Press Conference by Global Social Economy Group on World Financial Crisis Summit

26 June 2009

Press Conference by Global Social Economy Group on World Financial Crisis Summit

26 June 2009
Press Conference
Department of Public Information • News and Media Division • New York


The outcome of the Conference on the World Financial and Economic Crisis and Its Impact on Development in its third day at United Nations Headquarters provided a means for continued discussion, but in no way measured up to the extreme gravity of the situation facing developing countries, representatives of civil society groups told correspondents today, also at Headquarters.

“The Titanic is sinking and Governments are thinking about the arrangement of the deck chairs,” Gemma Adaba, of the International Trade Union Confederation (ITUC), said.  Referring to the analysis and recommendations of the commission led by Nobel Prize-winning economist Joseph Stiglitz, she added:  “The way forward is a way of struggle to bridge the gap between the analysis, which shows what needs to be done, and the actions, which were very weak.”

She was joined by other representatives of the Global Social Economy Group (GSEG) at the press conference, which was organized by the United Nations Non-Governmental Liaison Service.  Present were John Foster of the North-South Institute; Magda Lanuza, of the Women's Working Group on Financing for Development; and Vitalice Meja, of the African Forum and Network on Debt and Development.

In her analysis of the outcome document for the conference, Ms. Adaba welcomed the agreement for the creation of an ad hoc open-ended working group under the Economic and Social Council (ECOSOC) on the development implications of the crisis, as well as the recognition of the need for job-intensive assistance schemes. 

However, she said, an overall enabling environment was required, and that could only be achieved with strong reform of international financial policy and institutions -– the World Bank and the International Monetary Fund (IMF).  Such reform was not included in the document.  Those institutions continued to oppose “counter-cyclical” spending in developing countries to boost social programmes during the crisis.  Instead, she explained, they required a “pro-cyclical” approach from those countries, asking them to cut spending during hard times, which would make problems worse.

She added that a global economic council was needed to bring together all Member States and stakeholders, but a proposal for such a Council was missing from the outcome document.  The text also lacked time frames for its recommendations, so there was no way to monitor the actions of the Governments of industrialized countries.  For that reason, civil society needed to remain strongly engaged at every step.  Non-governmental organizations would insist on a consultative arrangement for civil society in the open-ended panel that had been proposed. 

Mr. Foster said that non-governmental organizations were pleased that the document affirmed the United Nations as the venue where world financial matters were debated, but they were very disappointed at the total outcome after the high hopes engendered by the Stiglitz Commission.  The World Bank and the International Monetary Fund should be brought into greater accountability –- while they were broadly representative in some ways, developing countries felt that they had little voice in those institutions.

Concern with financial architecture was a priority for the Group, he said, adding that it was also crucial to have global taxation mechanisms and other means to counteract the draining of funds from the developing South to the developed North.  That meant, in addition to stopping illicit flows, that some sort of tax on international financial transactions or currency transactions was needed. 

Ms. Lanuza added that non-governmental organizations had hoped that the crisis would be a new starting point for developing assistance without the conditionalities applied by the international financial institutions, which prevented investment in social programmes.  She had hoped for new flows to be able to push forward gender equality and other pressing issues.  Huge pools of resources had been made available for stimulus and bank rescue in developed countries, but nothing in the conference’s outcome document indicated how such stimulus packages could work to help developing countries during the crisis. 

“This is a missed opportunity,” Mr. Meja agreed, noting a lack of specific steps in the outcome document to help developing countries emerge from the crisis, the depth of which required a clear statement on the elimination of debts for those countries or other outside-the-box thinking on the issue.  On the other hand, the text’s vagueness gave poor countries some opportunities to take some needed measures outside the conditionalities of the International Monetary Fund and the World Bank.  Countries must be allowed to take bold steps so that their people “can live a dignified life like everyone else”. 

Asked why developing countries had agreed to the outcome document, Ms. Lanuza replied that there was a strong push for consensus, as well as the exercise of power by industrialized countries.  Ms. Adaba added that the “Group of 77” developing countries and China made a judgement call that if they did not agree to the current document, they would only get something worse, a “one-off conference and that’s it”.  At least now there was an open-ended working group.  There were, in addition, some countries that wanted the United Nations to concentrate on development rather than veer into financial matters. 

Asked whether the developed countries differed on the outcome, the panel agreed that at the end they all got together to prevent institutional reform and additional assistance funding.  Mr. Foster added that there was a lack of courageous political leadership on all sides.  As an exception, Norway had decided to bring the issue of illicit North-South transfers to the fore.  That, he said, was the kind of initiative that was needed. 

Asked if negative reactions to General Assembly President Miguel d’Escoto Brockmann had led to a weaker outcome, panellists agreed that such reactions were just an excuse for inaction.  Developed countries wanted to deal with economic matters in exclusive forums such as the Group of Twenty, without civil society and developing countries present, Mr. Foster maintained.  With the new administration in place, the United States was a little less obstructionist than it been previously, he said, but the resistance to change continued. 

It was important, for that reason, for non-governmental organizations to remain engaged despite the disappointing outcome, Ms. Adaba reiterated.  “We have to continue to struggle to make this work,” she said.  “That’s why we can’t walk away from it.”

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For information media • not an official record
For information media. Not an official record.