IMF were working to incorporate the private sector in their strategies and initiatives. The representative of Japan asked what consideration was given to mitigating the risks of private investment.
Highlighting the costs of tied aid, Morocco’s representative said that, despite efforts by development partners to reduce those costs, aid was still not being procured from developing countries. He further stressed the need for better coordination among donors, suggesting the establishment of a code of conduct. A representative of civil society asked what consideration was being given to the constraints imposed by tied aid on the efforts of countries emerging from conflict to build up their productive capacity.
With rising food prices throwing millions of people into poverty and jeopardizing political stability in some countries, China’s representatives asked what measures the World Bank had undertaken to address the situation of these newly impoverished and if the Bank’s Global Food Crisis Response Program sufficient to deal with today’s situation. Ghana’s delegate asked what efforts were being carried out to immunize peaceful countries that were surrounded by conflict, from being infected by the contagion of conflict.
Speakers agreed that with conflicts multiplying, the international community must better leverage its development toolkit to help prevent and end them. Noting the general consensus that fragility and conflict threatened the Millennium Development Goals, the Bank’s Executive Director from the United Kingdom said gender did as well. One representative asked about the barriers to further progress in the multilateral trusts in conflict countries.
Egypt’s delegate could not agree more with the World Development Report’s emphasis on the need for job creation and expressed hope that it would also be considered in the context of the International Development Agency. Also, he hoped future analysis might not be confined to the least developed countries, with consideration given to middle-income countries. He asked how external financing could be linked to increasing productive capacities and increasing job creation.
Responding, Mr. VON AMSBERG said that, on aid effectiveness, the Bank was doing “pretty well”, particularly in areas like tied aid and working through country systems. But it continued to be challenged in some areas of its partnership behaviour, including pool funding arrangements. He saw a strong link between the World Development Report’s analysis and the need to work through country institutions. While it was sometimes necessary to have “quick wins”, the fragile States needed longer-term investments. He also noted protections that MIGA was working to protect private investment in a number of areas.
He cautioned that the trap of an overly rigid division of labour must be avoided. Work on the ground mattered most to practically translating the report’s recommendations. Finally, he underlined the opportunity the report gave to implementing a “step-change”, as one speaker had said.
Mr. VAN TROTSENBURG said the Agency placed 40 per cent of its investments in infrastructure. That must be scaled up, possibly with private sector involvement. On the issue of job creation, he said there would be a working group on growth and job creation. “This is clearly on the radar screen.”
Ms. CLIFFE said the Bank was looking at provisions to increase support for regional programmes, covering development in more than one State, as well as working with regional institutions. To a question on peacebuilding, she said the message of drawing together political, security and development actors was an area where the Peacebuilding Commission was uniquely positioned to advise on future action. In addition, there was possibly an unexploited potential for it to advise on thematic issues, which could include timetables. Regarding public-private partnerships, she said the main issues were to look at infrastructure complementarities, risk sharing in financing, and political risk guarantees.
Also participating in the interactive discussion were representatives of Argentina, Iran, Peru, Zambia, Switzerland, Germany, France, Gabon, Norway and Indonesia.
A representative of the European Union also spoke.
Several Executive Directors of the World Bank also participated.
Also speaking were representatives of the following major groups: business sector and civil society.
Thematic Debate 2
The Council then held a thematic debate, moderated by the Council President, on “The role of the United Nations system in global economic governance”, which featured presentations by Serge Tomasi, Director for Global Economy and Development Strategies, Ministry of Foreign and European Affairs of France and Co-Chair of the Group of 20 Development Working Group; and Vanu Gopala Menon, Permanent Representative of Singapore to the United Nations and Convener of the Global Governance Group (3G).
Opening the afternoon’s discussion, Mr. TOMASI said that for several years, a number of crises had unfolded one after the other, starting with the Asian financial crisis, which demonstrated the shortcomings of international financial tools. More recently, in 2008 and 2009, the food, energy and financial crises had sent shocks throughout a multilateral system that, developed as it was in the wake of the Second World War, was based on the principle of national sovereignty. Those crises had shed light on several structural flaws in that system and raised questions about how realistic the prevailing model of continuing growth was. Against that backdrop, it was clear that, in a world characterized by instability, a rapid response capacity was needed and global economic governance must be reconsidered.
What exactly was meant by global governance, however, was unclear, he said. States had three functions — legislative, executive and administrative — but there were clear differences when these functions were applied to the global level. While the United Nations was the single global body for the legislative function, it had shortcomings. Meanwhile, administrative functions existed in the multilateral system in the form of the various secretariats. As for the executive function, there was a clear ambiguity. Regardless of whether there was a desire for a body to develop a policy to be applied across the board, such a body was, actually, impossible.
He stressed that in this discussion, two false debates should be avoided. First, the G-20 was not a kind of “economic Government”, but a forum for economic cooperation to manage growing interdependence. The debate over the Group’s legitimacy was, really, a non-issue since legitimacy only applied to bodies that had the power to implement decisions for all. There was, however, a real question in terms of the Group’s representation. Regarding the coordination of macroeconomic policies to ensure more cooperative and effective action to remedy imbalances in global markets, he believed the G-20 was fairly representative, though not universal. Moreover, in the wake of the crisis, the G-20 had set in motion reforms to adapt to the realities of today’s world.
Yet the challenge — which had already been noted today — was to identify whether that forum would be able to remedy more structural issues, he said, adding that, under France’s presidency, such questions would be on the agenda. He agreed that stronger ties were needed between the G-20 and the United Nations, and he also noted several dialogues between the G-20 and non-members in the run-up to that Group’s meetings. Although institutionalizing the participation of the United Nations Secretariat was difficult, the Secretary-General was invited to attend the Group’s meetings, as were representatives of regional groups. Another proposal aimed to organize forums on issues that included non-members.
Rather than establishing a new body aimed to handle global economic governance, the French Government believed that existing ones should be retooled. He argued that the time was right to generate consensus on this front, and the Economic and Social Council could engage in dialogue on the matter. Finally, in a divided world beset by numerous crises, the United Nations was the world’s only “shared house”. As others had suggested, the twenty-first century would be one of cooperation, or it would be nothing, and the United Nations must be at the heart of that cooperation and, indeed, foster it. To work together in this shared house, Member States had the responsibility to reform this system, he added.
Next, VANU GOPALA MENON, ( Singapore), Convener of the Global Governance Group (3G), said the United Nations’ role in global economic governance had been the subject of much debate following the 2008-2009 global financial crisis. In his opinion, the United Nations system, which included the Bretton Woods institutions and the World Trade Organization, played an important role in global economic governance.
Nonetheless, when the global financial crisis hit, it was the G-20 that stepped up, he said, and, working with the Bretton Woods bodies, catalysed a coordinated global response to help avert a global economic depression. Its response highlighted the reality that key decisions on global economic issues could no longer be the preserve of a small, elite group of developed economies, but must include key emerging economies, such as China, India and Brazil. It also pointed to the weaknesses of the current system.
Against that backdrop, he said the informal 3G, which comprised 28 countries from all regions, had worked to promote constructive dialogue between the United Nations and the G-20. “We need to keep an eye on the work of the G-20 and keep them honest, especially since their decisions will have a major impact on all of us”, he said, “whether we like it or not”. The grouping had called on the G-20 to provide regular briefings on its work and continue to invite established regional groupings to their summits to increase engagement.
However, the G-20 had yet to show sustained leadership in the area of international trade, he said, a system which must be kept open for markets to adjust and for prices to find their right levels — all of which was part of the restructuring the G-20 was hoping to achieve. Those nations, which together accounted for 80 per cent of international trade, must lead in breaking the impasse in the Doha Round of trade negotiations. “One cannot wish away protectionism by saying all the right things in G-20 communiqués,” he said.
In the meantime, the United Nations must reform its own internal processes to stay relevant, he said, noting that some parts of the Secretariat were still trying to “protect their turf” at the expense of the system as a whole. “This must stop,” he said. It was no secret that some in the Secretariat were not “terribly enthusiastic” about reforming the United Nations, as seen in discussions about the creation of UN Women. States too must stop obstructing reform and instead propose constructive ideas. Some were so reluctant to retire their pet issues that the number of General Assembly resolutions had grown year after year.
Moreover, because agreements were often driven to the lowest common denominator, voluntary trust funds were created which lacked resources and reports were requested of the Secretary-General that most did not read. That said, he conceded that many of the world body’s agencies were “doing good work”, including those focused on implementation in the field, and it was important to equip them with resources and capabilities to effectively address global challenges. Also, the Economic and Social Council’s present composition must be re-examined, as its “archaic” structure had not kept up with geopolitical realities.
Such work was linked to the larger institutional framework for sustainable development, he said, noting that climate change and trade were two issues that transcended its economic, environmental and social pillars. To stay relevant, the Council must take on issues that States were addressing.
The United Nations’ greatest strength was often its greatest weakness, he said. Accommodating the concerns of 192 countries often resulted in slow movement and outcomes that were watered down to the lowest common denominator. It was important that the Organization tackled the tension between inclusiveness and efficiency, which was key to strengthening the global governance framework. If the United Nations was unable to agree on the important issues of the day, it ran the real risk of having no voice, and worse, disenfranchising itself in the global debate.
During the ensuing debate, which focused on the possible routes for reforming global economic governance — whether to “start from scratch” or retool current structures — the majority of representatives of Member States, the Bretton Woods institutions and civil society argued strenuously for the latter approach. In that context, most took up the call for greater coordination between the United Nations and the G-20, with some contending that developing an integrated approach between the bodies responsible for norm-setting and those tasked with implementation was at the heart of the call for more coherence and coordination. One speaker said the United Nations system must be made more capable.
Others argued that the G-20 alone could not take the kinds of decisions needed, with some speakers voicing support for proposals for what they referred to as a “Governing Economic Council” within the United Nations. In that context, one speaker called for the development of a charter for sustainable and economic development. She also asked why the financing for development process did not have its own permanent decision-making body.
Chile’s delegate said that he liked the G-20 so much he wished it were within the United Nations in the form of a global governing council, provided there was representation by non-member countries. While it was true that the G-20 was increasingly concerned with development, Nepal’s delegate, who spoke on behalf of the least developed countries, worried about the Group’s non-inclusive nature.
Echoing the worry that the G-20 was not inclusive enough, the representative of Bangladesh asked how the Group was addressing the needs and challenges of the least developed countries. Speaking on behalf of the “Group of 77” developing countries and China, Argentina’s delegate said efforts to reform the international financial architecture must be a global exercise that included the participation of developing countries.
Suggesting another route, one Executive Director of the International Monetary Fund (IMF) said the G-20 had, de facto, become the “steering committee” for the global economy. From that starting point, the G-20 could, he proposed, be transformed into a global forum and from there, tighter coordination established between it and the United Nations.
He went on to say that decisions were currently taken in the G-20, while their implementation was the purview of specialized agencies such as the World Bank or the IMF, which had their own governance layers through which the G-20’s decisions must be filtered. While that system was currently working, it was not ideal, and the implication of his proposal was that some subsidiary bodies would have to disappear. In that scenario, the Economic and Social Council must forge a closer partnership with the G-20.
Another of the Fund’s Executive Directors said the latest round of quota reform would likely be in place by the end of 2012. However, in his experience, changing representation did not frequently change outcomes. The relationship between the IMF and the G-20 was pragmatic, and currently, the Fund was betting on “working with what we have”. Going forward, it was essential to see how the G-20 itself evolved. From there, the different agencies would then be able to determine how they fit into the new structure.
Amid the talk of reform, China’s delegate warned that, with the global economic crisis abating, the world’s economic actors were returning to business as usual and the United Nations must play a vital role in maintaining momentum for change. Similarly, the representative of the Republic of Korea argued that efforts to reform global economic governance must continue.
Responding, Mr. MENON said that to put in motion the “variable geometry”, it was his view that countries should be invited to participate in discussions and decisions relevant to them. In response to the proposal to transform the G-20 into a universal economic decision-making body, he cautioned that that forum had not “sunk its roots so deeply” that it would be welcomed with open arms within the United Nations. Discussions on the G-20 were, he recalled, quite contentious, suggesting that it must proceed cautiously, or the whole reform process would just collapse.
Reminding participants that the idea of a global economic council was not new, Mr. TOMASI said it was instructive to consider that discussions on Security Council reform, which began 20 years ago, had not moved “one iota”. For his part, he wondered what would be the domain of such a global economic council, and if it would be able to take immediate decisions and impose sanctions accordingly.
Also, the issue of bringing interdependencies into international law was considerable. He believed the economic and financial crisis was far from over and it was not yet time to consider what the G-20 would do after it ended. The G-20 had shown itself capable of dealing with the crisis, but it remained to be seen if the forum could deal with deeper structural questions. If it could not manage the needed reforms, it would then be necessary to consider other options.
He disagreed with comments that the G-20 actually decided anything; their press communiqués had no legal force. The Group’s agenda was largely decided through the office of its president. In terms of its working method, the G-20 operated on the basis of consensus. There were a number of fields that required further action to better balance the global economic system. Because the focus remained on the agenda that came out of the Seoul Summit, no new topics would be tackled this year.
As for the differences between the “Group of 8” (G-8) and the G-20 following the economic crisis, he said the G-8 no longer saw itself as an economic coordinating body, but as a forum to consider emerging issues, such as the green economy, as well as ongoing ones like security. The G-20 was also addressing development issues. A number of national reports on accountability had been completed, including one from France. The G-8 was also working with its African partners to identify areas to enhance organization.
With respect to the least developed countries, he said the G-20 could not do everything. Indeed, it was not the United Nations and, thus, could not address the full range of issues covered by that Organization. The upcoming summit on the least developed countries in Istanbul would prompt movement on that issue. Likewise, the forum to be held in Busan, Republic of Korea, would also provide an opportunity to move forward on aid effectiveness.
In continued debate, participants underscored the priority their countries’ placed on better collaboration among multilateral institutions and groupings, with some agreeing that the rapid emergence of the G-20 during the global financial crisis was a sign that current structures, including the United Nations, were outdated and had been caught flat-footed. Despite that, many said the United Nations, with its wealth of expertise, had a rightful contribution to make to the G-20’s development work and welcomed its participation in summits, the “Sherpa” process and finance minister meetings. The G-20 should not be seen as a competitor to the United Nations, but rather as a complementary group.
However, it was vital the Organization mobilized its expertise across the range of agencies to participate in the G-20’s work as efficiently as possible, the United Kingdom’s delegate said. Reform would be “neither comfortable nor fast”, but those were not reasons to abandon the process. Other speakers, including from civil society, said the United Nations had focused on tactics, rather than strategies to bring bold visions to light. “The world does not wait for the United Nations,” he said. Decisions were made in other forums, after limited debate among elite and powerful players. Leaders in the United Nations must learn it was time to “take a risk and make the Organization a place for a genuine, detailed exchange of ideas”.
The United Nations had generated so many papers, resolutions and interventions that “it’s [created] a blizzard”, said the United States delegate. It was, therefore, hard to find a point of focus. As such, a balance must be struck between inclusiveness and effectiveness. Echoing the remarks of others, he said legitimacy was not gained, but rather earned. He asked what the appropriate focus should be for the United Nations, as, at present, it was focused on everything and not accomplishing enough.
The cause of the United Nations’ ineffectiveness was not related to the number of members, said Cuba’s representative, but rather to a lack of political will among some of them. It was the same advanced economies in the G-20 that resisted discussing the same matters in the United Nations. To increase the Organization’s legitimacy, said Venezuela’s delegate, countries in the global South had created a financial group within the Economic and Social Council, and had proposed that a conference be held in 2012 to follow-up on the global financial crisis.
Offering a different perspective, the representative of Mauritius said of the functions of governance – legislative, administrative and executive – there had been the least agreement on the executive function. Debate had centred on the norms of financial regulation — the legislative component of governance; however, there had been little debate about executive functions like how to enforce new normative frameworks. Those functions should be left to national authorities that could act on behalf of the international community. Regional coordination was key in that context, as many States would be able to enforce new norms through such cooperation.
A business sector representative said the goal of governance was to eliminate corruption, which had two primary sources: the granting of licenses and procurement. If the United Nations observed elections, there was no reason why it could not observe whether procurement or licensing enjoyed the same transparency. By way of example, he said the more than 25-fold difference between 2G and 3G cellular network licenses granted in India highlighted that an opportunity had been lost to lower telephony costs. The United Nations should translate the concept of “transparency” into a finite goal achievable in a finite time frame.
Responding, Mr. TOMASI said combating corruption was part of the G-20’s agenda. “Anything and everything to focus attention on this item is being done,” he said, requesting support from all participants. To the idea of creating a working group of experts that would serve as an economic governing council, he did not have a defined stance on that proposal. In any case, international organizations could provide the needed expertise and analysis on macroeconomic issues, and many were already playing that role.
As for balancing efficiency with inclusiveness, he said the G-20 was grappling with that issue as its mandate expanded and results became more difficult to attain.
Regarding the Group’s effectiveness, he was struck that some had said it did too much, while others said it did not do enough. Outlining gains, he said the G-20, even at the height of the crisis, did not fall into the trap of protectionism, which was “quite an accomplishment”. Also, the fact that it had ensured that developing economies avoided a crisis of liquidity was another. He had witnessed the “free fall” in private capital flows in those nations, in which public policies had played a role. The International Monetary Fund had injected liquidity, another notable accomplishment.
He agreed on the need for regional cooperation in governance. In Africa, for example, “disjunction” and the inability to economically integrate were major obstacles. He also agreed that the “G-20” was not a substitute for the United Nations. As for the coherence of the multilateral system, he said the issues of action must be defined, especially between trade and social norms, for example, or trade and environmental norms.
Rounding out the conversation, Mr. MENON said outreach by “G-20” members had improved. At first, attempts at inclusiveness had not been systematic but now, more outreach meetings were taking place in New York. In an ideal world, everyone would be involved in all decisions, but “that is not the real world”. Look at multilateral trade system, he said, pointing out that the Doha Round had not concluded after 10 years of negotiations, but that had not stopped international trade — it had only grown.
“They’re not waiting for the Doha Round to be completed”, he said. Singapore’s own trade was four times the size of its gross domestic product (GDP). Countries with a big interest in trade did not have an interest in concluding the Round.
Also participating in the discussion this afternoon were the representatives of Indonesia, Morocco, Mexico, Switzerland, Egypt and Ecuador.
The representative of the European Union also commented, as did the observer for the Holy See.
Also speaking were representatives of the business sector and civil society major groups.
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