Severe Austerity, Weak Policies, Job Shortages Hurting Global Recovery, Experts Caution as Economic and Social Council Concludes High-level Meeting
Severe Austerity, Weak Policies, Job Shortages Hurting Global Recovery, Experts Caution as Economic and Social Council Concludes High-level Meeting
|Department of Public Information • News and Media Division • New York|
Economic and Social Council
Special High-Level Meeting
6th & 7th Meetings (AM & PM)
Severe Austerity, Weak Policies, Job Shortages Hurting Global Recovery, Experts
Caution as Economic and Social Council Concludes High-level Meeting
Special Event Provided Valuable Input for Major Upcoming
United Nations Conferences on Development, President Says in Closing Remarks
Severe austerity measures, weak policies and a dearth of jobs were constraining efforts to reduce poverty and to trigger real recovery from economic crisis and sustainable “green” growth, the Economic and Social Council heard today as it concluded its special high-level meeting with international financial and trade institutions.
Much of today’s debate centred on how the Bretton Woods institutions — the World Bank and the International Monetary Fund (IMF) — as well as the United Nations and other actors in the development sphere, could coordinate their strategies in helping the world’s poorest nations down a path of sustainable economic development.
During this morning’s thematic panel discussion on “promoting sustained, inclusive and equitable economic growth, job creation, productive investment and trade”, top officials from the United Nations Department of Economic and Social Affairs and the World Trade Organization (WTO) examined approaches to collaboration in efforts to better serve the needs of recipient countries as the global economy continued to recover.
With that in mind, panellist Jomo Kwame Sundaram, Assistant Secretary-General for Economic Development in the Department of Economic and Social Affairs, warned that implementing severe austerity measures could jeopardize economic recovery just as countries needed not only to build up their own economies, but also to establish trust with their citizens. “We cannot afford to fail our future generations,” he stressed. “This is a time for cooperation. We will fail our generation if we do not provide a way out when Government leaders are looking over their shoulders on how financial markets will judge them.”
Fellow panellist Rob Vos, Director of the Department’s Development Policy and Analysis Division, cautioned that “prospects for quick recovery were dim”, citing “persistent and high unemployment” as the main challenge to the economy. It remained the “Achilles’ heel to recovery”, he added. Premature fiscal austerity strategies should be replaced with more short-term stimulus that should be internationally coordinated and focused on job creation and investments in structural reform for sustainable development, he said.
A third panellist, Shishir Priyadarshi, Director of Development at the World Trade Organization, underscored the need for a strong focus on the economic aspects of development in any post-2015 development and poverty-alleviation agenda. “Taking ownership of its own future is a nation’s best option of designing an appropriate growth strategy,” he said. However, the WTO could not work in isolation, he cautioned. The multilateral trading system was a tool for achieving growth, but it was only one of many, he emphasized. It was only by working together in shared partnerships that international organizations could help nations achieve their goals and aspirations.
In the ensuing debate, representatives of Governments, intergovernmental bodies, civil society and the business sector emphasized the need for robust policies that would attract investors and the private sector to develop jobs, which in turn would create consumers, tax revenues and better public services. Many speakers agreed that austerity measures hobbled economies, expressing a preference for stimulus packages to “jump-start” recovery.
Participants in this afternoon’s thematic debate, on “financing of sustainable development”, heard from panellists David O’Connor, Chief of the Policy Analysis and Network Branch in the Department’s Division for Sustainable Development, and Michael Clark, Interregional Adviser of the United Nations Conference on Trade and Development (UNCTAD).
During the interactive discussion, many participants queried the ability of the World Bank and the United Nations to provide assistance to maximize aid effectiveness with a view to achieving sustainable green growth and development.
Miloš Koterec (Slovakia), President of the Economic and Social Council, said in his concluding remarks that deliberations during the two-day meeting had provided valuable inputs for major United Nations conferences on development issues, including next month’s thirteenth United Nations Conference on Trade and Development (UNCTAD XIII) in Doha, Qatar, and the United Nations Conference on Sustainable Development (“Rio+20”), to be hosted by Brazil in June.
Yesterday, the Council’s work focused on bolstering efforts to spur “green” growth and jobs, ensuring sustainable development in the least developed and other developing countries. The discussions featured presentations by officials from the World Bank, the International Monetary Fund (IMF), the WTO and UNCTAD, in addition to an address by United Nations Secretary-General Ban Ki-moon.
Also participating in today’s deliberations were representatives of the Comoros, Bangladesh, Belarus, Russian Federation, Nigeria, Republic of Korea, Germany, Sri Lanka, Morocco, Brazil, United Republic of Tanzania, Venezuela, China and Japan. A representative of the European Union delegation also spoke.
Civil Society participants included representatives of the Food and Agriculture Organization, Regional Commission New York Office, International Chamber of Commerce, United Nations Marianists International, International Labour Organization, PricewaterhouseCoopers, Committee on Financing for Development, Society of Catholic Medical Missionaries, Latin American Network of Debt and Development, NGO Committee on Financing for Development, Business Council for the United Nations and Financing for Development.
The Economic and Social Council will reconvene at a time and date to be announced.
The Economic and Social Council met this morning to conclude its annual special high-level meeting with the Bretton Woods institutions, the World Trade Organization (WTO) 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 included four thematic debates. Today’s first debate will focus on the promotion of sustained, inclusive and equitable economic growth, job creation, productive investment and trade and financing for sustainable development.
Thematic Debate 1
The first thematic debate, titled “Promoting sustained, inclusive and equitable economic growth, job creation, productive investment and trade”, featured the following panellists: Jomo Kwame Sundaram, Assistant Secretary-General for Economic Development, Department of Economic and Social Affairs; Shishir Priyadarshi, Director, Development Division, Department of Economic and Social Affairs; and Rob Vos, Director, Development Policy and Analysis Division, Department of Economic and Social Affairs.
Mr. SUNDARAM cautioned that austerity measures were not always the best way to bolster economic recovery, and efforts to boost investor confidence could be deceptive in a global economy. Slashing social services could be harmful to economy recovery while depressed demand and greater instability, coupled with fiscal austerity, would hardly inspire investors. The 2011 United Nations World Economic Situation and Prospects, as well as studies by UNCTAD warned that austerity measures could actually damage recovery efforts and called for policy coherence in global economic governance, he noted.
“This is a time for cooperation,” he emphasized, pointing out that the slow recovery of 2009 had been nipped in the bud by severe austerity measures. “We will fail our generation if we do not provide a way out, when Government leaders are looking over their shoulders on how financial markets will judge them.” A Marshall Plan for the present age should aim at sustainable measures, he said, adding that the current crisis had been fuelled by debt and a shortage of tax revenue. Without strengthening revenues there was no way for countries to finance social measures, he said, stressing that stakeholders at today’s meeting must ensure better cooperation in order to help Governments enhance their tax-collection capacities.
Higher food prices would only exacerbate poverty and hunger, he said, underlining that recovery must be equitable. Reform did not mean dismantling the current system but it should enhance economic resiliency. Trade offered the opportunity to grow through exports, but growth in productivity was also needed, including investments in education, skills, science and technology, he said. Developing countries, especially the least developed ones, must improve their productive capacities and access to markets. Condoning protectionism now would further undermine trust, he warned, adding that the WTO had played a crucial role in sounding a warning against protectionist measures and their potential consequences. “We cannot afford to fail our future generations,” he stressed.
Mr. PRIYADARSHI said it was imperative that the international community implement an agenda which linked growth to environmental sustainability. The challenge of managing that change through agreements establishing new global rules and development partnerships concerned not only trade but also climate change, food security and natural resources. Regarding trade, however, he said the issues that the multilateral trading system would need to continue working on in the coming years were reducing the number of remaining barriers to trade by keeping markets open, including by promoting food and energy security; fostering a developmental partnership by making the rules of trade more equitable and sustainable; monitoring protectionism and strengthening the rules where they were weak; and building trade capacity, as well as trade-related infrastructure, through enhanced and targeted aid for trade and technical assistance.
Any development agenda would have to include economic growth as a central pillar of its strategy, he said, stressing the need for a strong focus on the economic aspects of development in any post-2015 development and poverty-alleviation agenda. “The WTO members will find it difficult to accept the fact that a development agenda which professes to be ‘people focused’ and is a ‘reflection of reality’ does not have a strong emphasis on the economic aspect of human development,” he pointed out. Without a continued focus on economic empowerment, any development agenda would not be sustainable, he added. It would be important to include the share of developing countries in global and regional trade as an indicator of development. The new realities of trade and global good production had had a transformative influence on national trade policies. Global value chains meant that countries would increasingly have to look at domestic regulatory mechanisms, such as those relating to intellectual property, competition policy, banking and investment regulations, and procurement policy.
While trade was viewed as a multidimensional and multifaceted tool of economic growth, with implications for development policy, ultimately, a nation should set its own priorities and objectives, he stressed, adding that it was up to each to determine what it needed while setting out a development plan to achieve its targets. Governments must take the leading role in a consultative process with the private sector, civil society and other stakeholders to ensure sustained, inclusive and equitable growth. “Taking ownership of its own future is a nation’s best option of designing an appropriate growth strategy,” he said. Stressing that the WTO could not work in isolation, he said the multilateral trading system was a tool for achieving growth, but only one of many. Only by working together in shared partnerships could international organizations help nations achieve their goals and aspirations, he said.
Mr. VOS said the main challenge to the economy was “persistent and high unemployment”, which remained the “Achilles heel to recovery”. The world economy was still at a critical juncture, he said, adding that a double-dip recession in major developed countries was still a risk. The main “downside” risks and uncertainties included contagion of sovereign debt crisis, fragility in the banking sector, prolonged high unemployment, and policy dilemmas.
High unemployment in developed countries and rising long-term unemployment, as well as high youth unemployment, undermined future growth prospects, he said. “Prospects for quick recovery are dim,” he said, noting that, although employment levels in developing countries had recovered, they were still below pre-crisis levels. Moreover, rising employment, long-term unemployment and high youth unemployment remained, he said, noting that in the long term, a growing global labour force would mean an increasing jobs deficit.
Turning to policy challenges, he said there should be no premature fiscal austerity but rather a more short-term stimulus. That should be internationally coordinated and focused on job creation, as well as investments in structural reform for sustainable development. Persistent high unemployment, compounded by early withdrawal of fiscal stimulus had increased the risk of a double-dip recession in developed economies. Sovereign debt distress was spreading to more countries and fragile banking sectors had created turbulence in the financial markets, he said. The key policy dilemma and challenge was short-term job creation versus fiscal sustainability, he added.
The representative of the Comoros noted that the debt crisis had devastated the euro zone, with damaging consequences in developing countries and small island developing States. Could the panellists comment on that? he asked
A representative of the Food and Agriculture Organization (FAO) highlighted the importance of growth and investment in rural economies and rural youth. Rural women also faced additional challenges, she said, calling for more productive rural strategies aimed at improving non-farming rural employment opportunities.
A representative of the Regional Commissions New York Office pointed to large gaps in productivity, as well as the technology gaps that hindered a rise in wage levels in the Caribbean region. Growth in consumption would not achieve the desired levels in the Asia and Pacific region. Africa, heavily dependent on the primary commodity sector, had been enjoying growth rate of 7 to 8 per cent before the crisis, he said, adding that diversity was the key to developing growth in the region. In the Arab region, youth employment needed a new model to connect the economic with the social and political spheres, he said, adding that more tailored, targeted programmes aimed at the regions would be beneficial.
An executive director of the World Bank said emphasis was needed on financial sector issues. Given the magnitude of financial globalization, characterized by huge daily transfers on speculative instruments, he wondered what that did to the economy. “With the crisis, the world has changed,” he said. “Now we live with almost indefinable insecurities in the system, which hold the banks back.” He asked the panellists to comment on that trend.
Emphasizing the importance of building up internal markets, he said that, since trade was not enough to ensure equitable development, establishing domestic demand must be the first step. It was not only about dropping wages, but also about primary income distribution, he said, noting, for instance, that tax systems were lagging behind. While caution was needed alongside fiscal austerity, it was important to note that, although social spending was a kind of permanent fiscal stimulus, keeping the workforce and internal market from deteriorating, inefficiencies must be eliminated.
The representative of Bangladesh sought the panel’s opinion on the importance of recalculating the optimal unemployment rate, asking also about trade policy in respect of developed and developing countries. “I fear that the existing industries and unions will resist the changes in policy and one has to handle that carefully,” he said. Expressing scepticism about pledges to boost official development assistance (ODA) to 0.7 per cent of gross domestic product (GDP), he said delivery on that commitment was taking too long. There was a gap between conceptual policies and realities on the ground, he said, noting that proper funds and resources were not being allocated to those in the field. Institutions stood in the way of funding flows, he added.
The representative of the International Chamber of Commerce said ODA was no longer the primary driver of economic growth in developing countries, pointing out that remittances, private-sector investment and domestic growth were additional funding sources. Promoting domestic markets and capital formation was important, she said, adding that nurturing and developing domestic growth was the key to development and growth. In order to provide access to capital, developing countries should promote stock and bond exchanges. Investing in infrastructure, including railroads, telecommunications technologies, bridges and roads created links to regional and international trade, she said, adding that education, including vocational skills training, would provide the labour market with a productive labour force. The International Chamber of Commerce encouraged national Governments, the United Nations and other international organizations to include businesses in the debate on how to move ahead, he said, pointing out that the business sector was committed to its own core values and was a critical partner in restoring confidence in the world economy, she said.
A representative to the United Nations Marianists International said it was important to spread the burden of borrowing, and urged international financial institutions to draw upon national experiences. They should also allocate more funds to help the most vulnerable, he said, adding that the duty- and quota-free access agreement for the least developed countries should be applied to all their products. “Protectionism is not always a bad word if it helps protect domestic markets,” he said, stressing that there was no “universal blueprint”.
The representative of Belarus asked whether the policies under discussion would be adopted and when. ODA remained extremely important, particularly for the most vulnerable countries, including middle-income countries. Trade was critical to making regional strategies as in the case of Belarus, which was working out well.
An Executive Director of the World Bank asked whether fiscal space should be depleted or preserved in such a way as to be able to deal with future crises. Noting that the same unsustainable pattern was being repeated, he welcomed the trend of countries making more contributions as their economies grew.
A representative of the International Labour Organization (ILO) said the global outlook was indeed worrisome. Out of 197 million unemployed in 2011, 75 million were youth. System-wide policy responses and frameworks were already available to facilitate labour-market transitions and bolster social services, among other things, and collective action was needed to boost recovery, she said.
The representative of the Russian Federation said a State’s first task was to provide an environment conducive to a particular type of investment. Given that new work conditions must be addressed, in addition to the quality of life for families, the Russian Federation would hold a conference on the practical implementation of methods enshrined in ILO concepts. However, business and State interests were not always in line with development interests, he cautioned. Given current efforts to formulate a post-2015 development agenda, he asked the panellists how the interests of the State, private business and employees could be balanced.
The representative of the European Union delegation said an early conclusion of the Doha Round of WTO negotiations, as well as rights and commitments under such an agreement, must be identified. He sought the panellists’ input on that matter an on the “ Rio+20” process.
The representative of Nigeria said the global nature of the economic and financial crisis, and its rapid spread, made clear the inadequacy of national efforts to overcome it and the necessity of regional and international action. Developing countries needed flexible fiscal policies that would promote job creation and harness social safety nets. An enhanced, predictable and sustainable flow of ODA was essential to meet regular development challenges, as well as new and emerging ones, particular in least developed countries, she said. Furthermore, there was a need to reform the rules governing intellectual property rights and to enable access for developing countries to new technologies and products, without undue hindrance, she added.
The representative of the Republic of Korea said the adverse economic downturn posed serious challenges to the realization of the Millennium Development Goals. The Republic of Korea was continuing a discussion with other Member States on promoting global policy coordination in trade policy. While noting his country’s heavy dependence on international trade, he cautioned: “Sometimes trade is a double-edged sword and the negative conditions of international trade make the domestic markets and employment market very unstable.” He asked whether it was possible to find a balance between international trade and domestic growth.
A representative of PricewaterhouseCoopers, describing the private sector as “huge, complex and incredibly diverse”, note that a few speakers had pointed out the importance of current and future technologies, but stressed the importance of asking how those technologies would affect the world. Citing feedback from a private-sector survey which concluded that Governments faced uncertain futures, he said: “What we need to talk about is good growth, because we are already suffering from bad growth.” Governments faced the challenge of striking a balance between creating jobs and maintaining fiscal discipline. Improving accountability, transparency and access to public services was vital to stability because it would increase the quality and reliability of Government services, he said, emphasizing also the importance of tax revenues to the promotion of Government efficiency and effectiveness.
A representative of the Committee on Financing for Development said that what really mattered to people everywhere was the ability to provide food, shelter and clothing for their families in a secure environment. However, the current environment had made that impossible for many, especially the most vulnerable, she said. Regarding austerity measures being promoted by politicians around the world, she said: “These are not the answers to our problems and would likely cause future problems.” However, she agreed with the representative of the Republic of Korea on the importance of strengthening local and domestic markets. Small community-owned banks helped to create jobs by providing funds while helping to build economies from the grass roots and turning them into prosperous communities. Supporting small-scale enterprises and cooperatives could also contribute to the local economy, she said, adding that such contributions had a positive impact on employment and reducing poverty. At the same time, Governments must support such local enterprises, she stressed, adding that tax revenues must be used to invest back into the community. That would not only create jobs, but also promote sustainable development.
A representative of the Society of Catholic Medical Missionaries said that, with widespread hunger and poverty, there was a distinct need for social protection. Cooperatives were important tools for stimulating local economies and quality of life, she said, adding that economic morality was needed to build sustainable communities. The first successful cooperative had been established in the United Kingdom, and focused on the values of people working together. One cooperative in India had sold produce and goods, eventually changing the lives of an entire community and breaking the monopolistic tendencies of the local market structure, she said, stressing that such cooperatives must be established in rural areas to battle poverty. Government and private-sector investment were needed, especially given that 2012 had been designated the Year of the Cooperative, she said.
Mr. SUNDARAM, responding to comments and questions, said issues of financial access had led to the current crisis. Since 2001, credit had been made available in the United States and sustained by the leadership of the Federal Reserve. As a result, over-investment had occurred in many sectors. It was now necessary for Governments to provide the enabling investments that would encourage private-sector investment, he added.
Investment was also needed to tackle climate change, he said emphasizing that it was also necessary to induce investments in areas with needs, including renewable energy, he said, noting that the 1970s green revolution’s success in encouraging farmers to increase food production had been made possible due to Government interventions. A strong international and public effort was now needed to complement private initiatives in that area. As for the debt crisis, continuing steps were needed to find solutions or broadly accepted new rules, he said. On taxation, he said recent experiences in Italy, Greece and elsewhere had demonstrated the need to improve tax systems in order to realize sustainable development.
Mr. PRIYADASHI, answering a question about “leaving countries to their own determination”, said not all countries had the same capacity to take on the monumental challenges they were faced with. He admitted that trade policies in some countries caused distortions, and that it was important to curb such policies, agricultural subsidies in particular.
Responding to a question about finding the right balance between emerging economies and developed countries, he cited the Doha Round, recalling that, while it had been launched to support development and address obligations and responsibilities, a lot had changed in last 10 years. There had been rapid growth in some emerging economies, and there was still a lack of agreement on both sides as to where the balance must be struck. Fostering regional trade, including in the inputs that the WTO provided to the Group of 20 (G-20), was important.
Mr. VOS focused on a comment on the effect of financial fragility on the job crisis, particularly in Europe and the United States. The problem was not with fully managing and unclogging the market, but that was nearly impossible to do because of low income expectations, which in effect were holding back demand for credit. It was important to focus on measures that multiplied the effects of the stimulus and shifted spending, he stressed, noting, however, that he was uncertain how quickly that would work. “Let me empathize: it does matter how you do it,” he said about finding a solution for the ailing economy.
Addressing a question about unemployment rates, he said the optimal rate was mostly used as a base in macroeconomic discussions, but the issue was relevant across countries, because wages were correlated with economic growth and spending. In response to a question on the “education effect”, he said more people than ever were coming out of the education system, which was a positive sign, but it would create problems in the future because there would not be enough jobs. In the past, higher education meant getting a higher-paying job but in today’s world, that was less common. Greater policy coherence was critical to addressing that growing challenge.
Thematic Debate 2
The second thematic debate, titled “Financing of sustainable development”, featured panellists David O’Connor, Chief, Policy Analysis and Network Branch, Division for Sustainable Development, Department of Economic and Social Affairs; and Michael Clark, Interregional Adviser, UNCTAD.
Mr. O’CONNOR outlined the role of finance in the quest for a transition to the green economy. Regarding financial flows, there were many instruments to raise funds for the creation of a green economy, including public and private sources, he said, stressing that it was critical in the current financial climate to indentify gaps and barriers that blocked funding flows. Green sectors — including agriculture, energy, forestry, water, transport and waste — were in need of investments, he said, adding more specifically that a clean energy supply, clean transport and green buildings were examples of major areas in need of investment for climate change mitigation and sustainable development. As for finance, about three quarters came from private sources and one quarter from public sources, he said. Total investment in clean energy during 2009 was at $200 billion in G-20 countries alone, he said, adding that the ODA target of 0.7 per cent of GDP would deliver $150 billion to countries in need.
There were major financing needs in developing countries, including an estimated €300 billion in China, he continued. Instruments to leverage private investment entailed subsidizing, boosting returns; reducing risk bringing forward returns, altering payback periods, and co-investing. There were various proposals for public finance such as new taxes including a currency tax, a broadly financial transaction tax, a carbon tax, a levy on international transport, and the reduction or elimination of distortionary subsidies on fossil fuels, which was estimated to raise hundreds of billions of dollars. He stressed the importance of a balanced mix between private and public finances, but also emphasized the importance of finding innovative sources of funding.
The representative of Germany asked the panellists to point out where coherence and coordination in financing could be strengthened within the United Nations system.
The representative of Morocco asked how developing countries should use appropriate assistance with a view to ensuring sustainable development, and how the World Bank could help countries achieve aid effectiveness. He also asked how knowledge would be transferred, and what the World Bank’s position was on the concepts of creative financing, green bonds and the Green Climate Fund.
The representative of Brazil, associating himself with the “Group of 77” developing countries and China, said he looked forward to Rio+20 as an opportunity to come up with a new paradigm that hopefully would embody a clear and inclusive economic model and a more coherent approach to sustainable development. Noting that developing countries had been responsible for most of the global economic growth over the last few years, he said they were set to be the main drivers of world GDP growth over the coming years. Perhaps too much emphasis had been placed on patterns of green growth rather than on changing the current production and consumption patterns, he said, pointing out that green growth could not be sustainable unless it catered to the social dimensions of social inclusion and poverty alleviation.
The present fragmentation of financial mechanisms and their vertical approach were not sustainable in the long run, he continued. The transition towards a more integrated approach would require more resources, including domestic resources, and developing countries had made serious strides in that respect. While the private sector had a fundamental role to play, the role of Governments must also be recognized, he said, emphasizing at the same time that they must adopt appropriate and stable policies. Existing financial commitments remain unfulfilled, he noted.
The representative of the United Republic of Tanzania said it was crucial to admit that the policies adopted in the last century were no longer relevant. The least developed countries had trusted that the Doha Round would ultimately support their integration into the world economy, he said, calling for the conclusion of the negotiations and implementation of the Round. He said that, while green growth was good, it should complement Aid for Trade and ODA.
Mr. O’CONNOR replied to a question by Brazil’s representative by saying that the private sector in some countries had taken the lead in investing in green energy. In the context of the Doha Round and the Aid for Trade initiative, it was time to seize the opportunity to export green products and green produce, he said, adding that developing countries, and more particularly least developed ones, needed aid in order to pursue their development goals.
Mr. CLARK outlined proposals on financing North-South technology sharing, and noted that renewable sources could be of key importance in overcoming energy poverty and enabling infrastructure growth, a driver of inclusive development and a job creator. “Access to modern energy and development are the same things,” he said. Based on the “wish lists” of developing countries, international finance could help them develop twenty-first century industries, as well as co-develop and co-own cutting-edge technologies, he said. The concept of carbon financing, based on the collection of usage revenues, could generate between $90 billion and $120 billion per year, he added. However, alternative approaches included bargaining on new terms of trade, keeping in mind that commercial viability required changing the scale of the market, he said.
He said another measure would be adopting a firm-level, commercial approach to technology sharing, since the most urgent need was to lower transaction costs for owners of environmentally sound technologies and those wishing to access those technologies. In the case of developing countries, the cost of access should not be charged until the technologies became commercially viable, he stressed, suggesting also the convening of an open-ended convention with a minimum critical mass of participants to achieve the necessary market scale.
Partnerships meant a “win-win-win” situation, he said, noting that there would be gains for stakeholders, with a new large-scale market, and also for developing countries with low-cost access to technologies at the pre-commercial stage, and for global sustainability with an accelerated transition to carbon-free primary energy supplies.
In the ensuing discussion, the representative of Venezuela asked whether the proposals contained in the Istanbul Plan of Action could form the basis for discussions on the future of development, with the understanding that the countries of the South could not finance new technologies on their own.
The representative of China said that, since most developing countries faced a lack of funds and technology to meet their development goals, solving the funding issue was the key. Rio+20 should achieve tangible results, particularly how to provide new resources. Developed countries should demonstrate the political will to provide predictable and adequate funds to developing countries, she said, adding that international financial institutions should bolster their own commitments to sustainable development. The current discussions covered private-sector financing, which could not replace the critical role of public financing, she said, stressing also that developing countries should not be placed under an additional burden. She asked what kind of measures should be taken to achieve those objectives, and what kind of international policies should be undertaken to develop the renewable-energy sector.
A representative of the Latin American Network of Debt and Development said her civil society group was concerned about the debt crisis and the trend towards increasing debt and reducing ODA, which could undermine development. She asked how resources earmarked for poverty reduction would be monitored, and how the green economy would be regulated.
A representative of the NGO Committee on Financing for Development said that although actions that had bailed out banks in the United States gave the impression that the crisis had been contained, the reality on the ground during the lingering financial crisis showed that many were still grappling with the fallout. A new social compact was probably needed, he said. Expressing support for the partnership approach, he asked the panellist how countries would take part in those initiatives.
Representatives of the European Union delegation and Japan spoke in support of sustainable development practices.
Civil society representatives of the Business Council for the United Nations, and Financing for Development also participate in the discussion.
Mr. CLARK said delegates had raised a recurring theme about the role of the private and public sectors and how to find a balance between the two. Although many participants had said that the private sector should be the main driver of economic growth, Governments had to lead the private sector, he said, noting that asking the private sector to lead was “very challenging”, especially when there was a need to open a new sector requiring a large Government role. The State played a major role in fostering development, he emphasized, adding that it was the only entity that could drive development. However, today’s industrial model was very different from that of a few decades ago, he cautioned. He said that, with his experience of running a business council and serving as CEO of an Indian company, he had learned the importance of Governments not only in working together and sharing common goals and experiences, but also in ensuring the inclusion of innovative business voices.
That kind of experience in South-South, North-South and triangular cooperation must be shared, he continued. Furthermore, it was vital to hold intense and sustained discussions on a regular basis, he said, adding that they must be “institutionalized” in order to have any kind of long-lasting effect. They must be harmonized with some understanding of trade agreements and targeted special regimes for the sharing of intellectual property among those participating. As for civil society’s role, he said it was important to include all kinds of organizations, such as cooperatives and non-profits. There was already discussion forming leading up to Rio+20 with hopes that civil society would share its on-the-ground experiences, he added.
Mr. LIU WEI, stepping in for Mr. O’Connor, addressed the question of financing, saying that funding sources depended on each specific country and the level of development. For many countries, ODA had to form the main funding source, he said, adding that there were also innovative sources, such as taxes and capital flows, to name a few.
MILOŠ KOTEREC ( Slovakia), President of the Economic and Social Council, thanked all participants for their fruitful discussions. “I am very pleased with the outcome of the discussions of this high-level event,” he said. “I believe that our deliberations will provide valuable input into preparations for the major UN conferences on development issues this year, including the thirteenth session of the United Nations Conference on Trade and Development and the United Nations Conference on Sustainable Development, ‘Rio+20’.”
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